Insanity: PayPal Freezes Mailpile's Account, Demands Excessive Info To Get Access

from the why-we-need-paypal-alternatives dept

See update at the bottom

A few weeks ago, we wrote about Mailpile, a new attempt to create a webmail client that is built with both security and usability in mind -- think Gmail/Outlook-type interface, but which you can control and with built in security. The project looks awesome and is greatly needed these days, as we learn more and more about government intrusions into hosted webmail accounts. Their IndieGoGo campaign has been a huge success, going past their $100,000 target, and is currently at around $137,000, which will allow the three person team to focus on it full time.

Except... as the team announced this morning, PayPal, for reasons known only to PayPal, has decided to freeze their funds and won't let Mailpile access the money that people donated:

Saturday August 31st I woke to two emails from PayPal. The first notified me they had cancelled the debit card associated with my sole proprietor business account, the second was informing me they placed a block on my account barring me from withdrawing or sending any money out of my PayPal account.

Assuming this would get sorted out after a little explaining/security check, the team has been trying to get PayPal to unfreeze the account, with no luck. PayPal is demanding an insane level of detail into Mailpile's personal finances and business:

Afer 4 phone calls, the last of which I spoke to a supervisor, the understanding I have come to is, unless Mailpile provides PayPal with a detailed budgetary breakdown of how we plan to use the donations from our crowd funding campaign they will not release the block on my account for 1 year until we have shipped a 1.0 version of our product. A final email communication from PayPal reaffirmed us of their stance by stating:

"Please provide an itemized budget and your development goal dates for your project"

This puts us in an incredibly uncomfortable position as we do not feel that it's remotely in their jurisdiction to ask for a detailed budget of our business, any more than it is within our right to ask for theirs.

Even worse, it seems that the folks at PayPal recognize that it holds power over Mailpile, and seems almost to be lording that power over them:

Communications with PayPal have implied that they would use any excuse available to them to delay delivering as much of our cash as possible for as long as possible. Asking us to give them justification for such behavior is obviously not in our best interests. PayPal's position particularly ridiculous when contrasted with IndieGoGo's policy of transferring all funds to successful campaigns within 15 days of their conclusion. If IndieGoGo can do it, so can PayPal.

This isn't all of the money raised -- it's about $45,000 of the $137,000, but it's still a huge pain. Mailpile has now had the Software Freedom Law Center look into their legal options for obtaining the money that people donated to the project.

Yes, PayPal has a long history of similar things, but that doesn't make it okay.

Update: And... of course, the inevitable backtrack. After all the publicity. From PayPal:

We have reached out to MailPile and the limitation has been lifted. Supporting crowd funding campaigns is an exciting new part of our business.We are working closely with industry-leaders like IndieGoGo and adapting our processes and policies to better serve the innovative companies that are relying on PayPal and crowd funding campaigns to grow their businesses. We never want to get in the way of innovation, but as a global payments company we must ensure the payments flowing through our system around the world are in compliance with laws and regulations. We understand that the way in which we are complying to these rules can be frustrating in some cases and we've made significant changes in North America to adapt to the unique needs of crowd funding campaigns. We are currently working to roll these improvements out around the world.

Filed Under: email, frozen account, paypal, secure email
Companies: mailpile, paypal

PayPal Freezes Funds Of Famed Swedish ISP Twice

from the fool-me-once... dept

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.

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

PayPal Freezes Diaspora's Account

from the sad dept

PayPal has an unfortunate reputation for arbitrarily shutting down accounts for various organizations, without much rhyme or reason. The latest is that it has frozen the donation account for Diaspora, the heavily hyped up effort to create an open source, distributed Facebook alternative. Diaspora kicked off with a ton of money via Kickstarter, but (as we worried) the project has proven to be more difficult to get off the ground than some expected. It recently sought more donations... only to discover that PayPal froze the account. Whether or not you agree with the project, it seems pretty ridiculous that PayPal just freezes such accounts. We hear stories of this way too frequently for it to be a mere mistake. The world desperately needs more payment processing options, because the ones out there today are woefully limited. Thankfully, there is at least some movement in that arena. We've been hearing a lot about Stripe -- a Silicon Valley payments startup, with funding from some original Paypal folks -- and, it's nice to see that they quickly jumped in to help Diaspora. Still, the more payment solutions out there, the better off we'll be.

Filed Under: diaspora, frozen accounts, payment processors, paypal
Companies: diaspora, paypal, stripe

PayPal Turns Bradley Manning Defense Account Back On; Claims It Was A Paperwork Problem

from the that's-not-what-they-said-originally dept

PayPal's decision to cut off the account of an organization that was collecting funds to help with Bradley Manning's defense got a lot of attention -- so much that PayPal came out with a blog post explaining that it was just a paperwork problem on the part of the organization, Courage to Resist. Because of this, they've reinstated the account:

We recently placed a temporary limitation of the Courage to Resist organization’s PayPal account as they had not complied to our stated policy requiring non profits to associate a bank account with their PayPal account (for the vast majority of non-profits, this is not an issue).

In a press release issued today, the Courage to Resist organization claimed that their resistance to follow our policy is because PayPal sought to withdraw funds from their checking account.  To be clear: PayPal cannot take such action without the authorization of an account holder, nor does it ever take such unauthorized actions.

Upon review, and as part of our normal business procedures, we have decided to lift the temporary restriction placed on their account because we have sufficient information to meet our statutory 'Know Your Customer' obligations. The Courage to Resist PayPal account is now fully operational.

While it's good that they've done this, not all of this makes sense. Courage to Resist claims that they repeatedly asked for an explanation and for the specific policy that they had violated. If it was just a matter of associating an account with a bank account, why didn't PayPal just tell them that in the first place?

Filed Under: bradley manning, paypal
Companies: paypal

PayPal Suspends Payments In India?

from the that-seems-rather-big dept

After the story a few weeks ago about Paypal suspending the account of Wikileaks, and blocking it from removing money in the account, many people pointed out how risky it is to leave any money in a PayPal account. It seems that situation is getting worse and worse. PayPal has apparently halted personal payments in India, and aren't allowing merchants to remove money from their accounts. And the reasoning is... not particularly clear as to why:

"Personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service...."

Apparently, this has been going on for over a week, which has to be seriously frustrating to many merchants, but a seriously good thing for various PayPal competitors.

Filed Under: india, paypal
Companies: ebay, paypal

PayPal Suspends WikiLeaks Account Yet Again; Freezes Assets

from the no-payments-allowed dept

Wikileaks is an incredibly useful and important site, but there are many (mainly in the government) who would prefer it go away. It's somewhat upsetting to find out that PayPal has (for the second time) frozen all of WikiLeaks' assets. Apparently, the last time this happened it took nearly six months to resolve. That seems problematic:

Paypal has as of 23rd of January 2010 frozen WikiLeaks assets. This is the second time that this happens. The last time we struggled for more than half a year to resolve this issue. By working with the respected and recognized German foundation Wau Holland Stiftung we tried to avoid this from happening again -- apparently without avail.

Update: Wikileaks has now removed this message from its website, so it appears that things have been resolved. I'm a bit confused, however, as to why Wikileaks continues to use PayPal given this issue.

Filed Under: account frozen, paypal, wikileaks
Companies: ebay, paypal, wikileaks

eBay Moves Closer To Forcing Users To Use PayPal

from the it's-good-to-be-the-king dept

You may recall earlier this year that eBay experimented with requiring customers to use eBay-owned PayPal for payments on eBay auctions down in Australia. However, public backlash, combined with government threats convinced eBay to hold off for the time being. However, folks over at Slashdot are noting that eBay has now changed its terms of service in the US to push more people towards using PayPal. Specifically it's no longer allowing checks or money orders for payments on most items, saying that electronic payments, merchant accounts or direct payment for in-person exchanges are the only options. However, as the Slashdot post notes, in the electronic payment space, eBay then blatantly says it will not allow Google or Amazon's payment programs to operate on eBay because they compete with eBay.

While eBay may be allowed to do this, it definitely seems like a good way to shoot itself in the foot. If customers don't want to use PayPal, they're simply going to bypass eBay entirely, and use an alternative. That not only cuts eBay out of the transaction, but also the listing fee. eBay tries to position this as being about making the experience better for both buyers and sellers, but that's clearly untrue. Instead, it seems like eBay is afraid to compete on the merits with its payment solution, knowing that many, many users are increasingly fed up with PayPal. Yet, rather than fix PayPal, the company's response is to ban the competition.

Filed Under: competition, electronic payments, paypal
Companies: ebay, paypal

Amazon Launches Payment Service... Again

from the let's-try-this-again dept

As was widely expected, Amazon has now launched a new payment service for online retailers as something of a PayPal competitor. Basically, it will let people use their Amazon account info to buy things at other stores. Of course, as others have discovered, taking on PayPal -- while simple in concept -- has proven a lot more difficult in practice. Companies like Google and Yahoo have tried and haven't made much of a dent. Hell, even Amazon has tried this before, though that was a beta launch that never went very far. Actually getting retailers to implement this and then getting customers to use it is the challenge at this point, and it seems likely to be an uphill battle. There's definitely a sense that many people don't like PayPal, but it's so well established that to provide an alternative, you really need to offer something that provides significant value above and beyond Paypal -- and it's not clear that Amazon really does that.

Filed Under: online payments, payments, paypal
Companies: amazon, ebay

eBay Agrees To Hold Off Requiring PayPal For Payments In Australia

from the not-like-it-really-had-a-choice dept

You may recall that eBay execs were trying to require the use of subsidiary PayPal for payments in Australia -- which resulted in a bunch of protests. That, in turn, resulted in the Australia Competition and Consumer Commission (ACCC) saying that this probably broke the law. Not surprisingly, eBay has now agreed to indefinitely delay the plans to require PayPal, saying that it would wait for a final ruling from the ACCC. Of course, it still seems like a situation where this would present another opportunity for eBay competitors to try to steal customers away from eBay.

Filed Under: accc, australia, paypal
Companies: ebay, paypal

Is Amazon Getting Ready To Take On PayPal?

from the and-would-it-be-effective? dept

Plenty of other companies have tried to take on PayPal and discovered that it was a lot harder than it looked. Even though there are a lot of folks dissatisfied with PayPal, most attempts to compete with it have fallen flat. Even Google's efforts haven't really made a huge dent. However, could Amazon shake things up a bit? Over the years, it's done a few things to put its toes in the water of personal payment systems, and now some are predicting that it's gearing up to launch a full on PayPal competitor in the next few months. The analyst who wrote that report notes that Amazon isn't "just another" PayPal competitor, suggesting that its knowledge and experience with online retailing will allow it to create something better. It would certainly be an interesting fit with other "web services" that Amazon has been offering lately -- and would even tie further into Amazon's existing knowledge and scalability. That said, for whatever reason, this market has been a tough one to crack, so we should probably wait and see what the specifics are (if any) before determining its likelihood of success or failure.

Filed Under: online payments, payments, paypal
Companies: amazon, ebay, paypal