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It looks like I'm just going to echo the sentiments of others on this thread, but I feel compelled to issue this warning: Stay away. This "feature" could bankr

It looks like I'm just going to echo the sentiments of others on this thread, but I feel compelled to issue this warning: Stay away. This "feature" could bankrupt even a respectable company. Do not trust your money to any company offering credit that cannot or will not provide a balance sheet to back it up. Yes, I'm a competitor, but there's a very good reason my company did not and does not offer this service. We thought of it long ago, and long ago determined that even with small amounts of credit, the risk to the operator is astronomical. Stay away, stay away, stay away.

chc 15y ago
I don't quite understand. It sounds like you're saying this is weighted too heavily in favor of the user, so why are you telling the user to stay away? Shouldn't the warning be directed at Dwolla?
- pbreit 15y ago
  The warning goes out to anyone who is or will be owed money by Dwolla (ie, mainly the merchants, or payers who pre-fund their Dwolla accounts). PayPal performs a similar service but backs it with a credit card. The risk is fraudsters setting up phony bank accounts, piling up a bunch of Dwolla credit, paying themselves and disappearing.
  - ricardobeat 15y ago
    In that case they only hurt Dwolla, not any merchants or payers. Their money seems to be legally secure: Dwolla warrants funds property of their respective account holder. Warranty is only respective of Dwolla balance amount under FDIC or NCUA insured funds covered by financial institutions holding funds on your behalf. I don't know what it's like in the USA, but setting up a "phony bank account" depends on a small list of crimes to be commited before...
    - pbreit 15y ago
      I believe if Dwolla had a rash of stolen funds, the insurance of its partner bank would not cover it (since the insurance covers the bank, not Dwolla). The US is much different from the rest of the world as far as I know. There are thousands of banks and even more non-banks that have established ACH routing numbers. Fraudsters look for banks or companies with the laxest account opening procedures. There are some notable payments companies that went out of business because of fraud (NextCard, BankOne EmoneyMail). When that happens, there's a very real possibility of customers losing money.

chc 15y ago

I don't quite understand. It sounds like you're saying this is weighted too heavily in favor of the user, so why are you telling the user to stay away? Shouldn't the warning be directed at Dwolla?

pbreit 15y ago
The warning goes out to anyone who is or will be owed money by Dwolla (ie, mainly the merchants, or payers who pre-fund their Dwolla accounts). PayPal performs a similar service but backs it with a credit card. The risk is fraudsters setting up phony bank accounts, piling up a bunch of Dwolla credit, paying themselves and disappearing.
- ricardobeat 15y ago
  In that case they only hurt Dwolla, not any merchants or payers. Their money seems to be legally secure: Dwolla warrants funds property of their respective account holder. Warranty is only respective of Dwolla balance amount under FDIC or NCUA insured funds covered by financial institutions holding funds on your behalf. I don't know what it's like in the USA, but setting up a "phony bank account" depends on a small list of crimes to be commited before...
  - pbreit 15y ago
    I believe if Dwolla had a rash of stolen funds, the insurance of its partner bank would not cover it (since the insurance covers the bank, not Dwolla). The US is much different from the rest of the world as far as I know. There are thousands of banks and even more non-banks that have established ACH routing numbers. Fraudsters look for banks or companies with the laxest account opening procedures. There are some notable payments companies that went out of business because of fraud (NextCard, BankOne EmoneyMail). When that happens, there's a very real possibility of customers losing money.