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PayPal faces lawsuit for freezing customer accounts and funds
- pdimitar 5y agoSo why not use (Transfer)Wise, I wonder?
- Kaze404 5y agoEnterprise Wise accounts are not available worldwide.
- ranger_danger 5y agoPayoneer.
- ianhawes 5y agoPayoneer is objectively worse than PayPal.
- Kaze404 5y agoI received $50 last year through Payoneer for a quick freelancing job and completely forgot about it. A year later, last week, I remembered and decided to withdraw it only to find out that I was deducted $30 for not using the account. Shitty, but I decided to just withdraw the rest and be done with it, only to be faced with the fact that they have a minimum withdraw amount. I then proceeded to send them an e-mail requesting immediate termination of my account as they literally stole money from my account. I do not recommend this service to anyone.
- pdimitar 5y agoCan you clarify, please? I am legitimately interested. What stops a big company to have a normal business account?
- eliseumds 5y agoEach country has different compliance laws.
- Kaze404 5y agoIf you're a company and wish to use Wise, you need to create an Enterprise account. When doing so, not every country is listed in the dropdown. I've personally been waiting for Brazil to be added for almost 2 years at this point. It's a great service that would help me out a lot.
- pdimitar 5y agoInteresting. Is it based on a number of employees, annual profit, or something else? I did have to scan some documents and send it to them to prove that my company exists but nobody has called me for anything else.
- Kaze404 5y agoAs far as I know it is simply not allowed to make any sort of business-related transaction on a personal account, regardless of the size of your business or anything else. I asked them if that was a possibility when I saw it wasn't possible to open a Business account for a brazilian company, and they very clearly said no.
- voltagedivider 5y agoYeah, I don't get it either. Never had any problems with Wise and their rates seem fair. Maybe people use PayPal just for the escrow service?
- YXNjaGVyZWdlbgo 5y agoI went to visit the US and transferred just 500 Dollars to a friend for our shared Airbnb. The account got suspended because of "unusual activities" I called them and told them it was myself transferring funds and it still took them two weeks to reinstate the account...
- tjpnz 5y agoAll I had to do was login to be suspended a few minutes later for "suspicious activity". Fortunately I didn't have any money in my account. Fuck PayPal.
- lkxijlewlf 5y agoI had a CC lock my account once when I went on a trip to several places in a quick amount of time. I called them and worked it out. Their algos thought it was someone had stolen my card. Now, before I go on vacation or make a large purchase, I call them and tell them what I'm going to do. I've never had a problem since doing that and it's a very quick call, actually. I wonder if anyone has tried same with PayPal.
- thewebcount 5y agoI have had a situation where I called my bank to let them know I was traveling overseas so this wouldn't happen, and it still happened. It's utterly ridiculous.
- chrismcb 5y agoI used to travel a bunch and never informed anyone. Then one year I decided to inform my cc. That was the first time my cc was blocked because it unusual activity.
- consp 5y agoWith my bank I explicitly have to announce in advance if I am going to use my card abroad and can enter specific dates and times online. It's quite easy to do. You can also call if you forgot but then you will have to go online and add days if you want to use it for more than one/a few if I recall correctly.
- vmception 5y agoUse P e r m i s s i o n l e s s systems It's been 13 years guys. They use way less energy and cause way less carbon emissions than these behemoths.
- caseysoftware 5y agoI've also seen scenarios where they undo bank account transfers without notice to clawback funds they're suspicious of. I finally created a separate bank account that I connected Paypal to and never leave more than $30 with them and zero in the account. Trusting them is a quick route to losing everything they can touch.
- salusinarduis 5y agoI don't have anything to add other than to say Paypal stole $1800 from me this way.
- vamega 5y agoHearing the stories in this thread makes me wonder if anyone has ever tried to get a decree that PayPal owes them the money, and if PayPal refuses to pay show up to confiscate their property. I know things like this have happened to banks[1]. That would probably get them to start paying attention. [1]: https://abcnews.go.com/Business/bank-america-florida-foreclosed-angry-homeowner-bofa/story?id=13775638 https://abcnews.go.com/Business/bank-america-florida-foreclo...
- dobs_bob 5y agoImagine an Elon Musk company being total douchebags!
- basher 5y agoPayPal refuses to let heirs access, or even know if there is a balance on accounts after people die, regardless of death certificates. I wonder how much money is being held by this tactic?
- aasasd 5y agoI've heard about their ‘freeze and seize’ business model in mid-late 2000s, so it's been going on for almost fifteen years already, maybe more. Meanwhile Paypal's early top execs are icons of US business and techbros. This Musk is probably a really solid guy, what's not to like!
- Covzire 5y agoI hate paypal's shady business practices almost as much as I hate facebook.
- c7DJTLrn 5y agoPayPal and Ebay are like toxic waste. I've had both accounts frozen. Most recently my Ebay account for a reason they will not explain and will not allow me to appeal.
- lvl100 5y agoAre they still using pandemic as an excuse for not having live customer service? Paypal is simply the worst. I’ve once had to reach one of their execs to get a problem resolved only they couldn’t get it resolved.
- anm89 5y agoHard for me to understanding how this is only happening now. It feels like this one has been ripe for 5-10 years.
- alfalfasprout 5y agoI refuse to use paypal for any nontrivial amounts of money for this exact reason. I once had $10k frozen for no reason at all. I really needed that money back then. Was an absolute nightmare and took weeks to unfreeze. The only thing I now trust for "quick" payments of larger amounts of money is bank wire. Cryptocurrencies don't exactly solve this problem since you need to convert back to the fiat currency and you then have exchange rate volatility + withdrawal delays (and crypto exchanges also are notorious for freezing withdrawals).
- antux 5y agoWhen they freeze customer accounts they're essentially taking away people's livelihood and right to live. In a way, it's like killing someone, but slowly and non-violently. This is definitely unjust and deserves a class action lawsuit.
- eruci 5y agoYes, I'll join too. They froze one of my accounts with a cryptic message of "You can no longer do business with paypal" and included another "In six months we'll contact you to let you know how you can withdraw your funds" By reading on the experiences of people in this lawsuit, I doubt I'll see my money even in 6 months time.
- mrtweetyhack 5y ago
- birdyrooster 5y agoAs bad as it can be, PayPal is so easy to use for purchases and sending money to anyone anywhere for free. Why anyone would use crypto is confusing to me. We already have the tools we need outside the crypto world and they are creating broken copies.
- jaarse 5y agoCurrently using PayPal, Stripe (for Visa,MC,ApplePay, etc), Shopify payments and traditional merchant services from brick and motor banks. PayPal is by far the least merchant friendly.
- olingern 5y agoI’m in the same position as many other users with frozen accounts. I’ve called and appealed multiple times. I don’t understand how PayPal is a company when they’re clearly out to harm their users.
- smoldesu 5y agoNow when can I sue Coinbase for doing the same thing? I've got a couple hundred dollars tied up in their little trading business, and they won't let me withdraw until I verify my info; when I try to verify my info, I get an error. What gives? Why am I allowed to put money in without verifying, but I can't take money out?
- skarz 5y agoThis has happened to me in the past. They thought something was suspicious about my account and froze it entirely. Remember: Paypal is not a bank. That's not your money, that's theirs and they're letting you use it. Don't keep money in paypal. transfer or spend it immediately.
- 6510 5y agoIn old news: Judge Approves $4M Deal Over Closed PayPal Accounts https://www.courthousenews.com/judge-approves-4m-deal-closed-paypal-accounts/ https://www.courthousenews.com/judge-approves-4m-deal-closed... http://www.courthousenews.com/wp-content/uploads/2017/03/PayPal-Settlement-Order.pdf http://www.courthousenews.com/wp-content/uploads/2017/03/Pay... Some chunk of the doc: > Judge Fogel ruled that: (1) the PayPal User Agreement affords PayPal “sole discretion” to place holds on its users’ accounts, irrespective of whether the user has engaged in restricted activities; > and (2) PayPal has no contractual obligation to provide users with an explanation as to why their accounts may have been frozen. > [...] > Finally, he dismissed the unjust enrichment claim on the ground that the parties’ relationship was governed by an express contract. > etc etc bla bla bla
- mickotron 5y agoI was a customer for 16 years until they decided I couldn't use their services anymore. I had to fill out a bunch of forms and provide a lot of info to a financial services company who'd had a massive breach. I no longer use PayPal.
- mickotron 5y agoHN hates cryptocurrency. And yet, all the comments on this thread are about banks/paypal freezing funds or transactions. Decentralised digital money does have value and a use case. It's interesting that most here don't see that this kind of thing would not happen with crypto.
- Invictus0 5y agoPayPal is trying to stop fraud; crypto is literally the currency of fraud.
- mickotron 5y agoSo cash, wire/bank transfers, paypal have never been used for fraud? I have news for you. Financial fraud existed even before the concept of what we know of modern money. I would be confident to assert that pretty much all financial infrastructure and instruments have been used for fraud, historically. Crypto does not have a monopoly on that and you know it.
- sporkland 5y agoI had a total shit thing happen with Paypal. Someone, I had no idea who, sent me $80 for a supposed transaction (which I think may have been legit they just did the wrong email address). Then they asked for a refund when they realized it was in error. Which PayPal wanted me to pay a fee for. I filed a dispute they auto refunded and charged me $20. So I refuse to use it now. They won't let me close the account either.
- meandave 5y agoMy account was permanently suspended this week, along with some friends I used to share a studio with (they paid me their portion of rent via PayPal), my girlfriend, and the record store a close friend of mine works at. It seemed like my account flipped some automated trigger and it took out my whole payment network. There’s of course no information from customer service. I hope this becomes a class action suit and we can join
- meonly123 5y agoI would like to be added to the law suit. They froze my account at Christmas time how do I get involved
- gk1256 5y agoPayPal has the fraud problem. Every next payment platform who aims to become the next PayPal also suffer from it.
- deleted 5y ago[deleted]
- rad_gruchalski 5y agoSure, but it's not up to paypal to decide what's legal and what's not legal. Definitely not their responsibility to seize money from locked accounts. That’s plain theft.
- pizza234 5y agoThat a problem of any banking institution. Differently from Paypal though, the last time that there was a suspected fraudulent transaction in my bank account, I had a physical and factual meeting at a bank branch, rather than having my account frozen and given a stock answer.
- gk1256 5y agoPayPal has lot of third party data than most banks, but they stuck at decision making process. "Shoot First and Ask Questions Later"
- chris_wot 5y agoAnd this is the problem for PayPal. They seem to freeze accounts for arbitrary reasons, and way more frequently than banks. If you are a business, the ability to transfer money without getting all your funds locked up is important. I genuinely believe they are doing it for reasons other than fraud and money laundering.
- MeinBlutIstBlau 5y ago
- libertine 5y ago
- antihero 5y agoThing that amazes me is that people leave huge amounts of money in their PayPal instead of withdrawing it regularly. Why not just withdraw it, and then PayPal has nothing to seize!
- boring_twenties 5y agoIn the past at least, PayPal has also been known for simply taking funds from your linked banked account. So maybe it's better to not link a bank account at all, which means leaving funds in your PayPal account until you can spend them (since you have no way of withdrawing).
- ceejayoz 5y agoOr link a bank account in the middle, between your primary one and PayPal, that exists solely to receive and pass along your funds.
- TheNewsIsHere 5y agoI do this, but not specifically for PayPal. I have a checking account solely for using with third parties, writing checks, debit card transactions, account linking, etc. It has overdraft protection disabled. All my bank funds are in a “private” accounts that aren’t linked anywhere, don’t have checks, etc.
- chris_wot 5y agoSurely dropping PayPal would be way easier?
- ceejayoz 5y agoOn the consumer side, I'd much rather use PayPal than put my card number into a potentially dodgy site. Protects me quite a bit, and with a easier UI. If I can't PayPal or Apple Pay, I've at times gone elsewhere.
- acomjean 5y ago“using PayPal to buy and sell clothing on eBay, to exchange money for a poker league she owns and for a non-profit that helps women with various needs. “ I can see one of those things causing an issue (poker league) We use PayPal for membership fees for our nonprofit. This year they’re limiting us to 2000 a month transfer out which is annoying to us, but we’re small enough to get by.
- leviathant 5y agoEvery time I've read about someone making a fuss about PayPal freezing their account, as you get into the details of their business, it quickly becomes apparent that knowingly or otherwise, they're doing something risky enough that it triggered something related to terms and conditions that they didn't bother to read. I realize that's just my anecdote, but when you're working with money, there's a lot of boring reading you should do. Quickly becomes apparent why that opportunity to fill a seemingly obvious hole in a market isn't the opportunity you thought it was.
- CaptainZapp 5y agoIf they don't like that their service is used for poker activities they are free to dump the customer. What they are not free to do is to freeze his account and just keep his money.
- tzs 5y agoFor two of the three cases mentioned, I'd tentatively agree, but in that particular user's case they probably are free to keep the money for several months to a year after they freeze the account because she was running a business in a field that has a high chargeback risk. Someone has to pay for the high level of consumer protection that people who pay with credit cards receive. Every entity that is in the chain between the issuer of the credit card user and the merchant that receives the payment arranges it so that responsibility of this falls on someone farther down the chain than them. There is no one farther down the chain that the merchant, so the merchant ends up being the one who has to pay for chargebacks. There is nothing further down the chain than the merchant so it ends up on them. But a merchant that ends up incurring a lot of chargebacks often also is a merchant that ends up not having the money to pay for those chargebacks, and in that case the entity that the merchant was dealing with for accepting payments ends up having to pay. Thus that entity will almost always have in its contract with the merchant that they can keep some of the funds the merchant earns in reserve to cover chargebacks. I doubt any court will find such terms invalid. They have a legitimate purpose of risk mitigation, the companies will have the data and actuarial analysis to show that the amounts held in reserve are reasonable for the level risk, and the ultimate purpose is to support the strong consumer protections that credit cards provide.
- pizza234 5y agoVery good news, especially the potential class action. Something that I find very interesting is how the individual lawsuits will end. I remember (but can't find) a David vs Goliath case from some time ago, where a user brought Google to the small claims court. He won the case in that venue, but subsequently lost when Google followed up an brought a huge amount of documentation and won. The guy's conclusion was that Google knows _a lot_ of stuff and can leverage it; I think that the events could play similarly, here.
- creshal 5y agoI've been battling dumb Paypal problems both on the end user and the merchant side so often that I'll never again use it if at all possible, especially in shops. It's just not worth the time and effort to try and trick them into doing their job.
- throwaway2474 5y agoIn my (quite extensive) experience with the company, one should only ever use PayPal as an extremely temporary means to accept payment for clients who can’t pay any other way, and then immediately withdraw the funds to a real bank account. The company absolutely cannot be trusted, and will do everything in their power to take your money and not give it back. I do not know a single person who uses PayPal regularly for a business who doesn’t absolutely hate the company, because they do this type of thing so regularly. Recently, when you log into a business account, there is a giant alert that looks like an important warning, that actually says you’re “eligible for a business loan”. You have to dismiss it every single time with the little non-default no thankyou button. And then beg them to give you access to your own money, because apparently you can’t be trusted. I for one would love to see a lawsuit like this land.
- deleted 5y ago[deleted]
- tehwebguy 5y agoI would add that folks should have a bank account connected to PayPal (etc) that is separate from your day to day accounts. Not only will it localize any problems[0] but it will limit snooping[1]. [0] If PayPal wrongly deducts money from an account that has basically no funds in it you’ll be able to deal with the problem without having your actual funds locked up. [1] Seems like basically every non-bank is switching from ACH deposit verification to a service called Plaid that requires your bank username & password, which then screen scrapes your financial details. There’s no reason to hand over your real life financial data when you can just use a dummy account.
- monkeybutton 5y ago>service called Plaid that requires your bank username & password, which then screen scrapes your financial details That is hefty accusation. Wouldn't doing that be illegal? Edit: Looks like they have an entire controversies section on their wiki page and banks are suing them over said sketchy practices. Classy stuff.
- AniseAbyss 5y agoThe concept of directly paying someone from your bank account seems completely impossible in America. There always has to be some middleman parasite- who conveniently charges a nice transaction fee for the privilege.
- ahefner 5y agoThe funny thing to me is that you can't always even pay money to the government itself without involving some middleman parasite that takes 1 or 2% for themselves.
- cuteboy19 5y agoA UPI like system would completely solve these problems.
- skeletal88 5y agoYes, why doesn't the US have something like our SEPA where we can just transfer money to someone's account?
- salawat 5y agoBecause the U.S. financial system, and access to it is a very powerful tool in terms of international diplomacy, and a crucial source of evidence/intelligence for law enforcement. Trivial abilities to move money around and an inability to lock out financial endpoints would completely neuter it's utility as sanctioning measure.
- patio11 5y agoThe payment volume over Zelle, which is instantaneous, free, bank-to-bank transfers, was about $307 billion in 2020. For ACH transactions, it was about $62 trillion (not a typo). Wire transfers are also a thing. So are, for that matter, checks, which by ancient custom are free for all parties but the banks (at least for retail users). That the payment industry exists when all of the above is true is a fascinating topic. I should probably cover it in a newsletter sometime.
- durnygbur 5y agoTightening of mobile phone policies some years ago locked me out of few paypal accounts, also they seem to completely disregard and abandon security questions created long time ago.
- nerbert 5y agoSurprised it hasn't happened before.
- miohtama 5y agoThe problem is that usually anti-money laundering laws give the operator and the compliance officer an infinite protection even on a suspected money laundering. As long as the compliance process is followed, no matter how stupid the process is, there is no legal basis to go after account freezer and the company is protected. Thus, the company has no incentive to be reasonable with account freezes.
- perlpimp 5y agoAm at paypal this is every year in compliance videos, there must be terrible and inept bureaucracy - not sure what is that side of the story. but i can see them no wanting to invite ire of regulatory punishments. go to small claims court if its a small sum. you should not keep large sums at any online outfit, paypal, coinbase or others. Even bank account is a suspect space, better stow money in money market funds for quick liquidity, its super easy to defraud it.
- manbart 5y agoFreezing the account or booting the user from the service is one thing, but seizing the money as a result without any due process seems pretty messed up IMO
- johnebgd 5y agoPayPal has worked hard to not be a “bank” so they are long overdue for being sued about this. I know countless vendors who have had their funds stolen.
- deleted 5y ago[deleted]
- winter_blue 5y agoIt's really and outrageous that this open stealing of customers' hard-earned cash for minor perceived user agreement violations is so freaking rampant, with PayPal. I wouldn't be surprised if it turned out that this literally was a strategy cooked up by the higher-ups at PayPal to buff up the company's gross profits.
- stevespang 5y ago
- tootahe45 5y agoGovernments need to ban 'shotgun KYC', which is where they let you put funds in the account before they freeze it and make you do KYC, rather than making you do KYC directly on sign-up. You're effectively forced to give away your info or lose the funds. Sites like Paypal don't want this to happen because registrations would drop off majorly if you had to KYC on sign up.
- Sargos 5y agoGovernments encourage and are the ones pushing shotgun KYC so I would maybe phrase your comment more like "Citizens need to rebel against 'shotgun KYC'.
- joejohns 5y agoI resorted to using another payment gateway to prevent freezing accounts and funds; this is great news.
- sys_64738 5y agoPaypal threatened to cancel my account because I closed the linked bank account and canceled the linked credit card. OK, go ahead.
- Ekaros 5y agoThat took way way too long... How is it possible that this happens only now and not shortly after PayPal launched?
- thebiss 5y agoBefore Paypal launched, only companies had relationships with payment processors and could directly accept major credit cards. Individuals had basically nothing. Paypal was a huge catalyst for online auctions and small business, and it took took time for behavior like this to develop. And as others have said, they worked hard to not be a bank.
- toast0 5y agoI can recall reading many PayPal horror stories, but as I recall, they were all accounts frozen and then usually closed and paid out 6+months later. This story and others in comments suggest PayPal has decided not to pay out the frozen accounts anymore. Damages from freezing the money for 6 months are real, but may not be realistically legally actionable; damages from not paying the funds are clearly actionable.
- datavirtue 5y agoWhy doesn't this fall under the CFPB? The money is held in a bank account which ultimately belongs to the PayPal customer. When I was in the prepaid card industry we held money for people in our bank account just like PayPal does. The bank held us to account for each of our customers. We accidentally prevented some people accessing thier finds for a few days due to a software glitch and had our asses handed to us. As we should have. One lady was prevented from accessing her $200 for a few days and her lawyer extracted our maximum arbitration amount of $8000 from us.
- dragonwriter 5y ago> Why doesn't this fall under the CFPB? Who said it wouldn't? Government action to vindicate consumer rights is generally complaint-based and not exclusive of private rights of action, so a private class action isn't evidence that a thing is not also within the enforcement jurisdiction of a government agency.
- carlsborg 5y agoBitcoin (and others) solve this.
- ddtaylor 5y agoPayPal closed an account of mine after 20 years without explaining anything because I logged in one day while still connected to my VPN.
- ComodoHacker 5y agoWe should legitimize using VPN like we legitimized and then adopted e2e encryption.
- ddtaylor 5y agoI'm all for it, but my overall experience so far has been that if something happens to a small percentage of users - like 1% or less - then overall it won't gain traction or matter much. I am interested if this class action gets an support because I will for sure join it out of spite for how poorly they handled the situation and how they kept my money locked up for 6 months.
- Mezzie 5y agoDepends on which 1% and how good that number is at mobilizing. I promise you'd hear a ton about anything that only affected trans or gay people, for example, or any issue that only impacted the top 1% of customers based on money spent. If we found a population with a social microphone in that 1%, then it can gain traction.
- vmception 5y agoApple iCloud Private Relay is attempting to do that
- logicalmonster 5y agoThe thing that's surprising to me isn't that big corporations will do their damndest to rob people blind, it's that within minutes/hours/days after reading this thread, there will be a horde of people who read this article and smugly decry crypto saying there's no use case or purpose for it.
- finiteseries 5y agoSeizing funds without explanation or restitution is a well known use case for cryptocurrencies at this point.
- JRGC1 5y agoGood
- dm03514 5y agoI'm so happy to see this. I am working on publishing a book on leanpub, and leanpub disburses payments using paypal. Yesterday, I logged into my paypal account and I remembered that this happened to me and my funds and account were frozen since 2010 (something I must have put out of my mind :p). I was searching for this issue and found this lawsuit and cannot wait to be part of it. Dealing with Paypal during the time was borderline abusive and I felt helpless every step of the way. In 2010 when they froze my account they mailed me a physical letter with an activation code which took weeks, and when I called to confirm my account I was told that the code was incorrect... I had very very little money in my account < $100 and I can't imagine how frustrating it would be for someone who needed paypal for their income. I'm happy to be in a position where I can choose to never use paypal again and I hope they are punished for the way they treat their customers.
- mcv 5y agoFor over a decade I've heard tons of stories about PayPal freezing accounts for questionable reasons. I've heard of events that were cancelled because the organizers suddenly couldn't access the money people paid to the event, and PayPal wouldn't release the money until they could prove they'd organized the event for which people paid, for which the organizers of course needed that money. I will never ever use PayPal. Everything I've heard about them makes them sound like an extremely unreliable payment provider.They're not an organization you should trust with your money.
- amelius 5y agoThey even created this website, back in the old days: https://paypalsucks.org/ https://paypalsucks.org/ Worth mentioning in this context is this page: http://paypalsucks.org/paypal-frozen-accounts.shtml http://paypalsucks.org/paypal-frozen-accounts.shtml
- meonly123 5y agoThey frozen my account at Christmas. How do I get in Involved with this
- kmlx 5y ago
- kweks 5y agoWe are Europe's largest site for RFID and pentesting hardware (lab401.com) We are in the exactly the same situation. PayPal has conducted a personalised, manually executed war of attrition against our company and shareholders. Eight months ago, PayPal froze our account, seizing 15kEU. They refused to give any justification for the action, despite discussions with C-level staff. After the 180-day "withholding" period, we were informed that they would not release the funds, for undisclosed reasons. We immediately engaged legal counsel. PayPal refused to interact with our counsel, and so a C&D was issued. Within one week of the C&D, PayPal did the following: - Froze the account of our sister company (in Hong Kong), seizing 35k EU - Froze the personal accounts of all shareholders of the EU and HK corps (~1,5k EU) - Froze the business accounts of all shareholders by name search (different corporate entities, different businesses) - 5kEU - Froze the business accounts that the shareholders held (again, different corps, different businesses) - another 5kEU Our policy is to empty accounts on the 28th of each month. PayPal froze and seized funds in all accounts on the 27th of the month. Based on the time-stamps of the emails, and the order in which the accounts we closed, it's obvious that it was a targeted, manual process (2 - 3 minutes between closing each personal account, 15 minutes to find the next company account, 3 - 5 to close the personal accounts, and then 10 - 15 minutes for the next company accounts). We engaged secondary legal counsel in Luxembourg (PayPal's EU headquarters). Again, PayPal refused to disclose any reason, justification or proof, replying with typo-ridden copy-pasted document from a low-level legal peon, concluding that no funds would be returned, the businesses and personal accounts were deemed 'illegal', and as such, PayPal would confiscate all funds. All KYC was performed. All accounts had been "audited" by PayPal (when you reach the 5k, 50k, 100k+ processing tiers). Needless to say, operationally - we have shipped 50kEU of hardware to customers, and face losses of the hardware, and costs of replacing stock. I agree with the standpoint: this is purely racketeering - an online equivalent of Civil Forfeiture. For extra context, as the points have been raised in other comments: - In a perfect world, no merchant would use PayPal. In our experiments, disabling PayPal cuts revenue by ~30% in our industries. - Pentesting products could include illegal products: keyloggers, etc. We sell no such products for obvious legal and compliance reasons. All the products we sell are sold by countless other resellers that use PayPal. We have processed Visa/MC with Stripe for over 6 years with no problems (legal, chargeback, etc) - We empty accounts regularly, to minimize fallout. However, you have to keep a healthy minimum in accounts when dealing with large volume, or accounts get limited automatically (presumably to avoid merchants pulling cash to avoid chargebacks / refunds) - We have already 'invested' over 20k in legal fees. I justify this cost in (perhaps falsely) believing that we could establish some case law that could benefit other merchants. It's unfortunate that we cannot join the class action in the US, or we'd be into it. With that said, if anyone merchant in the EU has similar issues, it could be interesting to investigate if a similar action can be mounted in the EU. Feel free to reach out: simon at sn dot cm (not a typo).
- b8 5y agoI'm happy that this is happening. Small buisness owners, Twitch streamers etc. can get their PayPal account locked pretty easily for "suspicious" activity (i.e chargebacks or a few thousand dollars). Then PayPal locks their account for 180 days with little to no recourse. The big Twitch streamers register an LLC which PayPals gives more leniency to AFAIU.
- foxfluff 5y agoYeah... I've been hearing these horror stories about paypal for a very long time now and it makes my blood boil knowing that nothing's ever been done about it. I really hope that a big change is about to happen.
- johndough 5y ago"AFAIU" stands for "as far as I understand". (So those who have never seen this acronym do not have to google for it.)
- MeinBlutIstBlau 5y ago
- ckastner 5y ago> Lena Evans, one of the plaintiffs who'd been a PayPal user for 22 years, said the website seized $26,984 from her account six months after it got frozen without ever telling her why. Wait, what? They're actually taking the money? I thought the article was just being careless with the terms "frozen" and "seized". On what power are they doing so? It's understandable when the relevant authorities (be it a tax authority, or a financial supervisory authority, or a court, or whatever) seize money, but they are not an authority. Furthermore, if the money in question actually were illicit, then by what fantasy argument would they be allowed to keep it themselves rather than having to hand it over to the goverment? The entire point is that the money is dirty and nobody may keep it.
- gruez 5y ago>They're actually taking the money? I thought the article was just being careless with the terms "frozen" and "seized". but that's also the plaintiff's claim, so I wouldn't exactly call that reliable.
- mdek 5y agoPer the article, Paypal is seizing the money as damages: > It also said that the money was taken from her account "for its liquidated damages arising from those AUP violations pursuant to the User Agreement.
- ckastner 5y agoIndeed, this is an important point that I missed. So if I get this right, this isn't about actually AML activity, but a civil claim under something like ToS. So I looked up the AUP, and indeed: they claim $2,500(!) liquidated damages per violation of the AUP, which is on average a ridiculously high amount. Selling 10 individual bottles of wine without approval will incur $25,000 damages under this scheme. Given these terms, you have to be absolutely nuts to sign any agreement with Paypal.
- sam0x17 5y ago> if the money in question actually were illicit, then by what fantasy argument would they be allowed to keep it themselves rather than having to hand it over to the goverment? The entire point is that the money is dirty and nobody may keep it. I don't know what fantasy they operate under, but back in the 2010s I observed Google doing this numerous times with "seized" click fraud revenue -- one of my sites was a victim of a click fraud attack as an attempt to get my AdSense account banned, and my friend's site at the time was advertising on my domain via AdWords and he didn't see any kind of refund despite the $800 that was taken from me (which was the entirety of my revenue for that month). Google just keeps funds they seize I'm pretty sure, or at least they did back then.
- Jiro 5y agoLink to actual lawsuit: https://aupdamages.com/wp-content/uploads/2022/01/PayPal_Filed-Complaint.pdf https://aupdamages.com/wp-content/uploads/2022/01/PayPal_Fil... (I had to Google this and find it in a Reddit thread, so it's not directly from the court's website. If anyone can find that it'd help)
- kingcharles 5y agoIt took a bit to find it because PACER's search is awful. Plus you have to PAY for every search. I bought all the current docket entries and added them to RECAP so you can download them for free: https://www.courtlistener.com/docket/62596200/evans-v-paypal-inc/ https://www.courtlistener.com/docket/62596200/evans-v-paypal... EDIT: From PayPal's AUP in the Complaint.. yowch! "You acknowledge and agree that $2,500.00 U.S. dollars per violation of the Acceptable Use Policy is presently a reasonable minimum estimate of PayPal’s actual damages - including, but not limited to, internal administrative costs incurred by PayPal to monitor and track violations, damage to PayPal’s brand and reputation, and penalties imposed upon PayPal by its business partners resulting from a user’s violation - considering all currently existing circumstances, including the relationship of the sum to the range of harm to PayPal that reasonably could be anticipated because, due to the nature of the violations of the Acceptable Use Policy, actual damages would be impractical or extremely difficult to calculate. PayPal may deduct such damages directly from any existing balance in any PayPal account you control."
- mraudiobook_com 5y ago
- kingcharles 5y agoIf you're a big enough customer they give you your own personal account manager and he'll make sure your account stays open and running whatever happens. I had millions coming through PayPal when I was running a private tracker and I could speed dial our PayPal man if I needed.
- bastardoperator 5y agoThis has been happening to folks for ages. I'm looking forward to understanding why Paypal thinks it can steal from it's customers without facing repercussions. I wouldn't do anything serious with Paypal for this exact reason.
- kragen 5y agoBecause they've been doing it since last millennium, and the competing services that didn't steal from their customers went bankrupt because of fraud and reversed payments.
- anovikov 5y agoGood answer to people who ask what is the point of crypto...
- umrashrf 5y agoIt sounds like these lawsuits are used to bring the confidence back into the company (PayPal) to keep their unicorn status so US government can benefit from this. I might be paranoid or just crazy to think like this.
- johnboiles 5y agoGreat to see this! Not to the same scale as seizure but using buymeacoffee.com for OSS donations PayPal would lock my account every month or two until I uploaded a bunch of documents (which were always the same docs each time). Each time it was a little uncertain if I'd be able to get my money out or not. Meanwhile PayPal would happily continue to receive money in my name that I didn't have access to.
- mdavis6890 5y agoThis is devastating to those users affected by this, but I believe that the blame doesn't lie solely with PayPal. Unfortunately there are many laws they must comply with that delegate enforcement to private companies like PayPal rather than where is belongs - the government. From the article: PayPal allegedly sent his wife a letter that says she "violated PayPal's User Agreement and Acceptable Use Policy (AUP) by accepting payments for the sale of injectable fillers not approved by the FDA." If PayPal DOESN'T freeze the account and hold the money, they can get in far larger trouble with the government. Why should PayPal be involved in this enforcement at all? If the FDA doesn't like what this seller is doing, let the FDA themselves go after the seller and leave PayPal out of it. But the law doesn't work that way. I had $10k's in an account with BofA that was frozen and nearly killed the closing on a house I was buying at the time. Because they had a mailbox address on file for me, rather than my home address. It was horrible for me, but that's what the says that they had to do, and if they didn't the could end up in trouble with the feds facing huge penalties. Let's try to empathize with all parties and think rationally about the incentives and constraints that they face.
- throw10920 5y ago> think rationally about the incentives and constraints that they face The incentives never justify unethical behavior, ever.
- stronglikedan 5y agoNo sympathy here. They've been steali..err..seizing funds for decades, and dodging the lawsuits by leveraging their clout. Sure, maybe they have some regulations to follow, but they willfully choose to ignore the folks they're stealing from, instead of helping them to understand the process of getting their stolen money back, and prevent money from being stolen from them in the future. I hope they're squeezed hard on this one.
- shkkmo 5y ago> It was horrible for me, but that's what the says that they had to do, and if they didn't the could end up in trouble with the feds facing huge penalties. Except that most likely isn't true. The law does not require banks to have your home address. The law does require banks to verify your identity, but there are many ways to do this without requiring a "home address". The "home address" rule is self-imposed by banks and is yet another way that our country makes life unnecessarily difficult for homeless or itinerant people. Edit: This is regarding USA law, and I realized I am not where you reside. I assumed USA because of the FDA mention but I realized that was referencing the article so may not be a good clue.
- jliptzin 5y agoExorbitant punitive damages please, this is long overdue.
- LgWoodenBadger 5y agoFwiw, I closed my family’s PayPal accounts just now in response to this. Enough is enough.
- theplumber 5y agoRecently I've been suspended from an "online bank". It's a traumatic experience, especially if you need the money held in that account. Fortunately the amount I had there was not that big but the abusive procedure is trumatic. I can't imagine how someone would feel like to have all his rent money blocked in an online bank. Basically you are told that unless you provide whatever documentation they want you loose the access to your own funds. Of course providing them documentation is no guarantee they will lift the restrictions. The support is via email only. The boarding and verification process it's really just a bite and switch scheme. I don't know how someone would feel safe to keep money in such a bank after they put your account/transactions on hold for days. I start to like the "crypto currency" concept of owning your money more and more.
- clusterfish 5y agoYour "online bank" does not sound like an actual bank (much like PayPal isn't one).
- theplumber 5y agoRevolut, Monese and others claim to be online banks...can't tell you exactly what makes an "online bank" an "actual bank" but they provide you individual bank accounts (unlike paypal).
- TrickyRick 5y agoIn Revolut's case it's the banking license that makes them an "actual bank".
- clusterfish 5y agoI'm surprised they don't do KYC before taking your money. You always have to sit through that first with brick and mortar banks...
- theplumber 5y agoIt's part of their strategy to maximise the signups and force you do the KYC when you are vulnerable(i.e you need your money to pay the rent). They are pretty evil.
- rpaddock 5y agoThey did this to my late wife's account. They demanded that I prove she was dead, as if I didn't already have enough grief. See the documentary Pain Warriors about that saga. How do I sign up to be part of this suite?
- navbaker 5y agoDid they ask for something more than a death certificate or something similar? That should have been enough, right?
- rpaddock 5y agoI don't recall what all they wanted, it went well beyond the death certificate, which I had already supplied them. I had no issue with that. I went and talked to a lawyer about and even he was pissed off about such treatment. Alas the amount of money involved it wasn't worth bothering. This is truly how PayPal makes there money, by taking it from people, even dead ones. I'm hoping to find good alternatives in this tread...
- jedberg 5y agoWhen I worked at PayPal, some of the execs would say "we don't make money by giving it back to people". These were the execs that worked directly with Theil and Musk and I'm sure they're long gone, but it was definitely Theil and Musk who pushed for these types of policies right from the start (well Musk agreed when he showed up, he wasn't a founder of PayPal despite what he wants you to believe).
- digisign 5y agoWell there it is, Netcraft confirmed it.
- stjohnswarts 5y agoThis is why I use antiquated banking. At least I have someone to contact if something goes wrong.
- gossamer 5y agoYay! It is about time.