PayPal Freezes Mailpile Campaign Funds • Hacker News Board

Re: PayPal Freezes Mailpile Campaign Funds

#291

Post by wmf » Thu, Sep 05, 2013, 6:00 PM UTC

vubuntu wrote: post #222

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…

Excellent answer. In the case of mass merchants where the risk profile of their business model is low (i.e they are not crowd funding or pre sales receivers of funds from end users), the paypal model works well for everyone. Risk is equally distributed between paypal and the merchant (since their risk of going bankrupt is less and not binary) and the end consumer continues to enjoy 0% risk. But in a crowd funding (or…

What if there were a banking/credit card concept of "funds that are not eligible for chargeback per customer's decision"

AFAIK that's called Western Union, Bitcoin, or gold (ok, I'm kidding about gold). Dwolla tried to do this but gave up.

Re: PayPal Freezes Mailpile Campaign Funds

#292

Post by wmf » Thu, Sep 05, 2013, 6:03 PM UTC

surge wrote: post #290

wmf wrote: post #287

Earlier quoted context omitted.

Because PayPal's job is simply do deliver money from Party A to Party B. The problem is that PayPal is not dealing with real money but with credit cards. AFAIK, companies like Western Union don't have such onerous restrictions because they accept cash or as-good-as-cash. ...ABSOLUTELY NO CHARGE BACKS WILL BE ALLOWED... Credit cards fundamentally allow chargebacks; you can't turn them off. If you want to do business w…

I have checking setup on my PayPal, maybe they should only allow direct confirmed withdrawals then, if VISA or Mastercard is the problem.

ACH also has chargebacks. Also, I think one of the merits of PayPal is its simplicity, so having to track the difference between "chargebackable money" and "real money" in every account would add significant complexity. ("I have plenty of money in my PayPal account, why can't I spend it at this particular merchant?" "Sorry, you have fake money but the merchant wants real money.")

Re: PayPal Freezes Mailpile Campaign Funds

#293

Post by gesman » Thu, Sep 05, 2013, 6:03 PM UTC

Paypal is unavoidable - there are just too much more money that can be made using Paypal because so many people use paypal and have positive balances at paypal and considering "paypal money" as "cheap money" - which makes them easier to spend to buy or to donate.

Paypal is good when used for what it is good for - as a vessel to receive (and send) money easily. But no one ever said that Paypal is a great bank to keep money at.

There are simple rules of the game to avoid disasters like that:

The rules of using Paypal: transfer paypal balance to your bank account as soon as it reaches $500 or more. Once funds are transferred - transfer them to parallel bank account to keep them completely out of Paypal reach (as Paypal has full access to bank account connected to paypal account).

That's it.

Piling up cash at Paypal's account never been wise.

Re: PayPal Freezes Mailpile Campaign Funds

#294

Post by drivebyacct2 » Thu, Sep 05, 2013, 6:06 PM UTC

Person who uses GoDaddy is shocked when they have domain/registrar issues.

Person who knows to make backups but doesn't is shocked when they lose data and haven't made backups.

Person who uses PayPal is "shocked" when their campaign funds are seized.

Re: PayPal Freezes Mailpile Campaign Funds

#295

Post by PeterisP » Thu, Sep 05, 2013, 6:07 PM UTC

jafaku wrote: post #106

Samuel_Michon wrote: post #86

Earlier quoted context omitted.

> irreversibility - once you receive Bitcoin there are no chargebacks. Unless I receive the goods before paying, I would never buy anything with Bitcoin online. There’s no buyer or fraud protection whatsoever. I don’t understand how any legitimate merchant would be alright with that. If a merchant would only accept Bitcoin, that would come across just as sketchy as a merchant who wants me to mail him a cashier’s chec…

Remember that "chargebacks for everyone, no questions asked" is a US and Australia-only thing. In most other places it's not very common (you need to go premium for that), and Bitcoin would be more than welcome to reduce fees, delays, frozen accounts, and other bull . Fraud is still fraud, so if you get defrauded by someone, all you need is that a judge decides that Bitcoin is money, like it has already happened with…

On the other hand, "chargebacks for everyone if no evidence of goods delivered" is a global thing.

Fraud is very different from chargebacks - if you lose money in fraud, good luck getting it back from the fraudster; proper chargebacks mean you get the money back in any case, even in extreme cases if your bank goes bankrupt during that time.

Re: PayPal Freezes Mailpile Campaign Funds

#296

Post by PeterisP » Thu, Sep 05, 2013, 6:14 PM UTC

Xylakant wrote: post #76

kalms wrote: post #67

Earlier quoted context omitted.

I see your point. PayPal is a business partner in this setup, and they are shouldering a lot of risk on the developers behalf. I can understand not wanting to share something as intimate as a business/developement plan, but PayPal is within their rights, boty legally and morally, to ask for one. If the developers are having trouble with this, they should find another partner for their venture. (imho) That said, PayPa…

> but PayPal is within their rights, boty legally and morally No and no. They're a payment provider, a utility, not a partner. They could have stated up front that they want a business plan or could have denied acting as payment provider. They could have demanded the backers to waive their refund rights. I'd even be on their side if they kept a percentage of the funds as security. The backers have a moral right to se…

"They could have stated up front..." - IIRC their ToS stated up front that you can't accept that money at all (i.e., no pre-sales) - but they didn't catch you in time, so they are holding the funds. It's essentially as an escrow, but better than that - escrow would release funds only AFTER shipment, but they are presumably offering to release part of it before shipment according to the requested business plans. And they have no obligation to catch 100% of violating merchants immediately, it's your responsibility to not request payments breaking the ToS.

"They could have demanded the backers to waive their refund rights." : No, they can't demand that - the refund rights are mandated by law and nothing can waive that, consumers have them no matter what any merchant (like you) or intermediary (like paypal) might want or put in agreements; some chargeback rights apply even if they sign in blood "this is an nonrefundable donation".

Re: PayPal Freezes Mailpile Campaign Funds

#297

Post by wmf » Thu, Sep 05, 2013, 6:16 PM UTC

jafaku wrote: post #113

BitMastro wrote: post #92

Earlier quoted context omitted.

There is something I don't understand about Bitcoin: right now there is a lot of instability in the exchange rate of Bitcoin and everyday currency like dollars, euros, or pounds, from the graph I checked from here[1]. How can it be a viable alternative, when its value can change by 40% in a month? Gaining or losing value is not important (if it's increasing value, I have to delay exchanging to dollars as much as poss…

It's a new currency that is not artificially stabilized by any government, so it's only natural that it has some wild fluctuations. If you don't like big gains just avoid holding BTC and you'll be fine.

It's not just that Bitcoin is not stabilized by any Government. Bitcoin has no stabilization mechanisms at all, and they cannot be added.

Re: PayPal Freezes Mailpile Campaign Funds

#298

Post by rapht » Thu, Sep 05, 2013, 6:16 PM UTC

patio11 wrote: post #147

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…

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.

I'm in full agreement with your demonstration, however, as to the case at hand, it appears to me that it's not really the point : the fact is that it should not be qualified as a "presale" and Paypal here is not a trade intermediary but a postman. If that's not the case, Paypal needs to explain how "crowdfunding", which depending on the viewpoint could be characterized either as a capital investment or as a donation and therefore in any case NOT a commercial transaction, intersects "presale" which definitely is a commercial transaction...

Re: PayPal Freezes Mailpile Campaign Funds

#299

Post by jusben1369 » Thu, Sep 05, 2013, 6:18 PM UTC

jtbigwoo wrote: post #235

jusben1369 wrote: post #117

What strikes me as really disappointing here is that the person has no idea why PayPal has frozen their account. It's surprising to me that they don't understand the inherent risks to PayPal from a kickstarter program (how dare they ask me for my business plan?!). In this post at least it seems like they just think PayPal doesn't like them and wants to hold their money for a long time. I guess they should have done m…

>> How hard is it for them to say "In the past, we have seen crowd funding sites/services that never delivered anything. That resulted in a lot of unhappy end users going to their credit card companies and initiating a chargeback which we're on the hook to pay. As you can see, if you took the money from your account and disappeared we'd be on the hook for that entire $X. That's why it's important we understand more a…

The problem with your answer though is that this was the top post on HN for x hours and damaged an already damaged (and trying to recover) brand. So I would say the complications of additional details would offset the risk of saying little and sending a bewildered blogger into the wilderness.

Re: PayPal Freezes Mailpile Campaign Funds

#300

Post by orclev » Thu, Sep 05, 2013, 6:18 PM UTC

wmf wrote: post #289

orclev wrote: post #275

Earlier quoted context omitted.

Am I missing something here? Things like IndieGoGo and KickStarter are inherently risky, but not for the payment processor, for the one doing the backing. If you back a project and it goes belly up or for whatever reason fails to deliver or under-delivers that is not "failure to provide service", that was the risk you took when you decided to back them. That money is gone, the horse has left the barn, you have no rig…

That's an interesting position, but do any credit card companies agree with it?

I don't know. I honestly don't really know how the chargeback system functions. I mean, what's to stop me from ordering for instance some hugely expensive item from say Amazon, waiting for it to show up, and then filing a chargeback on it? Does it make a difference if I go through say Paypal to do it? Is there anything stopping anyone from filing a fraudulent chargeback (which is essentially what a chargeback against a Kickstarter or IndieGoGo campaign would be)?