PayPal Promises That It's Changing Its Evil Ways In Wrongly Freezing Legit Accounts... But Does So Almost Immediately Again

from the whoops dept

Last week, of course, there was a big story about PayPal freezing Mailpile's IndieGoGo funds, and then making absolutely insane requests for details about their project, including detailed financials and itemized budget of the project. After the story got some press, PayPal quickly changed course, released the freeze (and contributed $1,000 to the campaign themselves). A PR person from the company reached out to us, and I sent back a series of questions, and was told that answers would be forthcoming. Except, they weren't. Yesterday, I was told (1) that the company spokesman "is unavailable this week" and (2) that they "cannot provide any specifics on a customer account due to PayPal's privacy policy." That seemed odd, because nothing in the questions I asked involved violating any privacy issues. I merely pointed out that IndieGoGo has been around for quite some time, and this couldn't be the first time this came up, so I was hoping for a further explanation over why Mailpile set off the alarm bells.

Instead, the PR person pointed me to two links. The first was a blog post from PayPal's President, David Marcus, promising a more "customer first" approach that avoids those kinds of "false positives." The post -- which was written a few days before PayPal froze Mailpile's account -- notes that the company had gotten away from a customer-centric focus, and they were hearing too many media stories about terrible experiences people were having because of PayPal's screwed up process. There are two specific promises in that blog post which it appears that PayPal totally flopped on when it came to MailPile. First, it insists that they need to "take more risks," by which he means "catch more bad guys and way fewer good guys." In fact, he claims that they've already "tweaked" their system and "Hundreds of thousands of customers who may have experienced holds last year based on our policies are no longer impacted."

The other promise is that PayPal would "be human." It notes that the company has changed its policies and now "gives the benefit of the doubt to the seller." Once again, that didn't seem to work at all when it came to Mailpile. Meanwhile, while I apparently didn't qualify to speak to someone at PayPal, they did send someone out to talk to other sites like Ars Technica and Security Ledger, where they just kept pointing back to that Marcus blog post about how they're really working hard to do a better job.

Except, apparently, they've still got some kinks to work out.

Because here we are, just a few days later, and (oh look!) Paypal has done the same damn thing to yet another IndieGoGo campaign, telling the makers of Yatagarasu Attack on Cataclysm that they've frozen their account until the game is actually released. PayPal even told the company that they have no option to discuss this and only to contact the company "closer to the release date beginning next year." In this case, the whole situation is even more ridiculous, because the developers had "already provided PayPal with documents providing the bona fides of Nyu Media, the developer, and the campaign."

Of course, a few hours after the media started picking up on this, PayPal once again admitted the error and reversed course. However, relying on media attention as the check and balance in your broken algorithm doesn't seem like the most effective of systems.

I think PayPal might want to go back to tweaking those algorithms. Especially that "be human" one.

Filed Under: crowdfunding, customer first, customer service, david marcus, frozen funds, funds
Companies: indiegogo, nyu media, paypal