Thank you! After reading the story I headed to the comments to look for this exact comment! This story was super, super sketchy! The tell was it didn't at all mention the products or services they sell. Since any normal person would mention the products/services they sell front-and-center as key information to the story, I went ahead and assumed the problem was the products or services they offer were illegal/sketchy/questionable/against TOS.
So I came here to see if anyone looked up what sort of products and services they offer.
Ooof, PBNs are literal spam. They're designed to game Google by producing a deluge of low quality content with backlinks on whatever search terms you're hoping to squat on.
That raises another question: why couldn't Paypal simply say this?
I can imagine several plausible reasons, related to potential liability, but does that mean that if we're trying to outsource business functions to specialist firms that we can't expect them to be transparent in their operations?
In my opinion the reason for ban, even though mentioned that unrelated to their SaaS offering, is likely higher number of transactions with parties who have been also baned for some shady practices.
Such rat clusters are usualy nuked in batch.
And it took PayPal 12 years to flag their product as Spam? In any case, PayPal should be a payment processor, not a enforcer of arbitrary business standards, like tagging something as spam 12 years too late.
Thank you for sharing this story, I have added it and Niteo to my growing list of PayPal (and other financial service) bans: https://gitgud.io/TornTongues/torntongues/#paypal (contributions welcome). Kafkaesque indeed...
The lack of customer service in the Silicon Valley is a pervasive problem.
* Cody Don on YouTube teaches the masses about science and regularly gets banned. His videos are rated G to PG. Despite millions of viewers and dollars of Revenue, there is nobody he can call.
* Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
* Lose your Instagram/Twitter/Gmail? Too bad, because it's free, you're treated as cattle.
> Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
Your bank. You dispute the charge. Uber can deal with your bank. It doesn't matter it was a debit card. It means you're missing the money immediately, but doesn't stop you from disputing.
In the case of Paypal it's not exactly a lack of customer service, as you can call or email and you will get a response, but a specific policy to not disclose the reason you are banned.
> Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
If you're in the U.S., I would think your state's Attorney General. It's potentially either theft or fraud, I would think.
Or if your A.G. won't pursue it, go after Uber in small-claims court. Not only are you likely to recoup your lost money, but you'd cause them some pain and/or lawyer fees.
Every Friday go online and withdraw all-but-the-necessary £€$$ to your bank account (transfer wire or via card number). I do get some revenue via PayPal, and the very same day (or the next) I 'download' comes it to my bank account (connected to PayPal via card) and IMMEDIATELY is shipped to another account that has all the controls to make money (relatively) unmovable.
I perceive PayPal as my wallet. I do keep 'some' money in it but I keep the motherload away 'layers' deep.
My money flow diagram, in the back end, includes "tax", "expenses", and "vault" (alarm Scrooge McDuck) accounts.
I see PayPal as the envelope that I am given the cash in. It doesn't stay there for more than 24-48h.
Edit: someone below mentioned they do spam.. if e.g. USA authorities has alerted them about doing shady things, PayPal would also receive a gag order with it to a) freeze their $$$$ and b) gag them. If I was Niteo I would get my pencils sharpened and wake up my lawyers.
>Every Friday go online and withdraw all-but-the-necessary £€$$ to your bank account (transfer wire or via card number). I do get some revenue via PayPal, and the very same day (or the next) I 'download' comes it to my bank account (connected to PayPal via card) and IMMEDIATELY is shipped to another account that has all the controls to make money (relatively) unmovable.
PayPal does have a feature they don't advertise named Auto Sweep, which withdraws any balance in your account each day. You need to contact support to enable it.
Nobody disagrees that this is what you have to do in PayPal's current state. The debate is to whether you should have to do it, or whether, given that it walks and talks like a bank, PayPal should nationally and globally be treated as a bank.
My only experience with paypal was about 8 years ago.
I briefly remember signing up for it roughly 2-3 years prior to that.
I linked my paypal to my (older) bank account so I could purchase something. This account had about $100 in it - it was my old left over account from before I got married and got a joint account, etc. So I kept a tiny bit of money in it.
I had moved about 2-3 times since opening that account - I never used the account for anything, it just sat there with money in it. It was eventually forgotten about.
Anyway, long story short. Someone managed to access my paypal and request a sum of money around roughly $40. That account had about $38 in it at the time. Paypal flagged the transaction as fraudulent, stored the money 'in my paypal account' instead of sending it to the requester, and froze my account. But this overdrew my bank account by roughly $2. Needless to say, 2-3 years of late fees added up to a substantial amount of money - two separate accounts - one for about $280 that I owed the bank and another that was about $350 that i owed to their 'overdraft' company. I didn't find out about either until they were about 2-3 years old and in collections.
I realize what I'm explaining is totally my own fault for not monitoring that account and keeping it up to date, but if paypal would have either redeposited that money into my account or sent some emails, instead of freezing the assets in a holding account, I could have avoided that.
In either event, that left a bitter taste in my mouth, and i severed all ties with paypal and that old account at that point.
I had to explain this multiple times to different government and military agencies throughout my career - it still comes up on background investigations.
I do not know how it is in your jurisdiction but where I live a collector needs to inform you in timely manner of these kind of discrepancies if they want to enforce fines or overcharge fees. The means different kind of channels of communication than the regular ones (e.g. postal instead of login to the site, or at least show some effort). Note: this is only if they overcharge without you being able to do so normally, if are allowed to have a negative balance you pay regular fees and you signed a contract to do so.
I used to help run a rather large fan convention. For our first 5 years (starting in about late 2003 or so), PayPal was the only option we offered for registering online. At the time, they were really the only option for implementing online payments easily without the complexity of a full merchant stack (and it was just me doing the programming, volunteering to help them while I was still in college).
By the time we finally switched away from them, we were probably clearing $80k or so a year through them, with a very large percentage of that coming over the course of a week or so just before the event. People like to wait until the last minute. :)
We never had any issues, but we were very vigilant about transferring funds out of PayPal every few days just in case. We did finally stop using them, probably about 2009 or 2010, when stories like OP's started to become widespread.
For us, having them "hold" our funds for 6 months or cancelling our account would have bankrupted us. The hotel wants to be paid on Monday after the event. Vendors need to be paid within 30 days. Things like that would have been impossible for us to do if they decided to sit on the money or can us. We were a volunteer fan convention; we didn't have the financial cushion to withstand something like that.
Not to mention the fees were higher than a standard merchant account. We finally did switch to a merchant account through Elavon and, after I left, I think they switched to Stripe. Either way, they don't accept PayPal now because the financial risk to them that could result from PayPal freezing or canceling the funds is significant.
For me as a customer, having PayPal as payment option increases the propability of purchase. Especially with one-time purchases from small vendors.
Reasons: No risk of credit card info misuse (by vendor), I only need username and password and I get certainly at least some kind of receipt for accounting.
Lots of people would simply think "It won't happen to me" and move on. But this is just another example that if it can happen to people using Paypal for years, it can happen to you too. It's better to offer other payment channels to customers so you can diversify. And if possible, move away from Paypal entirely.
Even though I absolutely agree that you shouldn't put all your eggs in one basket, it is ultimately the market that could drive you towards a dependency situation.
I have had a couple of customers for which I set up both PP and another PSP (such as stripe). Then it turned out that about 90% of their transactions came from PP.
So even if I set up 10 different PSPs for them, if PP bans them, they will still be out of business.
Then if you're an indie musician on Bandcamp they give you no option but to use PayPal however if you're not on Bandcamp nobody is going to buy your music directly from your website anymore and for underground acts Bandcamp is better than Spotify but the whole forced use of PayPal there meant for a decade I couldn't use Bandcamp until I got a new PayPal account after they killed the account I had had for 15 years.
Most indie acts here sign up with a tiny indie record label who handles the profiles on bandcamp for them and deals with paypal bs. People will still buy vinyl and merch from your own site.
As ar as I know PayPal in Europe is a bank with a Luxembourg banking license.
I'm wondering if they could pull the same shitty here. Considering that any bank, which freezes your account, doesn't provide you with any reason and actually refuses to talk to you may draw quite some ire from their respecive regulator.
I dislike PayPal as much as the next guy, but I don't get this:
> PayPal will also stop letting you refund the percent they take out so you will be holding the bag when you refund a customer.
When I refund a customer, I wouldn't expect the power company to refund the electricity spent serving that customer, and I wouldn't expect UPS/FedEx to refund the delivery of that customer's package. Why should PayPal refund the costs of the customer's transaction ?
I've had so many bad experiences with PayPal. (One of them was having the money in a checkout-through-Paypal transaction frozen for no reason. They insisted that they would keep my money and not pass it on to the vendor if I didn't set things straight by sending them a FAX; no other mode of communication accepted).
Even as a consumer I now no longer transact business through PayPal if it is at all avoidable. If I want to buy something from an online vendor that only offers PayPal, I will go to great lengths to find another vendor that offers a payment mechanism other than PayPal.
Others have said it, but it bears repeating.
If you build on someone else's platform for free, or cheaply, you are the product not the customer. At best, you are both product and a minor customer.
Paypal has a history of doing this sort of thing. I've seen articles about it with Google services as well.
This is one of the many reasons why I suggest using open standards. You could accept bitcoin or eth for payment, but that is possibly too impractical for some customer bases. There are alternative payment gateways to Paypal, but many of them have allegedly done similar things, including Stripe.
Here is an article with advice on selecting a payment gateway for your startup, from the folks at Chargify.
Only after having a law firm, who we knew through an advisor contact, send PayPal’s legal department a letter did they release our PayPal balance funds back to us.
We were banned without explanation after being a customer for 8+ years and had our PayPal balance (not yet transferred to a bank) frozen.
We left a high balance with PayPal because at the time the interest rate they provided was high.
No explanation was given at any point and the whole process took about 3 months to get our own funds back that we needed to operate the business.
Given that there is pile on of negative comments about Paypal already I figured it be nice to share that I have never had a single issue with PayPal in about 15-20 years or so.
Neither on my private account nor business accounts.
Not even with the paypal account for my burning man camp.
[+] [-] gotland_|6 years ago|reply
[+] [-] astura|6 years ago|reply
So I came here to see if anyone looked up what sort of products and services they offer.
[+] [-] mprev|6 years ago|reply
I'm utterly sick of this kind of junk.
[+] [-] ben509|6 years ago|reply
I can imagine several plausible reasons, related to potential liability, but does that mean that if we're trying to outsource business functions to specialist firms that we can't expect them to be transparent in their operations?
[+] [-] TheRealDunkirk|6 years ago|reply
[+] [-] imhoguy|6 years ago|reply
In my opinion the reason for ban, even though mentioned that unrelated to their SaaS offering, is likely higher number of transactions with parties who have been also baned for some shady practices. Such rat clusters are usualy nuked in batch.
[+] [-] ryandrake|6 years ago|reply
[+] [-] dmurko|6 years ago|reply
[+] [-] writepub|6 years ago|reply
[+] [-] jake_morrison|6 years ago|reply
[+] [-] alasdair_|6 years ago|reply
[+] [-] jzwinck|6 years ago|reply
[+] [-] TornTongues|6 years ago|reply
[+] [-] rak00n|6 years ago|reply
This sounds so similar to all other large tech companies, specially Google. Somewhere along the line all these tech companies lost user focus.
[+] [-] exabrial|6 years ago|reply
* Cody Don on YouTube teaches the masses about science and regularly gets banned. His videos are rated G to PG. Despite millions of viewers and dollars of Revenue, there is nobody he can call.
* Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
* Lose your Instagram/Twitter/Gmail? Too bad, because it's free, you're treated as cattle.
* Oh then there's the paying customers too: https://news.ycombinator.com/item?id=17431609
[+] [-] viraptor|6 years ago|reply
Your bank. You dispute the charge. Uber can deal with your bank. It doesn't matter it was a debit card. It means you're missing the money immediately, but doesn't stop you from disputing.
[+] [-] raverbashing|6 years ago|reply
Your bank. You call your bank.
[+] [-] ravenstine|6 years ago|reply
If only he sold out to NBC, PBS, Disney, or a Viacom company, then he could do whatever he wants and never be banned. ;)
[+] [-] conradfr|6 years ago|reply
[+] [-] bob_theslob646|6 years ago|reply
The reason their is very little customer service in SV is due to fact that it is extremely expensive to provide customer service...
[+] [-] Grollicus|6 years ago|reply
And here I thought small claims court was a thing in the US as well
[+] [-] DoofusOfDeath|6 years ago|reply
If you're in the U.S., I would think your state's Attorney General. It's potentially either theft or fraud, I would think.
Or if your A.G. won't pursue it, go after Uber in small-claims court. Not only are you likely to recoup your lost money, but you'd cause them some pain and/or lawyer fees.
[+] [-] HenryBemis|6 years ago|reply
Every Friday go online and withdraw all-but-the-necessary £€$$ to your bank account (transfer wire or via card number). I do get some revenue via PayPal, and the very same day (or the next) I 'download' comes it to my bank account (connected to PayPal via card) and IMMEDIATELY is shipped to another account that has all the controls to make money (relatively) unmovable.
I perceive PayPal as my wallet. I do keep 'some' money in it but I keep the motherload away 'layers' deep.
My money flow diagram, in the back end, includes "tax", "expenses", and "vault" (alarm Scrooge McDuck) accounts.
I see PayPal as the envelope that I am given the cash in. It doesn't stay there for more than 24-48h.
Edit: someone below mentioned they do spam.. if e.g. USA authorities has alerted them about doing shady things, PayPal would also receive a gag order with it to a) freeze their $$$$ and b) gag them. If I was Niteo I would get my pencils sharpened and wake up my lawyers.
[+] [-] razakel|6 years ago|reply
PayPal does have a feature they don't advertise named Auto Sweep, which withdraws any balance in your account each day. You need to contact support to enable it.
[+] [-] aerovistae|6 years ago|reply
[+] [-] _pmf_|6 years ago|reply
[+] [-] foggyToads|6 years ago|reply
[+] [-] deaps|6 years ago|reply
Anyway, long story short. Someone managed to access my paypal and request a sum of money around roughly $40. That account had about $38 in it at the time. Paypal flagged the transaction as fraudulent, stored the money 'in my paypal account' instead of sending it to the requester, and froze my account. But this overdrew my bank account by roughly $2. Needless to say, 2-3 years of late fees added up to a substantial amount of money - two separate accounts - one for about $280 that I owed the bank and another that was about $350 that i owed to their 'overdraft' company. I didn't find out about either until they were about 2-3 years old and in collections.
I realize what I'm explaining is totally my own fault for not monitoring that account and keeping it up to date, but if paypal would have either redeposited that money into my account or sent some emails, instead of freezing the assets in a holding account, I could have avoided that.
In either event, that left a bitter taste in my mouth, and i severed all ties with paypal and that old account at that point.
I had to explain this multiple times to different government and military agencies throughout my career - it still comes up on background investigations.
[+] [-] consp|6 years ago|reply
[+] [-] peckrob|6 years ago|reply
We never had any issues, but we were very vigilant about transferring funds out of PayPal every few days just in case. We did finally stop using them, probably about 2009 or 2010, when stories like OP's started to become widespread.
For us, having them "hold" our funds for 6 months or cancelling our account would have bankrupted us. The hotel wants to be paid on Monday after the event. Vendors need to be paid within 30 days. Things like that would have been impossible for us to do if they decided to sit on the money or can us. We were a volunteer fan convention; we didn't have the financial cushion to withstand something like that.
Not to mention the fees were higher than a standard merchant account. We finally did switch to a merchant account through Elavon and, after I left, I think they switched to Stripe. Either way, they don't accept PayPal now because the financial risk to them that could result from PayPal freezing or canceling the funds is significant.
[+] [-] ROFISH|6 years ago|reply
[+] [-] jpalomaki|6 years ago|reply
Reasons: No risk of credit card info misuse (by vendor), I only need username and password and I get certainly at least some kind of receipt for accounting.
[+] [-] metaprotocol|6 years ago|reply
PayPal has done the world a favour by banning them.
[+] [-] nakodari|6 years ago|reply
Lots of people would simply think "It won't happen to me" and move on. But this is just another example that if it can happen to people using Paypal for years, it can happen to you too. It's better to offer other payment channels to customers so you can diversify. And if possible, move away from Paypal entirely.
[+] [-] PMan74|6 years ago|reply
> Do not kid yourself – your business is never, never
> safe with PayPal. Move away or at least have a plan B
> in place so that you don’t lose your business over
> their arbitrary actions.
They all read like riff on The Trial: you've been banned, we're not going to tell you why, this is going to cost you money.
[+] [-] LeonM|6 years ago|reply
I have had a couple of customers for which I set up both PP and another PSP (such as stripe). Then it turned out that about 90% of their transactions came from PP.
So even if I set up 10 different PSPs for them, if PP bans them, they will still be out of business.
[+] [-] shams93|6 years ago|reply
[+] [-] hackermailman|6 years ago|reply
[+] [-] ihuman|6 years ago|reply
That isn't the case. You can use your credit card directly, without it going through paypal
https://get.bandcamp.help/hc/en-us/articles/360007803294-Pay...
[+] [-] lukeholder|6 years ago|reply
[+] [-] mprev|6 years ago|reply
[+] [-] CaptainZapp|6 years ago|reply
I'm wondering if they could pull the same shitty here. Considering that any bank, which freezes your account, doesn't provide you with any reason and actually refuses to talk to you may draw quite some ire from their respecive regulator.
[+] [-] sschueller|6 years ago|reply
There is absolutely no reason to use PayPal at this point and any place that only takes paypal should be boycotted.
[+] [-] victorNicollet|6 years ago|reply
> PayPal will also stop letting you refund the percent they take out so you will be holding the bag when you refund a customer.
When I refund a customer, I wouldn't expect the power company to refund the electricity spent serving that customer, and I wouldn't expect UPS/FedEx to refund the delivery of that customer's package. Why should PayPal refund the costs of the customer's transaction ?
[+] [-] stakhanov|6 years ago|reply
Even as a consumer I now no longer transact business through PayPal if it is at all avoidable. If I want to buy something from an online vendor that only offers PayPal, I will go to great lengths to find another vendor that offers a payment mechanism other than PayPal.
[+] [-] Communitivity|6 years ago|reply
Paypal has a history of doing this sort of thing. I've seen articles about it with Google services as well.
This is one of the many reasons why I suggest using open standards. You could accept bitcoin or eth for payment, but that is possibly too impractical for some customer bases. There are alternative payment gateways to Paypal, but many of them have allegedly done similar things, including Stripe.
Here is an article with advice on selecting a payment gateway for your startup, from the folks at Chargify.
[+] [-] WA|6 years ago|reply
[+] [-] dsauss|6 years ago|reply
We were banned without explanation after being a customer for 8+ years and had our PayPal balance (not yet transferred to a bank) frozen.
We left a high balance with PayPal because at the time the interest rate they provided was high.
No explanation was given at any point and the whole process took about 3 months to get our own funds back that we needed to operate the business.
[+] [-] isostatic|6 years ago|reply
Why can they afford to pay such a high interest? Because they can ban you whenever they feel like it.
If an offer's too good to be true etc.
[+] [-] rock_hard|6 years ago|reply
Neither on my private account nor business accounts.
Not even with the paypal account for my burning man camp.
Just my 2c