PayPal Freezes Funds Of Famed Swedish ISP Twice

from the fool-me-once... dept

Wed, Dec 26th 2012 3:44am — Mike Masnick

I have to admit I'm a bit surprised they relied on PayPal in the first place, but PRQ, the famed Swedish ISP created by two of the guys behind The Pirate Bay, and which (as you might imagine) was known for standing up for its users against legal threats, has had its PayPal account frozen twice for unclear reasons. Apparently PayPal had been working just fine for three years, and then suddenly the account was frozen. Employees contacted PayPal, who told PRQ to just set up a second PayPal account for users to use until they sorted things out, and then they'd merge the two accounts. Instead... they froze the second one as well. Of course, if you follow stories involving PayPal, this is hardly uncommon. It seems to happen all too frequently with many sites that use it. PayPal works hard to try to minimize fraud, but it seems to have a super itchy trigger finger to completely shut down sites with no warning and little process for appeal. Relying on it as a sole payment offering seems to be asking for trouble.

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Filed Under: freezing funds, isp, paypal, sweden
Companies: paypal, prq

57 Comments

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TheLoot (profile), 26 Dec 2012 @ 4:02am

Legality...
I'm assuming there's some sort of legal guidelines of how banks can or cannot do things like this. Why is PP free to do what it pleases whenever it feels like for whatever reason?
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Anonymous Coward, 26 Dec 2012 @ 4:16am

probably why so many are telling Paypal to swivel and probably also why Paypal is so sensitive. by freezing accounts for 180 days, they know they are at least getting interest on any funds, then they can claim they have had mega expenses so there are no funds left. win-win for Paypal in the short term only though. and i'll bet the entertainment industries are behind this as well! anything to have a go at TPB or those that used to be involved with it. pathetic, penalizing attitude but one that has become synonymous with those industries. shows the measure of the people in charge. when in such high power positions, they are supposed to show responsibility but show nothing but selfishness, jealousy and corruption!
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Anonymous Coward, 26 Dec 2012 @ 4:19am

Re: Legality...
because paypal is not a bank, it's a payment processor. they don't have to comply with banking laws. and they're located in singapore which has very liberal laws when it comes to money business.
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Anonymous Coward, 26 Dec 2012 @ 4:28am

That TF article says PRQ is setting up a Visa/Mastercard merchant account. Correct me if I'm wrong, but haven't those two credit card companies behaved in the past exactly as PayPal has here? Doing business with them might be a bad idea for PRQ.
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Anonymous Coward, 26 Dec 2012 @ 4:32am

Mike Masnick just hates it when people get busted for breaking the law.

That tells you how confident he truly is in his goofy economic theories.

http://news.cnet.com/8301-1023_3-57525679-93/swedish-isp-confirms-police-raid-targeted- illegal-file-sharing/
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Anonymous Coward, 26 Dec 2012 @ 4:46am

Re:
...because everyone simply *knows* that they were guilty of STUFF, and that random punishment imposed by PayPal == justice.

No, PayPal has spent lots of money to be able to skirt laws that any other bank would have to, and for that matter, so have Visa, MC, etc. PayPal is the most brazen, though. Basically, they can do whatever they like with your money, with absolutely no fear of repercussion. It's a license to steal, in the purest sense. As long as they don't skim TOO much, and they only do it from random individuals and Bad People that are automatically guilty of our highest and most sacred law, Offending of Old Media, they can do whatever they like.

Now, on the other hand, if I did that, it'd be called grand theft and nobody would ever hear from me again.
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Anonymous Coward, 26 Dec 2012 @ 4:48am

Re: Legality... Double Standards.
why do you expect there be a legal requirement that a company has to trade with another company ?

if PP does not want this person as a customer, do you think the government should force them too ?

SO in cases like this you feel more Government regulation is necessary and beneficial ?

So why not expect the Government to have an interest in all transactions, and force people to transact with whoever they (the Government) wants/ forces them to do !

It's funny when it suits you would love the Government to do your 'bidding' and when the Government actually DOES enforce the rules and law (in a different area like copyright) you say the Government has too much influence, and that the market should sort itself out without Government intervention !

Double standards
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Anonymous Coward, 26 Dec 2012 @ 4:53am

Re: Re:
if pay pal and it's likes are so bad why you complaining that they cannot access that service ?

no one forced them to use PP and equally no one is forcing PP to accept them as a client, it's PP's choice if they don't want their custom, I also notice Masnick was very quiet about the raid and so forth.

It does mean that there may have been legal requirements for PP NOT to keep them as a client as they are (may be) supporting the committing of crimes.
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Anonymous Coward, 26 Dec 2012 @ 4:53am

Re: Re: Legality... Double Standards.
PayPal doesn't have an obligation to have them as a customer, but they do have an obligation not to steal, which is what these indefinite "holds" are. If they want to drop the account, by all means, they should do so, but any funds on deposit absolutely 100% belong to the depositor, not the bank / processor / middleman, and ought to be turned over promptly.
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Anonymous Coward, 26 Dec 2012 @ 5:00am

Re: Re: Re:
I also notice Masnick was very quiet about the raid and so forth.

Mike Masnick supports pirates, piracy and anything connected to copyright infringement. He's intellectually dishonest, so of course you didn't get the full story from him.

Perhaps he'll come forward with some lame rebuttal to this, but the words within his thousands of posts on this site would then only show him to be a blatant liar.
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Anonymous Coward, 26 Dec 2012 @ 5:06am

Re: Re: Re: Re:
Aww. How cute. The trolls are up early this morning.
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Anonymous Coward, 26 Dec 2012 @ 5:12am

Re: Re: Re: Re: Re:
The fact that revealing the truth about a subject(s) is considered trolling here, tells everyone else everything they need to know about this site.
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Anonymous Coward, 26 Dec 2012 @ 5:20am

Re: Re: Re:
You mean the very same raid that is linked in the source article, which isn't relevant as this has only happened in the last week?

And committing what crimes, precisely? Do you have a cast-iron "people have been convicted of this in direct relation to the raids" citation that people have been performing criminal acts?

If not, then I kindly suggest you don't defame people any further.
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Anonymous Coward, 26 Dec 2012 @ 5:22am

Re:
Paypal is not the police, and they are not acting under any court order. They should only be responsible for transferring of money, and and leave any legal issues up to the law. Other than that they should provide a correspondence address if either party to a transaction requests it. The freezing of accounts is Paypal acting as a private law enforcement agency without proper oversight.
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Anonymous Coward, 26 Dec 2012 @ 5:48am

Re: Re: Re: Re: Re: Re:
"Revealing the truth" would involve citations, sources and references, none of which have been presented. If you're unable to the heavy lifting, just say so. Preferably somewhere else.
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Anonymous Coward, 26 Dec 2012 @ 5:54am

Re: Re: Re: Re: Re: Re:
Santa put you on the naughty list this year didn't he?
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Anonymous Coward, 26 Dec 2012 @ 5:58am

Re: Re: Legality... Double Standards.
Quote:
why do you expect there be a legal requirement that a company has to trade with another company ?

Anti-trust issues and discrimination issues.

You don't want a payment system that only do business in favor of their pals do you? that would be bad.

You also may not want to be on the receiving end of capricious discrimination.

So there you go, 2 very good reasons why there should be regulated and which everyone with a brain would agree makes sense.
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Anonymous Coward, 26 Dec 2012 @ 6:01am

Re: Re: Legality... Double Standards.
Further why hold the money indefinitely if you don't want to do business with some people?

Also why even allow them to open an account?

Would you be ok to open an account in a bank and have your assets freezed without explanation or good cause?
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average_joe (profile), 26 Dec 2012 @ 6:08am

So wait. After having their first account frozen, these guys opened up a second account at the same place? These guys are criminal masterminds! No wonder Mike idolizes them so.
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CK20XX, 26 Dec 2012 @ 6:47am

This isn't even the tip of the bad press Paypal has been generating for... what, the past year or so?

What are some alternatives? I've heard that the name "Bitcoin" has been entering the mainstream.
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Anonymous Coward, 26 Dec 2012 @ 6:50am

Re:
Not sure if funny, or just stupid...
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Anonymous Coward, 26 Dec 2012 @ 7:14am

Re:
No, they have to still do business. And the best method at the time was, of course, Paypal. So opening second account was logical. But Paypal holding on to the money in case of chargebacks for six months seems...less than sensible. Especially considering that chargebacks are a small part of the cost of processing payments.
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Anonymous Coward, 26 Dec 2012 @ 8:40am

Re: Re: Re: Legality... Double Standards.
If they take customers money and hand it over to the client, what service have PP removed ??

seems like that is exactly what they would normally do for their clients, but to hold the money until legally abliged to pay it to the courts or the client, is what they are supposed to do.
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John Fenderson (profile), 26 Dec 2012 @ 9:24am

Re: Re: Legality... Double Standards.
why do you expect there be a legal requirement that a company has to trade with another company ?

I didn't see any such expectation expressed in the article at all. What I do see is an overt reminder that using PayPal is a risky thing to do -- something that has been well known for years, but apparently gets forgotten or overlooked occasionally.
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John Fenderson (profile), 26 Dec 2012 @ 9:27am

Re:
What law did PRQ violate? The article you linked to doesn't indicate that they did, only that some of their customers did.
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btrussell (profile), 26 Dec 2012 @ 10:36am

Re:
"Employees contacted PayPal, who told PRQ to just set up a second PayPal account for users to use until they sorted things out, and then they'd merge the two accounts."
https://www.techdirt.com/articles/20121225/01255621481/paypal-freezes-funds-famed-swedis h-isp-twice.shtml
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WysiWyg (profile), 26 Dec 2012 @ 10:39am

Re: Re: Re: Re: Legality... Double Standards.
Wait, what? You think doing one final payout is the same as NOT canceling the service?

I think the point is that, at least from a common sense perspective, they are already obliged by law to not keep someone else's money like that.
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WysiWyg (profile), 26 Dec 2012 @ 10:44am

Re: Re: Legality... Double Standards.
You do have a point. Personally I don't think they should be able to both eat the cake and have it too though.

Basically, if you choose customers in this way, then you are also legally responsible for what those customers do with your service. If you want immunity, "mere conduit", then you also have to do business with everyone except the ones specifically called out by a legal courtorder.

Of course, then we get to the whole filtering your commentsection issue. If the same logic applies to that, then you can't filter out spam without loosing your protection.

BUT! There is a middleground, where you are allowed some filtering to maintain your service, kind of like how ISPs are allowed to disconnect you if your computer starts spewing viruses.
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Anon, 26 Dec 2012 @ 10:58am

Re: Re: Legality...
In Europe it is a bank. And regulated as bank. It is not a payment processor m
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Anonymous Coward, 26 Dec 2012 @ 11:03am

Google Wallet
Recently paid for my groceries with Google Wallet at store.

"Associated Food Stores Adopts Google Wallet"
https://plus.google.com/+GoogleWallet/posts/XEeTBPbYt4a

Would this be an option for ISP's and others?
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Anonymous Coward, 26 Dec 2012 @ 1:24pm

Re:
LOL You're a fucking failure at life.
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Anonymous Coward, 26 Dec 2012 @ 2:37pm

Re: Re: Re: Legality... Double Standards.
there is an element of risk in any business you do, or conduct, even more so when you're dealing with a company that gets raided on a regular basis.

the right thing to do in such cases is to cease trading or dealing with that company and to wait until it is confirmed that you are dealing with a legal company entity.

what you don't do is to keep trading when them.

what you are supposed to do is exactly what they have done.\

my comment was a response to someone else comment, who said the Government should force them to trade with clients they believe (or have very good reason to believe are conducting illegal activities).

I was amused that now TD readers want more Government intervention in situations like this, but when it comes to copyright they want the Government to not do anything !!.

therefore the double standards..
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Anonymous Coward, 26 Dec 2012 @ 2:42pm

Re: Re: Re: Re: Re: Re:
Too right !!

at least the hidden posts are still usually the only ones worth reading. It's a great flag to indicate you've upset a fanboi.
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Anonymous Coward, 26 Dec 2012 @ 2:44pm

Re: Re:
funny and stupid :)
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Anonymous Coward, 26 Dec 2012 @ 2:50pm

Re: Re:
No, they have to still do business.

NO they don't !!!

do you understand companies can choose who they do business with, within certain discrimination laws limitations.

ie, refusing to trade with Black people, or women would not be legal, but if you suspect the money is contributing to crime, or have good reason to believe that, or just because you don't want too, you are not force to trade, or EVEN CONDUCT A BUSINESS AT ALL.

but the facts remain the same, IF you SUSPECT that you are assisting in the conduct of a crime, you have every right to be able to 'opt out' of that situation and cease processing money for that company.

being raided is quite a good way to indicate that they may be doing something illegal, and not wanting to be a party to the committing of crimes they exercises their right to not conduct business with them.

you cant do that and keep paying them money you receive for them.

you stop taking in money for them and you stop paying money too them, until such times as it is assured that they are not using you to commit alleged crimes.
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That One Guy (profile), 26 Dec 2012 @ 3:16pm

Re:
'Employees contacted PayPal, who told PRQ to just set up a second PayPal account for users to use until they sorted things out, and then they'd merge the two accounts.'

It would help if you would actually read the article first before posting. Yes they did have their first account frozen, and yes they did set up a second account, but only because paypal suggest they do so.
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John Fenderson (profile), 26 Dec 2012 @ 3:43pm

Re: Re: Re: Re: Legality... Double Standards.
I was amused that now TD readers want more Government intervention in situations like this, but when it comes to copyright they want the Government to not do anything !!.

Right, because all commenters here agree about everything all the time. It's certainly not possible that some people here might hold one opinion and other people hold the opposite. If you ever see something that looks like that, it must be a double standard!

/sarc
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Anonymous Coward, 26 Dec 2012 @ 4:04pm

Re: Re: Re:
Then why did Paypal still accept money from other people who want to pay PRQ? That, my anonymous friend, is called fraud.
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Anonymous Coward, 26 Dec 2012 @ 5:30pm

Re: Re: Re: Re: Re: Re: Re:
What kind of universe do you live in, darryl, that everything is read as an insult? Oh, right. You live in Australia, where all the culture is dated back several years behind everyone else. And bless my soul, you actually like it that way, you unimaginable shitstain!
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Anonymous Coward, 26 Dec 2012 @ 6:46pm

Re:
That's from October and has nothing at all to do with what we are discussing. Grow up a little, try to follow the conversation and be productive within it.
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Anonymous Coward, 26 Dec 2012 @ 9:55pm

Re: Legality...
hahahahahahahaha... expect more! go PayPal!
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SUNWARD (profile), 27 Dec 2012 @ 2:16am

No
google wallet is only available in the US
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Anonymous Coward, 27 Dec 2012 @ 2:49am

Re: Re: Re: Legality... Double Standards.
I would love to see you try to build a case against PP based on discrimination or anti-trust... that would be funny.

I also stated discrimination as being one of the reasons you CANNOT use as an excuse not to trade, what group are they discriminating against ?? criminals ??

you're a joke :)
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Anonymous Coward, 27 Dec 2012 @ 2:56am

Re: Re: Re: Re:
I did not know they raided pay pal !!!.

a raid is not a conviction, or a hearing or a sentence. It's a part of an ongoing investigation, and there is not reason at all to allow them to continue to receive money until there is a hearing, or a conviction or a sentence, once they are cleared, or otherwise. then PP will either give the money to them, or give it to the police as proceeds of crime.

after all, this group are the subject of a raid and obviously an ongoing investigation, PP would be criminally liable if they continued to trade with this group until the investigation is concluded, regardless of the outcome.
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techflaws (profile), 27 Dec 2012 @ 3:00am

Re: Re: Re: Re: Legality... Double Standards.
my comment was a response to someone else comment...

I was amused that now TD readers...

Almost as amusing as your failed attempt at lumping TD readers together from one single comment.
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Anonymous Coward, 27 Dec 2012 @ 3:15am

lets compare it to a taxi cab and driver.

A taxi driver can refuse you travel or stop during your trip before you reach you destination for many reasons.

such as very dirty clothes and foul language or aggressive behaviour but it is an offense for him/her to refuse travel for many other reasons, such as the colour of your skin, your sex, age or he just does not like you.

in those cases it is an offense to refuse travel (turn down a client).

in other cases it would be an offense for the taxi driver to allow someone to travel, for example if they were aware that their client has just committed a crime (no he does not need a court hearing or a judgement) but if he sees this person fleeing from an accident he was in, or clearly just robbed a bank or set fire to a house.

it this case, if the taxi driver provided his service he too would be guilty of aiding in a crime.

if PP suspected this group had committed a crime (a police raid on their premises say.) then they would be legally obliged to cease providing their service so as to not contribute and be liable for the crime.

it has nothing to do with discrimination, or anti-trust, it's how the world works, responsible companies with reputations to uphold do not continue to deal with people suspected of criminal activities until such times and it has been made clear that they are either guilty or innocent of the allegations.
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Anonymous Coward, 27 Dec 2012 @ 3:20am

Re:
yes, funny right :)

I am glad they tagged you, otherwise I might of missed your comment !
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Anonymous Coward, 27 Dec 2012 @ 3:21am

Re: No
now that's discrimination !!
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btrussell (profile), 27 Dec 2012 @ 4:37am

Re:
Got a list of all the business' paypal refuses to do business with because of allegations made?

I hear the labels and studios are crooks. Hollywood accounting, pending lists...
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WysiWyg (profile), 27 Dec 2012 @ 7:21am

Re:
1. PRQ has never been accused of doing anything illegal. The raid wasn't against them, it was against one of their customers.

2. For your comparison to hold up, the taxi-driver would have to deny someone travel based on someone else (not the police) claiming that someone the person knows MAY have robbed a bank.

It's not like PP "saw" PRQ do anything illegal, since as I said no one has accused them of doing anything illegal.
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Rekrul, 27 Dec 2012 @ 7:21am

Re:
PayPal doesn't care about the law. Read some of the horror stories of people dealing with PayPal;

http://www.paypalsucks.com/
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FauxReal (profile), 27 Dec 2012 @ 10:54am

Re: Bitcoin
Bitcoin is interesting in that it is a decentralized P2P digital currency. I kind of like the idea but I don't trust it in practice.
https://en.wikipedia.org/wiki/Bitcoin

I don't know if I would tust BItcoin to secure my funds as Bitcoin exchanges have been hacked in the past. Some have replaced missing Bitcoins but they can't do that forever.
http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm

Though thinking about it, I do have an extra computer sitting around and it is cold in the house. Maybe I should try mining Bitcoins and warm up the room at the same time.
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Anonymous Coward, 27 Dec 2012 @ 11:06am

Re:
This sounds suspiciously like our old "friend" (I use the term very loosely), Out Of The Blue, up to his usual trolls again.
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Anonymous Coward, 27 Dec 2012 @ 2:38pm

How about... the freezing had to do with the raid in October? http://arstechnica.com/tech-policy/2012/10/swedish-web-host-prq-returns-following-raid/. Probably just the police/lawyers demanding it for reasons not disclosed ;)
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WysiWyg (profile), 27 Dec 2012 @ 11:18pm

Re:
PRQ wasn't raided, one of their customers were.
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Auction Essistance, 22 Apr 2015 @ 5:34pm

Freezes all accounts
PayPal will freeze numerous accounts for arbitrary reasons.
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Jill, 4 Apr 2018 @ 3:36pm

PP and eBay froze over $144.000
So this happened to me 10 years ago. I was in such a distress but there's a <a href="https://www.aspkin.com/forums/paypal-limited/">forum</a> that has helped me get back on my foot since.
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