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Comment by pinksoda | Hacker News Reader

PayPal once made me refund every customer in the last 6 months. They said it was the only way to unfreeze my account. I gave them the thumbs up because I had no other options at the time, and they said, "you have to manually refund them one-by-one yourself and then call us when it is done". It was really strange.

They permanently froze my account after I refunded everyone and refused to talk to me when I called. I wasn't able to get a merchant account and I lost thousands of PayPal recurring subscriptions. This was the death of my first start-up.

PayPal is a scam and it's not as uncommon as you think. If you're using PayPal, your time will come. I didn't think they would do it to me either, they never bothered me once until all of this went down.

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Interesting to read that. I thought it is only Paypal Germany whose customer service is bad. My experience with Paypal is, that they deliberately freeze my account and ask for private information and business details, that you really don't want to distribute. If I don't send them, the account remains frozen - well, I may upload money any time ;o).

And indeed, Paypal also doesn't talk to me anymore. They don't close my account on request, they don't respond to any kind of mails. Only the list of problems to resolve gets longer and longer.

Please read their terms and conditions. It is one document with numerous extensions, 48 pages as I counted them the last time! The way it is done looks to me like they want to make it impossible to understand (my personal interpretation). Try to find out under which circumstances Paypal may freeze your account or under which circumstances they transfer your money , as you request: It is their personal decision. There are no clear criteria given. It is a matter how much they think you can be trusted. Check it yourself.

Sorry for the rant. Hearing the name of Paypal really makes me angry.

Steve Jobs once said: I don't sign a contract that is longer than 1 page. Good advice.

He did?? Does he know the iTunes Music Store contract is a whopping 23 pages long, with some 112 sections? At least, it was as of early 2009, which was when I A) really read the thing and B) decided I was done with iTMS. (Full details at http://www.blahedo.org/blog/archives/001060.html .)

(EDIT: iTunes ≠ iTMS)

Well, iTunes is not for HIM to sign, its for YOU.

well, to be fair he never said what's the dimension of "the page" ;)

How in the world has PayPal managed to not be perpetually in court fighting off class action law suits?

I have a client who owns a bricks and mortar store that's been in business for about 15 years and employs about 20 people. They were using PayPal for payment processing on their website, when one day PayPal decided they didn't like the way the company was structured, and froze all funds.

Nothing they could do to appease PayPal. Six months later they got their money back, they now hate PayPal with a passion, and use eWay who have been great

We've been processing 5 figures a month with PayPal subscriptions for over 5 years (we've since moved to a different system but have a lot of legacy customers still on PayPal).

While I've had some odd issues here and there and the user experience for clients is poor, I've never had anything close to what you've described.

I have to say–either you're wrong about "your time will come" or there's simply more to your story.

It sounds like your time hasn't come yet.

my experience with paypal has also been largely positive. I process between USD$10K and USD$20K a month in paypal payments.

As far as I can tell, they aren't much worse than most other payment processors. Most payment processors, if someone with bad credit comes along, or someone gets lots of chargebacks, or if someone is in a funny business sector, they keep some percentage of your money in escrow for a certain number of months.

Now, personally, I have a very liberal refund policy (and really, I think anyone who accepts paypal or credit cards should do the same... because anyone who wants to, with either of those methods, can get their money back, if they really want to.) so I generally don't get chargebacks on my papal account. My last 'dispute' in fact, was an accident... the guy says he meant to dispute the next transaction, with a different company.

and hell, if you tangle with the IRS, your regular bank account will get frozen.

Now, I have heard many, many paypal horror stories from non-profits.

I wonder if paypal is going overboard in cooperating with the US government (in this case, the government harassing not-for-profits who haven't lawyered up enough) to avoid the fate of e-gold?

The e-gold guys, as far as I can tell, were told 'freeze your business or we will throw your asses in jail.' I've still got around a hundred bucks in e-gold I can't access because of that.

E-gold was set up a the way a privacy nerd would set up a banking system, and they built a fairly secure system, but they ignored fraud, saying they were trying to be 'like cash' and first accumulated a reputation for serving the shady and outright fraudulent market, before being shut down by the government.

Uhm.. there's another option you know? Like maybe your time hasn't come yet?

My guess is that you got lucky, flew under the radar and now the amount you're processing is substantial enough that they won't try to pull anything.

Either that or your time just hasn't come yet :)

Well, that certainly sounds like half of a good story.

Yeah, this is the sort of thing that happens when a business decides that it will simply terminate communication with a customer without explanation. We don't get to hear their side of the story. The customer has no idea what's going on. That's a pretty bad business practice.

I've heard enough insane PayPal stories from enough people that I trust such that I have no trouble believing pinksoda.

> We don't get to hear their side of the story. The customer has no idea what's going on. That's a pretty bad business practice.

That is the problem with pay pal. Dealing with them is like dealing with a roach motel: data and money go in, but nothing comes out. A sign of how abusive they are is that you cannot get a telephone number for them. There is no one you can call. No one you can send a certified/registered letter. Everything has to be via email.

Your point is well taken, but I have never seen a comment, here or elsewhere, where someone lauded the great PayPal service or the quick conflict resolution. It's always about being blindsided. Folks, if you have GOOD stories, those are worth posting for balance.

I am, among other things, pwelch@gmail.com.

Of course, this means that every Patrick, Patricia, Pedro, Paul, or Penelope Welch who leaves a numeral or something off their email address thinks they are pwelch@gmail.com. Or one of their colleagues or friends thinks they are pwelch@gmail.com.

Long story made short, some idiot set up a Paypal account on my email address and now I can't get it off. I've contacted Paypal and nothing came of it.

But how this idiot confirmed your email address?

As far as I can tell, PayPal doesn't require address confirmation.

The problem is, no amount of good stories can repair the damage done to those who trusted PayPal because "it works OK for most people". They may even have great customer support most of the time, but if they still do stuff like this, it reason enough to be very careful:

1) Never solely rely on PayPal for your income. 2) Never keep large amounts in your PayPal account - they can be come PayPals for 6m+ at a moments notice.

>1) Never solely rely on PayPal for your income.

This is VERY important to remember. If your business is making a good chunk of change a month you should be able to afford the card card processing fee your self. Get a REAL bank account, preferable somewhere local so you can go in and talk face-to-face with a person if an issue arises- more likely to get results this way. It's also easier for you to get scammed by scammers with paypal, not so much with a real bank as they will fight for you.

I am not saying, "never use paypal". As your business grows and matures make sure the way you handle your finances does as well. If you are able to process cards yourself you can also sell that service to other people or use it in another business venture. Build your empire, not someone else's.

Also hire/lease accountants. If you must use paypal for business ventures buy the business account. A lot of stories I've heard were from people who still used a personal account for their business.

Well the good story is pretty mundane. Here's mine: the payments have always gone through.

Point taken, but how about a story where there was a conflict that was settled quickly and fairly?

In my case, my account was flagged (the business was legit, but I could understand if they had some cause for concern), but it was such a hassle to satisfy them I gave up. I couldn't talk to a person; I had to send dozens of faxes; I couldn't even email - I had to use a stupid form with a character limit; it was never laid out what I had to do or how many steps remained.

That's not a good story; that's what they're suppose to do on the most basic level. They don't deserve praise for that. They do, however, deserve a very bad reputation for stories like above. I have one myself and of others close to me but I'll leave it at that.

The false positives are one problem with PayPal; the customer support is another.

Customer support only gets a chance to prove itself once something goes south, and I get the impression that it's unequivocally bad.

If I am looking at buying a laptop, I don't care much about whether it's a matter of "if" or "when" it breaks, but how the customer service and repair shop handle it once it happens.

PayPal's "customer service" is the Damoclean sword that people fear moreso than the false positives. Because good customer service would be able to ameliorate most of their mess and admit errors on their end.

Except that's probably is most of the story. Seriously, PayPal do this kind of thing. I'm sure they do it to loads and loads of scammers (who presumably set up a whole lot of accounts) but they also do it to normal people just trying to use the service.

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