Paypal Deals Blow To Freenet

hankaholic writes "I was checking into the latest progress of the Freenet project when I noticed a disturbing note on their homepage: 'Paypal has frozen the account we use to accept donations over the web, they refuse to give any reason other than "use of an anonymous proxy" [...] all of the projects subscriptions have been canceled which is a significant setback. Other means of accepting donations, including E-Gold, are still active.' Paypal is sending them a check for their remaining balance. The news update on the Freenet homepage also includes contact information for some people at Paypal."

Comments

Must have been considered a liability

[dacarr]

But that being said, Paypal is doing this a lot - it's almost as if they're going by textbook rule rather than rule and exercising discretion

I mean, Come on, Paypal, you of all people should know better! (FP?)

Re:Must have been considered a liability

[orthogonal]

Paypal does have a habit of scamming its customers.

But even worse than this, PayPal forces you to be a customer.

I made a purchase from 78s2CD.com> (they offer old 78 rpm recordings in CD form, hence the name, and do an excellent job of it too -- it's a great source for vintage Gilbert & Sullivan recordings, among others).

After I gave PayPal my credit card information, I found I had an unwanted, unasked for account with PayPal.

So I logged on to PayPal to close the account -- only to find that, in order to close the account, I first had to provide more information in order to activate it..PayPal required my Social Security Number and my mother's maiden name in order for me to activate and access the account, even though all I wanted to do was close it.

Now, many banks, unfortunately, use this data, Social Security Number and mother's maiden name, to identify customers: by providing that to PayPal, I'd have made it much, much easier for PayPal -- or a rogue PayPal employee, or someone who hacked PayPal's servers -- to gain access to my brick-and-mortar bank account (remember, the credit card number identifies this, and PayPal already had that) or to otherwise steal my "identity".

Naturally, I didn't want to give this information -- among other things, I have no way of knowing that would be deleted when I closed my account. But under the USA Patriot Act, giving incorrect information to a financial institution might be illegal. So I couldn't just fake it and close the account either.

So I contacted Paypal, and talked to a rep -- who told me that PayPal could not (sure) close the account, and I'd have to log in and provide my personal information.

To his credit, when I contacted 782CDs's owner, Jim Lockwood, he apologized, and offered to let me send check in the future -- and even said that he'd ship the CDs before he got the check, on my word that I'd sent it. And now, 782Cds accepts both Paypal and credit cards directly.

But I'll never buy (or donate, sorry OSS projects) via PayPal again. Even though my PayPal account still exists in some database limbo, neither closed nor fully open.

Re:Must have been considered a liability

[hendridm]

they make no claim to be a bank, so why use them as one?

I agree it's unsafe to leave sizable funds there for an extended period of time, given their track record of unpredictability, however, I'd say they do position themselves as a bank. They offer a Visa bank card, interest-bearing money market account and online bill payment. They want you to keep your money there for awhile (so they can earn interest on it, like a bank) and try to give you incentives to do so.

For the record, I've had perfect service in the ~4 years I've had a PayPal account, however, I know there are plenty of horror stories out there. I really like PayPal, but it isn't perfect.

Slashdot Uses PayPal

[johndiii]

Absent a satisfactory response from PayPal, Slashdot should stop accepting PayPal to pay for subscriptions.

Re:Slashdot Uses PayPal

[Surazal]

I've been uneasy about using their service despite the "convenience" it would offer me in the online world. The horror stories keep piling up, and I don't see an end to it.

PayPal, you are free to consider me a "lost customer" at this point. I will take my business elsewhere.

why?

[Anonymous Coward]

why do people put up with this crap?

i refuse to get paypal for the simple reason that one small complaint (which paypal won't divulge) can lead to them freezing potentially thousands of dollars.

they are NOT a bank, and don't need to be accountable! yet they offer bank like services...

Re:What an incredible suprise

[adzoox]

Paypalsucks.com is sponsored by Paypal's competition. Anyone who disagrees with the moderator has their IP address blocked from entering the site. Most thos that post are spazz freaks who couldn't handle a normal transaction anyway.

An eye opener about PaypalSucks.com

Re:bashing paypal

[ShaunC]

account was "hacked"

I wonder if maybe that has something to do with the freeze? Everyone's first guess seems to be that PayPal cut off Freenet because they didn't approve of the project, but the whole bit about "use of an anonymous proxy" has me curious.

The Freenet project leaders have said they've never logged into PayPal through a proxy. Maybe someone else was trying to brute-force the project's PayPal password through a proxy? Maybe a large percentage of Freenet's donors, being generally privacy-minded types, used proxies when they logged into PayPal to send money to the project? PayPal is known to freeze accounts which have been sent fraudulent funds, whether they know it or not; maybe now they're freezing accounts which receive funds sent from someone using a proxy.

I really hope PayPal provides an official explanation.

Re:PayPal has that right...

[madcow_ucsb]

Refusing service is one thing. But the main reason people are pissed about paypal is they have a tendency to refuse service..*and* not let you get your money out of your account.

Happened to two of my friends. One had over $5000 in there for a couple months before they decided that no, he didn't actually do anything wrong and wrote him a check. This is definitely a company that needs some more regulation. It looks like a bank and acts like a bank. But it isn't governed by any of the laws that real banks are.

Terminating an account and mailing you your balance is fine. Annoying, but fine. Holding your money hostage? Definitely not ok.

That said, with the number of people this happens to, you'd have to be a retard to keep money in the account. I use paypal, but *only* via credit card and I sure as hell don't leave any money with them.

Re:PayPal problems

[nacturation]

PayPalSucks.com is certainly a shady company. To find out why, go to adzoox.com/paypalsucks.html

PayPal Terminated our Business Account too...

[Anonymous Coward]

PayPal notified my one company, Psychotropics Cornucopia, Inc. http://www.psychotropics.org/ , Thursday May-15th 2003 via a "canned" email (see below for the full text of it) that stated in part: "Due to the severity of the violation, or your accounts history of repeated violations, your account will be permanently locked".

The only email notice we received from PayPal/Ebay terminating our account - no advanced notice, no discussion, just abrupt termination.

------

> Date: Thu, 15 May 2003 14:52:54 -0700
> To: Ronald Bennett
> Subject: PayPal (KMM30070882V34963L0KM)
> From: "customercare@paypal.com"
> Reply-To: "customercare@paypal.com"
> MIME-Version: 1.0
> Content-Type: text/plain; charset = "us-ascii"
> X-Mailer: KANA Response 7.01.102
> Message-Id:
> X-UIDL: [4O"!%U*!!oXj"!SHg"!
>
> Dear Ronald Bennett,
>
> We regret to inform you that your PayPal account will be permanently
> locked for the following reason:
>
> * engaging in activity expressly prohibited under the Acceptable Use
> Policy.
>

They further stated that we violated their Acceptable Use Agreement by selling illegal drug paraphernalia. It's obvious from their "canned" email that no one from PayPal ever actually examined our company, our many services, nor our past PayPal transaction history. We only sell advertising, videos, and memberships (non-adult) - NOT pipes, etc.

We opened our PayPal account back on June-21-2000 and in that time we *never had any disputes* and we *never had any reversed payments* - an amazing record given our activity. We had a "Business account" (which costs much more than a personal account) with PayPal and yet they never attempted to call us nor email us regarding their actions until after they terminated our account; all they sent was one brief automated email - not exactly customer service.

We requested more details from them regarding why our PayPal account was abruptly closed, but we never any response other than automated emails that mentioned nothing we didn't already know. PayPal was very convenient and served us well for nearly 3 years, but no more.

Our experience should serve as a warning to others who rely on PayPal ... doing so can be disaster ... many folks think the above can't happen to them until it does, then it's too late.

On the bright side, we'd already begun phasing PayPal out prior to them suspending our account, but I personally know of several people who have lost substantial amounts of business due to PayPal "problems".

Ron Bennett