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PayPal Freezes Mailpile Campaign Funds

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Re: PayPal Freezes Mailpile Campaign Funds

#241

Post by jlgaddis »

ubernostrum wrote: post #233
patio11 wrote: post #118

Indulge me in a flight of fancy in which we pretend, for the sake of argument, that a) Paypal is run not by Snidely Whiplash clones but b) by smart geeks working with thin margins in a highly regulated industry where c) customers are at risk essentially never, d) merchants eat 100% of the risk if they stay in business, and e) Paypal eats 100% of the risk if the merchant doesn't. Why is Paypal very skeptical of pre-sa…

The issue with PayPal is not that they take steps to insulate themselves from fraud and chargebacks. The issue is that their process for doing so is unilateral and -- as is well-documented -- offers essentially no options for resolution unless you are lucky enough to be able to bring significant media pressure to bear on them. That is a problem. Unfortunately, I think the only solution is to encourage people to basic…

> ... encourage people to basically sue PayPal at the drop of a hat.

I haven't looked at the PayPal ToS/EULA/whatever in quite a long while, but I imagine that you must agree not to do exactly that in order to use the PayPal service.

Re: PayPal Freezes Mailpile Campaign Funds

#242

Post by Xylakant »

mseebach wrote: post #234
HerraBRE wrote: post #220

Earlier quoted context omitted.

Oh, I am sure PayPal are doing what they believe to be in their best interests. However, I think you overestimate their competence. The people we spoke with on the phone didn't even know what Open Source software is, let alone have an understanding of the risks involved. They were just following procedure.

What does the license of the software have to do with the risks involved? What is the special case that they didn't understand that makes your project a smaller risk? What are the exact mechanisms in place that will prevent the project from failing miserably in any of the myriad ways software projects routinely fail after most of the money is spend and trigger a non-trivial number of chargebacks?

That for example this is not a software project where people for receiving the software. For example the perk for the $4096 backer tier is

"In addition to the previous perks you and your logo will be the most prominently featured in our credits. You also get a custom feature / design theme per your specs (see the FAQ for some fine print). In addition, if you fly to Iceland we'll meet with you to discuss the implementation and then take you on a road trip through the Icelandic countryside, taste fermented shark and our traditional alcohol Brennivín, whilst we talking tech, politics and security."

That's a pretty expensive chat to have, even if it includes the flight. Yet, two backers were willing to pay that price. All other tiers have a similar relationship between price and value provided. This cannot be explained in a rational business relationship - a solid gulp of idealism is included here. That influences the risk of chargebacks - backers paid to see this project worked on, not to receive their individual copy of the software.

Re: PayPal Freezes Mailpile Campaign Funds

#243

Post by ubernostrum »

jlgaddis wrote: post #241
ubernostrum wrote: post #233

Earlier quoted context omitted.

The issue with PayPal is not that they take steps to insulate themselves from fraud and chargebacks. The issue is that their process for doing so is unilateral and -- as is well-documented -- offers essentially no options for resolution unless you are lucky enough to be able to bring significant media pressure to bear on them. That is a problem. Unfortunately, I think the only solution is to encourage people to basic…

> ... encourage people to basically sue PayPal at the drop of a hat. I haven't looked at the PayPal ToS/EULA/whatever in quite a long while, but I imagine that you must agree not to do exactly that in order to use the PayPal service.

So include arguments against whatever clause in the ToS in your filing. Even if it takes their lawyer five minutes to write a response to that, five minutes of a corporate lawyer is usually more expensive than a full day of a CSR's time, which achieves the goal.

Re: PayPal Freezes Mailpile Campaign Funds

#244

Post by licnep »

yebyen wrote: post #140
dpcx wrote: post #77

Earlier quoted context omitted.

That's funny, because Amazon Payments is exactly what crowdfunding site Kickstarter uses[0] to pay out to projects. [0]: http://www.kickstarter.com/help/amazon

I think that Kickstarter has their shit together, and the risk of a chargeback from Kickstarter to [project leader] is relatively low, compared to the risk of a project funded directly through Amazon Payments. I don't know how indiegogo works, but in the case of Kickstarter, I would assume that Kickstarter is collecting the payments, arbiter of refunds in the case a goal is not met, and does not have access to the mo…

Not 100% sure but I think kickstarter uses amazon's deferred payment api. Basically they get authorizations from the donors to be charged a certain amount on their credit card, but the amount isn't charged until the crowdfunding ends successfully. If the goal isn't reached nothing is charged on credit cards, if it is, the money is sent to kickstarter's amazon payments account, and from there kickstarter sends it to the project after taking its cut.

Re: PayPal Freezes Mailpile Campaign Funds

#245

Post by _pius »

patio11 wrote: post #118

Indulge me in a flight of fancy in which we pretend, for the sake of argument, that a) Paypal is run not by Snidely Whiplash clones but b) by smart geeks working with thin margins in a highly regulated industry where c) customers are at risk essentially never, d) merchants eat 100% of the risk if they stay in business, and e) Paypal eats 100% of the risk if the merchant doesn't. Why is Paypal very skeptical of pre-sa…

This is absurd apologism. If Indiegogo projects are fundamentally incompatible with PayPal's risk profile as you imply, the onus is on PayPal not to accept money for those projects. Full stop.

Why on Earth should we sympathize with PayPal about internal aspects of their underwriting at the expense of a small business whose funds they've practically seized?

Re: PayPal Freezes Mailpile Campaign Funds

#246

Post by anigbrowl »

Xylakant wrote: post #198
patio11 wrote: post #147

Earlier quoted context omitted.

Interesting reading: the Paypal Pre-sales Policy https://www.paypal-businesscenter.com/content/presale-policy... In particular I like the bullet point under "I’m a legitimate business selling products and services in advance. Why do I have reserves on my account?", which is lengthy, worth a read, and which you'll have to click to expand.

So why do they actually do business with IndieGoGo? I would expect the vast majority of IGG campaigns not to be able to deliver within 20 business days. Since the users of IGG obviously intend to use the money to fund a lengthy process of building a product that sort of invalidates the use-case.

Because IndieGoGo is a single actor willing to absorb a good deal of the risk itself.

Re: PayPal Freezes Mailpile Campaign Funds

#248

Post by anigbrowl »

patio11 wrote: post #118

Indulge me in a flight of fancy in which we pretend, for the sake of argument, that a) Paypal is run not by Snidely Whiplash clones but b) by smart geeks working with thin margins in a highly regulated industry where c) customers are at risk essentially never, d) merchants eat 100% of the risk if they stay in business, and e) Paypal eats 100% of the risk if the merchant doesn't. Why is Paypal very skeptical of pre-sa…

Masterful explanation. Only thing I'd add is that a sole proprietor business account from a venture obviously involving three people also reeks - it might be a lot easier if Mailpile had been configured as a regular or non-profit corporation, even if that meant paying fees to a state entity to register it.

Re: PayPal Freezes Mailpile Campaign Funds

#249

Post by adam-a »

patio11 wrote: post #203
HerraBRE wrote: post #188

Earlier quoted context omitted.

You are glossing over one important point: PayPal has a financial stake in keeping money within their network for as long as possible. For every month they keep $X within their network instead of releasing to the rightful owners, they have effectively seized whatever could have been earned by investing $X for that month. For smaller amounts (individuals, small campaigns like ours), this is negligible, but in aggregat…

I totally understand that this inconveniences you a lot. Be that as it may, your conspiracy theory has no basis in fact whatsoever . Paypal will, in fact, not make large amounts of money on transaction float -- they're already probably losing money on your account by talking to you too darn much. Interest rates are presently something like 15 basis points ($150 per year on $100k). Even if we count their underwriter a…

I don't know a lot about finance, I also don't believe in conspiracy theories, but how is it that I can open a savings account with my local bank and easily earn 1.5% interest but you're saying PayPal can't do better than 0.15%?

Re: PayPal Freezes Mailpile Campaign Funds

#250

Post by PhasmaFelis »

patio11 wrote: post #118

Indulge me in a flight of fancy in which we pretend, for the sake of argument, that a) Paypal is run not by Snidely Whiplash clones but b) by smart geeks working with thin margins in a highly regulated industry where c) customers are at risk essentially never, d) merchants eat 100% of the risk if they stay in business, and e) Paypal eats 100% of the risk if the merchant doesn't. Why is Paypal very skeptical of pre-sa…

And yet this story keeps happening, over and over and over across the years. Remember the $1 million-plus raised for hurricane relief raised after Katrina that PayPal threw down the drain by declaring that they wouldn't release it until long after it mattered?

If PayPal has good reasons not to accept donations and crowdfunding, they shouldn't fucking accept donations or crowdfunding, instead of letting users get in deep enough to get screwed before dropping the hammer. Maybe it's buried in the small print that they don't expect anyone to read. The burden is on them to communicate effectively. They need to either openly refuse to accept those accounts in the first place, or else come up with a separate way of dealing with them that works for all involved. Holding funds in escrow should not be a complicated problem.

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