[HN Gopher] PayPal faces lawsuit for freezing customer accounts ...
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PayPal faces lawsuit for freezing customer accounts and funds
Author : I_am_tiberius
Score : 629 points
Date : 2022-01-14 12:08 UTC (10 hours ago)
(HTM) web link (www.engadget.com)
(TXT) w3m dump (www.engadget.com)
| rpaddock wrote:
| They did this to my late wife's account. They demanded that I
| prove she was dead, as if I didn't already have enough grief. See
| the documentary Pain Warriors about that saga.
|
| How do I sign up to be part of this suite?
| navbaker wrote:
| Did they ask for something more than a death certificate or
| something similar? That should have been enough, right?
| datavirtue wrote:
| Why doesn't this fall under the CFPB? The money is held in a bank
| account which ultimately belongs to the PayPal customer.
|
| When I was in the prepaid card industry we held money for people
| in our bank account just like PayPal does. The bank held us to
| account for each of our customers. We accidentally prevented some
| people accessing thier finds for a few days due to a software
| glitch and had our asses handed to us. As we should have.
|
| One lady was prevented from accessing her $200 for a few days and
| her lawyer extracted our maximum arbitration amount of $8000 from
| us.
| dragonwriter wrote:
| > Why doesn't this fall under the CFPB?
|
| Who said it wouldn't? Government action to vindicate consumer
| rights is generally complaint-based and not exclusive of
| private rights of action, so a private class action isn't
| evidence that a thing is not also within the enforcement
| jurisdiction of a government agency.
| anm89 wrote:
| Hard for me to understanding how this is only happening now. It
| feels like this one has been ripe for 5-10 years.
| YXNjaGVyZWdlbgo wrote:
| I went to visit the US and transferred just 500 Dollars to a
| friend for our shared Airbnb. The account got suspended because
| of "unusual activities" I called them and told them it was myself
| transferring funds and it still took them two weeks to reinstate
| the account...
| lkxijlewlf wrote:
| I had a CC lock my account once when I went on a trip to
| several places in a quick amount of time. I called them and
| worked it out. Their algos thought it was someone had stolen my
| card.
|
| Now, before I go on vacation or make a large purchase, I call
| them and tell them what I'm going to do. I've never had a
| problem since doing that and it's a very quick call, actually.
|
| I wonder if anyone has tried same with PayPal.
| consp wrote:
| With my bank I explicitly have to announce in advance if I am
| going to use my card abroad and can enter specific dates and
| times online. It's quite easy to do. You can also call if you
| forgot but then you will have to go online and add days if
| you want to use it for more than one/a few if I recall
| correctly.
| Cthulhu_ wrote:
| I mean that's fair enough because that (payment methods being
| stolen) happens frequently enough, but it should be just as
| easy to clear it up again.
|
| Over here, banks have set things up so that by default you
| can't get money from foreign ATMs - you have to activate that
| first. Because lots of people got their bank card stolen and
| PIN code skimmed, only for the card to pop up again in
| eastern Europe or wherever to drain the account.
| nitn wrote:
| These "unusual activity" detecting algos are a menace. If I
| use a VPN to access my account, blocked.
|
| Had this issue with Paypal & Digitalocean. Reddit shadowbans
| accounts made with VPN.
| sstephant wrote:
| At least the 'unusual activity' should block the
| transaction not ban the account and you get notified on the
| spot.
| thewebcount wrote:
| I have had a situation where I called my bank to let them
| know I was traveling overseas so this wouldn't happen, and it
| still happened. It's utterly ridiculous.
| FireBeyond wrote:
| I paid my PayPal credit card with my PayPal balance (which was
| "cleared funds"), $700 or so, and that triggered a three week
| hold on both my card and my balance.
| datavirtue wrote:
| They hold people's money a lot. Very profitable as they are
| essentially free overnight loans. Fuck PayPal. Anyone who
| does business with them is captive.
| politician wrote:
| When a bank places a hold on a transaction or account for
| compliance review, the law state that those funds are to be
| held in an interest-bearing escrow account to be returned
| to the owner when the hold is lifted.
|
| It's illegal for PayPal to treat held funds as an overnight
| loan-- that's a gross misunderstanding of what is going on.
| iwasakabukiman wrote:
| As many others have pointed out, PayPal goes out of their
| way to make sure they are _not_ a bank.
| politician wrote:
| It doesn't matter. If they aren't holding your deposits
| then the underlying bank would place the hold and they
| must follow the banking regulations.
|
| If PayPal isn't holding deposits and doesn't forward the
| hold to the underlying bank, then go get your funds from
| the underlying bank or sue them.
|
| FinTech is a stack of companies operating as veneers on
| the underlying, heavily regulated banks.
| oauea wrote:
| Good luck with that. Any links to stories of people who
| have successfully done that?
| politician wrote:
| https://www.paypalobjects.com/marketing/ua/pdf/US/en/sync
| hro...
|
| Look through the disclosures and agreements you signed on
| account opening and find out which banks PayPal is using
| for your account. The linked one above is for a deposit
| account at Synchrony Bank.
| oauea wrote:
| Never signed anything.
| politician wrote:
| Do you have a PayPal account? If so, I assure you that
| you signed an agreement. The complaint in this class
| action lawsuit says that the agreement is a 65-page PDF.
| You would likely have signed it electronically by
| clicking an "I agree" checkbox.
| jjoonathan wrote:
| They sure didn't give me a penny more when they froze
| _my_ account.
| tootahe45 wrote:
| Governments need to ban 'shotgun KYC', which is where they let
| you put funds in the account before they freeze it and make you
| do KYC, rather than making you do KYC directly on sign-up. You're
| effectively forced to give away your info or lose the funds.
| Sites like Paypal don't want this to happen because registrations
| would drop off majorly if you had to KYC on sign up.
| Sargos wrote:
| Governments encourage and are the ones pushing shotgun KYC so I
| would maybe phrase your comment more like "Citizens need to
| rebel against 'shotgun KYC'.
| bastardoperator wrote:
| This has been happening to folks for ages. I'm looking forward to
| understanding why Paypal thinks it can steal from it's customers
| without facing repercussions. I wouldn't do anything serious with
| Paypal for this exact reason.
| kragen wrote:
| Because they've been doing it since last millennium, and the
| competing services that didn't steal from their customers went
| bankrupt because of fraud and reversed payments.
| umrashrf wrote:
| It sounds like these lawsuits are used to bring the confidence
| back into the company (PayPal) to keep their unicorn status so US
| government can benefit from this. I might be paranoid or just
| crazy to think like this.
| nerbert wrote:
| Surprised it hasn't happened before.
| throwaway2474 wrote:
| In my (quite extensive) experience with the company, one should
| only ever use PayPal as an extremely temporary means to accept
| payment for clients who can't pay any other way, and then
| _immediately_ withdraw the funds to a real bank account.
|
| The company absolutely cannot be trusted, and will do everything
| in their power to take your money and not give it back. I do not
| know a single person who uses PayPal regularly for a business who
| doesn't absolutely hate the company, because they do this type of
| thing so regularly.
|
| Recently, when you log into a business account, there is a giant
| alert that looks like an important warning, that actually says
| you're "eligible for a business loan". You have to dismiss it
| every single time with the little non-default no thankyou button.
| And then beg them to give you access to your own money, because
| apparently _you_ can't be trusted.
|
| I for one would love to see a lawsuit like this land.
| [deleted]
| danlugo92 wrote:
| > and then immediately withdraw the funds to a real bank
| account.
|
| If you link your bank account, you're at risk of them pulling
| funds from your bank account due to [reasons].
|
| There's been such cases.
| tehwebguy wrote:
| I would add that folks should have a bank account connected to
| PayPal (etc) that is separate from your day to day accounts.
|
| Not only will it localize any problems[0] but it will limit
| snooping[1].
|
| [0] If PayPal wrongly deducts money from an account that has
| basically no funds in it you'll be able to deal with the
| problem without having your actual funds locked up.
|
| [1] Seems like basically every non-bank is switching from ACH
| deposit verification to a service called Plaid that requires
| your bank username & password, which then screen scrapes your
| financial details. There's no reason to hand over your real
| life financial data when you can just use a dummy account.
| RHSeeger wrote:
| > Seems like basically every non-bank is switching from ACH
| deposit verification to a service called Plaid that requires
| your bank username & password,
|
| Why would anyone EVER do this. That has to be the most
| insecure and possibly catastrophic possible way to verify
| information.
| mnd999 wrote:
| Handing over your bank username and password to anyone
| would be a breach of the banks terms. So no, never do this.
| jrochkind1 wrote:
| I've been wondering about this as more and more services
| are asking me to do it via this same "Plaid" service. (I
| don't do it. I can't use some services. Cashapp _mobile_
| didn 't want to let me withdraw cash without it; I
| figured out a way to on cashapp desktop).
|
| Plaid is a company/service literally built around asking
| people to supply their bank username and password to a
| third party. (who then stores them (in cleartext, right?)
| for continued use!) I find it pretty astonishing.
|
| (It's also literally training users to be phished, no?)
|
| I'd be curious to see an article about it, with some
| details and context.
| RHSeeger wrote:
| Here's a StackExchange discussion on it, and what a
| nightmare it is
| https://security.stackexchange.com/questions/198005/is-
| plaid...
|
| I see a link to a lawsuit against Plaid in that
| discussion, but it's from 2020.
|
| Interestingly, this page has someone claiming it's
| possible to register on Plain using ACH info
| https://teslamotorsclub.com/tmc/threads/for-those-
| hesitant-t...
| monkeybutton wrote:
| >service called Plaid that requires your bank username &
| password, which then screen scrapes your financial details
|
| That is hefty accusation. Wouldn't doing that be illegal?
|
| Edit: Looks like they have an entire controversies section on
| their wiki page and banks are suing them over said sketchy
| practices. Classy stuff.
| TheNewsIsHere wrote:
| Not if it's not otherwise illegal and disclosed in the
| terms you agree to. As part of a settlement they now have a
| "privacy-centric" portal so you can manage what they know
| about you, ostensibly. But it's difficult to find, and I
| would wager that most people who use the service don't
| understand what they're getting into.
|
| Everyone seems to use it now, and it's increasingly
| difficult to link accounts using ACH micro deposits because
| Plaid can be configured to disallow manual linking if the
| routing number corresponds to a bank they support logging
| into.
|
| I simply don't do business with companies that use Plaid in
| that manner, it's a hard stop for me. My bank's customer
| agreement specifically prohibits disclosing user
| credentials to any other party, and when support is
| confronted by that, they typically have no idea what to do
| with that other than say "Plaid is secure".
| lief79 wrote:
| I've never heard of this before, who's everyone? Which
| country are you talking about?
| TheNewsIsHere wrote:
| I'm not sure if they're in other countries, but I'm
| referring to the US. As for who uses them: off the top of
| my head, for well known services: PayPal, Coinbase, YNAB,
| Truebill, Acorns, Venmo, Stripe has an integration, I
| think Mint?, the list goes on.
|
| More often than not I encounter them when trying to link
| bank accounts to anything now, except with other banks.
|
| They have a history of imitating bank login screens and
| not disclosing that they're not your bank. They settled a
| few lawsuits about that in the past few years and are a
| little more upfront, but I wouldn't expect the average
| user to reasonably understand the situation.
|
| Visa tried to acquire them back in 2020 but dropped the
| plan.
| diggernet wrote:
| Visa probably got a look at their infrastructure, and saw
| liabilities that could expand to consume all of Visa.
| patio11 wrote:
| Prior to going to work for a direct competitor (which I was
| also a heavy user of), I fed my family out of a Paypal account
| for approximately 10 years, and had good experiences
| throughout. Total processed through Paypal on order of $X00,000
| mostly in $30 chunks; I don't own the business anymore so can't
| SQL the breakdown by processor.
|
| The one time my account was limited was after moving $3k
| immediately following a new apartment move in Japan. Total time
| to resolution: 2 minutes after calling them.
|
| There, now you know one.
| effingwewt wrote:
| two good anecdotes vs over a decade of non-stop abusive
| practices.
|
| 2 white sand grains on a black beach count for very little.
| emaginniss wrote:
| Honestly, it is almost certainly the opposite. The vast
| majority of people use PayPal on a regular basis to pay for
| things they buy online without handing over a CC number.
| Those people generally have a perfectly fine experience and
| they never post about it. When people do post about their
| experience with a company, they are far more likely to post
| negative experiences than positive.
|
| Putting that aside, I think PayPal should absolutely get
| reamed for this behavior. Even if they're only fucking over
| one out of 100k customers, it is still completely
| unacceptable and I hope they suffer for it.
| effingwewt wrote:
| I don't believe PP taking money is the outlier here. I
| know far too many people in real life who have had funds
| seized and never returned. I imagine it's happened to
| more people I know but who haven't spoken to me about it.
| I have had PP close one of my early accounts and keep the
| money.
|
| As much as I hate Visa/MC/Amex et al they have never just
| stolen my money, or even left me holding the bag if
| someone got ahold of a number (as opposed to banks which
| have always left me hanging a la PP).
| PaulDavisThe1st wrote:
| Very similar position here. $X00,000 for 10 years or so,
| payments generally in the US$1 - US$50 range. No specific
| complaints other can a couple of API breakdowns over the
| course of a decade.
|
| So now they know two.
| acomjean wrote:
| "using PayPal to buy and sell clothing on eBay, to exchange money
| for a poker league she owns and for a non-profit that helps women
| with various needs. "
|
| I can see one of those things causing an issue (poker league)
|
| We use PayPal for membership fees for our nonprofit. This year
| they're limiting us to 2000 a month transfer out which is
| annoying to us, but we're small enough to get by.
| Cederfjard wrote:
| So they're preventing you from accessing your own money?
| acomjean wrote:
| For a time they are limiting our ability to transfer money
| out. We talked to support so we'll see what happens . We only
| open registration once a year for a month. With our event
| being canceled (pandemic) we did have a lot of refunds. But
| we've been using them 10 years prior without issue.
| Cthulhu_ wrote:
| Well if that's in their T's and C's that's fine, to a point,
| but they can't just silently close an account and take money
| from people. They need to return the money - it's not their job
| to play police and judge and seize illicit gains, a court has
| to decide whether it IS illicit and what happens to it first -
| and to give an explanation as to why they no longer want to do
| business with them.
|
| I mean not wanting to do business is every business and
| person's right. But taking someone else's money without a court
| order or mandate is theft.
| salawat wrote:
| You should look into OFAC. They'll freeze your account for
| withdrawals, but not deposits, and no one is allowed to tell
| you it was an OFAC hit.
|
| Make no mistake, financial service in the United States is
| heavily tilted against the consumer, and your service
| provider should be considered an actively hostile entity.
| CaptainZapp wrote:
| If they don't like that their service is used for poker
| activities they are free to dump the customer.
|
| What they are not free to do is to freeze his account and just
| keep his money.
| tw04 wrote:
| >What they are not free to do is to freeze his account and
| just keep his money.
|
| If the poker league is being run illegally, not only are they
| free to freeze it, they are required to.
| kevingadd wrote:
| Are they required to steal money that was generated by a
| crime instead of handing that money over to law
| enforcement? How does that make sense?
| mikro2nd wrote:
| Illegally in what jurisdiction? Paypal's? This client's?
| These details matter.
| [deleted]
| ryandrake wrote:
| It's not PayPal's job to investigate whether a particular
| game of poker is legal or illegal. That's why they just ban
| all transactions peripheral to gambling. If you're going to
| use PayPal for poker night, just don't mention that word
| anywhere in your use of the application.
|
| A lot of PayPal's complex enforcement algorithms seem to be
| merely word matches. Someone I know as a joke said "Kim
| Jong Un" in the message when he paid for his half of dinner
| and got his account insta-locked for weeks just like that.
| tzs wrote:
| For two of the three cases mentioned, I'd tentatively agree,
| but in that particular user's case they probably are free to
| keep the money for several months to a year after they freeze
| the account because she was running a business in a field
| that has a high chargeback risk.
|
| _Someone_ has to pay for the high level of consumer
| protection that people who pay with credit cards receive.
| Every entity that is in the chain between the issuer of the
| credit card user and the merchant that receives the payment
| arranges it so that responsibility of this falls on someone
| farther down the chain than them. There is no one farther
| down the chain that the merchant, so the merchant ends up
| being the one who has to pay for chargebacks.
|
| There is nothing further down the chain than the merchant so
| it ends up on them. But a merchant that ends up incurring a
| lot of chargebacks often also is a merchant that ends up not
| having the money to pay for those chargebacks, and in that
| case the entity that the merchant was dealing with for
| accepting payments ends up having to pay.
|
| Thus that entity will almost always have in its contract with
| the merchant that they can keep some of the funds the
| merchant earns in reserve to cover chargebacks. I doubt any
| court will find such terms invalid. They have a legitimate
| purpose of risk mitigation, the companies will have the data
| and actuarial analysis to show that the amounts held in
| reserve are reasonable for the level risk, and the ultimate
| purpose is to support the strong consumer protections that
| credit cards provide.
| deathanatos wrote:
| > _Someone has to pay for the high level of consumer
| protection that people who pay with credit cards receive._
|
| I, the consumer, does, every step of the way. If I
| understand their fee structure, Paypal takes about 3.5% of
| any transaction I make with them. (They show this to the
| _merchant_ , but any merchant is going to have to consider
| this part of their costs. Some just directly pass it back
| to the customer. The point is: they make money from the
| good transactions, and should plan appropriately to deal
| with the bad ones. And there is CC & interchange fees, too,
| at those levels...)
| [deleted]
| leviathant wrote:
| Every time I've read about someone making a fuss about PayPal
| freezing their account, as you get into the details of their
| business, it quickly becomes apparent that knowingly or
| otherwise, they're doing something risky enough that it
| triggered something related to terms and conditions that they
| didn't bother to read. I realize that's just my anecdote, but
| when you're working with money, there's a lot of boring reading
| you should do. Quickly becomes apparent why that opportunity to
| fill a seemingly obvious hole in a market isn't the opportunity
| you thought it was.
| anovikov wrote:
| Good answer to people who ask what is the point of crypto...
| gossamer wrote:
| Yay! It is about time.
| basher wrote:
| PayPal refuses to let heirs access, or even know if there is a
| balance on accounts after people die, regardless of death
| certificates. I wonder how much money is being held by this
| tactic?
| salusinarduis wrote:
| I don't have anything to add other than to say Paypal stole $1800
| from me this way.
| carlsborg wrote:
| Bitcoin (and others) solve this.
| johnboiles wrote:
| Great to see this! Not to the same scale as seizure but using
| buymeacoffee.com for OSS donations PayPal would lock my account
| every month or two until I uploaded a bunch of documents (which
| were always the same docs each time). Each time it was a little
| uncertain if I'd be able to get my money out or not. Meanwhile
| PayPal would happily continue to receive money in my name that I
| didn't have access to.
| mraudiobook_com wrote:
| ddtaylor wrote:
| PayPal closed an account of mine after 20 years without
| explaining anything because I logged in one day while still
| connected to my VPN.
| ComodoHacker wrote:
| We should legitimize using VPN like we legitimized and then
| adopted e2e encryption.
| vmception wrote:
| Apple iCloud Private Relay is attempting to do that
| ddtaylor wrote:
| I'm all for it, but my overall experience so far has been
| that if something happens to a small percentage of users -
| like 1% or less - then overall it won't gain traction or
| matter much. I am interested if this class action gets an
| support because I will for sure join it out of spite for how
| poorly they handled the situation and how they kept my money
| locked up for 6 months.
| Mezzie wrote:
| Depends on which 1% and how good that number is at
| mobilizing.
|
| I promise you'd hear a ton about anything that only
| affected trans or gay people, for example, or any issue
| that only impacted the top 1% of customers based on money
| spent.
|
| If we found a population with a social microphone in that
| 1%, then it can gain traction.
| joejohns wrote:
| I resorted to using another payment gateway to prevent freezing
| accounts and funds; this is great news.
| creshal wrote:
| I've been battling dumb Paypal problems both on the end user and
| the merchant side so often that I'll never again use it if at all
| possible, especially in shops. It's just not worth the time and
| effort to try and trick them into doing their job.
| mdavis6890 wrote:
| This is devastating to those users affected by this, but I
| believe that the blame doesn't lie solely with PayPal.
| Unfortunately there are many laws they must comply with that
| delegate enforcement to private companies like PayPal rather than
| where is belongs - the government.
|
| From the article: PayPal allegedly sent his wife a letter that
| says she "violated PayPal's User Agreement and Acceptable Use
| Policy (AUP) by accepting payments for the sale of injectable
| fillers not approved by the FDA."
|
| If PayPal DOESN'T freeze the account and hold the money, they can
| get in far larger trouble with the government. Why should PayPal
| be involved in this enforcement at all? If the FDA doesn't like
| what this seller is doing, let the FDA themselves go after the
| seller and leave PayPal out of it. But the law doesn't work that
| way.
|
| I had $10k's in an account with BofA that was frozen and nearly
| killed the closing on a house I was buying at the time. Because
| they had a mailbox address on file for me, rather than my home
| address. It was horrible for me, but that's what the says that
| they had to do, and if they didn't the could end up in trouble
| with the feds facing huge penalties.
|
| Let's try to empathize with all parties and think rationally
| about the incentives and constraints that they face.
| kweks wrote:
| I have (almost) no issue with accounts being frozen. At the end
| of the day, it's a private company, they can chose if they want
| to do business with you or not. Likewise, holding for 180 days
| is aligned with most credit card chargeback limits, so they
| protect themselves. (There are other ways to go about this,
| which most other processors handle in a frictionless fashion,
| ie Stripe).
|
| Having an account frozen is more than annoying, but it's their
| choice.
|
| However seizing (stealing) funds is completely unacceptable, no
| matter how it's dressed up. Hell, even if they gave seized
| funds to charity it'd be slightly more palatable than lining
| their pockets from proceeds they deemed as "risky".
| shkkmo wrote:
| > It was horrible for me, but that's what the says that they
| had to do, and if they didn't the could end up in trouble with
| the feds facing huge penalties.
|
| Except that most likely isn't true. The law does not require
| banks to have your home address. The law does require banks to
| verify your identity, but there are many ways to do this
| without requiring a "home address".
|
| The "home address" rule is self-imposed by banks and is yet
| another way that our country makes life unnecessarily difficult
| for homeless or itinerant people.
|
| Edit: This is regarding USA law, and I realized I am not where
| you reside. I assumed USA because of the FDA mention but I
| realized that was referencing the article so may not be a good
| clue.
| throw10920 wrote:
| > think rationally about the incentives and constraints that
| they face
|
| The incentives never justify unethical behavior, ever.
| stronglikedan wrote:
| No sympathy here. They've been steali..err..seizing funds for
| decades, and dodging the lawsuits by leveraging their clout.
| Sure, maybe they have some regulations to follow, but they
| willfully choose to ignore the folks they're stealing from,
| instead of helping them to understand the process of getting
| their stolen money back, and prevent money from being stolen
| from them in the future. I hope they're squeezed hard on this
| one.
| logicalmonster wrote:
| The thing that's surprising to me isn't that big corporations
| will do their damndest to rob people blind, it's that within
| minutes/hours/days after reading this thread, there will be a
| horde of people who read this article and smugly decry crypto
| saying there's no use case or purpose for it.
| finiteseries wrote:
| Seizing funds without explanation or restitution is a well
| known use case for cryptocurrencies at this point.
| miohtama wrote:
| The problem is that usually anti-money laundering laws give the
| operator and the compliance officer an infinite protection even
| on a suspected money laundering. As long as the compliance
| process is followed, no matter how stupid the process is, there
| is no legal basis to go after account freezer and the company is
| protected. Thus, the company has no incentive to be reasonable
| with account freezes.
| johnebgd wrote:
| PayPal has worked hard to not be a "bank" so they are long
| overdue for being sued about this. I know countless vendors who
| have had their funds stolen.
| [deleted]
| [deleted]
| winter_blue wrote:
| It's really and outrageous that this open stealing of
| customers' _hard-earned cash_ for minor perceived user
| agreement violations is so freaking rampant, with PayPal. I
| wouldn 't be surprised if it turned out that this literally
| was a strategy cooked up by the higher-ups at PayPal to buff
| up the company's gross profits.
| rdtsc wrote:
| I was thinking of that too. It's gotta be quite profitable
| for them.
|
| It's probably one of those things which is never explicitly
| written down. Like, the CEO says 'we have to double down on
| our "fraud" account seizures' and they smile when they say
| "fraud".
|
| Or simply those that understand and play along get promoted
| and those that start asking questions are pushed out due to
| "restructuring".
| manbart wrote:
| Freezing the account or booting the user from the service is
| one thing, but seizing the money as a result without any due
| process seems pretty messed up IMO
| notch656a wrote:
| AML/KYC laws are a travesty to a free society. Wealth transfer
| shouldn't be illegal. Prosecute the underlying crimes and let
| the judicial process seize proceeds of crime after due process.
| In the meantime, various electronic systems continue to provide
| adequate avenues for those seeking minimized exposure to
| KYC/AML.
| matheusmoreira wrote:
| AML/KYC is just the financial version of global mass
| surveillance. They're bad for society and freedom for exactly
| the same reasons. I truly hope that some cryptocurrency like
| Monero will succeed.
| nyolfen wrote:
| ZKs, bulletproofs etc are going to be working their way
| into btc and eth in the next year or two and i would expect
| to be ported to competitors. it will be impossible to
| prevent strong anonymity in transactions on any of the
| major chains in short order. even LND offers very good
| privacy advantages.
| matheusmoreira wrote:
| Yeah, that's totally cool. I'm doubtful that something
| like this will ever make it into Bitcoin but I'm really
| hopeful for what Ethereum could achieve in the long term.
| If these solutions prove to be better, I hope Monero will
| adopt them as well.
| nyolfen wrote:
| yes, i didn't mean this in a way that was dismissive of
| monero, only trying to convey my excitement about privacy
| tech becoming an intrinsic part of crypto as a whole
| mschuster91 wrote:
| > Prosecute the underlying crimes and let the judicial
| process seize proceeds of crime after due process.
|
| At least a basic identity check (that's the "KYC" part) must
| be part of bank account onboarding for that to work though.
| Otherwise, how would a government be able to seize the bank
| account of a convicted criminal if they had no way to tie the
| bank account to a criminal?
|
| As for the anti money laundering regulations: these are a
| _very_ fine line to balance. Personally, I 'd like for these
| to go away the earlier the better since I agree with you that
| the potential for dragnet-style abuse is way too high, but on
| the other hand, terrorism financing _is_ a present and clear
| danger worldwide.
| notch656a wrote:
| I'm supposed to give up my anonymity because of an entirely
| different person's crime? No thanks, I'm not a criminal.
| I'll keep using monero or whatever other systems limit my
| exposure to these unreasonable search without probable
| cause/warrant of my identity. I believe KYC is violation of
| 4th amendment, and that the government's ability to seize
| proceeds of crime is a lower priority than civil rights.
| boring_twenties wrote:
| On top of all that (with which I fully agree), it's not even
| effective, in any plausible sense of that word.
|
| If this analysis[1] is to be believed, AML laws recover less
| than 1% of estimated laundered funds, at an explicit cost at
| least an order of magnitude higher than what is actually
| recovered.
|
| That's not even including the implicit costs, e.g. when
| innocent people get caught up and lose their accounts or even
| their funds.
|
| Travesty doesn't even begin to cover it.
|
| [1] https://www.ledgerinsights.com/anti-money-laundering-has-
| les...
| FabHK wrote:
| > an explicit cost at least an order of magnitude higher
| than what is actually recovered.
|
| The goal is not to make money with AML laws, but to deter
| and prosecute crime (which has huge externalities itself).
| Is it effective at that? Your comment doesn't address that.
| edoceo wrote:
| If it's only capturing 1% of the dirty money it's not
| effective at deterring nor is it an effective part of the
| prosecution.
| nulbyte wrote:
| That poses the potential problem of circular reasoning.
| How do we arrive at this estimate of 1%? Maybe it is more
| than 1% of the actual value because the estimate is
| wrong.
| mistrial9 wrote:
| agree with the overall conclusion, have to ask for some
| reason in the expression of it. That is, there are legitimate
| reasons to Know Your Customer, yet, those the least in
| control are unendingly required to jump through ever more
| hoops. It is easier to exert control on the defenseless, and
| they do it. Meanwhile, professional money handlers are
| seriously considering negative interest rates, since there is
| just _that much money_ being moved around. A requirement for
| cell phone numbers closes the connection graph, and a
| reporting requirement of "every transaction USD$600 or
| greater" (less than one month rent in most places), to my
| mind, is the straw that breaks the camels back.
| notch656a wrote:
| I consider KYC violation of 4A. It's an unreasonable
| compulsory search to ascertain my identity devoid of
| probable cause or warrant of a crime.
| Seattle3503 wrote:
| KYC laws are a tragedy that perpetuate the unranked I the
| digital age. without an ID you don't exist to the global
| financial system. Nevermind that some countries are too poor
| or lack the infrastructure to provide all of their citizens
| with IDs. Not to mention poor citizens in wealthy countries
| who don't have ID.
| lotsofpulp wrote:
| I agree, which means electronic money transfer should be a
| utility offered by the federal government.
| notch656a wrote:
| That reminds me on how ironically the shipping company with
| lowest exposure to having your package snooped on is
| probably USPS. Since they are bound to 4th amendment,
| generally probable cause is necessary to open your package.
| Covzire wrote:
| I hate paypal's shady business practices almost as much as I hate
| facebook.
| sys_64738 wrote:
| Paypal threatened to cancel my account because I closed the
| linked bank account and canceled the linked credit card. OK, go
| ahead.
| stevespang wrote:
| kingcharles wrote:
| If you're a big enough customer they give you your own personal
| account manager and he'll make sure your account stays open and
| running whatever happens. I had millions coming through PayPal
| when I was running a private tracker and I could speed dial our
| PayPal man if I needed.
| JRGC1 wrote:
| Good
| vmception wrote:
| Use P e r m i s s i o n l e s s systems
|
| It's been 13 years guys. They use way less energy and cause way
| less carbon emissions than these behemoths.
| kweks wrote:
| We are Europe's largest site for RFID and pentesting hardware
| (lab401.com)
|
| We are in the exactly the same situation. PayPal has conducted a
| personalised, manually executed war of attrition against our
| company and shareholders.
|
| Eight months ago, PayPal froze our account, seizing 15kEU. They
| refused to give any justification for the action, despite
| discussions with C-level staff.
|
| After the 180-day "withholding" period, we were informed that
| they would not release the funds, for undisclosed reasons.
|
| We immediately engaged legal counsel. PayPal refused to interact
| with our counsel, and so a C&D was issued. Within one week of the
| C&D, PayPal did the following:
|
| - Froze the account of our sister company (in Hong Kong), seizing
| 35k EU
|
| - Froze the personal accounts of all shareholders of the EU and
| HK corps (~1,5k EU)
|
| - Froze the business accounts of all shareholders by name search
| (different corporate entities, different businesses) - 5kEU
|
| - Froze the business accounts that the shareholders held (again,
| different corps, different businesses) - another 5kEU
|
| Our policy is to empty accounts on the 28th of each month. PayPal
| froze and seized funds in all accounts on the 27th of the month.
| Based on the time-stamps of the emails, and the order in which
| the accounts we closed, it's obvious that it was a targeted,
| manual process (2 - 3 minutes between closing each personal
| account, 15 minutes to find the next company account, 3 - 5 to
| close the personal accounts, and then 10 - 15 minutes for the
| next company accounts).
|
| We engaged secondary legal counsel in Luxembourg (PayPal's EU
| headquarters). Again, PayPal refused to disclose any reason,
| justification or proof, replying with typo-ridden copy-pasted
| document from a low-level legal peon, concluding that no funds
| would be returned, the businesses and personal accounts were
| deemed 'illegal', and as such, PayPal would confiscate all funds.
|
| All KYC was performed. All accounts had been "audited" by PayPal
| (when you reach the 5k, 50k, 100k+ processing tiers).
|
| Needless to say, operationally - we have shipped 50kEU of
| hardware to customers, and face losses of the hardware, and costs
| of replacing stock. I agree with the standpoint: this is purely
| racketeering - an online equivalent of Civil Forfeiture.
|
| For extra context, as the points have been raised in other
| comments:
|
| - In a perfect world, no merchant would use PayPal. In our
| experiments, disabling PayPal cuts revenue by ~30% in our
| industries.
|
| - Pentesting products could include illegal products: keyloggers,
| etc. We sell no such products for obvious legal and compliance
| reasons. All the products we sell are sold by countless other
| resellers that use PayPal. We have processed Visa/MC with Stripe
| for over 6 years with no problems (legal, chargeback, etc)
|
| - We empty accounts regularly, to minimize fallout. However, you
| have to keep a healthy minimum in accounts when dealing with
| large volume, or accounts get limited automatically (presumably
| to avoid merchants pulling cash to avoid chargebacks / refunds)
|
| - We have already 'invested' over 20k in legal fees. I justify
| this cost in (perhaps falsely) believing that we could establish
| some case law that could benefit other merchants.
|
| It's unfortunate that we cannot join the class action in the US,
| or we'd be into it. With that said, if anyone merchant in the EU
| has similar issues, it could be interesting to investigate if a
| similar action can be mounted in the EU. Feel free to reach out:
| simon at sn dot cm (not a typo).
| throw10920 wrote:
| > - Froze the business accounts of all shareholders by name
| search (different corporate entities, different businesses) -
| 5kEU
|
| > - Froze the business accounts that the shareholders held
| (again, different corps, different businesses) - another 5kEU
|
| _Shareholders?_ Not execs, but shareholders?
|
| If true, this is one of the worst things that I have ever seen
| a company do, and this should probably be the top comment.
| kweks wrote:
| For clarity, we are not a publicly held company, the EU corp
| is owned by two entities 50/50.
|
| The business accounts of the shareholder companies (in
| unrelated industries) were frozen, the personal accounts of
| the owners of the shareholder's companies were frozen, and
| any other account related (via email, name, passport, credit
| card, bank account, domain or corp name) were frozen.
|
| We woke up to 6 "you can no longer do business with PayPal"
| emails, sent over the space of 30 minutes. You can clearly
| see the trail: corp one, shareholders of corp one. Corps of
| each shareholder. Accounts with the same email domain.
| Accounts of permutations above.
| kmlx wrote:
| > We immediately engaged legal counsel. PayPal refused to
| interact with our counsel, and so a C&D was issued. Within one
| week of the C&D, PayPal did the following:
|
| - Froze the account of our sister company (in Hong Kong),
| seizing 35k EU
|
| - Froze the personal accounts of all shareholders of the EU and
| HK corps (~1,5k EU)
|
| - Froze the business accounts of all shareholders by name
| search (different corporate entities, different businesses) -
| 5kEU
|
| - Froze the business accounts that the shareholders held
| (again, different corps, different businesses) - another 5kEU
|
| how can any of this be legal? aren't there laws prohibiting
| such actions from PayPal?
| nerbert wrote:
| When you don't need to justify your actions and are allowed
| to stay vague, everything is permitted.
| kweks wrote:
| Based on the advice given from our French, Hong Kong and
| Luxembourg lawyers, it's not legal. But the barrier for
| _proving_ that it's not legal is very high.
|
| PayPal don't reply to account holders, and they don't reply
| in any tangible form to lawyers. PayPal forced us (and our
| lawyers) to sign three rounds of paperwork before they would
| even acknowledge correspondence from our lawyers, despite the
| fact that our lawyers were obviously retained and
| representing us.
|
| Likewise, the delay between each step averaged 1.5 months.
|
| At the end of all of the hoops, they gave a copy-pasted
| letter that said _exactly_ the same thing that their initial
| "You can no longer do business with PayPal" emails said.
|
| They know that legal representation is expensive. They know
| that you'll have to get representation (at least in the EU)
| in multiple jurisdictions. They know that by drawing out the
| affair over months, you'll bleed money, and at some point,
| you'll end up saying: We've lost more money on lawyers than
| PayPal seized, and you'll give up.
|
| The only recourse that appears to remain for us is actually
| going to court (and our claims won't fit in the small claims
| court). At which point, while they'll possibly return the
| stolen money, they won't re-open the accounts, so we still
| lose.
|
| In any case, I feel we have a moral obligation to force them
| to court, with the hopes of establishing some case law for
| other merchants.
| bluGill wrote:
| > how can any of this be legal? aren't there laws prohibiting
| such actions from PayPal?
|
| laws are only as good as the legal enforcement.
| jackson1442 wrote:
| > In our experiments, disabling PayPal cuts revenue by ~30% in
| our industries.
|
| I'm curious- have you considered adding other third party
| gateways (Apple Pay/Amazon Pay/something else)? I personally
| try to avoid entering my card number, so my general order of
| precedence is Apple Pay > Amazon Pay > Paypal > card entry.
| kweks wrote:
| We have Shopify's "Pay" and Apple Pay, crypto and regular
| Visa / MC gateways (Stripe). We haven't tried Amazon pay -
| I'll try it as an experiment to see what happens.
|
| However, the fact remains that removing PayPal means losing
| business. Consumers are shielded from (most) PayPal's
| horrors, and just see the advantages: ease of use, ubiquity
| and "guaranteed win" claims against the merchant.
| jackson1442 wrote:
| Dang. I try to avoid PayPal as a consumer because I'm
| familiar with these practices (I use services like Venmo
| but always withdraw immediately upon receipt). But if the
| only other option is sending my card number on a less
| reputable site, I'll pick PayPal over card entry every
| time.
|
| Google Pay might be another gateway to consider as well.
| While I prefer to always use Apple Pay, it's not available
| in Chrome, even on a Mac or iOS device.
| pdimitar wrote:
| So why not use (Transfer)Wise, I wonder?
| Kaze404 wrote:
| Enterprise Wise accounts are not available worldwide.
| ranger_danger wrote:
| Payoneer.
| ianhawes wrote:
| Payoneer is objectively worse than PayPal.
| Kaze404 wrote:
| I received $50 last year through Payoneer for a quick
| freelancing job and completely forgot about it.
|
| A year later, last week, I remembered and decided to
| withdraw it only to find out that I was deducted $30 for
| not using the account. Shitty, but I decided to just
| withdraw the rest and be done with it, only to be faced
| with the fact that they have a minimum withdraw amount.
|
| I then proceeded to send them an e-mail requesting
| immediate termination of my account as they literally stole
| money from my account. I do not recommend this service to
| anyone.
| pdimitar wrote:
| Can you clarify, please? I am legitimately interested.
|
| What stops a big company to have a normal business account?
| eliseumds wrote:
| Each country has different compliance laws.
| Kaze404 wrote:
| If you're a company and wish to use Wise, you need to
| create an Enterprise account. When doing so, not every
| country is listed in the dropdown. I've personally been
| waiting for Brazil to be added for almost 2 years at this
| point. It's a great service that would help me out a lot.
| pdimitar wrote:
| Interesting. Is it based on a number of employees, annual
| profit, or something else?
|
| I did have to scan some documents and send it to them to
| prove that my company exists but nobody has called me for
| anything else.
| Kaze404 wrote:
| As far as I know it is simply not allowed to make any
| sort of business-related transaction on a personal
| account, regardless of the size of your business or
| anything else. I asked them if that was a possibility
| when I saw it wasn't possible to open a Business account
| for a brazilian company, and they very clearly said no.
| pdimitar wrote:
| I see, so it's literally a regional lock. :(
|
| Sorry about that. I opened a business account in Eastern
| Europe just fine.
|
| Tried Paysera? Never used them, just heard of them.
| Kaze404 wrote:
| Never heard of Paysera. Thank you, I'll check it out :)
| voltagedivider wrote:
| Yeah, I don't get it either. Never had any problems with Wise
| and their rates seem fair. Maybe people use PayPal just for the
| escrow service?
| c7DJTLrn wrote:
| PayPal and Ebay are like toxic waste. I've had both accounts
| frozen. Most recently my Ebay account for a reason they will not
| explain and will not allow me to appeal.
| b8 wrote:
| I'm happy that this is happening. Small buisness owners, Twitch
| streamers etc. can get their PayPal account locked pretty easily
| for "suspicious" activity (i.e chargebacks or a few thousand
| dollars). Then PayPal locks their account for 180 days with
| little to no recourse. The big Twitch streamers register an LLC
| which PayPals gives more leniency to AFAIU.
| foxfluff wrote:
| Yeah... I've been hearing these horror stories about paypal for
| a very long time now and it makes my blood boil knowing that
| nothing's ever been done about it. I _really_ hope that a big
| change is about to happen.
| johndough wrote:
| "AFAIU" stands for "as far as I understand".
|
| (So those who have never seen this acronym do not have to
| google for it.)
| MeinBlutIstBlau wrote:
| antux wrote:
| When they freeze customer accounts they're essentially taking
| away people's livelihood and right to live. In a way, it's like
| killing someone, but slowly and non-violently. This is definitely
| unjust and deserves a class action lawsuit.
| theplumber wrote:
| Recently I've been suspended from an "online bank". It's a
| traumatic experience, especially if you need the money held in
| that account.
|
| Fortunately the amount I had there was not that big but the
| abusive procedure is trumatic. I can't imagine how someone would
| feel like to have all his rent money blocked in an online bank.
|
| Basically you are told that unless you provide whatever
| documentation they want you loose the access to your own funds.
| Of course providing them documentation is no guarantee they will
| lift the restrictions. The support is via email only. The
| boarding and verification process it's really just a bite and
| switch scheme. I don't know how someone would feel safe to keep
| money in such a bank after they put your account/transactions on
| hold for days.
|
| I start to like the "crypto currency" concept of owning your
| money more and more.
| clusterfish wrote:
| Your "online bank" does not sound like an actual bank (much
| like PayPal isn't one).
| theplumber wrote:
| Revolut, Monese and others claim to be online banks...can't
| tell you exactly what makes an "online bank" an "actual bank"
| but they provide you individual bank accounts (unlike
| paypal).
| jedberg wrote:
| When I worked at PayPal, some of the execs would say "we don't
| make money by giving it back to people". These were the execs
| that worked directly with Theil and Musk and I'm sure they're
| long gone, but it was definitely Theil and Musk who pushed for
| these types of policies right from the start (well Musk agreed
| when he showed up, he wasn't a founder of PayPal despite what he
| wants you to believe).
| vamega wrote:
| Hearing the stories in this thread makes me wonder if anyone has
| ever tried to get a decree that PayPal owes them the money, and
| if PayPal refuses to pay show up to confiscate their property.
|
| I know things like this have happened to banks[1]. That would
| probably get them to start paying attention.
|
| [1]: https://abcnews.go.com/Business/bank-america-florida-
| foreclo...
| AniseAbyss wrote:
| The concept of directly paying someone from your bank account
| seems completely impossible in America. There always has to be
| some middleman parasite- who conveniently charges a nice
| transaction fee for the privilege.
| cuteboy19 wrote:
| A UPI like system would completely solve these problems.
| patio11 wrote:
| The payment volume over Zelle, which is instantaneous, free,
| bank-to-bank transfers, was about $307 billion in 2020. For ACH
| transactions, it was about $62 trillion (not a typo). Wire
| transfers are also a thing. So are, for that matter, checks,
| which by ancient custom are free for all parties but the banks
| (at least for retail users).
|
| That the payment industry exists when all of the above is true
| is a fascinating topic. I should probably cover it in a
| newsletter sometime.
| skeletal88 wrote:
| Yes, why doesn't the US have something like our SEPA where we
| can just transfer money to someone's account?
| salawat wrote:
| Because the U.S. financial system, and access to it is a very
| powerful tool in terms of international diplomacy, and a
| crucial source of evidence/intelligence for law enforcement.
|
| Trivial abilities to move money around and an inability to
| lock out financial endpoints would completely neuter it's
| utility as sanctioning measure.
| ahefner wrote:
| The funny thing to me is that you can't always even pay money
| to the government itself without involving some middleman
| parasite that takes 1 or 2% for themselves.
| caseysoftware wrote:
| I've also seen scenarios where they undo bank account transfers
| without notice to clawback funds they're suspicious of.
|
| I finally created a separate bank account that I connected Paypal
| to and never leave more than $30 with them and zero in the
| account. Trusting them is a quick route to losing everything they
| can touch.
| dm03514 wrote:
| I'm so happy to see this. I am working on publishing a book on
| leanpub, and leanpub disburses payments using paypal. Yesterday,
| I logged into my paypal account and I remembered that this
| happened to me and my funds and account were frozen since 2010
| (something I must have put out of my mind :p).
|
| I was searching for this issue and found this lawsuit and cannot
| wait to be part of it.
|
| Dealing with Paypal during the time was borderline abusive and I
| felt helpless every step of the way. In 2010 when they froze my
| account they mailed me a physical letter with an activation code
| which took weeks, and when I called to confirm my account I was
| told that the code was incorrect...
|
| I had very very little money in my account < $100 and I can't
| imagine how frustrating it would be for someone who needed paypal
| for their income.
|
| I'm happy to be in a position where I can choose to never use
| paypal again and I hope they are punished for the way they treat
| their customers.
| mcv wrote:
| For over a decade I've heard tons of stories about PayPal
| freezing accounts for questionable reasons. I've heard of
| events that were cancelled because the organizers suddenly
| couldn't access the money people paid to the event, and PayPal
| wouldn't release the money until they could prove they'd
| organized the event for which people paid, for which the
| organizers of course needed that money.
|
| I will never ever use PayPal. Everything I've heard about them
| makes them sound like an extremely unreliable payment
| provider.They're not an organization you should trust with your
| money.
| amelius wrote:
| They even created this website, back in the old days:
|
| https://paypalsucks.org/
|
| Worth mentioning in this context is this page:
|
| http://paypalsucks.org/paypal-frozen-accounts.shtml
| kmlx wrote:
| > leanpub disburses payments using paypal
|
| generally speaking, is it more complicated for these kinds of
| payments to be done via wire/swift/etc versus paypal?
| bluGill wrote:
| I've used Zelle and it was easy. My bank is suggesting them
| (they have first class support), but I have no idea if they
| are otherwise better/worse than paypal. Most of the time if I
| owe money it is either credit card or I used my bank's bill
| pay (which sends a physical check if they don't have an
| electronic arrangement)
|
| I did a wire transfer once, $15 in fees, but since the amount
| was from a house sale (to get from the bank where the money
| was deposited to my mortgage bank - they couldn't do this
| direct which was annoying). I wouldn't do it for normal
| things, but with that much money involved I don't blame the
| banks for some friction and the cost wasn't much. Hopefully I
| never do one again, and also I hope I'm an oddity for even
| doing it at all.
| kevin_thibedeau wrote:
| Zelle is window dressing on top of ACH.
| wiml wrote:
| Which is exactly what I want, most of the time -- I want
| to write a check, but without the hassle of paper, or the
| recipient having to explicitly deposit it.
| pc86 wrote:
| Wire transfers have borderline predatory fees unless you're
| moving thousands of dollars, and there's still the issue of
| "oh you entered one of the numbers incorrectly, hopefully
| they give you your money back!"
| ratg13 wrote:
| I wonder how Wise (formerly TransferWise) accomplishes
| this.
|
| They seem to be able to send money to bank accounts
| anywhere for extremely reasonable prices.
| Scoundreller wrote:
| They have bank accounts everywhere. They just avoid
| transferring money between them in the first place. As
| long as an even amount of money is going in each
| direction, they won't have to.
|
| Only if flow gets too out of whack but that means their
| rates are too one-sided.
|
| That's the forex business in a nutshell. They don't
| convert money, they just exchange it.
| Xylakant wrote:
| This is a distinctively US feature. SEPA transfers cost
| (next to) nothing, and the IBAN has a checksum, so entering
| a single digit wrong will get the transaction rejected.
| maccolgan wrote:
| It's not a US feature, the US has ACH.
| vorpalhex wrote:
| Try shopping banks. My wires are free in most cases and I
| am not a big customer or anything.
| designium wrote:
| Don't worry.
|
| You won't have that money after they've implemented the
| inactivity fee last year:
| https://www.paypal.com/be/smarthelp/article/what-is-the-inac...
| savolai wrote:
| Wow. Notably receiving money does not make the account
| active.
|
| Notifications to inactive accounts begins 15 November 2021
| and advise simple actions to take before 15 December 2021 to
| avoid the fee:
|
| - Log-in to your account; or
|
| - Shop wherever PayPal is accepted; or
|
| - Send money to friends & family, or vendors for goods &
| services; or
|
| - Withdraw money from your account; or
|
| - Donate to a charity with your account
| tintor wrote:
| Good to know. I just transferred out my PayPal balance.
| m-p-3 wrote:
| I chose the option to close my account.
| malka wrote:
| I chose the option of making a bot that logs in every
| 150ms.
|
| I think everyone should do this. It is the best way to
| keep your money safe
| Red_Leaves_Flyy wrote:
| Did you publish your code?
| [deleted]
| CryptoBanker wrote:
| PayPal will limit your account soon enough for security
| concerns. I would _highly_ recommend not doing what you
| are proposing
| chias wrote:
| > Accounts with zero balance won't be impacted and this
| charge won't result in any negative balance.
|
| How gracious.
| Bilal_io wrote:
| Yeah, very nice of them.
| tananaev wrote:
| Inactivity fee is such a disgusting practice. It doesn't cost
| them anything to keep the account.
| Trias11 wrote:
| It's an attempt to legalize theft.
| muzika wrote:
| This. Skype has been doing the same for years.
| kgermino wrote:
| That's not strictly true. It doesn't cost them _much_ but
| holding and tracking other people's money has a cost.
|
| That said, I think the better answer is to send it to the
| state as unclaimed property.
| halpert wrote:
| Is there really a marginal cost to holding more money?
| Presumably they can buy treasury bonds and earn some
| interest off the holdings. In terms of data storage, is
| it really more expensive to store a positive number vs.
| zero?
| mmanfrin wrote:
| Holding other peoples money has a _profit_ , not a cost.
| That float is valuable.
| vasco wrote:
| Presumably it costs more to keep the money and process
| login attempts. Since logging in is enough to keep the
| account at zero fees, this seems like a money grab.
| pengaru wrote:
| > holding and tracking other people's money has a cost.
|
| When you have as many users as PayPal does, in aggregate
| those non-zero balances are a mountain of money to play
| with. It's not a cost, it's opportunity for profit.
| stjohnswarts wrote:
| This is why I use antiquated banking. At least I have someone to
| contact if something goes wrong.
| alfalfasprout wrote:
| I refuse to use paypal for any nontrivial amounts of money for
| this exact reason. I once had $10k frozen for no reason at all. I
| really needed that money back then. Was an absolute nightmare and
| took weeks to unfreeze.
|
| The only thing I now trust for "quick" payments of larger amounts
| of money is bank wire.
|
| Cryptocurrencies don't exactly solve this problem since you need
| to convert back to the fiat currency and you then have exchange
| rate volatility + withdrawal delays (and crypto exchanges also
| are notorious for freezing withdrawals).
| gk1256 wrote:
| PayPal has the fraud problem. Every next payment platform who
| aims to become the next PayPal also suffer from it.
| libertine wrote:
| IF they choose the path of not having humans interact with
| their customers, and give bot replies, then yes, such platforms
| will suffer from it.
|
| If they want to invest in proper human customer service, at the
| cost of decreasing their margins, then maybe part of that
| problem will be solved.
| pizza234 wrote:
| That a problem of any banking institution.
|
| Differently from Paypal though, the last time that there was a
| suspected fraudulent transaction in my bank account, I had a
| physical and factual meeting at a bank branch, rather than
| having my account frozen and given a stock answer.
| chris_wot wrote:
| And this is the problem for PayPal. They seem to freeze
| accounts for arbitrary reasons, and way more frequently than
| banks.
|
| If you are a business, the ability to transfer money without
| getting all your funds locked up is important. I genuinely
| believe they are doing it for reasons other than fraud and
| money laundering.
| MeinBlutIstBlau wrote:
| [deleted]
| rad_gruchalski wrote:
| Sure, but it's not up to paypal to decide what's legal and
| what's not legal. Definitely not their responsibility to seize
| money from locked accounts. That's plain theft.
| ckastner wrote:
| > _Lena Evans, one of the plaintiffs who 'd been a PayPal user
| for 22 years, said the website seized $26,984 from her account
| six months after it got frozen without ever telling her why._
|
| Wait, what? They're _actually taking_ the money? I thought the
| article was just being careless with the terms "frozen" and
| "seized".
|
| On what power are they doing so? It's understandable when the
| relevant authorities (be it a tax authority, or a financial
| supervisory authority, or a court, or whatever) seize money, but
| they are not an authority.
|
| Furthermore, if the money in question actually _were_ illicit,
| then by what fantasy argument would they be allowed to keep it
| themselves rather than having to hand it over to the goverment?
| The entire point is that the money is dirty and _nobody_ may keep
| it.
| gruez wrote:
| >They're actually taking the money? I thought the article was
| just being careless with the terms "frozen" and "seized".
|
| but that's also the plaintiff's claim, so I wouldn't exactly
| call that reliable.
| sam0x17 wrote:
| > if the money in question actually were illicit, then by what
| fantasy argument would they be allowed to keep it themselves
| rather than having to hand it over to the goverment? The entire
| point is that the money is dirty and nobody may keep it.
|
| I don't know what fantasy they operate under, but back in the
| 2010s I observed Google doing this numerous times with "seized"
| click fraud revenue -- one of my sites was a victim of a click
| fraud attack as an attempt to get my AdSense account banned,
| and my friend's site at the time was advertising on my domain
| via AdWords and he didn't see any kind of refund despite the
| $800 that was taken from me (which was the entirety of my
| revenue for that month). Google just keeps funds they seize I'm
| pretty sure, or at least they did back then.
| kweks wrote:
| See my comment below: they just seized (not frozen, seized) 50k
| EU from us in a targetted attack against our company and
| shareholders because we took legal counsel when they froze the
| accounts.
| ckastner wrote:
| At the risk of arm-chairing this too much: did you contact
| the CSSF, who seems to be the supervisory authority
| responsible for AML enforcement in Luxembourg?
|
| To highlight how insane this sounds: let's assume, for the
| sake of argument, that your 50K is suspected to be cocaine
| money. There exist exactly two outcomes: either you are
| exonerated and you get your money back, or you're eventually
| found guilty of something, and the government takes the
| money.
|
| But Paypal? They have zero claim to the money, and they could
| be in hot water even for merely holding on to it.
|
| But to seize it? There is just no way that any bank involved
| in AML enforcement can keep funds for themselves, and any
| supervisory authority who's handed evidence to such a
| practice would tear them apart.
| kragen wrote:
| They could plausibly return it to the people who paid it
| in, if their excuse is that it's believed to be fraudulent.
| Six months of float is enough to make a significant amount
| of money, too, especially if it's in an inflating currency
| (like the dollar over the last year).
| loceng wrote:
| Indeed, their behaviour should be criminal if it somehow
| already isn't.
| kweks wrote:
| I definitely appreciate the arm-chair assistance: I'm
| unfamiliar with the Luxembourg jurisdiction, so your
| pointers are great - we will discuss with our lawyers.
|
| From what I understood, Luxembourg's consumer laws are more
| loosely defined than that of other EU jurisdictions - which
| makes the type of T&C that PP has established easier to
| maintain.
| effingwewt wrote:
| Good. I love when companies are so big they do as they please
| and retaliate when brought to task.
|
| Hopefully it's one more nail in their coffin.
|
| All the best, hope this is the beginning of their end.
| shoulderfake wrote:
| the only way this stuff will change is if the fines are
| SUBSTANTIAL
| bigjimmyjohnson wrote:
| It's theft in great amounts of money. Fines are necessary
| but not sufficient. There should be prison time.
| andrepd wrote:
| This applies to a great deal of white-collar crime. As
| long as there aren't serious PERSONAL consequences for
| wrongdoing, just a fine that the company coffers will pay
| as the cost of doing business, nothing will change. We
| need to start to put CEOs in actual prison and to forfeit
| their fortune.
| effingwewt wrote:
| Agreed, _that 's_ the only thing that will stop this
| garbage.
|
| Between companies and banks doing this, our own
| government allowing civil forfeiture, and the penalties-
| of there even are any, are a monetary slap on the wrist,
| what recourse do we have?
|
| We can't even change the laws because money lobbies and
| always wins.
|
| I really hope this is the tide changing.
| tedivm wrote:
| PayPals parent company, Ebay, is not exactly innocent
| either.
|
| > Federal prosecutors have said the harassment included
| anonymous deliveries of items like live insects, a funeral
| wreath, and a bloody pig face Halloween mask to the
| couple's home. The employees also sent pornographic
| magazines with the husband's name on it to their neighbor's
| house and planned to break into the couple's garage to
| install a GPS device on their car.
|
| https://abcnews.go.com/Business/wireStory/couple-ebay-
| harass...
| mdek wrote:
| FYI Ebay no longer owns Paypal, and hasn't for several
| years. Per
| https://en.wikipedia.org/wiki/Timeline_of_PayPal
|
| > _September 2014 onward: It is announced that PayPal
| will be split off eBay. The split will be completed by
| the second quarter of 2015._
| Scoundreller wrote:
| EBay is actively de-integrating PayPal. E.g. sellers are
| being required to provide their banking info to eBay for
| eBay to deposit payments directly.
|
| It was dumb to see eBay send two verification payments to
| "authorize" my bank account, of 1 cent and 3 cents, and
| after confirming, they let me know that they were going
| to take their 4 cents back.
| nradov wrote:
| There's nothing dumb about it. This is common practice
| when linking accounts throughout the financial services
| industry. Like my stockbroker did it when I linked my
| bank checking account. By verifying the amounts on two
| small payments you give them reasonable assurance that
| you actually control the account. This protects against
| both fraud and accidental account number data entry
| errors.
| Scoundreller wrote:
| It was the clawback of the hilariously low amount that I
| found dumb, not the verification technique.
|
| In my experience, it's 2x double digit amounts, not two
| single digit amounts. I guess if they're clawing it back,
| maybe my low sums are out of randomness, or maybe they've
| really lowered the cap on the test deposits (less
| float/fraud loss but less security?).
| mthoms wrote:
| I suspect it's because they want to verify they can
| withdraw from the account, not just deposit. Maybe they
| have deposit-only account links but IIRC the default is
| two-way. That's because, for example, you can subscribe
| to various services using PayPal (if you have no funds in
| your PP account they will withdraw it from your bank
| account).
| Scoundreller wrote:
| This makes a lot of sense. Lots of advice in the early
| days of PayPal to have a separate account for them and
| keep nothing in it.
| colanderman wrote:
| ACH fees almost certainly mean it's not "worth" it to
| pull back the 4 cents.
|
| But I can see people being frustrated by verification
| payments throwing their bookkeeping off, especially by a
| (literally) random amount.
| Scoundreller wrote:
| I couldn't tell if the numbers were just randomly low or
| decidedly low.
|
| I'm used to the amounts being larger and thinking "hey, a
| free dollar almost", but if they are random, 1 cent and 1
| cent are entirely possible.
| bluGill wrote:
| random under $1 in every bank I've had do this. It better
| be a good random algorithm, if it isn't you can defraud a
| lot of people fast. (I won't say how, but I think anyone
| here can guess quickly)
| mdek wrote:
| Per the article, Paypal is seizing the money as damages:
|
| > _It also said that the money was taken from her account "for
| its liquidated damages arising from those AUP violations
| pursuant to the User Agreement._
| ckastner wrote:
| Indeed, this is an important point that I missed. So if I get
| this right, this isn't about actually AML activity, but a
| civil claim under something like ToS.
|
| So I looked up the AUP, and indeed: they claim $2,500(!)
| liquidated damages per violation of the AUP, which is on
| average a ridiculously high amount. Selling 10 individual
| bottles of wine without approval will incur $25,000 damages
| under this scheme.
|
| Given these terms, you have to be absolutely _nuts_ to sign
| any agreement with Paypal.
| nikanj wrote:
| On what power? "We are big and have money. You are small and
| have no money".
|
| This has been a reliable source of power for at least a century
| edoceo wrote:
| Longer than that.
| ckastner wrote:
| I meant on what official authority.
|
| I understand what you meant to say, but realize that this is
| like some random bully stopping cars on the highway and
| issuing speeding tickets. Victims might play along for a
| while, but when actual law enforcement shows up, the bully is
| going to have a very bad time.
| erichocean wrote:
| > _this is like some random bully stopping cars on the
| highway and issuing speeding tickets_
|
| LOL, I've paid that _exact_ "fine", the "bullies" were
| official, uniformed Mexican police. They were literally
| just flagging everyone on vacation at a specific resort,
| along the only road from that resort into town (with a big
| chain across the road to collect everyone) and taking $200
| to be allowed to continue on. Nice work if you can get it I
| guess.
|
| I've also paid bribes to bullies in Yugoslavia ("people
| with machine guns standing in the road") in order to pass
| by. I don't think they were official though.
| technothrasher wrote:
| I had to pay an extra $90 when crossing the border into
| Zimbabwe. I was a little slow and asked all innocently
| why I had to pay more then the official entry tax when
| the guy in front of me paid the normal amount. The guy
| just shifted his AK-47 a bit and repeated the request. I
| figured it out at that point and forked it over.
| anonAndOn wrote:
| I don't know if this is still true, but years ago if you
| wanted to board your plane in La Paz, Bolivia everyone
| had to hand the police officer at the gate $20 USD cash
| (no substitutions) to board the plane. It didn't matter
| your nationality or where the plane was headed, just hand
| over $20 bucks or GTFO.
| hallway_monitor wrote:
| Yes, rental cars stick out like a sore thumb so keep some
| cash on you. It is usually easy to negotiate them down by
| 50% though!
| hnov wrote:
| You can tell them, "dame la multa" (give me my fine) and
| most of the time they'll wave you on.
| dobs_bob wrote:
| Imagine an Elon Musk company being total douchebags!
| aasasd wrote:
| I've heard about their 'freeze and seize' business model in mid-
| late 2000s, so it's been going on for almost fifteen years
| already, maybe more.
|
| Meanwhile Paypal's early top execs are icons of US business and
| techbros. This Musk is probably a really solid guy, what's not to
| like!
| Jiro wrote:
| Link to actual lawsuit: https://aupdamages.com/wp-
| content/uploads/2022/01/PayPal_Fil...
|
| (I had to Google this and find it in a Reddit thread, so it's not
| directly from the court's website. If anyone can find that it'd
| help)
| kingcharles wrote:
| It took a bit to find it because PACER's search is awful. Plus
| you have to PAY for every search.
|
| I bought all the current docket entries and added them to RECAP
| so you can download them for free:
|
| https://www.courtlistener.com/docket/62596200/evans-v-paypal...
|
| EDIT: From PayPal's AUP in the Complaint.. yowch! "You
| acknowledge and agree that $2,500.00 U.S. dollars per violation
| of the Acceptable Use Policy is presently a reasonable minimum
| estimate of PayPal's actual damages - including, but not
| limited to, internal administrative costs incurred by PayPal to
| monitor and track violations, damage to PayPal's brand and
| reputation, and penalties imposed upon PayPal by its business
| partners resulting from a user's violation - considering all
| currently existing circumstances, including the relationship of
| the sum to the range of harm to PayPal that reasonably could be
| anticipated because, due to the nature of the violations of the
| Acceptable Use Policy, actual damages would be impractical or
| extremely difficult to calculate. PayPal may deduct such
| damages directly from any existing balance in any PayPal
| account you control."
| Ekaros wrote:
| That took way way too long... How is it possible that this
| happens only now and not shortly after PayPal launched?
| toast0 wrote:
| I can recall reading many PayPal horror stories, but as I
| recall, they were all accounts frozen and then usually closed
| and paid out 6+months later. This story and others in comments
| suggest PayPal has decided not to pay out the frozen accounts
| anymore. Damages from freezing the money for 6 months are real,
| but may not be realistically legally actionable; damages from
| not paying the funds are clearly actionable.
| thebiss wrote:
| Before Paypal launched, only companies had relationships with
| payment processors and could directly accept major credit
| cards. Individuals had basically nothing.
|
| Paypal was a huge catalyst for online auctions and small
| business, and it took took time for behavior like this to
| develop. And as others have said, they worked hard to not be a
| bank.
| pizza234 wrote:
| Very good news, especially the potential class action.
|
| Something that I find very interesting is how the individual
| lawsuits will end. I remember (but can't find) a David vs Goliath
| case from some time ago, where a user brought Google to the small
| claims court. He won the case in that venue, but subsequently
| lost when Google followed up an brought a huge amount of
| documentation and won. The guy's conclusion was that Google knows
| _a lot_ of stuff and can leverage it; I think that the events
| could play similarly, here.
| durnygbur wrote:
| Tightening of mobile phone policies some years ago locked me out
| of few paypal accounts, also they seem to completely disregard
| and abandon security questions created long time ago.
| lvl100 wrote:
| Are they still using pandemic as an excuse for not having live
| customer service? Paypal is simply the worst. I've once had to
| reach one of their execs to get a problem resolved only they
| couldn't get it resolved.
| LgWoodenBadger wrote:
| Fwiw, I closed my family's PayPal accounts just now in response
| to this. Enough is enough.
| antihero wrote:
| Thing that amazes me is that people leave huge amounts of money
| in their PayPal instead of withdrawing it regularly. Why not just
| withdraw it, and then PayPal has nothing to seize!
| boring_twenties wrote:
| In the past at least, PayPal has also been known for simply
| taking funds from your linked banked account.
|
| So maybe it's better to not link a bank account at all, which
| means leaving funds in your PayPal account until you can spend
| them (since you have no way of withdrawing).
| ceejayoz wrote:
| Or link a bank account in the middle, between your primary
| one and PayPal, that exists solely to receive and pass along
| your funds.
| TheNewsIsHere wrote:
| I do this, but not specifically for PayPal. I have a
| checking account solely for using with third parties,
| writing checks, debit card transactions, account linking,
| etc. It has overdraft protection disabled. All my bank
| funds are in a "private" accounts that aren't linked
| anywhere, don't have checks, etc.
| chris_wot wrote:
| Surely dropping PayPal would be way easier?
| ceejayoz wrote:
| On the consumer side, I'd much rather use PayPal than put
| my card number into a potentially dodgy site. Protects me
| quite a bit, and with a easier UI.
|
| If I can't PayPal or Apple Pay, I've at times gone
| elsewhere.
| datavirtue wrote:
| You have zero risk in this situation so I'm not sure why
| you feel protected.
| ceejayoz wrote:
| It's not zero risk; changing my card numbers after a
| compromise is an annoying process given the number of
| places I have to do it. Not having to provide that number
| to the random e-commerce site I'm trying to buy something
| unusual from is helpful, and reduces the risk of me
| having to spend an afternoon making sure I switched
| cable, internet, Github, Patreon, Heroku, kids' school
| lunches, music lessons, and fifty other recurring
| payments over to a new card number.
|
| (I also get to skip entering card and billing details
| every time. Given the number of sites that see fit to use
| a special non-standard widget for the state field, that
| saves me time and annoyance on every transaction of this
| nature, too.)
| ranger_danger wrote:
| My credit card provider allows me to create unlimited
| virtual card numbers with any expiration date I want,
| that way every transaction can be its own number and any
| fraud is extremely easy to detect and prevent.
| ceejayoz wrote:
| Cool, but mine doesn't.
| alex_sf wrote:
| Check out https://privacy.com/. Pretty neat and gives
| similar/better features.
| ceejayoz wrote:
| Tried it, but I'm giving up serious credit card points
| that way.
| AlfeG wrote:
| All banks I've using have strong 3D secure. One of the
| banks require biometrics approve with installed phone
| app. I have no issues directly use credit card on random
| merchant sites for years. Especially when most of them
| use one of the popular payment aggregators.
| ceejayoz wrote:
| > All banks I've using have strong 3D secure.
|
| I've yet to see any bank in the US implement such a
| thing.
|
| Citi, Discover, American Express, Chase, and my local
| credit union all lack such a two-factor setup for
| charges.
| sebzim4500 wrote:
| That is crazy to me. Could you at least link PayPal to an
| account which you do not leave funds in?
| boring_twenties wrote:
| Yes, that seems like a good option, provided you can find a
| bank account that's free with no hoops to jump through.
| KeyBank offered one at some point, not sure if they still
| do.
| ashwagary wrote:
| Might need to use a credit union instead of a traditional
| bank.
| zaarn wrote:
| I'd just go to my bank and tell them to reverse the transfer.
| Thanks to SEPA for that one.
| greedo wrote:
| Paypal will issue physical checks if you want to withdraw
| funds. They charge $1.50 for this service, but I use it since
| I refuse to link any of my bank accounts directly. I have a
| credit card linked, but that's a safer (in my mind) way to
| deal with any PayPal shenanigans.
| cuteboy19 wrote:
| Wait so merchants can just pull funds out of accounts without
| user authentication? This seems tailor made to facilitate
| fraud.
| TheNewsIsHere wrote:
| Not universally but a lot of the ACH agreements you consent
| to have a clause allowing drafts to be initiated on-demand
| until you revoke that consent. This isn't necessarily bad
| and can often be desirable, but then it's often up to you
| and the withdrawing party to settle your disputes about
| what is authorized and what is not.
| tootahe45 wrote:
| They offer the worst currency conversion rate imaginable when
| you go to withdraw to your non-US bank, so some people prefer
| to keep it in PP as a USD spending account i guess.
| MikeDelta wrote:
| True, if I have to pay in a foreign currency I let Paypal
| charge my cc in that currency, so that the cc company
| converts my currency instead of Paypal.
|
| I don't recall the difference, but I believe the cc company
| gave me more than an order of magninude tighter spread on the
| conversion, perhaps even two.
| genocidicbunny wrote:
| Sometimes PayPal institutes transfer limits on accounts, so its
| entirely possible that they don't let you transfer out the
| money fast enough.
| sharemywin wrote:
| If you move 50k a week it could still be a problem.
| Cthulhu_ wrote:
| If you move 50K a week you can engage a payment platform to
| accept other means of payment in addition to Paypal, then
| reorganize how people pay so that paypal is de-emphasized in
| favor of more secure, lower cost, etc means of paying you.
|
| Hell, for that kind of money you can hire an accountant or a
| full dev team to do it for you.
| creshal wrote:
| Paypal still makes it hard for you to automatically transfer
| out money, so you have to remember to do it manually every so
| often. And then they'll block you anyway because you tried to
| transfer out
|
| - too much
|
| - too often
|
| - too seldomly
|
| - too little
|
| Or any combination thereof. The only winning move it to not use
| it in the first place.
| PaulDavisThe1st wrote:
| It's trivial set to up automatic payout. The only issue with
| it is that you can only get _daily_ automatic payout, which
| for some of us is not desirable.
|
| I manually move $15-20k out of PayPal on the last/first day
| of every month, and never have an issue with this. Could be
| because it's a merchant account.
| shiftpgdn wrote:
| Merchant accounts have a feature called auto leveling to
| automatically move money to a bank account that can be
| enabled with a phone call.
| [deleted]
| jliptzin wrote:
| Exorbitant punitive damages please, this is long overdue.
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