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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 scr

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.
  - dangrossman 15y ago
    Do you have anything to back this up? Because all you've done so far is spread unsubstantiated FUD. It'll take more than a pointer to "PayPal Sucks dot com", please. Despite PP's 232 million registered accounts, and millions more unregistered buyers, that site's only found 887 people in 12 years with a negative experience to share. I'm sure people have their accounts frozen every day. Most of them will have them unfrozen as soon as they fax over an ID and a bill, while the rest were actual fraud that needed to be stopped. When you're dealing with more total users than the population of the United States, that's to be expected. Probability says that if PayPal were as irrational as you paint them to be, they would have no high volume merchants paying the bills at all, as 99% of them would be terminated for no reason. Is that really what you're selling? As for me, I've been through everything PayPal can throw at you. I've been through everything the merchant processing industry can throw at you. I learned about risk and fraud management early when one of my businesses was targeted by a credit card scam ring that lost me my first merchant account. I had thousands of dollars held for, you guessed it, 180 days... while I was still on the hook to provide product and service to customers without their payments to cover it. My PayPal account's had its ups and downs, I've seen every type of dispute, complaint, escalation, chargeback, and reversal possible. I've dealt with the risk department, faxed in documentation, argued over inane policies and seen the boilerplate autoresponse system first level customer support can feel like. But in the end, 11 years and 6 months after first signing up, I'm still with them, because they're no worse than anyone else in the industry. Hell, they're better than most of the industry, certainly less deceptive when it comes to fees. And I've managed my own fraud problem to the point that, as I said in an earlier post, they now send me mails starting with "as your chargeback rate is so low...".
    - downandout 15y ago
      I'm not saying that PayPal's account-limiting decisions are always irrational or entirely arbitrary. I am saying that in many cases, where there is no obvious cause, these decisions are based upon criteria largely out of control of the merchant. In the vast majority of these cases, PayPal chooses to close the account and hold the money despite the availability of effective risk-control alternatives that would enable the merchant to continue operating without interruption. PayPal uses a number of factors to determine the risk associated with particular transactions, and in turn the aggregate risk presented by the receiving account. They look at things like the age of the accounts sending money to the merchant, percentage of foreign transactions, the payment methods used (credit card, instant transfer, paypal balance, etc.), and many other factors. None of these are within control of the merchant. If, in aggregate, these factors happen to fall outside of the the norms, it increases the likelihood that your account will be limited without explanation - regardless of how many faxes you send them and additional hoops you jump through. While PayPal may in fact have internal data to justify these decisions, they could just as easily achieve the same risk-management goals with far more merchant friendly measures, such as rolling reserves. In far too many cases, they simply close the account and hold the merchant funds for as long as the law allows. That is my problem with 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.
- dangrossman 15y ago
  Do you have anything to back this up? Because all you've done so far is spread unsubstantiated FUD. It'll take more than a pointer to "PayPal Sucks dot com", please. Despite PP's 232 million registered accounts, and millions more unregistered buyers, that site's only found 887 people in 12 years with a negative experience to share. I'm sure people have their accounts frozen every day. Most of them will have them unfrozen as soon as they fax over an ID and a bill, while the rest were actual fraud that needed to be stopped. When you're dealing with more total users than the population of the United States, that's to be expected. Probability says that if PayPal were as irrational as you paint them to be, they would have no high volume merchants paying the bills at all, as 99% of them would be terminated for no reason. Is that really what you're selling? As for me, I've been through everything PayPal can throw at you. I've been through everything the merchant processing industry can throw at you. I learned about risk and fraud management early when one of my businesses was targeted by a credit card scam ring that lost me my first merchant account. I had thousands of dollars held for, you guessed it, 180 days... while I was still on the hook to provide product and service to customers without their payments to cover it. My PayPal account's had its ups and downs, I've seen every type of dispute, complaint, escalation, chargeback, and reversal possible. I've dealt with the risk department, faxed in documentation, argued over inane policies and seen the boilerplate autoresponse system first level customer support can feel like. But in the end, 11 years and 6 months after first signing up, I'm still with them, because they're no worse than anyone else in the industry. Hell, they're better than most of the industry, certainly less deceptive when it comes to fees. And I've managed my own fraud problem to the point that, as I said in an earlier post, they now send me mails starting with "as your chargeback rate is so low...".
  - downandout 15y ago
    I'm not saying that PayPal's account-limiting decisions are always irrational or entirely arbitrary. I am saying that in many cases, where there is no obvious cause, these decisions are based upon criteria largely out of control of the merchant. In the vast majority of these cases, PayPal chooses to close the account and hold the money despite the availability of effective risk-control alternatives that would enable the merchant to continue operating without interruption. PayPal uses a number of factors to determine the risk associated with particular transactions, and in turn the aggregate risk presented by the receiving account. They look at things like the age of the accounts sending money to the merchant, percentage of foreign transactions, the payment methods used (credit card, instant transfer, paypal balance, etc.), and many other factors. None of these are within control of the merchant. If, in aggregate, these factors happen to fall outside of the the norms, it increases the likelihood that your account will be limited without explanation - regardless of how many faxes you send them and additional hoops you jump through. While PayPal may in fact have internal data to justify these decisions, they could just as easily achieve the same risk-management goals with far more merchant friendly measures, such as rolling reserves. In far too many cases, they simply close the account and hold the merchant funds for as long as the law allows. That is my problem with PayPal.