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Amazon forces Unglue.it to Suspend Crowdfunding for Creative Commons eBooks
- alexro 14y agoIs it at all legal for Amazon to selectively disable it's services for no real reason? I'm surprised that it looks like this.
- gluejar 14y agowhy would it be illegal?
- Jtsummers 14y agoThe implication being that they're abusing their market position as a payment service to prevent potential competition against their other business (book sales). Not being able to get to unglue.it here at work I don't know the specifics. However, since Amazon isn't (as far as I know) in anyway a monopoly or majority concern in the payment processing business then this could be abusive, but is likely not illegal.
- gluejar 14y agoSeems unlikely.
- Jtsummers 14y agoI agree, I've just heard enough people making arguments about situations like this that I thought I'd share the reasoning they offer, and then followed it up with why it's flawed. For instance, I have a coworker who keeps insisting that Apple should have been hit with an anti-trust suit like MS since they only allowed the Safari browser on iOS (for a time). He was dead serious (for some reason he truly hates Apple and wants to see the corporation fail, still owns an iPhone though). It was based off a flawed understanding of the laws and the markets the laws apply to. A lot of people seem to jump to the legality of the actions of the group in charge of a particular platform without considering whether that platform is one of a larger marketplace.
- Steuard 14y agoI really like the Unglue.it model, so I'm upset by this decision, too, but I suspect there aren't any legal grounds for complaining about it. I fully expect that Amazon's contract language gives them plenty of latitude to refuse services at their discretion. Even if there were some non-discrimination law that touched on this sort of situation, it's not inconceivable that they view Unglue.it as competing in their core market. I can't imagine many cases where a company would be legally obligated to provide services to support a competitor. (Sure, local phone utility companies are in that situation, but that's for solid historical reasons related to government backing of their monopoly on infrastructure.) [I'm obviously not a lawyer or an expert on these things, so corrections are welcome.]
- milesskorpen 14y agoIf Visa and other card processors much higher up the value chain can do it (e.g., Wikileaks), Amazon certainly has the same option.
- Irfaan 14y agoAnyone have any guess why Amazon pulled the plug? There must be a reason beyond "Amazon has decided against “boarding fresh crowdfunding accounts at this time”" - just pulling the plug on an entire category of products willy-nilly is a terrible image for a cloud service provider to project.
- ahi 14y agoLikely fraud related. Not that unglue.it is running a scam, but Amazon probably can't be bothered to separate the money laundering operations from the legit crowdfunding operations.
- gluejar 14y agoI was told that crowdfunding presents regulatory and contractual challenges that Amazon Payments is trying to deal with. They don't want new crowdfunding clients at this time.
- pja 14y agoSomething to do with the regulations for credit card payments? IIRC you can't 'pre-pay' for goods on a credit card: the merchant agreement says that you can only be charged when you actually ship the goods. This makes crowdfunding projects like this a little tricky, since they doesn't map well to the legal agreements that make up the existing payment systems.
- TylerE 14y agoMuch more likely SEC/investment regulations.
- ScottBurson 14y agoNo. You're thinking of equity crowdfunding. No equity is changing hands here.
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- jack-r-abbit 14y agoSo you're telling me that Amazon (who makes a pretty good living selling books) shut off payment processing for UnglueIt (who seems to be working to give away books for free). Who would have seen that coming? With all the payment services available, why go with the one that is run by the company that your "business model" threatens most? Edit: ok... not knowing exactly how delayed payments work for pledge style funding, I don't know which payment services can handle that. As far as other options, there are many. I just don't know if any others will handle the delayed payment part. If the options truly are only PayPal and Amazon then I see a huge hole that needs to be filled.
- beedogs 14y agoWhat are the alternatives? (Don't say PayPal -- they seem to have a habit of locking out these types of accounts too.)
- rdhyee 14y ago(I work for Gluejar on unglue.it) We've struggled with the issue of finding the right payment processor. We went originally with PayPal, but 7 months after we submitted our application, we still don't have a decision (see http://blog.unglue.it/2012/05/03/unglue-it-payment-options-amazon-vs-paypal/ http://blog.unglue.it/2012/05/03/unglue-it-payment-options-a...). Amazon FPS was easy to get started with, and we got what seemed to be approval very quickly. So it was a bit surprising to then get shut down by Amazon after running for a while and demonstrating unglue.it works in practice. We'd love to hear of alternative payment systems. I'm looking at using subscriptions in https://www.braintreepayments.com/docs/python/subscriptions/ https://www.braintreepayments.com/docs/python/subscriptions/ to simulate conditional payments. http://www.quora.com/Online-and-Mobile-Payments/What-payment-solutions-besides-Amazon-can-be-used-for-crowdfunding http://www.quora.com/Online-and-Mobile-Payments/What-payment... leads to https://www.wepay.com/ https://www.wepay.com/ and https://www.balancedpayments.com/ https://www.balancedpayments.com/ I'd love to hear of people's experiences with these payment systems and any others we should look at for unglue.it
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- rickmb 14y agoProviding payment services to structural crowdfunding efforts is a legal grey area when it comes to financial regulations. Amazon is not the first to suspend taking on such accounts until they have better grip on the regulatory implications.
- DennisP 14y agoWhy is it a grey area? Which regulations? Seems like a pretty straightforward transaction to me.
- adgar 14y agoMoney laundering is the first giant red flag that should come to mind.
- ScottBurson 14y agoAt first glance, I suppose there would be that potential. I think unglue.it has chosen their business model very wisely. By starting with already-published books, they make money laundering rather difficult to carry out and easy to detect -- to launder money through their service, one would first have to publish a book, which would probably have to sell a significant number of copies for unglue.it to even consider it.
- DennisP 14y agoAny brick-and-mortar shop that accepts cash and charges a lot for labor can be used for money-laundering, but that doesn't make it illegal. An online business is actually less useful for laundering than the brick-and-mortar shop, since you don't have cash payments.
- adgar 14y agoBrick-and-mortar shops don't have botnets.
- milesskorpen 14y ago
- carolh12 14y agoAmazon making it up as they go? I used their payments to support a couple of Kickstarter projects. Maybe Unglueit is seen as competitor to Kickst?
- rdhyee 14y agoThe fact that Amazon payments powers Kickstarter led me to think that Amazon would allow other crowdfunding sites such as unglue.it.
- donpdonp 14y agoI came to the same conclusion about using Amazon payments for everythingfunded.com (my crowdfunding site). After testing on the sandbox and moving to a production payment account, I got the same letter. "We are currently not on-boarding any new crowd funding/social fundraising sites at this time." So after some comparison I moved to Wepay. They can handle a 'marketplace' or three-party transaction and I liked that stunt with the block of ice.
- unreal37 14y agoThus is born another startup idea for someone to tackle: Wanted: a dedicated backend for crowdfunding that other businesses can leverage for their crowdfunding projects. The only two competitors are Paypal and Amazon Payments, and they should be easy to beat because they are actively turning away legitimate business.
- rmc 14y agoOr payments is such a massively hard problem that it's not "easy" to beat the incumbants.
- angelbob 14y agoGuess you could start be setting up on top of, say, Stripe, and see how long until the regulators come knock on your door.
- drone 14y agoActually, it's a bit harder than that... Both of these companies have transaction volumes in a high enough range that they can afford to be their own aggregator and process their own transactions. Any new company would have to work with an ISO/MSP, which places severe restrictions on what kind of transactions they can handle and how, and the fees paid. For example: waiting more than seven days to capture an authorization can double or triple the rate with some banks (SVB's Merchant E-Solutions shows you such warnings in the virtual terminal, for example), and exceeding a certain rate of transactions captured over seven days after the fact can cause a shutdown of your account. (My contract with MES has such a clause, for example.) In other words: if it were "that easy," there'd already be a lot of competition. But, Visa et. al. aren't real big on letting just anyone be direct inputs to them and the kinds of activities we're talking about here look a lot like fraud to existing ISOs/MSPs.
- mocampbell 14y agoIt's pretty easy to surmise that Amazon doesn't want to facilitate crowd-source funding for a group whose purpose is to provide free e-books.
- paulhauggis 14y agoAmazon is not a good company. I don't know why more people aren't talking about it. They treat their 3rd-party sellers like garbage. They make up a large percentage of their yearly income and don't even offer any kind of support beyond automated responses. Amazon also doesn't keep the same standard of service as their sellers. They have bots that will auto-ban your account with no recourse. If a customer complains, they get their money back in 99% of the cases (even if it's > 1 year later) without ever having to return the item (I got scammed by many customers this way). Amazon also has no way of banning a customer, so they can keep doing it, leaving you negative feedback, and their bots will auto-ban you (good luck getting it un-banned after this happens). So you end up losing all of the money and the item you sold. If I buy an ipad and complain, Amazon (If I'm buying from Amazon.com..and not a 3rd party seller) will make me return it before I get a refund. I was a seller for many years and finally called it quits. They know they can get away with it because they are biggest site on the Internet (besides Ebay). Ebay has its problems, but at least you are treated with respect as a seller. After moving everything to Ebay, all of my problems went away.
- ayelton 14y agoWe have been treated respectfully by Amazon's customer service people, FWIW.
- LoganCale 14y ago> If I buy an ipad and complain, Amazon (If I'm buying from Amazon.com..and not a 3rd party seller) will make me return it before I get a refund. What's wrong with that?
- delinka 14y agoThe implication was that if a third party sells an iPad via Amazon, the customer can complain, get an immediate refund, and the customer is never forced to return the iPad to the seller.
- rprasad 14y agoTitle is inaccurate. Amazon did not force Unglue.it to suspend crowdfunding; it merely forced Unglue.it to stop using Amazon as the backend for their crowdfunding payment system. Also, the license for the ebooks and the distribution model were irrelevant to Amazon's decision. After all, Amazon sells/gives way plenty of CC'd books. As other comments have noted, Amazon has decided as a matter of policy not to accept new crowdfunding customers until the legal and regulatory issues (i.e., money laundering, refunds, undelivered goods/failed projects, etc.) are worked out. You can still use Paypal (takes a long time to get approved) or Stripe (you must set up your own backend). Alternatively, you can go directly to a card processor (but you must then satisfy very stringent and expensive security requirements).
- Dylan16807 14y agoBlocking payments to them, including ones already set up, sure sounds like forcing them to suspend to me.
- ayelton 14y agoWe submitted our PayPal application in January and it has not been either approved or rejected at this time. So, yes, it does take a long time, but no, we can't use PayPal. Not today, anyway.
- duaneb 14y agoDon't forget Google Checkout.
- graue 14y agoThey don't do delayed payments, only immediate purchases. So that doesn't work with a crowdfunding "pledge" model.
- kno 14y agoIt’s always very sad to see these Big companies give hard times to startups mostly for the simple reason that they can. They don't generally give a good reason, with a generic overnight internal policy rule they will just shut down a service. It’s even more so when you think that they too were startup. Just hang in there Unglue.it team, implement a new payment process, it’s the hard way to success I guess.
- salman89 14y agoPerhaps there is a market for a crowdfunding payment processor. Such payment processor could then focus on regulations and legal implications.
- jamoes 14y agoYet another reason to support bitcoin. Bitcoin empowers payments that aren't subject to the whims of corporations (or any central authority for that matter).
- kalleboo 14y agoHow would you do "pledges" in bitcoin? Credit/Debit card pledges work by only extracting the money of the funding goes though. That seems impossible with Bitcoin without either (1) trusting the crowdfunding site to refund you (2) trusting the users to go through with the payment when the date hits (3) Some kind of third-party, trusted, card company-like escrow server
- zupreme 14y agoWhy not use Stripe? While TeddyPass is not a crowdfunding app, it is a recurring billing app and Stripe works well for it. So why not, for every pledge, obtain a Stripe token with the project funding date as the one and only rebill date? If the project does not fund then you cancel the "subscription". Again, we're not in the crowdfunding business but that's how I would do it if I were in your position.
- irollboozers 14y agoShhhh... you're not supposed to tell anyone...
- irollboozers 14y agoWow, so no one in this thread chimed in on the fact that maybe it wasn't Amazon's Payment Services that pulled the plug, but in fact the publishing companies?
- ckchen 14y agoFrom the desk of a WePay API employee: 1. We have a 24 hour approval process and we support rewards based crowdfunding companies; equity is wait and see 2. Numerous companies already use us so our api is battle tested and offers all standard features (all or nothing, real time charges, split payments...etc) 3. Smooth and quick onboarding process for fundraisers using an OAuth 2.0 flow. No disjointed flow or long application process for your fundraisers. They can accept payment directly in their WePay account. 4. No redirect on checkout. Pick from an iframe or tokenization. White label experience for your donors. 5. Our api was built for marketplace/platforms.
- gluejar 14y agoThe much longer and slightly funnier version is up on my personal blog: http://go-to-hellman.blogspot.com/2012/08/why-im-not-mad-at-amazon.html http://go-to-hellman.blogspot.com/2012/08/why-im-not-mad-at-...