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Yeah, the real solution is not vigilante activism, but tougher financial regulation with actual penalties under the law for screwing people around (and over).

Yeah, the real solution is not vigilante activism, but tougher financial regulation with actual penalties under the law for screwing people around (and over). It's much much harder for a bank to freeze assets.

dangrossman 13y ago
> It's much much harder for a bank to freeze assets. Not really. Banks establish reserve holds (i.e. you keep processing credit cards but the money is not reaching your bank account) all the time. They also freeze accounts and keep that held money for 180 days, all the time. None of it requires any exceptional circumstance nor is there any way for you to dispute the decision to establish a reserve or to close your account and hold the funds. Don't confuse savings accounts with merchant accounts; they are not treated the same even at banks. I speak from first-hand experience. I had to continue providing service to customers while their payments for that service were held for 6 months by the largest private bank in the country (FNBO, $17 bn in assets). That was an interesting time cashflow-wise when bootstrapping one of my earlier businesses. It was all triggered by a single incident of fraud where someone made 6 separate purchases through my website, which were all charged back at the same time. As a relatively low-volume merchant at the time, that made me look like a huge risk the bank wasn't willing to work with anymore. I've considered fraud screening from the start of everything I've worked on since.
- foobarbazqux 13y ago
  You're right, I was confusing savings accounts with merchant accounts. So given your experience, why do you think people make so much noise about PayPal if this kind of behavior is par for the course with banks?
  - milesskorpen 13y ago
    Probably because the people dealing with PayPal aren't used to dealing with merchant accounts, and are used to dealing with savings accounts.
contingencies 13y ago
According to Wikipedia, between 2003 to 2006 the FBI sent out >200 National Security Letters (secret information demands) per day. In addition, Anti Money Laundering (AML) compliance requires significant expense, process, staff and training investment from financial service providers. Know Your Customer (KYC) rules also increase the overheads. Any large business such as PayPal is essentially between a rock and a hard place: eiter allow government spying and perform proactive account seizures and lock-outs which create these issues, or wind up targeted for removal and find partner relationships pressured away and severed. The problem is US dot gov and their existing 'regulation'. While I agree that better consumer-protection laws in financial services might help here, ultimately the government's right hand will cut off their left to maintain spy and seizure capabilities. As Schneier said: we're the technologists, we made the problems, and we have to fix things.
acchow 13y ago
Paypal is complying with laws in a way that is often hostile to users. The answer is not more regulation. The free market will kick in here and decide if Paypal's service is no longer acceptable.
- CamperBob2 13y ago
  No free market exists in this space, unless you count BitCoin. And I'm sure that is being "addressed."

dangrossman 13y ago

> It's much much harder for a bank to freeze assets. Not really. Banks establish reserve holds (i.e. you keep processing credit cards but the money is not reaching your bank account) all the time. They also freeze accounts and keep that held money for 180 days, all the time. None of it requires any exceptional circumstance nor is there any way for you to dispute the decision to establish a reserve or to close your account and hold the funds. Don't confuse savings accounts with merchant accounts; they are not treated the same even at banks. I speak from first-hand experience. I had to continue providing service to customers while their payments for that service were held for 6 months by the largest private bank in the country (FNBO, $17 bn in assets). That was an interesting time cashflow-wise when bootstrapping one of my earlier businesses. It was all triggered by a single incident of fraud where someone made 6 separate purchases through my website, which were all charged back at the same time. As a relatively low-volume merchant at the time, that made me look like a huge risk the bank wasn't willing to work with anymore. I've considered fraud screening from the start of everything I've worked on since.

foobarbazqux 13y ago
You're right, I was confusing savings accounts with merchant accounts. So given your experience, why do you think people make so much noise about PayPal if this kind of behavior is par for the course with banks?
- milesskorpen 13y ago
  Probably because the people dealing with PayPal aren't used to dealing with merchant accounts, and are used to dealing with savings accounts.

contingencies 13y ago

According to Wikipedia, between 2003 to 2006 the FBI sent out >200 National Security Letters (secret information demands) per day. In addition, Anti Money Laundering (AML) compliance requires significant expense, process, staff and training investment from financial service providers. Know Your Customer (KYC) rules also increase the overheads. Any large business such as PayPal is essentially between a rock and a hard place: eiter allow government spying and perform proactive account seizures and lock-outs which create these issues, or wind up targeted for removal and find partner relationships pressured away and severed. The problem is US dot gov and their existing 'regulation'. While I agree that better consumer-protection laws in financial services might help here, ultimately the government's right hand will cut off their left to maintain spy and seizure capabilities. As Schneier said: we're the technologists, we made the problems, and we have to fix things.

acchow 13y ago

Paypal is complying with laws in a way that is often hostile to users. The answer is not more regulation. The free market will kick in here and decide if Paypal's service is no longer acceptable.

CamperBob2 13y ago
No free market exists in this space, unless you count BitCoin. And I'm sure that is being "addressed."