The other day I was trying to make some kind of transaction with Dwolla, and before I could, they asked me a series of questions to verify my identity.
The questions had obviously been pulled from a background check based on my name that I didn't know they had done. It was asking me what the price of a house was when I originally bought it, and what street I lived on in a given time period.
Outside of this being really creepy, all of the questions weren't actually useful for identifying me because they all applied to my father. I am a Jr., and the background check must have been run for my dad.
I also now have a reasonable idea of the price range my dad paid for a house that we moved into when I was 7, which I never would have known or asked about otherwise.
At this point I'm afraid to continue using the service. They allowed me to transfer $1,000 into it, but apparently don't know enough about me to let me make certain transactions. They should get everything they need for me to use 100% of their service up front, and not have this staggered approach where additional identity info is required to transfer money, at the last minute when you're trying to do the transfer.
Right now it seems that they could at any arbitrary moment determine that they haven't actually identified me well enough, and suspend my account.
I don't think Dwolla is the payment solution we've been looking for. At least not yet.
My understanding is that Dwolla is trying a fairly unusual approach to handling fraud, which is that they pay out of their own pockets for fraud (instead of kicking it down the line as all other financial institutions do) but this requires that they actually prevent fraud, not just identify it after the fact. And the cost of really stopping fraud turns out to be something that many people do not feel comfortable paying when they're personally confronted with it.
FYI, those sound like credit check questions. They probably did some sort of credit pull.
(They know the answers to these because the credit reporting agencies know how much the house cost, where it was located, what previous address(es) you've had on your credit accounts (including credit cards), etc.)
I also now have a reasonable idea of the price range my dad paid for a house that we moved into when I was 7, which I never would have known or asked about otherwise.
It's a matter of public record. You can probably type the address into Google to find a site that shows you the full transaction history on the house. Here's the house where I spent most of my childhood:
Dwolla did not perform a "background check" in the sense that you may think. When dealing with online fraud, it's common to use identify verification services like IDology (and a few others) that basically provide an API to generate these types of questions based on public records matching your name/address. Many banks use the same verification services.
The "background check" questions for verifying your identity will have been drawn from a credit reference agency or similar. It may seem creepy, but actually if you want to verify someone's identity online and mitigate the risk of identity theft, the alternatives are limited. Of course the fact that they mixed you up with your Dad is unfortunate to say the least; your date of birth should have disambiguated you.
What they should have done is explained this, rather than just baldly present you with what appear to be alarming and intrusive questions.
Having different levels of service depending on the level of identity assurance is sensible for many applications, but for a funds transfer system I agree that it does not seem sensible.
Clowns implies that they screwed something up or did something wrong - from his story, he signed up and moved 5 figures of cash immediately (which is either exactly the limit of a business account or over it, see https://www.dwolla.com/about ) if I were in the payments business (and I was previously) this would have been a fraud red flag.
This is something that happened today (April 18th) - this is not five days of waiting around for money to free up. This is a gripe because the author triggered ever fraud alarm in the book and they have not responded fast enough.
I'd lean towards the "give them a little bit a of break" - yes it sucks he had to provide additional documentation and they haven't sorted it out yet, but no business could allow anonymous folks on the web to sign up and move 5 figures of cash providing only publicly available information as documentation.
This is an excellent point, the site says "Up to 10,000 for businesses, with the possibility of increasing it". So obviously he's opened a brand new account, and then tried to pull more money than he's authorized for. That seems like it would take some time, and I would have talked to Dwolla before I had them send the money.
On a side note, I love their payment method comparison matrix (on the page you linked). It's factual, but a bit cutesy, and just a little bit mean to Paypal (who totally deserve it).
I opened an account about a year ago and did nothing with it. I had my account suspended about a week ago, after not really touching it that whole year. When I asked Dwolla about it, they couldn't tell me why it had been suspended, so I just closed the account. Very unprofessional, all around, I was very glad I never attached any real accounts to it.
I tried to use Dwolla and it it was absurd. I set my account up fine. My friend sent me $1200 for a ski lease. I withdrew it and it appeared to work. Days later when the money did not appear in my bank account, I checked back and it said, "processing withdrawl" (or something like that.) It said that for many days before I contacted them. They said I needed to scan my drivers license and send it to them. The only account that has a copy of my DL is the DMV. No other company in capitalism asks for a scanned DL except for (maybe?) my employer. They had my social for crying out loud! And their UI was so broken that it wasn't clear that anything was wrong. At that point I refused to deal with them and kicked the money back to my friend and had him go through paypal. To top it off, they won't delete my personal details from their servers.
A drivers license is a higher trust level document, as your driver ID and document number can be tied to an actual, trusted physical interaction, and it links you to a physical location.
SSNs are horrible IDs for a variety of reasons. Thousands or millions of Americans do not have valid SSNs or use EINs for personal IDE identification.
America is a funny place. You can get 127 varieties of salad dressing at your local supermarket, but you can't pay for it except with cash, unless you want to be hit with credit charges, and when you do the prices are not as marked. Australia, in sharp contrast, has laws requiring that the price on the shelf matches the price at the register -- some of them even allow you to get incorrectly-priced items for free, although technically this is a voluntary agreement among shops, not a law. Also, Australia has EFTPOS nearly everywhere; in fact, people are justly suspicious of retail businesses that don't provide EFTPOS, because that's one of the first signs that the business is probably going to go under. And if you want to transfer money, the same system that makes EFTPOS ubiquitous makes direct deposit from one bank account to another a very simple thing. The result is that cheques ("checks" in US English) are very rare indeed, and people really only use credit cards for online purchases or when they're already living beyond their means. (Which means the use of a credit card in day-to-day spending is another warning sign!)
Granted, it's hard to get all 127 varieties of salad dressing here, so there is that.
people really only use credit cards for online purchases or when they're already living beyond their means
If I'm parsing what you're saying correctly, then that doesn't match my experience.
Most people I know will use a credit card at an EFTPOS machine in preference to using their ATM card, and lots of people use the credit card regular because it's simpler than regularly getting cash from the ATM.
My current trip from Home -> Work does not go directly past any ATMs that are free for me (I pass a couple, but the ATM operator will charge me to use them), so I regularly buy everyday items on my credit card.
Heck, I buy my train ticket (a whole $6.60) on my credit card each morning because
1. it doesn't cost me any more than paying with cash
2. it saves me from having to worry about whether my wallet is empty, when my focus is on getting in to the office
Now, I also have a cheque book in a drawer somewhere, but I think the last time I used it would have been when about 3 years ago when I needed to give my parents some money and my Mum didn't have her bank account details with her (which would have allowed me to transfer it electronically)
I don't think your impression of American shopping is accurate.
Many people pay with credit cards because they don't want to deal with loose coins and because credit card transactions can be viewed online. Anything I put on my Visa card I pay off in full at the end of the billing period; there are no fees, charges, or changes in prices that hit you when you use a credit card.
One key difference: banks in Australia have high assurance of identity because of the 100-point check, which non-Australians may find sounds a bit like what Dwolla were asking for.
I haven't ever been subject to differing costs between credit/debit card and cash prices, with the sole exception of the liquor store. Are there specific stores in the US that do this?
...people really only use credit cards for online purchases or when they're already living beyond their means. (Which means the use of a credit card in day-to-day spending is another warning sign!)
Ridiculous, unsubstantiated, and false. The US is not perfect, but neither are your ideas about credit cards and the people who use them. I, much of my family, and many of my friends use credit cards for all of our daily expenses and pay them off immediately, or at least before the bills are due. It's convenient and lets you keep a small cash stash on you that rarely gets used just in case you need it.
Hah. Australia's population is half of California's so having "singular" experiences is just a wee bit easier. I'm not sure what you're referencing with prices being different between cash and credit. It sounds like you might have been struggling with county taxes that vary significantly and thus mean you don't see the final price till you pay.
If you think pricing is confusing at an American store, you should try figuring out how much anything in the American healthcare system is going to cost you. I've honestly gotten answers from doctors and staff that turned out to be off by an order of magnitude.
My Dad owns an ACH processing company. This is typical for any electronic payment processor. It does sound like they went overboard with the identity verification.
It just goes to show that disrupting payment processing is not just about some awesome new payment API. It's also about preventing fraud and crime without pissing your customers off. From my observations, this problem has yet to be solved.
It truly is shit. Japan's isn't great either. UK's probably the best I've experienced in all the countries I've lived in. Hong Kong comes a close second.
Maybe I'm a little old fashioned here but I don't trust all those new private payment processors (including paypal) with any significant amount of money.
I'm usually fine with using the services for < $200 but above that I'm using wire transfer (within the EU) or checks. Yes, it takes longer (and in case of checks costs me ~40 EUR to cash in) but at least I know that the entities handling the transfer are registered banks and have refined their procedures over decades.
I happily pay the extra charges or wait a few days longer for minimizing the danger of getting into a kafkaesque verification loop comedy - or worse.
You know you can just print a check with your partner's account number on it and deposit it, right?
It's called 'Remotely Created Check' (RCC) and its as good as a check sent through snail mail with an actual signature on it. You just put 'Signature on File - This check has been authorized by your depositor' where the signature line would go.
I wrote a little program to generate my own checks like this a few years ago. I used to print them and take them to the ATM but since my bank added Check Deposit to their iPhone app, I just take a picture of the check displayed on my monitor. As a bonus, my signature is already in the back.
You'll need the OpenMICR font so your can print the MICR line, and it'll take a bit of tweaking to get the alignment right. I was thinking of rewriting it in HTML if anyone is interested... (client side only of course)
As a word of warning to those who would try Dwolla. Not only do they ask for tons of information as many posters have mentioned, but they will not remove your data if you close an account. If you read the Terms of Service Closely they dictate they they will keep your data for a _minimum_ of three years and possibly indefinitely. This includes your name, address, phone number, SSN, and Drivers License. Think twice about how much you trust them before you fork over information to a company that provides you with that kind of ultimatum.
I have both bitcoin and dwolla, and between the two I've found Bitcoin much more useful. Dwolla has a difficult business model these days, and I will be sorry to see them fail. But they will fail.
Citibank and Chase both have money transfer services via email. QuickPay and PopMoney, I believe. I have used both of them and they work. The sender needs to have an account with the originating bank, either Chase or Citi but the recipient can have an account anywhere with a routing number and account number. The bank facilitating the transfer will ask for ACH access to your receiving account and place some small transfers into your account. When you see those transfers they are like activation codes which you then use to validate that you are the owner of that account.
This certainly works in one off situations but I would love to see Citi or Chase productize this via an API for authorized merchants, etc.
I had some minor issues with Dwolla or at least my perception of how they work that left a bad feeling for their brand and operations.
A buddy paid me money he owed me through Dwolla. I made the 'mistake' of leaving it in the Dwolla account instead of pushing it on to my bank account. A month later his bank was allowed to pull that back out because he had overdrafted.
Why is it that people think that they can open a payment account, transfer thousands of dollars into it as their first transaction and no one will ask any questions or be the least bit suspicious?
It is true that Dwolla are not professional but it never was meant to be a real business, it was always intended as a spotlight for Ben Milne.
Nothing wrong with that, ego has driven much of civilization but you certainly should build Dwolla into actual business plans, it won't be around much longer.
I can understand this guy's frustration. While I've never used Dwolla before, all the negative reviews of it make sure that I will never use it. Hopefully Ripple and OpenCoin take off, in the meantime it's probably better to use traditional methods of money transfer.
This is why I'm eagerly waiting for Stripe to arrive in the UK (anyone have an ETA?) For some reason every company that has a service like this seems to feel the need to make you jump through a stupid amount of hoops. That wouldn't be that bad if they were completely incompetent at it. Take PayPal: My account was limited out of the blue. I provided them with all the information they needed. 3 weeks later they asked for more. Then after providing that they reopened my account. A further month later they closed it again and started asking for the same stuff.
I understand the financial industry is extremely locked down, but I was hoping itd be a little easier to accept payments now-a-days
Moving 5 figures of needed funds through Dwolla immediately after opening an account. Come on - that's just pricelessly stupid, and I'm not surprised it raised flags. The clown is the person who would do such a thing. And he expects the funds to be available almost instantly. Send a few hundred or thousands of dollars to test an entirely new payment method first, and to establish that it works.
Anyone involved in technology should know - test before making a big commitment.
Sorry, I don't give any demerits to Dwolla on this and neither should you.
I've used dwolla quite a bit, mostly for bitcoin, and it's been fine. As with any place that handles your money, you need to establish a short record of legitimate transactions and use it sensibly. Otherwise you are a "clown."
Their passive-aggressive credential demanding is nasty - I tried to create a basic account and then the demands started. Calling them clowns is insulting - to clowns. Dwolla: you are supposed to be upstanding midwestern folks: be G-D UPFRONT about your requirements!
[+] [-] ok_craig|13 years ago|reply
The questions had obviously been pulled from a background check based on my name that I didn't know they had done. It was asking me what the price of a house was when I originally bought it, and what street I lived on in a given time period.
Outside of this being really creepy, all of the questions weren't actually useful for identifying me because they all applied to my father. I am a Jr., and the background check must have been run for my dad.
I also now have a reasonable idea of the price range my dad paid for a house that we moved into when I was 7, which I never would have known or asked about otherwise.
At this point I'm afraid to continue using the service. They allowed me to transfer $1,000 into it, but apparently don't know enough about me to let me make certain transactions. They should get everything they need for me to use 100% of their service up front, and not have this staggered approach where additional identity info is required to transfer money, at the last minute when you're trying to do the transfer.
Right now it seems that they could at any arbitrary moment determine that they haven't actually identified me well enough, and suspend my account.
I don't think Dwolla is the payment solution we've been looking for. At least not yet.
[+] [-] wmf|13 years ago|reply
[+] [-] kbuck|13 years ago|reply
(They know the answers to these because the credit reporting agencies know how much the house cost, where it was located, what previous address(es) you've had on your credit accounts (including credit cards), etc.)
[+] [-] jrockway|13 years ago|reply
It's a matter of public record. You can probably type the address into Google to find a site that shows you the full transaction history on the house. Here's the house where I spent most of my childhood:
http://www.redfin.com/IL/Third-Lake/186-Mainsail-Dr-60030/ho...
[+] [-] g_h|13 years ago|reply
[+] [-] kenmck|13 years ago|reply
[+] [-] citricsquid|13 years ago|reply
[+] [-] tragomaskhalos|13 years ago|reply
What they should have done is explained this, rather than just baldly present you with what appear to be alarming and intrusive questions.
Having different levels of service depending on the level of identity assurance is sensible for many applications, but for a funds transfer system I agree that it does not seem sensible.
[+] [-] cykod|13 years ago|reply
This is something that happened today (April 18th) - this is not five days of waiting around for money to free up. This is a gripe because the author triggered ever fraud alarm in the book and they have not responded fast enough.
I'd lean towards the "give them a little bit a of break" - yes it sucks he had to provide additional documentation and they haven't sorted it out yet, but no business could allow anonymous folks on the web to sign up and move 5 figures of cash providing only publicly available information as documentation.
[+] [-] alanctgardner2|13 years ago|reply
On a side note, I love their payment method comparison matrix (on the page you linked). It's factual, but a bit cutesy, and just a little bit mean to Paypal (who totally deserve it).
[+] [-] hexis|13 years ago|reply
[+] [-] uuilly|13 years ago|reply
[+] [-] aidenn0|13 years ago|reply
[+] [-] Spooky23|13 years ago|reply
SSNs are horrible IDs for a variety of reasons. Thousands or millions of Americans do not have valid SSNs or use EINs for personal IDE identification.
[+] [-] bricestacey|13 years ago|reply
[+] [-] etfb|13 years ago|reply
Granted, it's hard to get all 127 varieties of salad dressing here, so there is that.
[+] [-] timv|13 years ago|reply
If I'm parsing what you're saying correctly, then that doesn't match my experience.
Most people I know will use a credit card at an EFTPOS machine in preference to using their ATM card, and lots of people use the credit card regular because it's simpler than regularly getting cash from the ATM.
My current trip from Home -> Work does not go directly past any ATMs that are free for me (I pass a couple, but the ATM operator will charge me to use them), so I regularly buy everyday items on my credit card.
Heck, I buy my train ticket (a whole $6.60) on my credit card each morning because
1. it doesn't cost me any more than paying with cash
2. it saves me from having to worry about whether my wallet is empty, when my focus is on getting in to the office
Now, I also have a cheque book in a drawer somewhere, but I think the last time I used it would have been when about 3 years ago when I needed to give my parents some money and my Mum didn't have her bank account details with her (which would have allowed me to transfer it electronically)
[+] [-] stinky613|13 years ago|reply
Many people pay with credit cards because they don't want to deal with loose coins and because credit card transactions can be viewed online. Anything I put on my Visa card I pay off in full at the end of the billing period; there are no fees, charges, or changes in prices that hit you when you use a credit card.
[+] [-] jacques_chester|13 years ago|reply
http://en.wikipedia.org/wiki/100_point_check
[+] [-] timdorr|13 years ago|reply
[+] [-] obviouslygreen|13 years ago|reply
Ridiculous, unsubstantiated, and false. The US is not perfect, but neither are your ideas about credit cards and the people who use them. I, much of my family, and many of my friends use credit cards for all of our daily expenses and pay them off immediately, or at least before the bills are due. It's convenient and lets you keep a small cash stash on you that rarely gets used just in case you need it.
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] jusben1369|13 years ago|reply
[+] [-] abbasaamer|13 years ago|reply
[+] [-] ryanackley|13 years ago|reply
It just goes to show that disrupting payment processing is not just about some awesome new payment API. It's also about preventing fraud and crime without pissing your customers off. From my observations, this problem has yet to be solved.
[+] [-] kalleboo|13 years ago|reply
Does the U.S. really not have customer-to-customer wire transfers from regular banks? I'm continually amazed by how terrible your banking system is.
[+] [-] aidenn0|13 years ago|reply
[+] [-] hoi|13 years ago|reply
[+] [-] mbesto|13 years ago|reply
[+] [-] suhastech|13 years ago|reply
[+] [-] hackerboos|13 years ago|reply
[+] [-] kybernetyk|13 years ago|reply
I'm usually fine with using the services for < $200 but above that I'm using wire transfer (within the EU) or checks. Yes, it takes longer (and in case of checks costs me ~40 EUR to cash in) but at least I know that the entities handling the transfer are registered banks and have refined their procedures over decades.
I happily pay the extra charges or wait a few days longer for minimizing the danger of getting into a kafkaesque verification loop comedy - or worse.
[+] [-] userulluipeste|13 years ago|reply
Yet it also (still) "takes longer"???
[+] [-] zaroth|13 years ago|reply
It's called 'Remotely Created Check' (RCC) and its as good as a check sent through snail mail with an actual signature on it. You just put 'Signature on File - This check has been authorized by your depositor' where the signature line would go.
I wrote a little program to generate my own checks like this a few years ago. I used to print them and take them to the ATM but since my bank added Check Deposit to their iPhone app, I just take a picture of the check displayed on my monitor. As a bonus, my signature is already in the back.
You'll need the OpenMICR font so your can print the MICR line, and it'll take a bit of tweaking to get the alignment right. I was thinking of rewriting it in HTML if anyone is interested... (client side only of course)
[+] [-] dkhenry|13 years ago|reply
[+] [-] jgoodwin|13 years ago|reply
[+] [-] siculars|13 years ago|reply
This certainly works in one off situations but I would love to see Citi or Chase productize this via an API for authorized merchants, etc.
[+] [-] mutagen|13 years ago|reply
A buddy paid me money he owed me through Dwolla. I made the 'mistake' of leaving it in the Dwolla account instead of pushing it on to my bank account. A month later his bank was allowed to pull that back out because he had overdrafted.
[+] [-] kenmck|13 years ago|reply
[+] [-] jusben1369|13 years ago|reply
[+] [-] WordSkill|13 years ago|reply
Nothing wrong with that, ego has driven much of civilization but you certainly should build Dwolla into actual business plans, it won't be around much longer.
[+] [-] yarou|13 years ago|reply
[+] [-] andyhmltn|13 years ago|reply
I understand the financial industry is extremely locked down, but I was hoping itd be a little easier to accept payments now-a-days
[+] [-] loceng|13 years ago|reply
[+] [-] zefhous|13 years ago|reply
[+] [-] austinstorm|13 years ago|reply
[+] [-] javert|13 years ago|reply
[+] [-] aneth4|13 years ago|reply
Anyone involved in technology should know - test before making a big commitment.
Sorry, I don't give any demerits to Dwolla on this and neither should you.
I've used dwolla quite a bit, mostly for bitcoin, and it's been fine. As with any place that handles your money, you need to establish a short record of legitimate transactions and use it sensibly. Otherwise you are a "clown."
[+] [-] kfcm|13 years ago|reply
And why is he a clown for assuming his "verified with state and federal ids" Dwolla account could receive such amounts, and he could get it?
It's a business account--5 figures is nothing. This may have been his test.
Getting in the way of business? I do give them demerits.
[+] [-] abawany|13 years ago|reply