"Aggressive changes" coming to PayPal's frozen funds policy
31 replies, posted
[img]http://i2.cdn.turner.com/money/dam/assets/130118111954-paypal-frozen-funds-monster.jpg[/img]
[url]http://money.cnn.com/2013/01/21/technology/paypal-frozen-funds/?source=cnn_bin[/url]
[quote][b]PayPal's overzealous fraud filters have frustrated customers for years, with an inscrutable verification process that leaves some battling for months to get access to their money.[/b]
The eBay-owned payments processor, like other financial companies, has policies in place to ensure that fraudsters aren't using its system to transfer ill-gotten gains. But PayPal also traps legitimate businesses and charities in its filters, and proving you're no scam involves a ton of paperwork and time.
PayPal says it's finally ready to deal with the problem. It's promising to roll out a massive overhaul of its system within the next several months -- but details are scant for now.
"These are not minor -- these are aggressive changes," said Anuj Nayar, PayPal's senior director of communications. "This is a fundamental shift in our business operations."
Nayar said he can't go into specifics about what will change, but transparency is a major focus. "We want to be clear about how people can get out of the [frozen funds] situation," he said. "We need to get better about helping people, or explaining why actions are being taken."
PayPal customers have complained for years about the Kafkaesque nightmare of trying to pry frozen funds loose.
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 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."
Nayar first discussed PayPal's plan for "big changes" in a TechCrunch article posted last week, after science fiction author Jay Lake found his account frozen. Lake, who is battling advanced colon cancer, is raising money for an experimental genome-sequencing process.
Thanks to his own fame and the aid of friends like Neil Gaiman, Lake's fundraising effort went viral. Just five hours after launching his campaign, he had $20,000 in contributions. At about 4 p.m. Pacific time the next day -- January 11, a Friday -- Lake tried to transfer the funds into a bank account. Instead, he received an alert that his PayPal account was frozen.
"They wanted me to provide receipts, shipping information, business paperwork," Lake told CNNMoney. "That obviously didn't apply to me, but there was no way to bypass the process. I called, and they said appeals take 24 to 72 hours to get going. I asked, 'How I do prove I'm not conducting transactions?'"
After Lake fired off a sarcastic tweet at PayPal, his fans and famous friends lobbied for help. His account was restored by 6 p.m., and PayPal tossed in a corporate donation to Lake's fund.
"If it weren't for my small bit of fame, if I were the guy down the street, this could have taken months," Lake said.
Related story: 5 pay-by-phone apps tested
That's what happened to Brook Drumm, an entrepreneur who sells 3-D printers. After running a successful Kickstarter campaign, he launched an online store to sell his Printrbot machines. More than $100,000 rolled in.
"PayPal freaked out and froze our funds," Drumm said. "They needed references and bank statements and tax records. This went on for months. And even with all that paperwork, they still ended up holding $50,000. We finally got the money, but it was an untold amount of stress and sleepless nights."
Nayar, the PayPal rep, said the company can't comment on specific cases.
"We've made a commitment to be clearer with consumers on how they can get out of these situations," he said.
For example, the issue that Jay Lake faced -- being asked to mail in receipts and other paperwork that doesn't apply to fundraisers?
"We're fixing a lot of that," Nayar said. "At a minimum, the fact that someone needs to mail in something to an online payments company is a problem. 2013 is going to be the year that we fix a lot of those pain points."
It will take time, he cautioned. PayPal has multiple, complex security systems in place, and all of them need a fresh look.
Ironically, Lake understands better than most what PayPal is up against. As a sideline to his writing, Lake consults with financial institutions about their communications systems -- for example, the automated calls you receive when your credit card may be compromised. He's familiar with the fraud protection process, and he thinks PayPal's has plenty of room for improvement.
"There's a guilty until proven innocent bias to it, and that needs to change," he said.
PayPal can't afford to be complacent much longer. The field that it once monopolized is now full of competition: WePay, Square, Stripe and smartphone-based systems like Google Wallet are only a few of the up-and-coming rivals.
"We are committed to getting back to being the center of our customers' financial lives," PayPal's Nayar pledged. "Big changes are coming."[/quote]
Paypay sounds like a comic book villian.
PayPay
is that a joke or
If they pull it off I'd use them more. I keep my funds out of PayPal as much as possible out of fear I may make a bad transaction that results in a freeze.
Maybe this means Gary can make gold membership $1000 again?
[QUOTE=Mateo!;39309171]PayPay
is that a joke or[/QUOTE]
I misspelled PayPal and i didn't notice, I am not a person that double checks things.
I don't trust PayPal with too much of my money, I heard to much stories.
PayPay on the other hand, I trust with ALL my money
[QUOTE=Iago;39309298]I don't trust PayPal with too much of my money, I heard to much stories.[/QUOTE]
I go through thousands of dollars every year with paypal, I love it. I heard those stories too, but of course you are going to hear the disaster stories and not the success stories.
I know a few people that've gotten fucked over by this. glad to see it change
[QUOTE=Iago;39309298]I don't trust PayPal with too much of my money, I heard to much stories.[/QUOTE]
unless you're foolish enough to pay for a car from some unknown seller in China, I think you'll be fine...
If you're a victim of fraud, it's most likely your own fault.
[QUOTE=QuikKill;39309516]I go through thousands of dollars every year with paypal, I love it. I heard those stories too, but of course you are going to hear the disaster stories and not the success stories.[/QUOTE]
That's really dumb, they run a service at the very center of it is money, there shouldn't be any success stories, the whole [B]thing[/B] should be a success story and frozen funds should be few and far between with empirical evidence to [I]why[/I] they did it.
honestly ebay is reknowned for gathering fraudsters, that's the one site you have to really think before buying.
I use paypal, but never actually keep money in there. I will do card transactions through it, and if necessary, put in the exact amount needed to buy what I want. I've heard too many horror stories.
[QUOTE=AK'z;39309737]unless you're foolish enough to pay for a car from some unknown seller in China, I think you'll be fine...
If you're a victim of fraud, it's most likely your own fault.[/QUOTE]
Paypal is a protection system as well as a payment one, they're going to lose a [i]shitload[/i] of business if they stop being a safety net and start going "Good job, nothing to do with us, though"
I have a business account through which travels tens of thousands of dollars a month. We've had our account frozen no less than 8 times in the past 3 years and have lost thousands of dollars of revenue to fraudulent chargebacks.
PayPal is great in the way that everyone uses it and that I guess it's quite secure (or more so than a lot of the competition), but I do feel that they genuinely freeze some accounts just to hold onto cash, and there is no seller protection at all.
It's a 24/7 job just going through chargebacks, finding legitimate/fraudulent ones and then sending off a bunch of paperwork to PayPal. Even then you're not guaranteed to win.
[I]PayPal needs to get their shit together.[/I]
[QUOTE=Rents;39309855]Paypal is a protection system as well as a payment one, they're going to lose a [i]shitload[/i] of business if they stop being a safety net and start going "Good job, nothing to do with us, though"[/QUOTE]
well they're improving, but fraud on the net is mostly one's gullability to obtain things too good to be true.
You would be surprised how much skimmed money passes by paypal
More like PayFoe.
I have paypal and I never once had a problem with it like this and I've had it for what like 7 years or so?
been using paypal for years and never had a problem
For those who never had a problem, this kind of thing doesn't usually happens with low amounts, this kind of thing happens when you start receiving large amounts or many small amounts. This affects mostly businesses as you can probably see and this make business lose a lot of money.
[QUOTE=QuikKill;39309516]I go through thousands of dollars every year with paypal, I love it. I heard those stories too, but of course you are going to hear the disaster stories and not the success stories.[/QUOTE]
You say this, but multiple banks in my area tell a completely different tale.
They have it built into their policy that they will create a secondary account purely for interactions with paypall. I asked about it at a few places, and it turned out that they had a crushing number of problems that specifically tied into paypall and people getting thousands of dollars withdrawn from their accounts due to fraudulent charges.
[QUOTE=kenji;39309743]That's really dumb, they run a service at the very center of it is money, there shouldn't be any success stories, the whole [B]thing[/B] should be a success story and frozen funds should be few and far between with empirical evidence to [I]why[/I] they did it.[/QUOTE]
I didn't mean it like it was a "success". It's years of using it without any issues. If people have such a problem, there are other services that they can use.
All paypal transactions for me take at least three days to process with my bank so I just tell them to bounce any rogue incoming or pending transactions and they don't touch my money.
I'm getting the impression that most people who are having problems with PayPal are sellers/merchants, who run into PayPal's draconian anti-fraud systems or fall victim to customer chargebacks. PayPal is a system that favors the buyer, I'd probably never use it if I was a merchant.
PayPal really went south when eBay bought them. All the smart ones and the inspirational ones left and the much more bureaucratic eBay management took over, pretty much slowing any major changes to a halt.
Paypal is the standard system used for TF2 trading, if anyone decides to dispute the payment, nothing you can say will get you your money back, there have been cases when someone has stolen thousands of dollars of items, just for paypal to declare it to not be fraudulent activity, and I have had my account locked before, they claim they were going to close the account after 180 days, just to reopen it after a week
I love how Paypal basically acts like a bank, yet legally isn't one in the US :v:
Paypals security shit is nasty.
[QUOTE=Uzbekistan;39312978]Paypal is the standard system used for TF2 trading, if anyone decides to dispute the payment, nothing you can say will get you your money back, there have been cases when someone has stolen thousands of dollars of items, just for paypal to declare it to not be fraudulent activity, and I have had my account locked before, they claim they were going to close the account after 180 days, just to reopen it after a week[/QUOTE]
thats why you make them send money as a gift yo
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