5 ms·

Given various horror stories regarding paypal account freezes, seeing that much money in a paypal account (even when it isn't mine), gives me the cold sweats.

Given various horror stories regarding paypal account freezes, seeing that much money in a paypal account (even when it isn't mine), gives me the cold sweats. Of course, in his case the backlash to an account freeze would probably kill paypal (would be so widely reported that the feds would have to get involved, I'd guess), but still...

herbivore 15y ago
Would not surprise me to learn that this whole "experiment" was a ploy to eventually have PayPal freeze the account and finally bring to its demise.
- rcfox 15y ago
  Louis C.K. strikes me as a guy with better things to do with his time. Besides, the people having issues with PayPal have (almost?) always been using terminology implying that they were taking donations without being registered as a non-profit, or were taking money with the promise of a return in the future. I'm not trying to defend PayPal here; I'm just pointing out that there is specific behaviour that is likely to invoke their wrath, and Louis C.K. does not appear to be doing those sorts of things.
SquareWheel 15y ago
Paypal has frozen the accounts of many large people. Notch, for instance.
- redthrowaway 15y ago
  Yes, but Louis CK is way, way more well-known than Notch is. The dollar amounts might be similar, but Louis CK is regularly on late night talk shows and the like. The backlash would be far greater.
  - staunch 15y ago
    The dollar amounts are not similar. Notch is earning a hell of a lot more and he's not in the US. He's making like $220k/day. Something like $70+ million total sales.
    - redthrowaway 15y ago
      I doubt that $70MM is sitting around in his paypal account, though. IIRC, he had something like $350k frozen.
    - kenjackson 15y ago
      Really? Is there a source for that? Not that I don't believe you, but I'd love to cite this data myself. That's incredible.
      - deleted 15y ago
        [deleted]
      - ugh 15y ago
        Minecraft.net has a stats page: http://www.minecraft.net/stats http://www.minecraft.net/stats I’m pretty sure that someone somewhere on the web has recorded those numbers – but I’m too lazy to search right now. Calculating the average is something I can do, though: On January 12, 2011 Minecraft had sold one million copies. Since then Minecraft sold another 3.4 million copies in 345 days – that works out to an average of a little less than 10,000 copies per day. That works out to €150k daily revenue for 309 of those days (during beta, €15 per copy) and €190k daily revenue for the rest of the time (after the release, €20 per copy), resulting in a revenue around €50m for 2011.
    - georgieporgie 15y ago
      Holy cow, seriously? Apparently, yes: http://texyt.com/minecraft+persson+notch+indie+game+success+00127 http://texyt.com/minecraft+persson+notch+indie+game+success+... At the end, they note that sales were settled in to about $100k/day in September 2010, from a relatively brief peak of $350k/day. Amazing numbers.
- izak30 15y ago
  No reason to bring weight into this. I don't think that PayPal is fighting against Louie's crotch belly.
dangrossman 15y ago
Unlike Notch and other indie game developers, Louis thought this out with advisers and lawyers, and no doubt notified PayPal of the plans. If they already know what he's selling and have his ID on file, they have no reason to temporarily suspend the account to ask those things.
- drivebyacct2 15y ago
  (Random, honest question)... is this acceptable? Should one have to pre-clear it with PayPal if they think they might hit some non-specified limit upon which PayPal will seize your funds?
  - dangrossman 15y ago
    > (Random, honest question)... is this acceptable? That's how it works everywhere. It's written into any merchant account agreement with any payment provider. If your average ticket size, average monthly volume, or the business you're in changes, you have to notify them and get approval because it changes your risk profile. Because Visa and MasterCard mandate a <1% average chargeback rate from their members, that carries through to every level of payment processing service to make risk management a core piece of the business. 3rd party processors make it easy to sell an item or two on eBay without having to fill out pages of work history and references as you'd have to in order to accept credit cards directly... because there's very little risk. If you scam someone out of $100 and they charge it back, that $100 is going to be too small a portion of the processor's business to impact their rate. But if the next month you sell $100k of product, and they don't even know who you are or what you're selling, it's time to pull back and ask you who you are. PayPal will do this. Amazon Payments will do this. Google Checkout will do this. 2Checkout will do this. Heck, 2Checkout will also call a random sampling of your customers to make sure you're actually selling what you say you're selling. So in exchange for not having to fill out a 6 page application up front and tie yourself to a contract with monthly fees, PayPal and every other 3rd party processor will suspend your account for a business day or two to get the information from you only when it becomes necessary, then set you back on your way to continue doing business. Most people never think about things like chargeback rates and risk to the processor, so when their account gets suspended, they freak out and spam a blog post assuming someone's trying to steal their money. A few days later they always have to follow up that everything's actually OK... there's no conspiracy to lock accounts and earn interest on the balance (reserve funds are held in non-interest-bearing accounts), they really just want to make sure you're not something so risky it's going to hurt their average chargeback rate.
phillco 15y ago
I just noticed that Stripe's payment fee (2.9% + $0.30) is the exact same as PayPal's. Definitely not a coincidence.
- pwim 15y ago
  PayPal has a micropayments option of 5% + $0.05, which would work out to be cheaper in this case (the video was $5). https://micropayments.paypal-labs.com/ https://micropayments.paypal-labs.com/
  - phillco 15y ago
    Good catch, I didn't know about that.
downandout 15y ago
I would say there is a 99% chance that the moment he requests to have the money transferred to his bank account, his PayPal account will be limited. In the screenshot it shows that there are already 43 disputes. While this is a small percentage, PayPal will use this to point to the possibility of many more chargebacks arising in the future. Granted, he will eventually receive it (after 180 days). But, he will not receive it before then. This is a matter of standard operating procedure for PayPal.
- dangrossman 15y ago
  Highly unlikely. 43 disputes out of ~201,000 payments is nothing. 0.02% of his purchases. It's a maximum liability to PayPal of something like $800 (including typical chargeback fees) out of a million dollars in revenue. Most of those disputes are probably just disputes, not chargebacks, anyway -- people clicking "item not received" because they weren't tech-savvy and had trouble with the download process or the video didn't play on their computer right. PayPal isn't worried until your chargebacks are more than 1-2% of your volume. With a dispute rate that low on so much volume, he's helping bring down PayPal's overall CB rate with their banks (Wells Fargo and Chase), doing the company a favor. Not only will Louis's account not be frozen when he withdraws the money, but his dispute rate as a percentage of volume is so low, the mails he gets about them will say "because your chargeback rate is so low, we are allowing you to keep the funds until the end of the investigation". I know this because that's what they send me, too. This is standard operating procedure at PayPal. Louis CK is their optimal merchant in almost every way. Even if their business processes were so terrible as to want to close this account, which they aren't, it's not a company of fools -- this account is run by a celebrity selling a virtually no-risk product and brings in $50,000 a month in fee revenues for PayPal.
  - downandout 15y ago
    Apparently you've never been on the receiving end of PayPal's unending wrath. It isn't pretty when it occurs. If you haven't experienced it, you won't believe that there is even a possibility that they would do it to a legitimate business. You think that it only happens to people that are committing fraud, have excessive chargebacks, or are at the very least violating their TOS in some way. But the reality is that PayPal freezes accounts every single day that belong to entirely legitimate merchants operating well within the TOS. The only thing he has going for him is his fame. This makes freezing of funds slightly less likely, though still not entirely implausible, solely because he could actually cause a large amount of negative publicity.

herbivore 15y ago

Would not surprise me to learn that this whole "experiment" was a ploy to eventually have PayPal freeze the account and finally bring to its demise.

rcfox 15y ago
Louis C.K. strikes me as a guy with better things to do with his time. Besides, the people having issues with PayPal have (almost?) always been using terminology implying that they were taking donations without being registered as a non-profit, or were taking money with the promise of a return in the future. I'm not trying to defend PayPal here; I'm just pointing out that there is specific behaviour that is likely to invoke their wrath, and Louis C.K. does not appear to be doing those sorts of things.

SquareWheel 15y ago

Paypal has frozen the accounts of many large people. Notch, for instance.

redthrowaway 15y ago
Yes, but Louis CK is way, way more well-known than Notch is. The dollar amounts might be similar, but Louis CK is regularly on late night talk shows and the like. The backlash would be far greater.
- staunch 15y ago
  The dollar amounts are not similar. Notch is earning a hell of a lot more and he's not in the US. He's making like $220k/day. Something like $70+ million total sales.
  - redthrowaway 15y ago
    I doubt that $70MM is sitting around in his paypal account, though. IIRC, he had something like $350k frozen.
  - kenjackson 15y ago
    Really? Is there a source for that? Not that I don't believe you, but I'd love to cite this data myself. That's incredible.
    - deleted 15y ago
      [deleted]
    - ugh 15y ago
      Minecraft.net has a stats page: http://www.minecraft.net/stats http://www.minecraft.net/stats I’m pretty sure that someone somewhere on the web has recorded those numbers – but I’m too lazy to search right now. Calculating the average is something I can do, though: On January 12, 2011 Minecraft had sold one million copies. Since then Minecraft sold another 3.4 million copies in 345 days – that works out to an average of a little less than 10,000 copies per day. That works out to €150k daily revenue for 309 of those days (during beta, €15 per copy) and €190k daily revenue for the rest of the time (after the release, €20 per copy), resulting in a revenue around €50m for 2011.
  - georgieporgie 15y ago
    Holy cow, seriously? Apparently, yes: http://texyt.com/minecraft+persson+notch+indie+game+success+00127 http://texyt.com/minecraft+persson+notch+indie+game+success+... At the end, they note that sales were settled in to about $100k/day in September 2010, from a relatively brief peak of $350k/day. Amazing numbers.
izak30 15y ago
No reason to bring weight into this. I don't think that PayPal is fighting against Louie's crotch belly.

dangrossman 15y ago

Unlike Notch and other indie game developers, Louis thought this out with advisers and lawyers, and no doubt notified PayPal of the plans. If they already know what he's selling and have his ID on file, they have no reason to temporarily suspend the account to ask those things.

drivebyacct2 15y ago
(Random, honest question)... is this acceptable? Should one have to pre-clear it with PayPal if they think they might hit some non-specified limit upon which PayPal will seize your funds?
- dangrossman 15y ago
  > (Random, honest question)... is this acceptable? That's how it works everywhere. It's written into any merchant account agreement with any payment provider. If your average ticket size, average monthly volume, or the business you're in changes, you have to notify them and get approval because it changes your risk profile. Because Visa and MasterCard mandate a <1% average chargeback rate from their members, that carries through to every level of payment processing service to make risk management a core piece of the business. 3rd party processors make it easy to sell an item or two on eBay without having to fill out pages of work history and references as you'd have to in order to accept credit cards directly... because there's very little risk. If you scam someone out of $100 and they charge it back, that $100 is going to be too small a portion of the processor's business to impact their rate. But if the next month you sell $100k of product, and they don't even know who you are or what you're selling, it's time to pull back and ask you who you are. PayPal will do this. Amazon Payments will do this. Google Checkout will do this. 2Checkout will do this. Heck, 2Checkout will also call a random sampling of your customers to make sure you're actually selling what you say you're selling. So in exchange for not having to fill out a 6 page application up front and tie yourself to a contract with monthly fees, PayPal and every other 3rd party processor will suspend your account for a business day or two to get the information from you only when it becomes necessary, then set you back on your way to continue doing business. Most people never think about things like chargeback rates and risk to the processor, so when their account gets suspended, they freak out and spam a blog post assuming someone's trying to steal their money. A few days later they always have to follow up that everything's actually OK... there's no conspiracy to lock accounts and earn interest on the balance (reserve funds are held in non-interest-bearing accounts), they really just want to make sure you're not something so risky it's going to hurt their average chargeback rate.

phillco 15y ago

I just noticed that Stripe's payment fee (2.9% + $0.30) is the exact same as PayPal's. Definitely not a coincidence.

pwim 15y ago
PayPal has a micropayments option of 5% + $0.05, which would work out to be cheaper in this case (the video was $5). https://micropayments.paypal-labs.com/ https://micropayments.paypal-labs.com/
- phillco 15y ago
  Good catch, I didn't know about that.

downandout 15y ago

I would say there is a 99% chance that the moment he requests to have the money transferred to his bank account, his PayPal account will be limited. In the screenshot it shows that there are already 43 disputes. While this is a small percentage, PayPal will use this to point to the possibility of many more chargebacks arising in the future. Granted, he will eventually receive it (after 180 days). But, he will not receive it before then. This is a matter of standard operating procedure for PayPal.

dangrossman 15y ago
Highly unlikely. 43 disputes out of ~201,000 payments is nothing. 0.02% of his purchases. It's a maximum liability to PayPal of something like $800 (including typical chargeback fees) out of a million dollars in revenue. Most of those disputes are probably just disputes, not chargebacks, anyway -- people clicking "item not received" because they weren't tech-savvy and had trouble with the download process or the video didn't play on their computer right. PayPal isn't worried until your chargebacks are more than 1-2% of your volume. With a dispute rate that low on so much volume, he's helping bring down PayPal's overall CB rate with their banks (Wells Fargo and Chase), doing the company a favor. Not only will Louis's account not be frozen when he withdraws the money, but his dispute rate as a percentage of volume is so low, the mails he gets about them will say "because your chargeback rate is so low, we are allowing you to keep the funds until the end of the investigation". I know this because that's what they send me, too. This is standard operating procedure at PayPal. Louis CK is their optimal merchant in almost every way. Even if their business processes were so terrible as to want to close this account, which they aren't, it's not a company of fools -- this account is run by a celebrity selling a virtually no-risk product and brings in $50,000 a month in fee revenues for PayPal.
- downandout 15y ago
  Apparently you've never been on the receiving end of PayPal's unending wrath. It isn't pretty when it occurs. If you haven't experienced it, you won't believe that there is even a possibility that they would do it to a legitimate business. You think that it only happens to people that are committing fraud, have excessive chargebacks, or are at the very least violating their TOS in some way. But the reality is that PayPal freezes accounts every single day that belong to entirely legitimate merchants operating well within the TOS. The only thing he has going for him is his fame. This makes freezing of funds slightly less likely, though still not entirely implausible, solely because he could actually cause a large amount of negative publicity.