15 ms·

More Paypal nonsense

870 points by bradleyjoyce 15y ago

dgurney 15y ago
I have never seen a company more in need of competition. I realize its massive installed base makes it tough to approach, but isn't there somebody who can compete credibly? I have to think that there's enough user dissatisfaction that people would defect in droves, given a decent alternative.
- thinkcomp 15y ago
  The regulatory situation has made it nearly impossible to start a payments company in the United States. http://www.facecash.com/legal/brown.html http://www.facecash.com/legal/brown.html
Hilyin 15y ago
Paypal is a bunch of scumbags. They deserve to go out of business.
brianr 15y ago
These horror stories are so common that I have to ask: why does anyone still use PayPal? I ask this in the most constructive way possible... is there a set of use-cases that PayPal is still the best for? Is it a lack of awareness of alternatives? International availability? Something else?
- bphogan 15y ago
  Because buyers keep demanding sellers use it. If you're a buyer, it's about the most painless thing out there. I got forced into it by a client once for that very reason. Unfortunately PyPal froze his account with about $20k in it. We switched to a real merchant account and everything went uphill from there.
  - DanI-S 15y ago
    Is there a current best alternative to PayPal that you would recommend?
    - bphogan 15y ago
      I've used Authorize.net + a merchant account at a real bank a few times. It works, every time. BrainTree is awesome too. If you're doing subscriptions, http://spreedly.com/ http://spreedly.com/ is good. And Stripe looks cool but I've never used it. (https://stripe.com/ https://stripe.com/)
    - dangrossman 15y ago
      Taking credit cards on your own site with a merchant account and gateway. But it'll almost definitely cost you more, you'll invest 10 times the resources into handling and stopping fraud, and some customers won't trust your site with their credit card. The reality is PayPal has a lot of benefits for both sides.
    - alapshah 15y ago
      Samurai is really good http://samurai.feefighters.com http://samurai.feefighters.com priced similarly to paypal at 2.3% + 30 cents You really need a true merchant account plus gateway.
      - DanI-S 15y ago
        This looks seriously promising - I love that it doesn't require user sign-up. Their site is brilliantly designed, too.
    - einhverfr 15y ago
      You have two basic options: 1) A proper merchant gateway solution 2) A third party payment provider with better terms of service. On the first, I have generally recommended TrustCommerce both due to their emphasis on security (having reviewed their Perl and PHP API classes directly) and the richness of services they provide. They do cost more because Paypal gets a tremendous volume discount, but it's an option. For online payments also you have additional PCI-DSS worries that are burdensome for small businesses. The second option includes solutions like Amazon Payments. I currently use Amazon Payments because I process 4-5 transactions per year. At that volume it isn't worth maintaining my own merchant account and certainly is not worth worrying about PCI compliance......
- sp332 15y ago
  Mainly international payments. Plus, customers are more likely to already have an account with them, and no one feels like signing up for a new payment system just to buy something at your store.
  - brianr 15y ago
    I'd be curious to know how conversion rates vary when you have Paypal vs. a merchant account (or something like Stripe) vs. both. Anyone have any data?
    - dangrossman 15y ago
      I have several websites; some sell products, some monthly subscriptions, some target consumers, some businesses. Universally, on all of these sites, customers choose to pay with PayPal more often than credit card. For the most part, my payment pages are a secure credit card form with a "or Pay with PayPal" button to the right of the form. More people choose to click through to PayPal than to just put their card in to the form already on screen. The preference for PayPal is larger outside the US among my customers.
      - sk5t 15y ago
        Have you added Amazon payments as an option as well? I would choose that every time, given the choice, if for no other reason than Paypal is always trying to trick me into paying from my bank account, when I really want to pay with credit card for rewards and security. Amazon doesn't try to trick me.
        zem 15y ago
        same here - my preferred options are amazon, credit card and if there's no alternative and i really want whatever it is, paypal.
- james33 15y ago
  40% of my customers will only pay with PayPal. I went without PayPal for about a month at one point and sales were down dramatically even though I still had credit card and other options available.
- wdewind 15y ago
  Because in reality paypal is actually pretty awesome (note: I work for Etsy which uses paypal as a payment processor, so I guess I'm kind of biased). The cost for the business, compared to maintaining your own payments platform at scale, is pretty reasonable, and the failure rate is pretty miniscule when you consider the amount of potential fraud that goes through the platform. Paypal wasn't really designed to handle one off personal payments, it was designed to let small (and large) businesses accept payments, internationally and fraud free. This is ridiculously difficult (how many of you have ever written software that integrates with a bank? ugh.) PayPal does this exceptionally well and because of that many huge businesses are built on its back. The reality is, in most of the situations that people complain about freezing their money, without paypal their entire project would've been a no-go anyway. I do feel for people who legitimately have their accounts wrongly frozen (I am one of them, though mine was unfrozen after a few days), but you have to understand how small a percentage of people that is, and that you can't have a system without failure. Again, paypal's failure rate, when you consider what they actually do, is astoundingly low. Edit: Just for absolute clarity - I work for Etsy and have zero affiliation with the blog from the OP, and it has zero affiliation with Etsy. Also these are my opinions not my employers etc.
  - latchkey 15y ago
    I wrote the software that integrates with WePay. They are a 'real' bank. Works great. ;-) https://github.com/lookfirst/WePay-Java-SDK https://github.com/lookfirst/WePay-Java-SDK
  - joshu 15y ago
    IIRC Paypal was originally designed for interpersonal payments.
    - wdewind 15y ago
      TBH you might be correct. I don't think that's what is currently optimized for, but even there, it still works pretty damn well. Haters gonna hate...
    - sk5t 15y ago
- thomasgerbe 15y ago
  Because it is what most sellers offer for transactions.
- dangrossman 15y ago
  > These horror stories are so common Don't take that for granted. PayPal has 232 million registered accounts, and many more unregistered buyers. Even if 99.99% of PayPal account holders were completely satisfied and never had any problem, that'd 0.01% would still be 23200 pissed off people. Is it right to wonder "does anyone still use PayPal" if 99.99% of PayPal users have no problem using the service?
  - ubernostrum 15y ago
    The problem with PayPal, and the reason why these horror stories exist at all, is simple: the entirety of PayPal's dispute-resolution system seems to consist of "the system flagged it, tough luck". And the only way to get actual service from PayPal past that point is to raise a massive cry of bad PR for them online. So, yeah: if they don't want to deal with their customers, we can fix that by encouraging a situation in which they have no customers to deal with.
- simoncpu 15y ago
  There is no good alternative. Existing alternatives require additional user signup, and the fees are the same. The Internet needs a good Paypal competitor.
- hokua 15y ago
  Im guessing this rant was submitted and upvoted by the developers of Stripe. Paypal works.
- ugh 15y ago
  Because – as a buyer – PayPal is quite awesome.
vaksel 15y ago
Paypal has a reputation for stuff like this...can't exactly be a surprise
CaveTech 15y ago
It really perplexes me as to how paypal can get away with withholding money from people. What is stopping them from simply picking accounts at random and saying, "actually, I don't think you deserve this money, so we'll keep it."
- daemin 15y ago
  I think they legally have to refund the money, although it would seem that they keep the transaction fees still.
- dangrossman 15y ago
  When PayPal terminates an account and holds the funds, they're returned after 180 days. The same as any merchant account that's terminated. It's to cover potential chargebacks, which can come in months after the fact -- though they really shouldn't do that when the only payment the frozen account received wasn't funded by a credit card.
  - quicksilver03 15y ago
    Does anyone known if when PayPal returns the held money they also pay the legal interest? Or if they have some specific clause in their contracts that allows them not to?
    - dangrossman 15y ago
      "legal interest"? Reserve accounts at any merchant account provider I've ever heard of are non-interest-bearing. It's probably a requirement of the Visa/MC Operating Regulations to de-incentivize creating them without cause.
kevinalexbrown 15y ago
PAYPAL: I haven’t seen that PDF. And what you’re doing is not a worthy cause, it’s charity. ME: What’s the difference? PAYPAL: You can use the donate button to raise money for a sick cat, but not poor people. Sigh. At the risk of pedantry, it's hard for my wtf filter to believe this without more context. Is this a direct quote?
- Zarathust 15y ago
  Yes this is the major point of the exchange to me. It is not really for scam prevention and it has nothing to do with what is a donation or legal context. I just don't get the reason why people is not ok.
  - skore 15y ago
    I think this one is very simple to understand: Pets don't commit fraud. Or put differently: If somebody is running a scam here, the "pet" scenario would mean that it is you. The "poor people" scenario would mean that it is somebody else, making the whole situation a lot more complex. I think this is simply a matter of internal risk assessment triggers.
  - there 15y ago
    i don't think it's an issue of people vs. animals, it's an issue of "save poor people that aren't being named and won't produce an audit trail" vs "save this cat that belongs to me, the owner of this paypal account". strictly on a risk assessment basis, an organization not registered as a 501(c) taking in lots of money for a generic cause is more likely to be fraudulent than one specific person that paypal can easily identify taking a smaller amount of money to save his cat. paypal is probably just as comfortable with "save walter white" as they are with "save mr. marbles", but not "save people like walter white" or "save cats like mr. marbles".
knightgj 15y ago
I'll be looking at alternatives after receiving the friendly "We reviewed your account and determined that there's a relatively higher than average risk of future transaction issues" email that states they'll be holding my money for 21 days... I have never made a claim. I have never had a claim filed against me. My account receives maybe $500/year, tops. I send $500/year, tops. HUDGE risk of transaction issues.
- bcl 15y ago
  I got one of those after years of service with 0 problems, so I canceled my PayPal and eBay accounts. I haven't missed them.
- saurik 15y ago
  What are you selling?
  - einhverfr 15y ago
    When my account was frozen I was selling IT services, internationally, but I was also told it wasn't about my transactions at all.
  - knightgj 15y ago
    i just use my account for personal use. selling used things via forums/ebay/cl.
- 8plot 15y ago
  Have you considered using bitcoin? If you have considered, but dismissed it, would you mind answering why bitcoin wouldn't work for your business?
  - skore 15y ago
    I think it's safe to say that for most businesses, while PayPal may only get you access to 80% of potential customers, Bitcoin gets you less than 1%. Until Bitcoin is an established process, offering it means that you have to evangelize it. That means you are suddenly in the position of trying to sell both a service and a currency to a customer. That's more risk than most merchants want to take. I did consider using it, I have a business with a fairly technical audience, but for now, I have to wait until the legal issues (whether only perceived or actually true) are worked out.
james33 15y ago
Almost this exact scenario happened to me a few months back, and they did the same, asking me to sign an agreement saying I knew what I did was wrong (it wasn't) and that I wouldn't do it again. I absolutely refused to sign such a thing, and thankfully a friend of a friend knew someone in a high position at PayPal that finally got it all sorted out. Two weeks of extreme stress later, but at least it got worked out. Take unusual measures and if you are lucky you'll get it worked out.
latchkey 15y ago
I'm a huge fan of WePay. They don't play these games. With all of the different competing solutions out there these days, I don't know why anyone continues to use Paypal.
- angusgr 15y ago
  If you're not in the US then the number of competing solutions (that don't require a merchant account) shrinks dramatically. I'm in Australia, and I don't know of one (have checked out WePay, Stripe, Samurai all mentioned in the comments here.)
  - latchkey 15y ago
    Just curious cause I don't know how it works... do you just find a way to create a foreign US company and run through that?
    - angusgr 15y ago
      If you're going to go that amount of cost/effort then it's probably just as easy to create an Australian Merchant account and then find a gateway that supports it. I don't know how the two compare cost-wise, though. The thing about PayPal that appeals to me for collecting funds is that it doesn't have that barrier to entry.
npc 15y ago
I'm sure everybody knows by now, but this is certainly not the first time paypal has done this kind of thing: http://www.somethingawful.com/d/news/paypal-fiasco-summary.php http://www.somethingawful.com/d/news/paypal-fiasco-summary.p... (slightly nsfw)
- dangrossman 15y ago
  That's a story of how a payment processor froze an account that had a sudden, incredible jump in processing volume, just like any payment processor in the world would have done. When he contacted PayPal they, understandably, wanted some evidence that the money was going to be used for the stated purpose, because if it's not PayPal could be on the hook for $30k in chargebacks and a few thousand more in fees. Instead of doing some work to provide convincing evidence, he asks a CSR to donate all his account money to Red Cross which she can't do, then gives up immediately and directs them to refund all the payments. I don't see anything about this story that makes PayPal look bad. Not objectively at least. Subjectively, we'd like the fundraiser to have worked out, but it's the processor on the hook if the fundraiser is a scam...
- rmc 15y ago
  I know they are partially being tounge in cheeck, but Something Awful's Privacy Policy implies they should not be trusted with money: We may share data with the following third parties: WHOEVER WE FEEL LIKE. IF A RANDOM BUM OFF THE STREET WANDERS IN HERE, WE'LL PROBABLY GIVE HIM YOUR IP ADDRESS IN EXCHANGE FOR A HAND JOB. These third parties will use the information as follows: EMOTIONAL BLACKMAIL.
geuis 15y ago
At the risk of being perceived as the devil's advocate, let me ask a question. I've heard of dozens of stories about Paypal along a similar vein. "They locked my account for unreasonable reason X and now are keeping the money". Most of these stories seem anecdotal. Can someone point to a rigorously documented set of cases where both Paypal and the customer's side of things are reviewed? Over the last few years, all of these "Paypal screwed me" stories have sounded like all the complaints a few years ago about Apple seeming to reject apps arbitrarily. As far as I know, the complaints about Apple from devs have largely died down since we've had a fairly straight-forward list of do's and don'ts to work from. If most of the people reporting problems with Paypal are doing things that are inconsistent with their policies and then saying publicly how they're being screwed, then that creates a negative reputation for other people who have never personally had a problem with Paypal.
- LearnYouALisp 15y ago
  A friend of mine down the street tried to sell an online account via PayPal. The would-be buyers sent the money to his PayPal account, got the online account credentials from him, then took the money out of PayPal. The money was lost but the admins for the software he used the account on reinstated it to him since this happens a lot. There are scammers with deep penetration into PayPal.
  - jeltz 15y ago
    I have also experienced one such scammer when selling software using Paypal. Now for me it was nothing important since no physical object was lost. But that time I learned that Paypal chargebacks are an excellent way to scam vendors, and that the conflict resolution tools of Paypal are a joke.
  - deleted 15y ago
    [deleted]
- dangrossman 15y ago
  I've yet to see a "PayPal horror story" that didn't fit into one of the "any payment processor in the world would consider this high risk and temporarily or permanently freeze the account" slots. If this discussion with the customer service rep did occur as written, it's the most ridiculous one I've seen yet, though. It's a major customer service fail even if the original reason for freezing the account was valid.
coderdude 15y ago
Fun fact: The horror that is PayPal came from the same guy who gave us our hope for the bright future of commercial spaceflight. PayPal has vertically integrated every step required to stiff you. They can do it safely and reliably, but a public mishap like this one may cost them.
- daniel-cussen 15y ago
  I've been on this forum for a long time, and I'd estimate that a new Paypal horror stories surfaces once a month. There's no shortage of them. Every one of those costs them something, no doubt, but not enough for them to knock it off.
- daniel-cussen 15y ago
  I've been on this forum for a long time, and I'd estimate that a new Paypal horror stories surfaces once a month. There's no shortage of them. Every one of those costs them something, no doubt, but not enough for them to knock it off.
- ken_railey 15y ago
  Unfortunately, the PayPal of today is a far cry from Peter Thiel's original vision. It was supposed to be an extra-governmental currency more akin to something like bitcoin, until Ebay got ahold of it. http://www.amazon.com/exec/obidos/ASIN/0974670103 http://www.amazon.com/exec/obidos/ASIN/0974670103
danilocampos 15y ago
I've been sitting here for the last five minutes trying to make a point eloquently. I'm having a hard time with it. So I'll just put it like this: What else can we really expect from a product whose parent is eBay? This company is a fucking fossil with all the hunger for customer satisfaction of a used tissue. Is it convenient for users? Yeah. Is it worth gambling your entire business on? Given the lack of accountability these clowns enjoy, I'm going to say probably not. Neither eBay or PayPal has evolved in any meaningful way in the last decade. On the contrary: they've steadily declined in user experience and customer satisfaction. Why trust a business to such a stagnant concern? On principle, on practicality, for the sake of all of our futures: just say no to PayPal.
- wdewind 15y ago
  For the other side: http://news.ycombinator.com/item?id=3318009 http://news.ycombinator.com/item?id=3318009 http://news.ycombinator.com/item?id=3318173 http://news.ycombinator.com/item?id=3318173
  - eykanal 15y ago
    Paypal may have a point, they may not. Regardless, freezing thousands of dollars on a whim because "they're worried" and then freezing the individual's personal account is just boneheaded. You can't run a bank like that.
    - scott_s 15y ago
      PayPal is not a bank, which perhaps is the problem. People expect them to behave like a bank, despite the fact they clearly state they do not behave like one.
    - thenextcorner 15y ago
      To my knowledge, Paypal is not a bank!
    - wdewind 15y ago
      On the contrary, NOT freezing them would be totally boneheaded. OP describes an EXTREMELY sketchy way of collecting money (take money from one random person on the internet, promise you they are sending a "mystery" gift to some other person on the internet) that clearly violates PayPal's TOS (you can only ship to billing addresses on paypal). There is not a payment processor in the world that wouldn't freeze someone under these conditions.
jfruh 15y ago
Yikes, are you really only allowed to use "donate" buttons if you're a nonprofit? I use them as a "tip jar" on my blog. What's the options for for-profit when you're giving money for nothing in particular?
- chucklarge 15y ago
  This was probably a bit rhetorical but have you contacted Paypal to ask? Maybe they could help since some of the policy seems a bit grey. These bigger Paypal stories come up every 6 months or so. I have my own issues with them and certainly am no cheerleader but I do wonder if these groups get clarification before they start their campaigns. I would guess they might not have followed some policy/regulation correctly which gets them shutdown, especially if they are a large, worldly popular website that takes donations.
- 8plot 15y ago
  Bitcoin is an option.
  - DiabloD3 15y ago
    Since HN removed public comment scoring, my up vote is not publicly indicative of the quality of this comment. Thus, I would also like to echo this sentiment that Bitcoin is worth pursuing.
    - 8plot 15y ago
      Unfortunately the down-voters of my comment disagree. Until they present their argument against bitcoin, I assume they are only being ignorant.
      - DiabloD3 15y ago
        Well, its worth mentioning that Bitcoin cannot do charge backs, cannot freeze your account, and doesn't charge astronomical fees. I'm not sure why anyone would downvote Bitcoin.
deleted 15y ago
[deleted]
alain94040 15y ago
I'm sorry that you don't realize what you are trying to do is nearly equivalent to a Nigerian scam, but in the eyes of a payment company, it is. So cut Paypal some slack.
- pyre 15y ago
  So: 1) You're going to tell me that those customer service interactions were perfectly normal? 2) You think that at the end of this the customer should be forced to sign something admitting wrong-doing? "I tried to take donations, but really it was all a scam and I'm a scammer. Paypal was right to freeze my account." Even when PayPal's own documentation was not straight-forward enough to let people know that they should not be doing what the OP was trying to do?
- OoTheNigerian 15y ago
  I was hoping I would go the full thread without the 'Nigerian Scam' jab. sigh Anyway, you are also factually incorrect; we deal with princes and inheritance, not children toys. :)
dr_ 15y ago
i use dwolla
- andrewfelix 15y ago
  I'm in Australia :(
- rynop 15y ago
  this is great for dwolla. I'm glad this made CNN. Paypal needs all the negative publicity they can get.
TheAmazingIdiot 15y ago
I'm going to be somewhat direct here. I allege that what Paypal is doing here (holding funds over 10 days) is illegal. In order to do what Paypal does in the USA, you need licensure. They point out that they are not a bank. Indeed, they aren't: in many states they are classified as a money transmitter. In 8 states, they have no license to operate.#1 And, Indiana also requires licensure for money transmission. IC 28-8-4-20 (a) A person may not engage in the business of money transmission without a license required by this chapter. What is this money transmitter stuff? In essence, the law in all the locales I have checked (I have not gone through every one), indicate only a short holding period (5-15 days) and only allow holding of money of a known crime. So indeed what they do is absolutely fraudulent. In other words, if you have a patent troll corporation with many lawyers, target Paypal for their illegal behavior. #1 Source: https://www.paypal-media.com/state_licenses.cfm https://www.paypal-media.com/state_licenses.cfm
- thinkcomp 15y ago
  Indiana has an unwritten policy of only requiring licenses of companies with a physical presence in the state. Other states (Massachusetts, South Carolina, Montana and New Mexico) do not require licenses for domestic money transmission at all. The other three have likely determined that PayPal does not meet the criteria for licensure in that state. PayPal may very well be exceeding the holding period threshold in some states, but someone would have to bring suit to push the issue.
- jahewson 15y ago
  However, Regretsy are dealing with EU PayPal, which is regulated as a bank in Luxembourg. No idea what the rules are there...
taylorbuley 15y ago
The donate button thing -- that's got to be because of tax reasons, right?
- wpietri 15y ago
  Reasonable question, but no. Paypal's not responsible for that, and even if they were the "it's ok to use it for a sick cat" thing is clearly not about compliance with 501c3 regulations.
frankydp 15y ago
http://i39.tinypic.com/25fizw1.png http://i39.tinypic.com/25fizw1.png Paypal wins still?
B1aZer 15y ago
Next time use bitcoins )
nclark 15y ago
uhm... don't use paypal?
Joakal 15y ago
Google does this too for the Donate button: http://checkout.google.com/support/sell/bin/answer.py?answer=72721 http://checkout.google.com/support/sell/bin/answer.py?answer... For a kicker, you MUST be based in USA otherwise according to their terms, they'll hold the money like PayPal does.
saurik 15y ago
"Donate" has a very specific meaning, at least in the US, and comes with numerous accounting connotations, including the ability to write off the expense. As many people don't realize that "charitable donations" do /not/ include "donations" to purchase toys for children, it is misleading to use the term "donation" in this circumstance. Meanwhile, often the person /accepting/ the donations doesn't understand this either. You cannot, for example, accept a $5 "donation" and then send someone a $5 product back to them: that is a "sale", not a "donation". You do not "donate" to Ikea in exchange for a chair: you "pay" them $5 for it. In this case, this person obviously doesn't get it. "Why? These are my customers!" <- Right, which is why they are not "donating". These "customers" are buying toys, which are then being sent to other people on their behalf. These are /purchases/, like any other. This seller even goes so far as to state they are operating "just like any other retailer would". At which point we ask the killer question: are they collecting sales tax? This is where the theoretical issues suddenly run right into the brick wall of reality, as sites that believe they are accepting "donations" on behalf of charitable work, such as handing out toys to children, put everyone in a position where they fail to realize that they are operating an online retail store where the receipts need to be reported (to the IRS), sales tax needs to be collected (for sales made to people in the same state), and the people buying the gifts can /not/ write off the expense. PayPal is therefore very right to be wary of these situations, and often contacts people making the claim "only a nonprofit can use the Donate button", as the PayPal representative stated in this e-mail. I know this, as they contacted me once: I had a button "Donate to saurik.com" on the top of my website, which I ended up changing to "Contribute money to saurik.com". That said, I am actually not 100% certain that that is their official "for everyone" rule. This author was correct when they said that "worthy causes" is mentioned in the PayPal PDF [1] on this feature: a more full quote being "for your nonprofit or worthy cause"; that said, the PDF also claims that when you sign up for your PayPal account you should do so "selecting “nonprofit” as the type". (edit: Reading some more context of the story from Regretsy, including more responses from PayPal, I think that what PayPal means by "worthy cause" may actually be those "on behalf of verified non-profit organizations", not that that is made clear at all in that PDF.) Their website [2], meanwhile, only ever seems to talk about nonprofits, but goes into detail regarding confirming non-profit status only for obtaining a discount on processing fees. I can certainly see that this is confusing, and I also believe I see a lot of websites around that /do/ use "Donate" in weird ways; certainly, if they really cared to limit it to nonprofits, they could actually enforce your account type /was/ nonprofit before letting you use it. So, I personally believe that they simply contact vendors who seem to be running a for-profit sales business (even one that is losing money or breaking even "for the children") using "donate", rather than people who are simply using "donate" "without being a non-profit". How do they figure that out, you ask? My guess is that users are flagging the transactions as fraudulent, or complaining to PayPal using the dispute transaction feature (which some PayPal users treat pretty flippantly), using wording that indicates that they were buying something. (For the record: I'm pretty certain that's what happened to me. I /also/ run a retail product called Cydia, which accepts payments through a separate PayPal account for SaurikIT (my company). People can contribute money to the cause I represent (open access to devices), or purchase things from Cydia. However, some users would just send my personal account (which I use for contributions to my work) $1.00, either by sendmoney or /my "Donate" button/, and then go on to say that they paid me $1 for some product in Cydia and that I didn't send it to them.) In the end? While I think PayPal needs to be clearer on some things, I do not actually blame them for their reaction here. This setup seems "sketchy", was probably not handling the taxes on the sales correctly, was almost certainly handling the "extra money sent to the family" part incorrectly, and in the end went over the top with this emotional appeal (seriously? I have to have crying children surrounding this text?) rather than looking at this as an intellectual debate about PayPal's policies here (which might be interesting, and might cause everyone, including them, to learn something). [1] https://www.paypalobjects.com/en_US/pdf/PP_Online_Donations.pdf https://www.paypalobjects.com/en_US/pdf/PP_Online_Donations.... [2] https://merchant.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=merchant/donations https://merchant.paypal.com/us/cgi-bin/?cmd=_render-content&...
amorphid 15y ago
It looks like PayPal's site for creating a donatiom button makes it really easy to get yourself into trouble... https://www.paypal.com/us/cgi-bin/?cmd=_donate-intro-outside https://www.paypal.com/us/cgi-bin/?cmd=_donate-intro-outside I don't see anything on that page to suggest you have to be a nonprofit or somehow a worthy cause. They optimize their web page for encouraging people to create a donation button and then provide you with a shitty experience on the back-end if you make a mistake. They aren't trying very hard to keep you from hurting yourself. This is why government creates consumer protection laws, so maybe PayPal needs a big warning label next next the link encouraging you to create a donation button.
deleted 15y ago
[deleted]
valugi 15y ago
this is not something new. In 2001-2003 I lost a lot of paypal money after they decided to block my account, because I was logging in from East Europe and ... they did not like it. If I had an UK account I should log in from UK, and I never recovered the money and never worked with them again. As most big companies they are abusing their position in the market, not by being a monopoly but by doing the rules they please.
muppetman 15y ago
I am SO sick to death of "I used Paypal, Paypal screwed me over" posts. The first few times when it happened and no one was aware of how they operated, sure, I felt bad for the person/people. Now I just think "The definition of insanity..." I guess I'm just an elitist prick though?
callmeed 15y ago
I hope Square buys Stripe, figures out the international bits, adds some features, and then starts eating away at PayPal's market share.
D_Drake 15y ago
Never before have I read an article and been greeted by the mental image of a vein bursting in my brain, the blood spewing out of my eye sockets, forming itself into an axe, and traveling through a magic portal to mutilate a company's board of directors.
dvdkhlng 15y ago
Too much is too much. Closing my PP account. So far I haven't seen an online shop that doesn't have alternative payment options other than PP. In Germany (Europe?) we have ClickAndBuy [1], which works great so far. Buyer protection is usually sold separately via Trusted Shops [2] (but has to be payed for by the seller). This also eliminates the various COI arising from the payment processor also trying to police account owners. And I can choose to not add additional buyer protection costs for shops that I trust in. [1] http://clickandbuy.com http://clickandbuy.com [2] http://www.trustedshops.com http://www.trustedshops.com
severance 15y ago
http://bitcoin.org/ http://bitcoin.org/
antninja 15y ago
There's a script in this blog page that makes Firefox freeze and crash.
- dvdkhlng 15y ago
  You mean there's something in Firefox that makes it freeze and crash on a script in this blog page?
coldarchon 15y ago
deleted my PayPal when they screwed the guy who wrote Minecraft. /thread
InclinedPlane 15y ago
No sympathy here. Abusing "donations" on paypal to avoid paying fees and taxes is not a good business practice. Either own up to the fact that you are indeed selling something or incorporate as an actual non-profit, neither is particularly onerous.
URSpider94 15y ago
At the end of the day, Paypal is a slave to the credit card associations. To that end, whenever they find something out-of-the-ordinary, they have no choice but to act. The sad reality is, they really don't have any latitude in cases like this, if they want to prove to their credit card overlords that they are tough on fraud. For whatever reason, it seems that they'd rather be known for having terrible customer service than own up to the fact that they are hog-tied as to their policies on what kinds of transactions they can process.
JonoW 15y ago
I'd love to know more about the legalities of a company (that isn't a bank) withholding funds for months. PayPal must be making a pretty profit on the interest accrueing on those accounts.
mrkmcknz 15y ago
Looking at the detailed arguments in this thread, my only advice is to use a little common sense. Or does that not exist anymore?
rlivsey 15y ago
After using PayPal on a number of projects over the years (both successfully and painfully unsuccessfully) I've come to the conclusion that PayPal is fine if what you're doing is completely standard. Once you start doing something that could be interpreted as even slightly non-standard then it's more trouble than it's worth and the odds are that PayPal aren't going to play ball.
scottshea 15y ago
I am so glad I turned down that job with Paypal
jdietrich 15y ago
A little experiment: Apply for a merchant account, saying that you're not a registered nonprofit, but intend to take donations to buy gifts for kids. I just phoned my bank and they literally laughed in my face. People who have customer service nightmares with Paypal are generally doing something that no other payment processor would touch. I hear complaints from people who have been accepting pre-orders of a game or pre-registration for a conference, which is obviously a massive risk for a payment processor. If you found a merchant account provider willing to take such risky business, they'd demand a huge deposit and charge well above the odds. Paypal provide an absolutely exceptional service in allowing pretty much anyone to accept card payments without a great deal of fuss. The flipside of this is that they have to deal with risky accounts retroactively, which means they have little choice but to freeze accounts that set off their fraud detection algoritms. If you prefer to know where you stand, apply for a merchant account - in most of the world, that will involve a long, expensive vetting process. People continue to use Paypal because for many use cases, there aren't any better alternatives. This isn't because Paypal or the card companies are abusing monopoly power, but because payment processing is hard and fraud is expensive.
whyme 15y ago
Out curiosity, why wouldn't PayPal just put categorical warnings on the payment page that allows merchants & buyers to assess the risk themselves? So if a merchant understands these relative risks, they can opt in to a high risk warning category, in order to make sure accounts don't become locked, and buyers can then fully understand what they're getting into via the warnings. I mean really this is all about liability right...or maybe is it that I'm expecting too much...?
- dangrossman 15y ago
  All the warnings in the world wouldn't reduce the liability one bit. The liability is that the buyers (donors) are unhappy for any reason and charge back the payments. If it turns out the fundraiser was a scam and that's outted publicly, all those donors may well do just that. The OP's story says they got "thousands of $2 payments". Let's say 3000. PayPal could, potentially, see $6000 in chargebacks, $900 in transaction fees, and $45000 ($15 * 3000) in chargeback fees assessed by the card-issuers. If the fundraiser disappears or doesn't have a spare $45000 sitting around PayPal is on the hook for that. They're not going to file 3000 court cases to recover it, no matter what warnings were on the site.
wbhart 15y ago
I wonder if PayPal has misunderstood what Regretsy is doing. For example, suppose PayPal think that Regretsy is buying cheap toys at cost, marking them up for profit, adding the cost of shipping, then selling them to customers as part of their ordinary business model (perhaps not even paying sales tax on them), but of course agreeing to send them to poor kids instead of the people paying the money. PayPal would have every right to block such transactions, and I'd expect it. It wouldn't be charitable on the part of Regretsy nor would it be donation to a worthy cause, but a partial "donation" to Regretsy, a for-profit company. It would be ordinary profit making on the part of Regretsy in the guise of charity work! I think Regretsy should just clarify with PayPal what it is they are actually doing. If Regretsy are honestly doing this for needy kids and not for their own profit, then I cannot see how it would be a win for PayPal to not accommodate this in some way.
- scott_s 15y ago
  I think PayPal does understand what Regretsy claims to do, and the problem is that what they claim to do goes against their policies. PayPal does not allow that kind of transaction because it's too difficult to prove that it's not fraud. There are detailed explanations of this elsewhere in the thread.
jrabone 15y ago
Anecdotal, but anyway... Earlier this year, Paypal notified me that they required more information about my personal account - namely confirmation that it wasn't a business in disguise. Due to my mistranslating from American English to British English, I accidentally declared that I was a charity (non-profit of course has a specific meaning), and Paypal promptly froze my personal account. It took one phone call to the UK helpdesk, and about 20 minutes to get this fixed, and my experience with their customer support was fine. I screwed up, they were polite and helpful, no problems. What WOULD help is if their UI translated their terms for the benefit of non-US customers (if they'd said "charity" instead of "non-profit" I'd never have chosen that option) and gave you an obvious way to say "I am not a business" (if they'd had that I wouldn't have been on that page in the first place), but I can't fault their customer support.
sp332 15y ago
This is an amazing, in-depth blog post that explores all the relevant policies and web pages regarding the use of the donate button. https://thegreengeeks.wordpress.com/2011/12/06/why-paypal-is-wrong-regarding-regretsy-according-to-their-own-policies/ https://thegreengeeks.wordpress.com/2011/12/06/why-paypal-is... Still nothing! No explanation anywhere on the site that might explain this behavior.
brown9-2 15y ago
So just to be clear, when the Paypal rep says "We know what you are trying to do and we aren't going to let you do it", what do they think the scam is? That the site would accept "donations" for a fraudulent reason?
- scott_s 15y ago
  Yes.
Cyph0n 15y ago
AlertPay is a good alternative. Fees are a bit high, but there is no such thing as a "limited" account, unless you send/receive fraudulent funds of course. The problem is that AlertPay is not accepted by many online services. Once that is solved, I believe that it could probably compete with PayPal.
joshuap 15y ago
Someone should start an anti-paypal campaign that recreates the paypal buttons, except they have a big red X through them, and link to a collected list of grievances. I'd put one on my site... I dealt with all this garbage in 2004 and haven't used them as a seller since.
Tangurena 15y ago
Paypal wants to be a bank without being regulated as a bank. If they were regulated, this sort of fiasco would get their charter revoked. In addition, the business courses I'm taking all (in the text books and case studies used in classes) point to how eBay is trying to transition away from the auction model and turn into fix-price sales as some sort of discount Amazon Marketplace. Making life miserable for smaller retailers and auctioners is part of this goal.
kmfrk 15y ago
Looks like they settled it: http://news.ycombinator.com/item?id=3320154 http://news.ycombinator.com/item?id=3320154.
radimm 15y ago
Wonder what percentage of users are facing such an issues with PayPal. As somebody who's just in the middle of setting up payment solution (UK) with PayPal, such a stories are not making it easy to justify the decision to go this way. In my eyes, PayPal is just another corporation, with all of its bureaucracy, both processes-wise and the way how they handle their customer care. My bank is not making it easier to get started (otherwise I would have merchant account), so why would I expect PayPal would handle edge cases otherwise? EDIT: jdietrich already made this point http://news.ycombinator.com/item?id=3319045 http://news.ycombinator.com/item?id=3319045
coldarchon 15y ago
https://www.thepaypalblog.com/2011/12/regretsy-issue-resolution/ https://www.thepaypalblog.com/2011/12/regretsy-issue-resolut... looks like they solved it, just a very low excuse.
ukdm 15y ago
PayPal has unlocked the account and made a donation to Regretsy https://www.thepaypalblog.com/2011/12/regretsy-issue-resolution/ https://www.thepaypalblog.com/2011/12/regretsy-issue-resolut...
loceng 15y ago
PayPal is just as likely to hold funds for 6+ months if you're not selling a product if using "Buy Now."

870 points by bradleyjoyce 15y ago

I have never seen a company more in need of competition. I realize its massive installed base makes it tough to approach, but isn't there somebody who can compete credibly? I have to think that there's enough user dissatisfaction that people would defect in droves, given a decent alternative.

thinkcomp 15y ago
The regulatory situation has made it nearly impossible to start a payments company in the United States. http://www.facecash.com/legal/brown.html http://www.facecash.com/legal/brown.html

Hilyin 15y ago

Paypal is a bunch of scumbags. They deserve to go out of business.

brianr 15y ago

These horror stories are so common that I have to ask: why does anyone still use PayPal? I ask this in the most constructive way possible... is there a set of use-cases that PayPal is still the best for? Is it a lack of awareness of alternatives? International availability? Something else?

bphogan 15y ago
Because buyers keep demanding sellers use it. If you're a buyer, it's about the most painless thing out there. I got forced into it by a client once for that very reason. Unfortunately PyPal froze his account with about $20k in it. We switched to a real merchant account and everything went uphill from there.
- DanI-S 15y ago
  Is there a current best alternative to PayPal that you would recommend?
  - bphogan 15y ago
    I've used Authorize.net + a merchant account at a real bank a few times. It works, every time. BrainTree is awesome too. If you're doing subscriptions, http://spreedly.com/ http://spreedly.com/ is good. And Stripe looks cool but I've never used it. (https://stripe.com/ https://stripe.com/)
  - dangrossman 15y ago
    Taking credit cards on your own site with a merchant account and gateway. But it'll almost definitely cost you more, you'll invest 10 times the resources into handling and stopping fraud, and some customers won't trust your site with their credit card. The reality is PayPal has a lot of benefits for both sides.
  - alapshah 15y ago
    Samurai is really good http://samurai.feefighters.com http://samurai.feefighters.com priced similarly to paypal at 2.3% + 30 cents You really need a true merchant account plus gateway.
    - DanI-S 15y ago
      This looks seriously promising - I love that it doesn't require user sign-up. Their site is brilliantly designed, too.
  - einhverfr 15y ago
    You have two basic options: 1) A proper merchant gateway solution 2) A third party payment provider with better terms of service. On the first, I have generally recommended TrustCommerce both due to their emphasis on security (having reviewed their Perl and PHP API classes directly) and the richness of services they provide. They do cost more because Paypal gets a tremendous volume discount, but it's an option. For online payments also you have additional PCI-DSS worries that are burdensome for small businesses. The second option includes solutions like Amazon Payments. I currently use Amazon Payments because I process 4-5 transactions per year. At that volume it isn't worth maintaining my own merchant account and certainly is not worth worrying about PCI compliance......
sp332 15y ago
Mainly international payments. Plus, customers are more likely to already have an account with them, and no one feels like signing up for a new payment system just to buy something at your store.
- brianr 15y ago
  I'd be curious to know how conversion rates vary when you have Paypal vs. a merchant account (or something like Stripe) vs. both. Anyone have any data?
  - dangrossman 15y ago
    I have several websites; some sell products, some monthly subscriptions, some target consumers, some businesses. Universally, on all of these sites, customers choose to pay with PayPal more often than credit card. For the most part, my payment pages are a secure credit card form with a "or Pay with PayPal" button to the right of the form. More people choose to click through to PayPal than to just put their card in to the form already on screen. The preference for PayPal is larger outside the US among my customers.
    - sk5t 15y ago
      Have you added Amazon payments as an option as well? I would choose that every time, given the choice, if for no other reason than Paypal is always trying to trick me into paying from my bank account, when I really want to pay with credit card for rewards and security. Amazon doesn't try to trick me.
      - zem 15y ago
        same here - my preferred options are amazon, credit card and if there's no alternative and i really want whatever it is, paypal.
james33 15y ago
40% of my customers will only pay with PayPal. I went without PayPal for about a month at one point and sales were down dramatically even though I still had credit card and other options available.
wdewind 15y ago
Because in reality paypal is actually pretty awesome (note: I work for Etsy which uses paypal as a payment processor, so I guess I'm kind of biased). The cost for the business, compared to maintaining your own payments platform at scale, is pretty reasonable, and the failure rate is pretty miniscule when you consider the amount of potential fraud that goes through the platform. Paypal wasn't really designed to handle one off personal payments, it was designed to let small (and large) businesses accept payments, internationally and fraud free. This is ridiculously difficult (how many of you have ever written software that integrates with a bank? ugh.) PayPal does this exceptionally well and because of that many huge businesses are built on its back. The reality is, in most of the situations that people complain about freezing their money, without paypal their entire project would've been a no-go anyway. I do feel for people who legitimately have their accounts wrongly frozen (I am one of them, though mine was unfrozen after a few days), but you have to understand how small a percentage of people that is, and that you can't have a system without failure. Again, paypal's failure rate, when you consider what they actually do, is astoundingly low. Edit: Just for absolute clarity - I work for Etsy and have zero affiliation with the blog from the OP, and it has zero affiliation with Etsy. Also these are my opinions not my employers etc.
- latchkey 15y ago
  I wrote the software that integrates with WePay. They are a 'real' bank. Works great. ;-) https://github.com/lookfirst/WePay-Java-SDK https://github.com/lookfirst/WePay-Java-SDK
- joshu 15y ago
  IIRC Paypal was originally designed for interpersonal payments.
  - wdewind 15y ago
    TBH you might be correct. I don't think that's what is currently optimized for, but even there, it still works pretty damn well. Haters gonna hate...
  - sk5t 15y ago
thomasgerbe 15y ago
Because it is what most sellers offer for transactions.
dangrossman 15y ago
> These horror stories are so common Don't take that for granted. PayPal has 232 million registered accounts, and many more unregistered buyers. Even if 99.99% of PayPal account holders were completely satisfied and never had any problem, that'd 0.01% would still be 23200 pissed off people. Is it right to wonder "does anyone still use PayPal" if 99.99% of PayPal users have no problem using the service?
- ubernostrum 15y ago
  The problem with PayPal, and the reason why these horror stories exist at all, is simple: the entirety of PayPal's dispute-resolution system seems to consist of "the system flagged it, tough luck". And the only way to get actual service from PayPal past that point is to raise a massive cry of bad PR for them online. So, yeah: if they don't want to deal with their customers, we can fix that by encouraging a situation in which they have no customers to deal with.
simoncpu 15y ago
There is no good alternative. Existing alternatives require additional user signup, and the fees are the same. The Internet needs a good Paypal competitor.
hokua 15y ago
Im guessing this rant was submitted and upvoted by the developers of Stripe. Paypal works.
ugh 15y ago
Because – as a buyer – PayPal is quite awesome.

vaksel 15y ago

Paypal has a reputation for stuff like this...can't exactly be a surprise

CaveTech 15y ago

It really perplexes me as to how paypal can get away with withholding money from people. What is stopping them from simply picking accounts at random and saying, "actually, I don't think you deserve this money, so we'll keep it."

daemin 15y ago
I think they legally have to refund the money, although it would seem that they keep the transaction fees still.
dangrossman 15y ago
When PayPal terminates an account and holds the funds, they're returned after 180 days. The same as any merchant account that's terminated. It's to cover potential chargebacks, which can come in months after the fact -- though they really shouldn't do that when the only payment the frozen account received wasn't funded by a credit card.
- quicksilver03 15y ago
  Does anyone known if when PayPal returns the held money they also pay the legal interest? Or if they have some specific clause in their contracts that allows them not to?
  - dangrossman 15y ago
    "legal interest"? Reserve accounts at any merchant account provider I've ever heard of are non-interest-bearing. It's probably a requirement of the Visa/MC Operating Regulations to de-incentivize creating them without cause.

kevinalexbrown 15y ago

PAYPAL: I haven’t seen that PDF. And what you’re doing is not a worthy cause, it’s charity. ME: What’s the difference? PAYPAL: You can use the donate button to raise money for a sick cat, but not poor people. Sigh. At the risk of pedantry, it's hard for my wtf filter to believe this without more context. Is this a direct quote?

Zarathust 15y ago
Yes this is the major point of the exchange to me. It is not really for scam prevention and it has nothing to do with what is a donation or legal context. I just don't get the reason why people is not ok.
- skore 15y ago
  I think this one is very simple to understand: Pets don't commit fraud. Or put differently: If somebody is running a scam here, the "pet" scenario would mean that it is you. The "poor people" scenario would mean that it is somebody else, making the whole situation a lot more complex. I think this is simply a matter of internal risk assessment triggers.
- there 15y ago
  i don't think it's an issue of people vs. animals, it's an issue of "save poor people that aren't being named and won't produce an audit trail" vs "save this cat that belongs to me, the owner of this paypal account". strictly on a risk assessment basis, an organization not registered as a 501(c) taking in lots of money for a generic cause is more likely to be fraudulent than one specific person that paypal can easily identify taking a smaller amount of money to save his cat. paypal is probably just as comfortable with "save walter white" as they are with "save mr. marbles", but not "save people like walter white" or "save cats like mr. marbles".

knightgj 15y ago

I'll be looking at alternatives after receiving the friendly "We reviewed your account and determined that there's a relatively higher than average risk of future transaction issues" email that states they'll be holding my money for 21 days... I have never made a claim. I have never had a claim filed against me. My account receives maybe $500/year, tops. I send $500/year, tops. HUDGE risk of transaction issues.

bcl 15y ago
I got one of those after years of service with 0 problems, so I canceled my PayPal and eBay accounts. I haven't missed them.
saurik 15y ago
What are you selling?
- einhverfr 15y ago
  When my account was frozen I was selling IT services, internationally, but I was also told it wasn't about my transactions at all.
- knightgj 15y ago
  i just use my account for personal use. selling used things via forums/ebay/cl.
8plot 15y ago
Have you considered using bitcoin? If you have considered, but dismissed it, would you mind answering why bitcoin wouldn't work for your business?
- skore 15y ago
  I think it's safe to say that for most businesses, while PayPal may only get you access to 80% of potential customers, Bitcoin gets you less than 1%. Until Bitcoin is an established process, offering it means that you have to evangelize it. That means you are suddenly in the position of trying to sell both a service and a currency to a customer. That's more risk than most merchants want to take. I did consider using it, I have a business with a fairly technical audience, but for now, I have to wait until the legal issues (whether only perceived or actually true) are worked out.

james33 15y ago

Almost this exact scenario happened to me a few months back, and they did the same, asking me to sign an agreement saying I knew what I did was wrong (it wasn't) and that I wouldn't do it again. I absolutely refused to sign such a thing, and thankfully a friend of a friend knew someone in a high position at PayPal that finally got it all sorted out. Two weeks of extreme stress later, but at least it got worked out. Take unusual measures and if you are lucky you'll get it worked out.

latchkey 15y ago

I'm a huge fan of WePay. They don't play these games. With all of the different competing solutions out there these days, I don't know why anyone continues to use Paypal.

angusgr 15y ago
If you're not in the US then the number of competing solutions (that don't require a merchant account) shrinks dramatically. I'm in Australia, and I don't know of one (have checked out WePay, Stripe, Samurai all mentioned in the comments here.)
- latchkey 15y ago
  Just curious cause I don't know how it works... do you just find a way to create a foreign US company and run through that?
  - angusgr 15y ago
    If you're going to go that amount of cost/effort then it's probably just as easy to create an Australian Merchant account and then find a gateway that supports it. I don't know how the two compare cost-wise, though. The thing about PayPal that appeals to me for collecting funds is that it doesn't have that barrier to entry.

npc 15y ago

I'm sure everybody knows by now, but this is certainly not the first time paypal has done this kind of thing: http://www.somethingawful.com/d/news/paypal-fiasco-summary.php http://www.somethingawful.com/d/news/paypal-fiasco-summary.p... (slightly nsfw)

dangrossman 15y ago
That's a story of how a payment processor froze an account that had a sudden, incredible jump in processing volume, just like any payment processor in the world would have done. When he contacted PayPal they, understandably, wanted some evidence that the money was going to be used for the stated purpose, because if it's not PayPal could be on the hook for $30k in chargebacks and a few thousand more in fees. Instead of doing some work to provide convincing evidence, he asks a CSR to donate all his account money to Red Cross which she can't do, then gives up immediately and directs them to refund all the payments. I don't see anything about this story that makes PayPal look bad. Not objectively at least. Subjectively, we'd like the fundraiser to have worked out, but it's the processor on the hook if the fundraiser is a scam...
rmc 15y ago
I know they are partially being tounge in cheeck, but Something Awful's Privacy Policy implies they should not be trusted with money: We may share data with the following third parties: WHOEVER WE FEEL LIKE. IF A RANDOM BUM OFF THE STREET WANDERS IN HERE, WE'LL PROBABLY GIVE HIM YOUR IP ADDRESS IN EXCHANGE FOR A HAND JOB. These third parties will use the information as follows: EMOTIONAL BLACKMAIL.

geuis 15y ago

At the risk of being perceived as the devil's advocate, let me ask a question. I've heard of dozens of stories about Paypal along a similar vein. "They locked my account for unreasonable reason X and now are keeping the money". Most of these stories seem anecdotal. Can someone point to a rigorously documented set of cases where both Paypal and the customer's side of things are reviewed? Over the last few years, all of these "Paypal screwed me" stories have sounded like all the complaints a few years ago about Apple seeming to reject apps arbitrarily. As far as I know, the complaints about Apple from devs have largely died down since we've had a fairly straight-forward list of do's and don'ts to work from. If most of the people reporting problems with Paypal are doing things that are inconsistent with their policies and then saying publicly how they're being screwed, then that creates a negative reputation for other people who have never personally had a problem with Paypal.

LearnYouALisp 15y ago
A friend of mine down the street tried to sell an online account via PayPal. The would-be buyers sent the money to his PayPal account, got the online account credentials from him, then took the money out of PayPal. The money was lost but the admins for the software he used the account on reinstated it to him since this happens a lot. There are scammers with deep penetration into PayPal.
- jeltz 15y ago
  I have also experienced one such scammer when selling software using Paypal. Now for me it was nothing important since no physical object was lost. But that time I learned that Paypal chargebacks are an excellent way to scam vendors, and that the conflict resolution tools of Paypal are a joke.
- deleted 15y ago
  [deleted]
dangrossman 15y ago
I've yet to see a "PayPal horror story" that didn't fit into one of the "any payment processor in the world would consider this high risk and temporarily or permanently freeze the account" slots. If this discussion with the customer service rep did occur as written, it's the most ridiculous one I've seen yet, though. It's a major customer service fail even if the original reason for freezing the account was valid.

coderdude 15y ago

Fun fact: The horror that is PayPal came from the same guy who gave us our hope for the bright future of commercial spaceflight. PayPal has vertically integrated every step required to stiff you. They can do it safely and reliably, but a public mishap like this one may cost them.

daniel-cussen 15y ago
I've been on this forum for a long time, and I'd estimate that a new Paypal horror stories surfaces once a month. There's no shortage of them. Every one of those costs them something, no doubt, but not enough for them to knock it off.
daniel-cussen 15y ago
I've been on this forum for a long time, and I'd estimate that a new Paypal horror stories surfaces once a month. There's no shortage of them. Every one of those costs them something, no doubt, but not enough for them to knock it off.
ken_railey 15y ago
Unfortunately, the PayPal of today is a far cry from Peter Thiel's original vision. It was supposed to be an extra-governmental currency more akin to something like bitcoin, until Ebay got ahold of it. http://www.amazon.com/exec/obidos/ASIN/0974670103 http://www.amazon.com/exec/obidos/ASIN/0974670103

danilocampos 15y ago

I've been sitting here for the last five minutes trying to make a point eloquently. I'm having a hard time with it. So I'll just put it like this: What else can we really expect from a product whose parent is eBay? This company is a fucking fossil with all the hunger for customer satisfaction of a used tissue. Is it convenient for users? Yeah. Is it worth gambling your entire business on? Given the lack of accountability these clowns enjoy, I'm going to say probably not. Neither eBay or PayPal has evolved in any meaningful way in the last decade. On the contrary: they've steadily declined in user experience and customer satisfaction. Why trust a business to such a stagnant concern? On principle, on practicality, for the sake of all of our futures: just say no to PayPal.

wdewind 15y ago
For the other side: http://news.ycombinator.com/item?id=3318009 http://news.ycombinator.com/item?id=3318009 http://news.ycombinator.com/item?id=3318173 http://news.ycombinator.com/item?id=3318173
- eykanal 15y ago
  Paypal may have a point, they may not. Regardless, freezing thousands of dollars on a whim because "they're worried" and then freezing the individual's personal account is just boneheaded. You can't run a bank like that.
  - scott_s 15y ago
    PayPal is not a bank, which perhaps is the problem. People expect them to behave like a bank, despite the fact they clearly state they do not behave like one.
  - thenextcorner 15y ago
    To my knowledge, Paypal is not a bank!
  - wdewind 15y ago
    On the contrary, NOT freezing them would be totally boneheaded. OP describes an EXTREMELY sketchy way of collecting money (take money from one random person on the internet, promise you they are sending a "mystery" gift to some other person on the internet) that clearly violates PayPal's TOS (you can only ship to billing addresses on paypal). There is not a payment processor in the world that wouldn't freeze someone under these conditions.

jfruh 15y ago

Yikes, are you really only allowed to use "donate" buttons if you're a nonprofit? I use them as a "tip jar" on my blog. What's the options for for-profit when you're giving money for nothing in particular?

chucklarge 15y ago
This was probably a bit rhetorical but have you contacted Paypal to ask? Maybe they could help since some of the policy seems a bit grey. These bigger Paypal stories come up every 6 months or so. I have my own issues with them and certainly am no cheerleader but I do wonder if these groups get clarification before they start their campaigns. I would guess they might not have followed some policy/regulation correctly which gets them shutdown, especially if they are a large, worldly popular website that takes donations.
8plot 15y ago
Bitcoin is an option.
- DiabloD3 15y ago
  Since HN removed public comment scoring, my up vote is not publicly indicative of the quality of this comment. Thus, I would also like to echo this sentiment that Bitcoin is worth pursuing.
  - 8plot 15y ago
    Unfortunately the down-voters of my comment disagree. Until they present their argument against bitcoin, I assume they are only being ignorant.
    - DiabloD3 15y ago
      Well, its worth mentioning that Bitcoin cannot do charge backs, cannot freeze your account, and doesn't charge astronomical fees. I'm not sure why anyone would downvote Bitcoin.

deleted 15y ago

[deleted]

alain94040 15y ago

I'm sorry that you don't realize what you are trying to do is nearly equivalent to a Nigerian scam, but in the eyes of a payment company, it is. So cut Paypal some slack.

pyre 15y ago
So: 1) You're going to tell me that those customer service interactions were perfectly normal? 2) You think that at the end of this the customer should be forced to sign something admitting wrong-doing? "I tried to take donations, but really it was all a scam and I'm a scammer. Paypal was right to freeze my account." Even when PayPal's own documentation was not straight-forward enough to let people know that they should not be doing what the OP was trying to do?
OoTheNigerian 15y ago
I was hoping I would go the full thread without the 'Nigerian Scam' jab. sigh Anyway, you are also factually incorrect; we deal with princes and inheritance, not children toys. :)

dr_ 15y ago

i use dwolla

andrewfelix 15y ago
I'm in Australia :(
rynop 15y ago
this is great for dwolla. I'm glad this made CNN. Paypal needs all the negative publicity they can get.

TheAmazingIdiot 15y ago

I'm going to be somewhat direct here. I allege that what Paypal is doing here (holding funds over 10 days) is illegal. In order to do what Paypal does in the USA, you need licensure. They point out that they are not a bank. Indeed, they aren't: in many states they are classified as a money transmitter. In 8 states, they have no license to operate.#1 And, Indiana also requires licensure for money transmission. IC 28-8-4-20 (a) A person may not engage in the business of money transmission without a license required by this chapter. What is this money transmitter stuff? In essence, the law in all the locales I have checked (I have not gone through every one), indicate only a short holding period (5-15 days) and only allow holding of money of a known crime. So indeed what they do is absolutely fraudulent. In other words, if you have a patent troll corporation with many lawyers, target Paypal for their illegal behavior. #1 Source: https://www.paypal-media.com/state_licenses.cfm https://www.paypal-media.com/state_licenses.cfm

thinkcomp 15y ago
Indiana has an unwritten policy of only requiring licenses of companies with a physical presence in the state. Other states (Massachusetts, South Carolina, Montana and New Mexico) do not require licenses for domestic money transmission at all. The other three have likely determined that PayPal does not meet the criteria for licensure in that state. PayPal may very well be exceeding the holding period threshold in some states, but someone would have to bring suit to push the issue.
jahewson 15y ago
However, Regretsy are dealing with EU PayPal, which is regulated as a bank in Luxembourg. No idea what the rules are there...

taylorbuley 15y ago

The donate button thing -- that's got to be because of tax reasons, right?

wpietri 15y ago
Reasonable question, but no. Paypal's not responsible for that, and even if they were the "it's ok to use it for a sick cat" thing is clearly not about compliance with 501c3 regulations.

frankydp 15y ago

http://i39.tinypic.com/25fizw1.png http://i39.tinypic.com/25fizw1.png Paypal wins still?

B1aZer 15y ago

Next time use bitcoins )

nclark 15y ago

uhm... don't use paypal?

Joakal 15y ago

Google does this too for the Donate button: http://checkout.google.com/support/sell/bin/answer.py?answer=72721 http://checkout.google.com/support/sell/bin/answer.py?answer... For a kicker, you MUST be based in USA otherwise according to their terms, they'll hold the money like PayPal does.

saurik 15y ago

"Donate" has a very specific meaning, at least in the US, and comes with numerous accounting connotations, including the ability to write off the expense. As many people don't realize that "charitable donations" do /not/ include "donations" to purchase toys for children, it is misleading to use the term "donation" in this circumstance. Meanwhile, often the person /accepting/ the donations doesn't understand this either. You cannot, for example, accept a $5 "donation" and then send someone a $5 product back to them: that is a "sale", not a "donation". You do not "donate" to Ikea in exchange for a chair: you "pay" them $5 for it. In this case, this person obviously doesn't get it. "Why? These are my customers!" <- Right, which is why they are not "donating". These "customers" are buying toys, which are then being sent to other people on their behalf. These are /purchases/, like any other. This seller even goes so far as to state they are operating "just like any other retailer would". At which point we ask the killer question: are they collecting sales tax? This is where the theoretical issues suddenly run right into the brick wall of reality, as sites that believe they are accepting "donations" on behalf of charitable work, such as handing out toys to children, put everyone in a position where they fail to realize that they are operating an online retail store where the receipts need to be reported (to the IRS), sales tax needs to be collected (for sales made to people in the same state), and the people buying the gifts can /not/ write off the expense. PayPal is therefore very right to be wary of these situations, and often contacts people making the claim "only a nonprofit can use the Donate button", as the PayPal representative stated in this e-mail. I know this, as they contacted me once: I had a button "Donate to saurik.com" on the top of my website, which I ended up changing to "Contribute money to saurik.com". That said, I am actually not 100% certain that that is their official "for everyone" rule. This author was correct when they said that "worthy causes" is mentioned in the PayPal PDF [1] on this feature: a more full quote being "for your nonprofit or worthy cause"; that said, the PDF also claims that when you sign up for your PayPal account you should do so "selecting “nonprofit” as the type". (edit: Reading some more context of the story from Regretsy, including more responses from PayPal, I think that what PayPal means by "worthy cause" may actually be those "on behalf of verified non-profit organizations", not that that is made clear at all in that PDF.) Their website [2], meanwhile, only ever seems to talk about nonprofits, but goes into detail regarding confirming non-profit status only for obtaining a discount on processing fees. I can certainly see that this is confusing, and I also believe I see a lot of websites around that /do/ use "Donate" in weird ways; certainly, if they really cared to limit it to nonprofits, they could actually enforce your account type /was/ nonprofit before letting you use it. So, I personally believe that they simply contact vendors who seem to be running a for-profit sales business (even one that is losing money or breaking even "for the children") using "donate", rather than people who are simply using "donate" "without being a non-profit". How do they figure that out, you ask? My guess is that users are flagging the transactions as fraudulent, or complaining to PayPal using the dispute transaction feature (which some PayPal users treat pretty flippantly), using wording that indicates that they were buying something. (For the record: I'm pretty certain that's what happened to me. I /also/ run a retail product called Cydia, which accepts payments through a separate PayPal account for SaurikIT (my company). People can contribute money to the cause I represent (open access to devices), or purchase things from Cydia. However, some users would just send my personal account (which I use for contributions to my work) $1.00, either by sendmoney or /my "Donate" button/, and then go on to say that they paid me $1 for some product in Cydia and that I didn't send it to them.) In the end? While I think PayPal needs to be clearer on some things, I do not actually blame them for their reaction here. This setup seems "sketchy", was probably not handling the taxes on the sales correctly, was almost certainly handling the "extra money sent to the family" part incorrectly, and in the end went over the top with this emotional appeal (seriously? I have to have crying children surrounding this text?) rather than looking at this as an intellectual debate about PayPal's policies here (which might be interesting, and might cause everyone, including them, to learn something). [1] https://www.paypalobjects.com/en_US/pdf/PP_Online_Donations.pdf https://www.paypalobjects.com/en_US/pdf/PP_Online_Donations.... [2] https://merchant.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=merchant/donations https://merchant.paypal.com/us/cgi-bin/?cmd=_render-content&...

amorphid 15y ago

It looks like PayPal's site for creating a donatiom button makes it really easy to get yourself into trouble... https://www.paypal.com/us/cgi-bin/?cmd=_donate-intro-outside https://www.paypal.com/us/cgi-bin/?cmd=_donate-intro-outside I don't see anything on that page to suggest you have to be a nonprofit or somehow a worthy cause. They optimize their web page for encouraging people to create a donation button and then provide you with a shitty experience on the back-end if you make a mistake. They aren't trying very hard to keep you from hurting yourself. This is why government creates consumer protection laws, so maybe PayPal needs a big warning label next next the link encouraging you to create a donation button.

deleted 15y ago

[deleted]

valugi 15y ago

this is not something new. In 2001-2003 I lost a lot of paypal money after they decided to block my account, because I was logging in from East Europe and ... they did not like it. If I had an UK account I should log in from UK, and I never recovered the money and never worked with them again. As most big companies they are abusing their position in the market, not by being a monopoly but by doing the rules they please.

muppetman 15y ago

I am SO sick to death of "I used Paypal, Paypal screwed me over" posts. The first few times when it happened and no one was aware of how they operated, sure, I felt bad for the person/people. Now I just think "The definition of insanity..." I guess I'm just an elitist prick though?

callmeed 15y ago

I hope Square buys Stripe, figures out the international bits, adds some features, and then starts eating away at PayPal's market share.

D_Drake 15y ago

Never before have I read an article and been greeted by the mental image of a vein bursting in my brain, the blood spewing out of my eye sockets, forming itself into an axe, and traveling through a magic portal to mutilate a company's board of directors.

dvdkhlng 15y ago

Too much is too much. Closing my PP account. So far I haven't seen an online shop that doesn't have alternative payment options other than PP. In Germany (Europe?) we have ClickAndBuy [1], which works great so far. Buyer protection is usually sold separately via Trusted Shops [2] (but has to be payed for by the seller). This also eliminates the various COI arising from the payment processor also trying to police account owners. And I can choose to not add additional buyer protection costs for shops that I trust in. [1] http://clickandbuy.com http://clickandbuy.com [2] http://www.trustedshops.com http://www.trustedshops.com

severance 15y ago

http://bitcoin.org/ http://bitcoin.org/

antninja 15y ago

There's a script in this blog page that makes Firefox freeze and crash.

dvdkhlng 15y ago
You mean there's something in Firefox that makes it freeze and crash on a script in this blog page?

coldarchon 15y ago

deleted my PayPal when they screwed the guy who wrote Minecraft. /thread

InclinedPlane 15y ago

No sympathy here. Abusing "donations" on paypal to avoid paying fees and taxes is not a good business practice. Either own up to the fact that you are indeed selling something or incorporate as an actual non-profit, neither is particularly onerous.

URSpider94 15y ago

At the end of the day, Paypal is a slave to the credit card associations. To that end, whenever they find something out-of-the-ordinary, they have no choice but to act. The sad reality is, they really don't have any latitude in cases like this, if they want to prove to their credit card overlords that they are tough on fraud. For whatever reason, it seems that they'd rather be known for having terrible customer service than own up to the fact that they are hog-tied as to their policies on what kinds of transactions they can process.

JonoW 15y ago

I'd love to know more about the legalities of a company (that isn't a bank) withholding funds for months. PayPal must be making a pretty profit on the interest accrueing on those accounts.

mrkmcknz 15y ago

Looking at the detailed arguments in this thread, my only advice is to use a little common sense. Or does that not exist anymore?

rlivsey 15y ago

After using PayPal on a number of projects over the years (both successfully and painfully unsuccessfully) I've come to the conclusion that PayPal is fine if what you're doing is completely standard. Once you start doing something that could be interpreted as even slightly non-standard then it's more trouble than it's worth and the odds are that PayPal aren't going to play ball.

scottshea 15y ago

I am so glad I turned down that job with Paypal

jdietrich 15y ago

A little experiment: Apply for a merchant account, saying that you're not a registered nonprofit, but intend to take donations to buy gifts for kids. I just phoned my bank and they literally laughed in my face. People who have customer service nightmares with Paypal are generally doing something that no other payment processor would touch. I hear complaints from people who have been accepting pre-orders of a game or pre-registration for a conference, which is obviously a massive risk for a payment processor. If you found a merchant account provider willing to take such risky business, they'd demand a huge deposit and charge well above the odds. Paypal provide an absolutely exceptional service in allowing pretty much anyone to accept card payments without a great deal of fuss. The flipside of this is that they have to deal with risky accounts retroactively, which means they have little choice but to freeze accounts that set off their fraud detection algoritms. If you prefer to know where you stand, apply for a merchant account - in most of the world, that will involve a long, expensive vetting process. People continue to use Paypal because for many use cases, there aren't any better alternatives. This isn't because Paypal or the card companies are abusing monopoly power, but because payment processing is hard and fraud is expensive.

whyme 15y ago

Out curiosity, why wouldn't PayPal just put categorical warnings on the payment page that allows merchants & buyers to assess the risk themselves? So if a merchant understands these relative risks, they can opt in to a high risk warning category, in order to make sure accounts don't become locked, and buyers can then fully understand what they're getting into via the warnings. I mean really this is all about liability right...or maybe is it that I'm expecting too much...?

dangrossman 15y ago
All the warnings in the world wouldn't reduce the liability one bit. The liability is that the buyers (donors) are unhappy for any reason and charge back the payments. If it turns out the fundraiser was a scam and that's outted publicly, all those donors may well do just that. The OP's story says they got "thousands of $2 payments". Let's say 3000. PayPal could, potentially, see $6000 in chargebacks, $900 in transaction fees, and $45000 ($15 * 3000) in chargeback fees assessed by the card-issuers. If the fundraiser disappears or doesn't have a spare $45000 sitting around PayPal is on the hook for that. They're not going to file 3000 court cases to recover it, no matter what warnings were on the site.

wbhart 15y ago

I wonder if PayPal has misunderstood what Regretsy is doing. For example, suppose PayPal think that Regretsy is buying cheap toys at cost, marking them up for profit, adding the cost of shipping, then selling them to customers as part of their ordinary business model (perhaps not even paying sales tax on them), but of course agreeing to send them to poor kids instead of the people paying the money. PayPal would have every right to block such transactions, and I'd expect it. It wouldn't be charitable on the part of Regretsy nor would it be donation to a worthy cause, but a partial "donation" to Regretsy, a for-profit company. It would be ordinary profit making on the part of Regretsy in the guise of charity work! I think Regretsy should just clarify with PayPal what it is they are actually doing. If Regretsy are honestly doing this for needy kids and not for their own profit, then I cannot see how it would be a win for PayPal to not accommodate this in some way.

scott_s 15y ago
I think PayPal does understand what Regretsy claims to do, and the problem is that what they claim to do goes against their policies. PayPal does not allow that kind of transaction because it's too difficult to prove that it's not fraud. There are detailed explanations of this elsewhere in the thread.

jrabone 15y ago

Anecdotal, but anyway... Earlier this year, Paypal notified me that they required more information about my personal account - namely confirmation that it wasn't a business in disguise. Due to my mistranslating from American English to British English, I accidentally declared that I was a charity (non-profit of course has a specific meaning), and Paypal promptly froze my personal account. It took one phone call to the UK helpdesk, and about 20 minutes to get this fixed, and my experience with their customer support was fine. I screwed up, they were polite and helpful, no problems. What WOULD help is if their UI translated their terms for the benefit of non-US customers (if they'd said "charity" instead of "non-profit" I'd never have chosen that option) and gave you an obvious way to say "I am not a business" (if they'd had that I wouldn't have been on that page in the first place), but I can't fault their customer support.

sp332 15y ago

This is an amazing, in-depth blog post that explores all the relevant policies and web pages regarding the use of the donate button. https://thegreengeeks.wordpress.com/2011/12/06/why-paypal-is-wrong-regarding-regretsy-according-to-their-own-policies/ https://thegreengeeks.wordpress.com/2011/12/06/why-paypal-is... Still nothing! No explanation anywhere on the site that might explain this behavior.

brown9-2 15y ago

So just to be clear, when the Paypal rep says "We know what you are trying to do and we aren't going to let you do it", what do they think the scam is? That the site would accept "donations" for a fraudulent reason?

scott_s 15y ago
Yes.

Cyph0n 15y ago

AlertPay is a good alternative. Fees are a bit high, but there is no such thing as a "limited" account, unless you send/receive fraudulent funds of course. The problem is that AlertPay is not accepted by many online services. Once that is solved, I believe that it could probably compete with PayPal.

joshuap 15y ago

Someone should start an anti-paypal campaign that recreates the paypal buttons, except they have a big red X through them, and link to a collected list of grievances. I'd put one on my site... I dealt with all this garbage in 2004 and haven't used them as a seller since.

Tangurena 15y ago

Paypal wants to be a bank without being regulated as a bank. If they were regulated, this sort of fiasco would get their charter revoked. In addition, the business courses I'm taking all (in the text books and case studies used in classes) point to how eBay is trying to transition away from the auction model and turn into fix-price sales as some sort of discount Amazon Marketplace. Making life miserable for smaller retailers and auctioners is part of this goal.

kmfrk 15y ago

Looks like they settled it: http://news.ycombinator.com/item?id=3320154 http://news.ycombinator.com/item?id=3320154.

radimm 15y ago

Wonder what percentage of users are facing such an issues with PayPal. As somebody who's just in the middle of setting up payment solution (UK) with PayPal, such a stories are not making it easy to justify the decision to go this way. In my eyes, PayPal is just another corporation, with all of its bureaucracy, both processes-wise and the way how they handle their customer care. My bank is not making it easier to get started (otherwise I would have merchant account), so why would I expect PayPal would handle edge cases otherwise? EDIT: jdietrich already made this point http://news.ycombinator.com/item?id=3319045 http://news.ycombinator.com/item?id=3319045

coldarchon 15y ago

https://www.thepaypalblog.com/2011/12/regretsy-issue-resolution/ https://www.thepaypalblog.com/2011/12/regretsy-issue-resolut... looks like they solved it, just a very low excuse.

ukdm 15y ago

PayPal has unlocked the account and made a donation to Regretsy https://www.thepaypalblog.com/2011/12/regretsy-issue-resolution/ https://www.thepaypalblog.com/2011/12/regretsy-issue-resolut...

loceng 15y ago

PayPal is just as likely to hold funds for 6+ months if you're not selling a product if using "Buy Now."