PayPal Preparing To Address Frozen Funds Policy

First time accepted submitter skywire writes "After years of forcing innocent customers to navigate a Kafkaesque process to unfreeze their funds, PayPal has announced that they are preparing major changes to alleviate the pain. From the article: 'The company routinely freezes funds for 21 days if it thinks there's a fraud risk, and its terms give it the right to extend the freeze for up to 180 days. To get access to their money, users are often asked to provide the kind of documentation that a product seller would have, like several months' worth of sales records. But if you're running a fundraiser or selling tickets to an upcoming conference, you don't have that paperwork. Even for those with extensive paper trails, the appeals process can take months to resolve. The Web is filled with enraged blog posts, websites like paypalsucks.com, and a Tumblr called "Conferences Burned by PayPal."'"

Comments

Too Late

[QuantumBeep]

After over ten years of destroying businesses and hurting people while hiding behind a blank gray wall of "policy", Paypal are kidding themselves if they think that they can ever recover the goodwill that they've burned.

Re:Too Late

[alexo]

You don't need much "goodwill" when you are the biggest player in the game and have a captive user base.

Re:Too Late

[Hognoxious]

we're just dumb

Speak for yourself, but don't count me in.

Re:Too Late

[tlhIngan]

Credit card policies are not very different

Most of the sellers I read about we're just dumb

That's the problem, really.

Merchant accounts aren't too different from what Paypal does in the end - except retailers are often forbidden by contracts to speak about it.

The other thing is, the average Joe cannot get a merchant account, so accepting credit cards is impossible (they often have minimum transactions per month of minimum amount to qualify, else you get the high rate account). Paypal does, however, let the average Joe do that, so if you're running a small shop and can't qualify, Paypal is pretty much your only option.

Especially if you want to sell online (imagine how online auctions go if you can't pay via credit card).

The problem is, most sellers just assume that it's like a cash account and Paypal will hide al lthe fees and crap from them. But given a chargeback can occur easily 6 months from the transaction date, and by default the credit cards refund the money unless the seller can prove the transaction (at which point it's paid back), well, most people are in for a surprise.

I suppose one could take cash or cheques sent through the mail. I'm sure that's viable in this day and age of buying stuff and getting it the next day.

Re:Too Late

[AK Marc]

But the credit card companies don't abuse their policy. Most are banks, and have some regulation. PayPal is a non-bank banking institution, and that's why they are evil (well, one reason of many).

Re:Too Late

[afidel]

For commercial seller Amazon seems to be the vastly superior service. I know I only look at ebay if there's none listed on Amazon or none at what I consider a reasonable price. As far as payment processors for things like donations there's Google Wallet, Isis, and Amazon payments.

Re:Too Late

[postbigbang]

None of these has really garnered much marketshare, despite Paypal's evils. Although an interesting payments model, its customer service is an oxymoron. When you've got auction funds tied up from eBay, or there's a question to your business model, they shoot their clientele first, look for blood, and allow questions to be asked later.

If the US banking laws were real (I know, another oxymoron), Paypal would have the teeth of a hundred US DAs in their leg, gnawing viciously. But they're seemingly exempt, as are all the big financial houses.

Square

[TechyImmigrant]

Maybe they're feeling the heat of competition from square and feel the need to do something to stop the exodus.

Our little business finds square a lot easier to deal with.

WAAAAAAAAAY too little, too late.

[Gorshkov]

Until recently, I was on the board of directors for a local homeless shelter here in town. RIght now, we're in the middle of planning a major fundraiser. When it was suggested that we get a paypal account so that people could purchase tickets on-line, I went ballistic - I've heard way too many horror stories over the years. I'm not sure others on the fundraising committee quite believed everything I said, but my reaction was so strong it spooked them, and they backed off the idea completly. Paypal's changes will have to be effective, and in place for a very long, long time before they even have a *chance* of having people like me deal with them. That's a very large part of the market they've never had, and quite possibly never will.

Reminds me of a funny story

[cualexander]

PayPal once froze my account. I didn't realize how much they take those comments seriously and several years ago I sent some money to my wife with PayPal and put "For Sexual Favors" in the memo box, just kidding around, the way people would do on checks back in the day. Well, apparently PayPal thought I was actually paying for sex with PayPal and froze the funds. After I called them and explained the situation though, they quickly released the funds.

Re:Reminds me of a funny story

[Anonymous Coward]

Well, apparently PayPal thought I was actually paying for sex with PayPal and froze the funds. After I called them and explained the situation though, they quickly released the funds.

The story is not funny at all, but it is indicative of problem with PayPal

The fact that you had to explain yourself before your account is un-frozen is the very reason PayPal should cease to exist. I should be able to write whatever the hell I want on the payment -- unless they have some proof of illegal activity, I should not explain myself to PayPal to recover my account/my money.

In Germany

[Anonymous Coward]

Paypal does not get much news coverage in Germany, it is just not as useful since the bank transfer system is pretty fine. But a while ago they managed to get onto the news when they tried to force a company to stop selling Cuban cigars. The company decided to stop offering paypal transfers instead of stopping to sell the cigars.
But really, how is that their bussiness? And why is that stupid Cuba embargo still in place? Some people said that this embargo has always been about turning Cuba into a colony.

Re:Too little too late

[Anonymous Coward]

>> They lost me 2 years ago and short of their entire executive team kissing my bare ass on national TV,

Hi! I'm with customer relations at PayPal and we're working hard to restore our name and good will to our prior customers. Our new policy is to do everything within our power to help you view the new open PayPal in a better light. As such, your request for a public ass kissing has been reviewed internally and accepted.

Please write back with your name, number and the nearest TV or film station so that it can be broadcast.

Disclaimer: Note: All fees and expenses related to the round-trip ticket to your home town, purchase of air time, film crew and all misc and incidental fees will be applied to your paypal account.

Thanks!

Joe
Paypal Customer Service.

Re:If PayPal wants to seem trustworthy

[Spad]

They are in Europe and have been since 2007. Not that it stops them acting like dicks, of course, they are just (in principle) well-regulated dicks over here.

Re:If PayPal wants to seem trustworthy

[AK Marc]

The only nice thing about PayPal being a non-bank is that someone in the US can pay someone in the UK relatively easily. I moved out of the US, and for me to send myself money from my US accounts requires I show up in my bank, in person, to order the international transfer. They don't even honor their own terms of sending based on a fax. Banks are afraid of being the next HSBC.

Too late for us

[tipo159]

I am involved with organizing a sporting event. This last year was our seventh running of the event. In previous years, the sanctioning body would collect the entry fee and send the events their portion. Because of some issues with the sanctioning body (not really set-up for credit card payment and slow payment to events), the system was switched to where events collected the entry fee.

We decided to go with PayPal for most of the normal reasons folks go with PayPal. I had the PayPal-based payment system up on the event web site in a couple of hours. The first month of getting entry fee payments went fine and we could transfer the funds into the event's bank accounts (to cover pre-event costs like venue deposits and insurance).

The trouble started at the end of the early entry period for the event (when entry fees increased). To avoid the increase in entry fees, almost everyone entered in the event who had not already done so, paid their entry fee on the same day. This triggered PayPal's fraud system and the event's PayPal account was locked. Although we had successfully run the event for the six prior years (with outside media coverage to prove it) and our paperwork was in order, PayPal decided that they would not give us access to the funds until after the event had run, "just in case the event was cancelled and the entry fees needed to be refunded".

PayPal's actions were almost a self-fulfilling prophesy. Without access to the funds to cover pre-event costs, the event was almost cancelled. Luckily, between the entry fees collected before the PayPal account was locked, the entry fees that we collected directly after the account was locked and understanding vendors, we were able to cover the pre-event costs and the event was held.

After successfully running the event, we contacted PayPal to get the account unlocked. At first, they wanted to make us wait six weeks. However, we pressed the point that we had bills that had to be paid and needed access to the funds ASAP. After an hour on the phone, they unlocked the funds and gave us access to the funds.

Compared to some people that I have spoken with, we got off easy.

I don't care what PayPal's new policy is. We are not putting our event at risk again by accepting payment via PayPal.

Re:Too late for us

[Jah-Wren Ryel]

Just tack on a PayPal "processing fee" for anyone that wants to use that method.

Paypal terms of use forbid surcharges specifically for paypal transactions. You might be able to get away with a discount for other payment methods (I don't know for sure), that is the way people traditionally got around similar rules for credit cards - a cash discount rather than a credit card fee.

Indeed merchant accounts don't freeze the whole ac

[raymorris]

Indeed. With CC merchant accounts they don't automatically freeze an account full of funds based on automated heuristics. It's possible they do it rarely, but working closely with thousands of businesses, and having my own merchant accounts, I've never heard of it happening. I've had my Paypal account frozen before and I know at least a dozen other people who have.

The chargeback process is still slanted toward the buyer, but the buyer has to fill out and mail or fax paperwork, not just click a button on a web page. That reduces BS chargebacks. More importantly, that chargeback affects only the one transaction; they don't freeze thousands of dollars of unrelated funds. CC processors only freeze the account after MANY complaints from buyers. Partly, that's because they do the anti-fraud work upfront, when you apply to open the account. That takes a couple of weeks.

Average Joe

[englishstudent]

I believe that the average Joe can now accept credit payments using 2CO https://www.2checkout.com/

Not going back

[JohnnyBGod]

Honestly, I've given up on Paypal. Back in 2009, I've had my account frozen due to using many credit cards. Since I didn't have a job, I (thought I) couldn't get an actual credit card, and used a service in my country that generates temporary credit card numbers, valid for a month and with a set credit limit*. Well, Paypal didn't like that I used more than (IIRC) 15 credit cards in X time, so they blocked my account. I've since learned that Paypal e-mail support is where messages go to die, and, through site revisions, has become almost impossible to find. So, to resolve my problem, I had to call an Irish number, where this lady basically told me "No credit card, no dice". So then silly me goes and gets an actual credit card and calls again. "Looks good. It should be OK, now" - someone else says. It isn't. The next call: "OK, reset the password from your main computer". a) My main computer was a laptop which died in the middle of this process, and I've told them this, and b) What's the point of being on the web if you're requiring people to do something from a set computer? I've reset the password and the account is still blocked, so I've given up. Luckily, I only lost a little money in this process, but I've been finding that living without PayPal is easier than I thought.

* For the curious, https://www.mbnet.pt/

2007 Transfer to Wife in Europe

[retroworks]

I transferred a good bit of money to my wife in Paris in 2007. It had worked twice previously. On the third time, Paypal "froze" the funds, IE took them out of our joint account in the USA, but not putting them into our account in France. Several weeks went by, I was calling constantly. One particular guy taking my calls will live in my memory forever. I learned to just say "escalate" "escalate" "escalate", as we reached a point when my wife in France's internet account would be cut off for non-payment. We had to keep faxing documents all showing both our names on both the accounts. It was an absolute horror show. I don't understand why there is not a class action suit against them for the interest Paypal earned from all of the people like me who had all of their money in Paypal limbo. I'm way too busy to worry about this now, but if I had time to, I'd hate their guts.

Re:Commission requirement

[tepples]

For many many many products you can get assigned an ASIN

And for many many many products you can't without first getting a UPC, EAN, or ISBN. The information is in a help file on Amazon, which is available only to logged-in subscribers to an Amazon seller account. I'm not at work right now and thus lack access to my employer's seller account at the moment. Do you have an Amazon seller account? If so, do you want me to look up the citation for which categories absolutely require a UPC, EAN, or ISBN?

Impossible to avoid Paypal in the UK on ebay?

[jago25_98]

The problem with Paypal is that they are heavily linked into ebay, certainly in France and the UK where Paypal has to be accepted and is very hard to avoid using.

I've looked hard at ways to use ebay without Paypal but can see no way even for someone such as myself who would sacrifice 50% less sales in order to use a competitor to Paypal. Ebay in turn is very dominant for goods in the UK, a first port of call for any cheap goods from HongKong or used goods especially.