It's a totalitarian hit-them-with-a-hammer approach that truly needs to end.
I don't know what it will take for this to change but it has to change. For example, AdSense alone has left a trail of destruction like no other service out there. You read stories all the time about legitimate businesses being cutoff for no apparent reason without even the possibility to engage in dialog.
This thing with PayPal is downright scary. Having done tens of thousands of dollars of business with PayPal its one of those things that can keep you up at night.
The problem isn't the suspension of accounts for investigation. I welcome a responsible approach to preventing fraud at all levels, as a consumer and a vendor.
No, the problem lies in the fact that they don't engage in any kind of mutually-constructive dialog in order to try to determine whether or not there's a real problem. By not doing so they can ruin people's lives and, because they have so much money, they don't really care because it causes them no pain at all.
I for one hate government burrowing too deeply into anyone's affairs. However, this is one case where I find myself really hoping that one day we'll see Congressional action here in the US in order to protect us from the monsters that these huge corporations have become. Remember, vendors are customers too, not just the end-users/buyers of products and services.
This, very plainly, is wrong and evil.
The problem is in the attitude. Being French, I'm well-trained in dealing with soulless bureaucracies; but with the French administration (or probably any public administration in most countries) there is always a way to escalate the issue; and if you were right, you very usually win.
But these companies are judge, jury, police and executioner. This can't go on forever.
The company obviously realizes it has a large number of false positives, and it's probably decided that it's worth it.
This would be akin to having airport security send anyone who sets off the metal scanner to a maximum security prison without right of appeal.
Not so loud, TSA will hear you.
I try not to buy of ebay or use paypal now (it wasn't difficult to open a another account - different card/address), I would rather pay a little more and buy off Amazon who in my experience have the best customer service I have ever experienced.
In my mind, this behaviour can be explained as the one of a monopoly. PayPal is probably a great service in the vast majority of cases, but the behave unacceptably in a number of exceptions. And it would not even be very hard to solve, because it seems to be mostly about process, transparency and communication.
This is quite similar to the treatment you get from many government services, which happen to be organized monopolistically as well.
Once there is a true choice for these basic services like text ads, auctions and online payment, this would likely end quite quickly.
There is probably something in the structure of these businesses that makes them come pretty close to natural monopolies. Maybe internet users should actively start to pick always the second biggest provider for everything in this space. But I would not be able to tell you a name for payment service and auctions site that was to fit that description.
But then, how do we fix this?
I can also see why you're being downvoted here.
And that's why things are not changing.
Down-vote away.
It'd be easy to implement a set of rules that could make it fair. For example, limit the rate of change on any given post so that it can't be attacked by a barrage of down votes by fan boys. This would open up a post to a wider non-ideological audience and allow it to float or sink on its merits rather than whether or not the author pandered to the fan-boy culture's point of view on all fronts.
Further to that, nobody should be allowed to down-vote silently. That's chicken-shit. If you down-vote you need to state why you are doing so and subject your view to the same peer review, if you will.
Another interesting idea is that down-voting costs you a significant amount of karma points. And, if you go below a certain number you are ejected from HN. Now people are likely to think twice before down-voting on ideological basis because they'll stand to loose something.
All said, HN is still tolerable but it really is frustrating to be down-voted when purely on ideological basis rather than on based on the merit, accuracy or veracity of a post.
Anyhow, the PayPal, Google, eBay, etc. problem is not likely to be solved by yelling and screaming on blogs and HN. I firmly believe that massive legal action, and, more than likely, in the US, Congressional action, is the only light at the end of the tunnel. They are too big and just can't be hurt or bothered with any other approach.
Be careful what you wish for. Congressional action forcing PayPal, Google, et. al to provide better customer service sounds great for consumers, but unless the legislation is very narrowly focused, it will just end up being another piece of regulation that protects incumbents and punishes newcomers (e.g. by imposing an untenable customer support burden on bootstrapping companies).
I always said that the service of all online companies is great until something goes wrong. How they handle mistakes and problems is the real test.
Certainly not hard enough to prevent your CS people from even giving out a phone number to call for support. Most certainly not hard enough to not be able to address quickly.
Financial transaction analysis is an old science. Experienced people are hard to find, but not exceedingly hard. Systems already exist to mine the hell out of data to tell the scammers apart form the genuine people. An of course, you can build your own system and whatever analysis you want.
And how big do you have to be to be able to afford this? Not large at all. I think you overestimate the difficulty of catching bad guys.
You should note that the recurring complaint is NOT "PayPal froze my funds". The complaint is "PayPal froze my funds and then refused to communicate at all with me". This points to incompetence and lack of consideration much more so than "This shit's hard, yo!"
So, no, financial transaction analysis is not hard enough to screw over your customers.
"The origins of Palantir go back to PayPal, the online payments pioneer founded in 1998. A hit with consumers and businesses, PayPal also attracted criminals who used the service for money laundering and fraud. By 2000, PayPal looked like “it was just going to go out of business” because of the cost of keeping up with the bad guys, says Peter Thiel, a PayPal co-founder.
The antifraud tools of the time could not keep up with the crooks. PayPal’s engineers would train computers to look out for suspicious transfers—a number of large transactions between U.S. and Russian accounts, for example—and then have human analysts review each flagged deal. But each time PayPal cottoned to a new ploy, the criminals changed tactics. The computers would miss these shifts, and the humans were overwhelmed by the explosion of transactions the company handled.
PayPal’s computer scientists set to work building a software system that would treat each transaction as part of a pattern rather than just an entry in a database. They devised ways to get information about a person’s computer, the other people he did business with, and how all this fit into the history of transactions. These techniques let human analysts see networks of suspicious accounts and pick up on patterns missed by the computers. PayPal could start freezing dodgy payments before they were processed. “It saved hundreds of millions of dollars,” says Bob McGrew, a former PayPal engineer and the current director of engineering at Palantir."
[http://www.businessweek.com/magazine/palantir-the-vanguard-o...]
As for Regretsy's continual lack of ability to get CS from PayPal, as someone who has often spent egregious amounts of time talking to PayPal, I honestly think Regretsy is doing something wrong. I also personally feel like PayPal should just ban them from using the service: they don't seem to understand how online payments work, and their reaction to normal procedures is to raise a public shit storm... it's just lame, and it shouldn't be getting play on HN.
Customer service != fraud department. Google, Netflix & Paypal seem to have similar methods of dealing with "suspicious accounts". Those methods usually involve something along the lines of shutting the account down and then rebuffing attempts to communicate with the people who made the decision. Customer service evaporates once you've been ostracized by their security systems.
"Big reserves on deposit" is what I was told.
It's probably not quite as simple as that, but I suspect being able to demonstrate a degree of financial solvency (airlines? really?) and having funds in reserve would go a long way towards paypal working with you more. In fact, I think paypal ends up holding some of your funds for you as a reserve against chargebacks after certain conditions are triggered, no?
If I'm not mistaken, if this were an actual, say, visa merchant account, all parties would have much clearer rules laid out. The customer would be protected "they didn't deliver, I'm not paying". The merchant doesn't get "credit" per-se..... they have to deliver goods or the charge-backs start, at which point they are up shit creek, along with possibly their substantial deposit with their merchant provider.
Paypal does not work like a normal merchant account for credit cards - people need to remember that - that's why we have these horror stories. If a credit card processor tried to pull this stuff they'd have their visa contract yanked in a heartbeat and thir merchant banks would drop them like a hot potato.
I rather liberally misused scam to mean "sloppy or negligent financials" -- like "let's take lots of pre-orders and with those funds maybe we'll be able to make something happen!" When businesses need to front-load financing from their future customers, the likelihood of failure increases dramatically.
Don't make the mistake of imagining that because you've worked in the same space as paypal that you have a grasp on the true scale of the problems they face.
They refuse to tell you why you're blocked.
They refuse to allow you to talk to someone to appeal the decision.
PayPal's CS is absolutely _horrible_. This magnifies any other issues you may have with them.
They have no business arbitrarily freezing accounts for months. None. It doesn't matter how much or how little customer support they have. That's wrong.
If paypal was letting chargebacks run out of control because they refused to police fraud they would have to raise the fee percentage to something like 10%, assuming they could even continue to have any sort of relationship with credit card processors. If that happened their customers would be screaming bloody murder and demanding they do something about fraud to keep things under control.
Not only that, but they would be shut down in just about every country in the world for helping to support terrorism and organized crime by failing at basic do diligence in stopping money laundering et al.
Welp. It's your own fault. Read the paperwork next time.
The freezes would be reduced to an inconvenience instead of an all-hands emergency if they didn't go out of their way to avoid talking to you. I cannot fathom what kind of boneheaded moron decided that an automatic system flagging your account means you are now persona-non-grata.
I reiterate: I don't care what their T&C says. It's not good business practice to freeze an account for months with no recourse. Period, paragraph.
What I do have a problem with is freezing accounts for 180 days with basically no input from their legitimate customers. Yes, I have had Paypal accounts frozen in the past. They are extremely trigger happy here and they do not work with their customers to unfreeze accounts or even get customer information for their review process. Every other processor I know of including ones which address high risk areas of processing (like porn sites), engages in such freezes largely on the short term while review is done in order to determine what steps need to be done in order to bring the site into compliance or terminate the account. In no case is money held for such a period of time or with so little feedback.
It's also reserved for stupid, uneducated opinions. Saying that "no, they shouldn't freeze accounts, no matter what, full stop, regardless of how good their CS is" not only adds nothing to the discussion, it's completely silly and flies in the face of the very logical and sensical reasons why accounts are blocked.
I'll say it again here: The problem isn't the automated blocking (which all payment processors do), it's the lack of an appeals process.
I'm not sure what the general worldwide fact is for all kinds of payment processing. But it is general practice (not federal law, as I thought before editing this) in the United States that a seller can't actually get money from a transaction paid by a credit card unless the item ordered has actually entered the shipment process.
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre28.shtm
That's the way Amazon has always billed me, and I think it's the reason that Amazon sends me partial shipments even when I didn't ask for separate shipments when I order several items at once.
That might be one of the reasons, but I'm sure the usual reason is that the items are coming from different warehouses and the logistics are easier (/cheaper) for each to ship to you directly than for them to shuffle their product around so they can send everything to you in one box.
(PayPal now supports this through PayPal X, but did not at the time that Kickstarter was being first released. Getting access to this API from PayPal requires more authorization than from Amazon, but the result is also more powerful: you can hold tokens with no expiration and seemingly no cap.)
https://cms.paypal.com/cms_content/US/en_US/files/developer/...
In fact, they might order the allegedly scammed buyer to simply destroy the thing you sold them instead of letting you refund the money and take it as a return:
http://www.cbsnews.com/8301-501465_162-57352136-501465/paypa...
Here's something else. When we were planning on setting up PayPal payments to integrate with our app, we went thru the process blah de blah, upgraded our account to Web Payments Pro III or whatever, and suddenly… we weren't able to access our money any more. They decided to hold 30% of all our revenue for 90 days. Forever.
Not just via this new mechanism. But every dollar that passed through our account.
This was after years and years of happily using PayPal and having hundreds of thousands of dollars pass through the account without incident or customer complaint.
Meanwhile when we were a brand new LLC without a credit record to our name, we had no problem getting set up with real "big boy" credit card processing, merchant account, etc., all of which deposits daily. No 30-day holds.
More importantly, if there ever were an issue, these companies have clear, firm policies, and great phone support. I loathe Auth.net for all kinds of reasons, but if you call them, they actually help you. There's none of this "No, I cannot discuss it, and no, you cannot talk to anyone else" crap that PayPal loooooves to pull.
So, while PayPal would like you to think that they actually offer better service, that their hands are tied, that it's somehow not due to them being total capricious assholes… that's just one big stinking lie.
PayPal is a direct subsidiary of Ebay Inc. which has around 11 billion dollars in revenue, so compared to American Express, which has 29 billion in revenue, it is smaller but in the same sort of ballpark.
You know, despite their tiny size, I think they might just about have the available funds and resources to work out fairly quickly if a book for a known cancer charity featuring popular authors is likely to be fraudulent or not. And to provide proper arbitration.
Let people spend their money how they want, be it scam or not. The only monitoring Paypal should do is that accounts aren't getting hacked.
Consider that criminal gangs are huge multi-million dollar businesses that run complex scams and money routing tricks that can confuse governments[1] it's not surprising that PayPal wants to try to protect itself.
For instance the site is, right now, taking pre-orders, not orders. There is no published timeframe when they'll actually ship the books that I can see. Paypal only allows you to accept pre-orders up to 20 days in advance of shipping the product to buyers, and even then they can demand significant additional proof.
Because, unfortunately, pre-orders are the classic setup of too many scams (which some random agent probably won't easily be able to eliminate), and it's the domain where PayPal ends up holding the bag. 5000 people pre-ordered some cool internet controller and then maker disappears, etc.
We've been hearing these sorts of "horror" stories for years (wow do people not understand how hard and exclusive the payment process used to be!), yet despite PayPal still being relatively small -- especially compared to the banks and credit card companies -- no one is credibly doing what they do. Maybe because they're doing something rather hard?