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Paypal Won't Release Funds To Slain Soldier's Family
robustyoungsoul writes "Popular sports blog Deadspin established the Adam Knox Fund for the purpose of raising money in honor of the fallen soldier who was killed in Iraq. They took the donations through a PayPal account.
Turns out now, however, PayPal will not release the money due to the way the account was set up on their end."
"Paypal Won't Release Funds To Slain Soldier's Family"
That isn't quite true, they are holding the funds until mid April, probably due to somebody screwing up. I'm not convinced that it was Paypal's mistake to begin with.
"Paypal Doesn't Want Slain Soldiers' Families To Receive Aid"
Come on now, yea, there may have been a mistake made, but it has nothing to do with the money going to a Slain Soldiers' Family.
Why the need for so much drama?
It could be worse, it could be Monday.
In the meantime Paypal gets a nice fat interest on those funds.
That is the reason they do that, NOT the fraud BS they tout.
While I hate large corporations ripping people off as much as the next guy, I don't think this says anything that bad about PayPal. This is my guess at what happened:
So it doesn't seem the company is trying to rip anybody off or laugh over the graves of the dead. In this case.
Lesson learned to all: if you're going to claim you're a nonprofit organization, BE A NONPROFIT ORGANIZATION.
This site was not nonprofit, and was having the funds sent to their own, private account.
Yes it's sad, but ask yourself the following: could you trust a nonprofit paypal donation if you knew that they only had to casually mention that they were nonprofit? That they didn't have to prove it?
There's nothing stopping the people who run that website, other than personal honor, from pocketing the cash and giving the finger to everyone who donated. And THAT is why PayPal has those policies. I'm surprised that they'd even hand over the cash after 180 days in fact.
It's sad, yes: but in the future, they should know to make an actual nonprofit organization with its own account. Doing such a thing isn't that hard: you just have to apply, and make a seperate checking account. My club at High School did it, and the people in that club were a bunch of idiots, especially in High School (myself included).
-Vendal Thornheart
also, paypal make shitload of money from the 180 days hold period gernerated interests.
It strikes me that they have already proven their innocence beyond the point that paypal has a right to know about. The fund in question was set up (possibly improperly) with an explicit, legitimate purpose that all donors can be expected to know about. That means that it is not phishing. Furthermore, there is no evidence that potential phishing is any part of the dispute. The only issue is that paypal is treating the account as belonging to an official, regulated charity, whereas the deadspin folks were doing an impromptu fundraiser.
If PayPal wants to continue pretending to be a bank, they should be regulated like one.
"The Federal Reserve is a fraudulent system."--Lew Rockwell
End The FED. -
Read the article, and it will be obvious that the person who set everything up is not only and idiot, but they are rude and foul-mouthed as well.
PayPal is doing what they have to, giving themselves time to investigate to make sure it isn't a scam. Scams like this are rampant, both with soldier funds and hurricane relief funds.
Considering the guy did NOT set this up as a non-profit, he is going to be in for a rude shock come tax time. Once PayPal releases $20,000 to his PERSONAL BANK ACCOUNT the bank will file a "suspicious transaction report" with the gov't. I wouldn't be surprised it HIS BANK didn't then freeze the funds for 30-90 days.
Assuming it is then released, the IRS is going to count that $20K as INCOME and will want 20-33% tax from this person. All his protestations of "but I gave it to the widow's family as a gift!" won't amount for shit.
Sure, he meant well, but he is going to be a living example of "The Road to Hell is Paved With Good Intentions" because PayPal is only the beginning of his descent.
Learning HOW to think is more important than learning WHAT to think.
Notice the use of the word "Had." I'm sorry, but responding to a problem like that with that sort of language is somewhat ridiculous. Paypal is supposedly following their own policy. You can respond to it by acting professionally, writing it up for the public, and then returning to PayPal and trying to get access to someone higher up the command chain, or you can do what they've done, and mouth off about it. Considering the way they reacted in text, I have a hard time believing that they acted professionally enough on the phone to make the PayPal representitive honestly feel they were there in good faith. As well, their request that people assault PayPal with phonecalls and other contacts is somewhat petty. Honestly, I'm not a fan of PayPal in the slightest, but this isn't the way to react to such things.
If I read correctly, the money is not for the family but is for care packages for the people in the unit he was in.
Engineering is the art of compromise.
They have every right to withhold the money until they prove it is an error. Just someone claiming there was an error in how the account was flagged isn't enough. It's very likely that on creation, the deadspin inadvertently said they were non-profit, since they are, just not documented.
Paypal has to put these sorts of safeguards in place since, as has been pointed out elsewhere, the way this account was set up looks *exactly* like a phishing scam account.
Someone made a mistake. Possibly Paypal, possibly the organizers of the fund.
My guess is that they had never set one of these up before and when setting up the Paypal account was asked many questions and they ticked of the wrong box.
This is not unreasonable due to those who tend to set these accounts up as scams. But putting the hold it forces the legit people to justify themselves and the bogus people to jump through hoops.
Now if you really want to be upset at someone it's the bankers who try to pull scams that caused these types of rules in the first place. The banking regulations that were tightened in the 90's. The Sarbanes/Oxley regulations that have caused increased accountability and paperwork.
Let's take a look at it from the PayPal perspective.
1. An account is opened.
2. A LOT of people pay towards this account, within rather little time, accumulating also a LOT of money.
3. The amount should be withdrawn, all at once and also rather shortly after it's been set up.
Where do I know that from... Ah heck, pick your favorite fraud scheme, I'm not teaching scamming 101 here.
It certainly isn't in PPs intention to keep a soldier's family from receiving their money. But I can well understand that they want to make sure that it does INDEED go to the family and not to some con artist.
Or we'll soon see headlines akin to "PayPal helps con artist to pull off scam", and people will get their undies in a knot because PP doesn't do jack against them and doesn't even try to stop these things from happening.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
"Paypal Doesn't Want Slain Soldiers' Families To Receive Aid"
PayPal is EVIL. It went from being merely obnoxiusly intrusive and officious to being downright EVIL when it was bought out by eBay. Both companies are all about greed and neither give a shit about fucking over their userbase. The problem with eBay is that Jane Average doesn't realize that there are better auction sites for anything more significant than "collectibles". If you are into books, music, tools, videos, firearms, art, high-fashion, etc. there are plenty of better online marketplaces that won't rip you off the way eBay tends to do. Just do a Google search on "online auction" + a keyword or three related to what you want to buy or sell.
PayPal is particularly pernicious. Most people don't realize that PayPal charges a small fortune for nothing more than a little convenience...and it isn't terribly convenient when one gets ripped off by eBay the way the family of this slain soldier are.
Remember, friends don't let friends use PayPal. It is anything but your pal!
"You're young, you're drunk, you're in bed, you have knives; shit happens." -- Angelina Jolie
The reason why Paypal does this is because creating a charity account without being able to provide documents proving your charity status is suspect. It's a red flag. Another red flag is having a new account suddenly receive a massive amount of funds from many individual.
:)
So why didn't they outline the fact that these things would be "red flags" when it comes to recovering money from them?
Why would they let someone set up an account in that way when it is obviously going to create problems with the recovery of funds?
Obviously, the account never should have been able to be set up as a charity without documentation identifying it as such if it's going to create these kinds of problems down the line. The problem is clearly of PayPal's own devising by allowing the account to be set up as such a trap in the first place.
To make things clear, the types of accounts that is:
A) New accounts
B) Unable to provide documents
C) Receiving many funds from many separate individuals
If you can't guess already.... accounts created by phishing scams!
Even if the person who set up the account requested the wrong type, PayPal should have either not set the account up in that way without the proper documentation, or outline the ramifications of not being able to produce said documentation when the money is withdrawn. I think it's obvious that they didn't do either of those things from the reaction of the site, and the "ho-hum should've known better" reaction of a lot of users here.
These people can provide a lot of documentation, just cannot prove they are a charitable organization, because they aren't, never were, and never should have ended up with an account of that type, but because of PayPal's corporate policy of setting up interest-traps like this (they obviously want to trap as much money as possible by luring people into setting up PayPal accounts in such a way that they will enter a "suspended" state which they can then collect interest on) they are now unable to collect their funds.
If PayPal were interested in helping people not be ripped off, they would demand all of the information required to draw down from a PayPal account at the establishment of the account, not when someone tries to withdraw their hard-earned (or hard-earned, then donated) cash from PayPal.
Paypal sucks, but not in this particular case.
This particular case highlights exactly why PayPal does suck. Because they encourage their staff to use legal technicalities to bar people from receiving money they have a legitimate right to, because it is more profitable and legally prudent to do so than not to.
PayPal sucks because as a corporate citizen they are psychopath with a pathological money addiction.
The same reason every other large corporation sucks.
Buddy, if your definition of evil is PayPal then you need some serious help.
I have read the Paypal horror stories. I still have and use it though but with caution. I set up a bottom of the line free checking account at a local bank and use if for nothing but Paypal. I even have a Visa attached to my Paypal account but that Visa is a debit card from the same checking account. When I want to buy something, I transfer money to that bank from my real bank or make a local deposit with just enough to cover the cost and then use Paypal. I guess my thinking is if I'm going to be buying stuff from FleaBay, I might as well use a Paypal account instead of sending money orders like I used to do in the past. I only buy a few things a year so maybe that is why I have not experienced an issue yet.
On that note, I may be back here next week with my own horror story about Paypal and saying the same thing as you are now.
Bad boys rape our young girls but Violet gives willingly.
They do that where I work and I fucking hate that. Our supervisors go around with this line about how they "expect us to top last years numbers" and my boss in particular gives you that long, thoughtful exhale followed by the head shake when you tell him you're not participating.
Fuck the United Way. It's inefficient to the point of being a scam. The only thing worse is the people who call my house every three months wanting me to donate to some kind of police officer charity fund. It's for the families of officers killed in the line of duty and obviously that's a good cause. I donate to another organization here in Houston that does the same thing so I don't deal with the people on the phone. It doesn't slow them down in the slightest however. I've actually explained to them why I wasn't going to donate, told them I wasn't interested, hung up on them, and then been called back by the same person who got rude about my hanging up on them. I wouldn't piss in those peoples mouths if their throats were on fire much less give them any money.
Appended to the end of comments you post. 120 chars.
A couple points... If they did set up the account as a non-profit/charity account, that's not paypal's fault for allowing that to happen.
It takes simple paper work but a decent amount of time to become an established 501c(3) charitable organization. Often times a disaster or other circumstance will occur that necessitates setting up a non-profit to try to help raise the funds... These organizations want to raise money while the cause is still fresh in people minds, even if it means that they're not formally set up as such... So paypal let them set up the account on the expectation that this would occur.
Also, if the account was indeed set up as a charitable organization, paypal, having found out that it wasn't actually a charitable organization, may need time to figure out (consult with lawyers, etc) whether or not they have to contact all the donors to inform them that their contribution weren't to a tax-deductible cause. I don't know about you, but if i donated to something expecting it to be a charitable contribution and found out afterwards that it wasn't, I'd be peeved at Paypal for having allowed that to happen. They simply want to make sure that no ones going to make a big stink or sue.
I don't think that paypal just abritrarily froze this account, that wouldn't make a bit of sense. They've said they'll release the funds in 180 days, so i think that whoever set it up mistakenly or not thought that they should check the the "non-profit" checkbox.
And his headaches aren't over. Once paypal does release the funds, he'll owe taxes, PERSONALLY, on the monies he received... Lets save that outrage for another slashdot article, though!
I just spent some time reading the articles on deadspin, along with a myriad of comments that really don't paint the complainers in a very good light either. Sure PayPal's policy might be annoying in a case like this, but name calling, mud slinging, foot stamping and whining is not the way to make your case. They're not keeping the money... they're following the policies they've put in place, and publicly posted, to protect their own interests as well as those of the vast number of customers they serve every day. In case you haven't noticed, there's a shitload of bad people out there who spend every waking hour of the day trying to take hard-earned money out of our pockets with a never-ending parade of scams, rip-offs, lies, etc... and many times try to do so using PayPal. Making it inconvenient for a few might just possibly be saving tons of money for many would-be targets. It's not a desire to piss you off, it's a by-product of doing large scale business in a hostile environment. If you think ganging up on PayPal is going to force them into changing their policies, you're most likely in for yet more disappointment in your life. Maybe it would be more beneficial to take some of the energy being put into slamming PayPal and redirecting it towards public education.... and no, I don't mean letting the world know that PayPal sucks.. I mean let your readers benefit from your situation by describing what went wrong and how they might avoid the same trap if they choose to use PayPal for such an activity. It's called constructive journalism.... it wins awards and shit... really.
chown -R us
This story smells.
The site author neglects to disclose a few things:
1. Are they paying taxes on the money?
2. How did they disclose their tax status to *both* donors and PayPal?
From the article, they are at fault, not paypal. It sounds like they tried to make some tax-free cash without setting up a non-profit.
So if PayPal just gave them the money, and the IRS stepped in, then PayPal would be blasted for allowing this to happen.
I'm not a fan of PayPal, but this story smells either: bogus, or skewed. Either way it's somewhat inaccurate and shouldn't be taken at face value.
Umm, are there stories that show Paypal in a good light? I haven't heard / read any...
It must have been something you assimilated. . . .
PAYING with PayPal is rarely the problem. It's GETTING YOUR MONEY BACK from PayPal where all the issues come up. All their policies are designed to do one thing: keep the cash in their accounts, earning interest for them, for as long as possible. As a payer, I've never had any issues.
Dude, I think I can see my house from here.
The constitutions of big business (anything with widely held shares) pretty much says that they're out to make money. They are their balance sheet, and anything that the CEO says will help the balance sheet is what gets done. If you've seen the corporation, you'll understand this.
Small businesses, on the other hand, are often there because the owner likes what (s)he is doing and they get to make a living doing it.
I, for example, love solving people's problems. Many of the jobs I've had, I'd do for free, if I had the money from an independent source. Other friends of mine are completely mercenary about their jobs.
I guess that what I'm saying is that small businesses are an expression of their owners .... larger businesses too, but shareholders tend to be only interested in the profits.
Free Software: Like love, it grows best when given away.
The fund in question was set up (possibly improperly) with an explicit, legitimate purpose that all donors can be expected to know about. That means that it is not phishing.
No it doesn't. All it means is that the person who created the account CLAIMS it's not a phishing scam. Someone who was running a phishing scam would say EXACTLY THE SAME THING that these people are saying. They would CLAIM that they were running a charity donation drive for a soldier's family, they would CLAIM that they were going to send the money to them, and then when Paypal put the money in their bank account, they would wire it to Russia.
The way you do this RIGHT is you set up a separate, legal, non-profit entity, and in the ARTICLES OF INCORPORATION state that the purpose of the organization is to benefit John Smith's family, and that funds may only be distributed for that purpose, and then you open an account in that organization's name, not in your personal name. Then when you advertise that you're a charity, sign up for a charity paypal account, and people pay you through paypal and paypal says you're a charity, you can actually get your money right away.
Paypal is doing the right thing here. There is simply no other way that paypal can offer a donate to charity function without this policy. Does it suck for this partciular 'charity'? Yes. Is it ENTIRELY their fault? Absolutely.
paintball
There's absolutely NOTHING new in Paypal doing this. They aren't regulated, so they can do what the hell they want to in effect. and you can notice this.
On top of that, atleast in one point, even fscking janitors could get to see your account info there!
It does get better tho... Rather than working honestly, in one case i had, i got a fraudulent order, found out about that myself
a day later, e-mailed them about the transaction needs to be reversed. This got to happen due to the fact, that they do not require any authentication at all to deposit more into paypal, as long as you have username & password.
I explained what has happened in detail etc. meanwhile, calming the victim down (who's account was stolen, victim of a phishing attack). I wasn't going to just send the funds to her, then the insane transfer fees would be lost etc. Total amount was approximately 150.
Almost 2 months later, i finally got a word from there... Nope, they hadn't read my e-mails, it seems it was automated message, saying the funds had been refunded etc. but the thing is, who's money it was, never got it. She noticed my Myspace profile 6months later, and she hadn't got STILL got it, while paypal had taken the funds from me.
In effect: Paypal decided to take the funds, without refunding them.
Nevermind the insanely high fraud amounts with them! I dropped them, after using them years and years, guess they calculated the
one time cash was worth to them more than continuing transfer fees.
People, don't use paypal, there is honest companies out there to replace them... That being moneybookers!
Pulsed Media Seedboxes
I sugest that you read the post again. He is saying "PayPal is evil" not "Evil is PayPal". There is a difference you know.
It probably sucks for the people who raised this money, but it also sucks for paypal that too many people set up these kinds of things with intent to defraud.
A problem, I think we all agree, but not PayPal's place to fix it.
PayPal doesn't handle the taxation aspects of charity. They don't guarantee legitimacy. They balk at giving the very refunds they claim they've held the money to cover.
So what exactly does "charity" status mean, other than a flag on an account that effectively translates into "Thanks for the 180 day interest-free loan" (or "less than going MM rate" if they used a PayPal MM account)?
Nice try, but PayPal should not have done this. I know their terms give them basically the right to tell you to take a hike and keep your money for any reason, but this will hurt them. Their long history of ripping people off traditionally hasn't received enough press to harm them. Ripping off a charity for a dead soldier's family? This could (and hopefully will) make the cover of the NYT (on a slow news day), and dozens of other major newspapers.
Time for PayPal to go under. They've played games long enough.
Which won't change as much you might think - banks can, and do, freeze funds, refuse transations, etc... etc... on a regular basis.
A few years back we had a virtually identical case locally. A local families house was burnt out - and a helpful neighbor collected cash and checks (made out to the neighbor) to help them out. Said neighbor took a sackful of checks and cash down to the bank and deposited it - two days later when the family showed up with a large check from from the helpful neighbor, the bank refused to honor it and froze the account. (As several posters have pointed out this behavior often points to fraud, or scams, or money laundering - all of which a bank is required by law to make notice of, and take steps to prevent.) In the end the only difference between the two cases is that the local one was sorted out in a matter of a few days.