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When are people going to learn that PayPal is never, ever, ever to be trusted? > When the site started in May, $12,000 in orders for a car diagnostics device

When are people going to learn that PayPal is never, ever, ever to be trusted? > When the site started in May, $12,000 in orders for a car diagnostics device poured in right away. PayPal, which the founders used to process payments, decided their account was “high risk” and suspended it, freezing their money for six months, Mr. Wu said. Mr. Wu and Mr. El-Hage maxed out their credit cards to fulfill the orders. Without investors backing them, they nearly went broke. MassDrop has recovered to “above-ramen status, but not that much higher,” Mr. El-Hage said.

Wingman4l7 14y ago
I'd more specifically qualify that as: "Don't ever use PayPal to process a large & sudden volume of orders for a product" -- which, granted, can be hard to anticipate. It seems like this is a guaranteed way to trigger their fraud detection, getting your account frozen. This is anecdotally a bear to fix. I believe the GP2X guys got burned by this at one point. Also, doesn't PayPal frown on taking preorders in their ToS?
- Negitivefrags 14y ago
  When we launched our product we got ~100,000 in the first 24 hours and we didn't have our account locked, so it isn't guaranteed. After 48 hours the did put a 25,000 reserve on the account plus 10% of future transactions for 90 days though, which is annoying.
rytis 14y ago
What are my options if I'm not in US? GoCardless is great but not instantaneous afaik. Paypal is so easy from the user perspective (and has low upfront cost for the developer) that most just accept the risk. But they are evil, very evil.
- j45 14y ago
  I've found Paypal to be much better if you: 1) Call them and get to know them 2) Let them know what you're selling up front 3) Verify all your info -- connect a bank account to it, connect a credit card to it 4) before a launch, marketing blitz, or push, call and let them know. Why? They're not a bank, but they're like a bank. They have to manage risk. Keep them in the loop and your account has a much, much better chance of not being locked down.
  - kokey 14y ago
    It's possible to call Paypal and talk to them?
    - j45 14y ago
      Yes, it used to be next to impossible but they prominently display their number now, and I have yet to speak to anyone incompetent. It's almost like the missing limb of Paypal all these years. Super knowledgeable people who have been working behind the scenes that I haven't had access to. I'm not saying Paypal (or any payment service) by any means is perfect or ideal. I just know my interaction with Paypal increased after I could access them by phone. There is a certain peace in saying "I told you my entire business model before I started and you cleared it as a good fit with Paypal" and documenting it politely. You'd be shocked how much a heads up of "I'm about to launch or might have a crush of traffic from x" does for their risk management department. It doesn't mean we should notify them of every business decision through them, but it's kind of like building credit, in the beginning it will take a bit more effort on your part to go out of your way to do the right thing. Otherwise, we're just a random unverified account with zero history with them. If they get to know you, like anything, things get easier. Scammers wouldn't want Paypal to get to know them, right? :)
- captaintacos 14y ago
  Second that. The PayPal incident in there succeeded in taking away my attention from the whole Hacker Hostel model and prompted me to quickly search for alternatives. Problem is, there are not many if you live outside the US :( Can anyone recommend any international options?
scott_s 14y ago
"Trust" isn't the issue. I doubt they could have convinced a bank that they were low-risk enough to open a merchant account.

Wingman4l7 14y ago

I'd more specifically qualify that as: "Don't ever use PayPal to process a large & sudden volume of orders for a product" -- which, granted, can be hard to anticipate. It seems like this is a guaranteed way to trigger their fraud detection, getting your account frozen. This is anecdotally a bear to fix. I believe the GP2X guys got burned by this at one point. Also, doesn't PayPal frown on taking preorders in their ToS?

Negitivefrags 14y ago
When we launched our product we got ~100,000 in the first 24 hours and we didn't have our account locked, so it isn't guaranteed. After 48 hours the did put a 25,000 reserve on the account plus 10% of future transactions for 90 days though, which is annoying.

rytis 14y ago

What are my options if I'm not in US? GoCardless is great but not instantaneous afaik. Paypal is so easy from the user perspective (and has low upfront cost for the developer) that most just accept the risk. But they are evil, very evil.

j45 14y ago
I've found Paypal to be much better if you: 1) Call them and get to know them 2) Let them know what you're selling up front 3) Verify all your info -- connect a bank account to it, connect a credit card to it 4) before a launch, marketing blitz, or push, call and let them know. Why? They're not a bank, but they're like a bank. They have to manage risk. Keep them in the loop and your account has a much, much better chance of not being locked down.
- kokey 14y ago
  It's possible to call Paypal and talk to them?
  - j45 14y ago
    Yes, it used to be next to impossible but they prominently display their number now, and I have yet to speak to anyone incompetent. It's almost like the missing limb of Paypal all these years. Super knowledgeable people who have been working behind the scenes that I haven't had access to. I'm not saying Paypal (or any payment service) by any means is perfect or ideal. I just know my interaction with Paypal increased after I could access them by phone. There is a certain peace in saying "I told you my entire business model before I started and you cleared it as a good fit with Paypal" and documenting it politely. You'd be shocked how much a heads up of "I'm about to launch or might have a crush of traffic from x" does for their risk management department. It doesn't mean we should notify them of every business decision through them, but it's kind of like building credit, in the beginning it will take a bit more effort on your part to go out of your way to do the right thing. Otherwise, we're just a random unverified account with zero history with them. If they get to know you, like anything, things get easier. Scammers wouldn't want Paypal to get to know them, right? :)
captaintacos 14y ago
Second that. The PayPal incident in there succeeded in taking away my attention from the whole Hacker Hostel model and prompted me to quickly search for alternatives. Problem is, there are not many if you live outside the US :( Can anyone recommend any international options?

scott_s 14y ago

"Trust" isn't the issue. I doubt they could have convinced a bank that they were low-risk enough to open a merchant account.