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Comment by 55555 | Hacker News Reader

> And yes, their decision is always final.

Perhaps their decision to close your account is always final, but don't lose all hope after having your funds frozen. I had 25-100k frozen (can't remember how much), and picked up the phone and called them and it was unfrozen within 48 hours.

Paypal is god-awful though and should be used as little as possible.

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Why do we call it "frozen"? It sounds more like "stolen" to me.

Right, if someone says alright, put your money in this box. But then they take the box and close it and say no, you can't open it, Sorry. What does that sound more like? Frozen, or stolen?

Frozen, as long as they don't take the money either.

But with PayPal, that’s not the case. Your “money” in your account at PayPal is just a number in a table. The actual money, however, is in PayPal’s bank account where it is earning PayPal interest and investment opportunities.

To be fair, anything other than M0 (physical cash) is just a number in a table. Banking regulations that ensure ease of access are the only reason other "numbers in tables" are considered part of the money supply.

You probably want it to be in a table that earns you interest, not PayPal, though.

I may be wrong like this, but I think only banks are allowed to earn interest on your cash, and Paypal isn't a bank.

The "money" in your Paypal account isn't "your cash". As you say, Paypal isn't a bank. Your Paypal balance is Paypal's cash, which it allows you to use for purchasing things with Paypal, or to transfer to your own bank account. But in the meantime, it's Paypal's money, which Paypal keeps in its own bank or investment vehicle, earning interest for Paypal.

The already have the money. The notion that it's somehow "in your account" is just PayPal fiction - especially if they deny you access to "your account" indefinitely.

(Supposedly they don't operate fractional reserve, which means that Peter Thiel pinky-promises not to touch the principle. But it's still in PayPal commercial investment vehicles, earning away.)

Peter Thiel hasn't been CEO of PayPal for almost 20 years...

Which just goes to show how insanely difficult it is to find good pinky swear talent. It's like the voice-over of Silicon Valley.

So if a crook steals your money and buries it in the back yard instead of spending it it's not theft?

"...It's not about making money, it's about taking money. Destroying the status quo because the status is not quo."

-- Dr. Horrible

It was a bad analogy. A better one would be, you send a friend to pick up some money for you, and when the friend returns, they suddenly refuse to give you the money.

I would call that theft, no question.

PayPal are not your friend.

PayPal has no obligation to keep your money in a secure trust, so essentially your balance is just a recorded number. The actual money is being invested. They keep a small pool of money in reserve and in easily liquifiable investments to cover withdrawals of course.

Yes they do. They’re a licensed money transmitter.

I can bet my absolute bottom dollar that the money is frozen, but they're still making interest on it.

Stolen is more appropriate here.

PayPay calls it "frozen" because that is the term that actual regulated banks use when they temporarily deny access to an account because of a government order or a fraud investigation.

It is to PayPal's benefit to use terminology that makes them look like a bank.

There are lots of horror stories about Paypal, but there is an obvious problem, nobody is going out of their way to write a blog post about how Paypal always worked for them. You can find pretty much the same horror stories about any Bank or credit card company.

I used to sell some automotive accessories on eBay. Approx 20-30 items a month. Every time I had to call or email Paypal's customer service, I had a good experience. Much, MUCH better than dealing with eBay's. Even though the complaint review process didn't always go my way, it seemed thorough and fair.

Can you point me towards examples of a bank (not the government - a bank) confiscating a company’s account balance?

were assets frozen? I didn't read that.

Quadriga

Early in LWN's history our credit card acquirer decided that our transactions were "suspicious". They not only cut us off...they reached into our bank account and pulled back $30,000 from there. That was a lot of money to us back then, and very nearly killed the entire operation.

Ironically, the thing that saved us was that the PayPal revenue stream still worked just fine.

> You can find pretty much the same horror stories about any Bank or credit card company.

I don't know if you can in the US, but not in my country. A bank working like paypal would be in trouble, and quickly. Closing accounts without prior notice? Deciding unilaterally to freeze assets? A bank can't do that unless ordered by a judge. If they would, they'll be on the receiving end of a court order and will get a call from the regulator's office that they really don't like to hear from.

Paypal is shady, and there's a reason they run their operation from Luxembourg, one of the top places to do shady financial business in Europe.

I don't know the exact law in the US, but it is similar.

A bank can freeze your account for suspected fraud, but they will try everything they can to contact you soon after to verify. They know that regulators will come after them if they don't have good customer service around this (plus good customer service can turn this into a customer loyalty win - customers like knowing their bank is watching out for them as long as there is only minor inconvenience).

Bank failure is sometimes a thing though. If the bank fails they probably don't have enough money to give everybody theirs back. You are insured for some amount ($250,000 last I checked) so the average person doesn't need to worry, but if you have more than that in your account you are out of luck. This would be once case where you can't access your money for a few weeks. You should have an emergency account with a second bank just in case - but this is a rare problem. This problem applies to all countries in some way, though the exact way it goes down can change.

I think every other case would be ordered by a judge. Real banks are regulated carefully. People have learned over the years of banking that they can be trouble if they are badly run and taken steps.

> I don't know if you can in the US, but not in my country. A bank working like paypal would be in trouble, and quickly. Closing accounts without prior notice? Deciding unilaterally to freeze assets? A bank can't do that unless ordered by a judge.

A bank would absolutely be expected to freeze an account if it suspected illegal activity as part of its AML obligations - filing a SAR would come later.

A judge wouldn't be involved until later on in the process to avoid tipping a potential criminal off and allowing them to move the money.

Neither should accounts like this necessarily be taken at face value - trying to apply social pressure through forums and social media is standard social engineering.

> A bank would absolutely be expected to freeze an account if it suspected illegal activity as part of its AML obligations - filing a SAR would come later.

And this would take months, and the bank wouldn't be able to respond to inquiries?

> Neither should accounts like this necessarily be taken at face value - trying to apply social pressure through forums and social media is standard social engineering.

Certainly. I tend to lean towards believing them because I've witnessed a similar case with PayPal that nearly ruined the company of a friend. It got resolved after all, but it took around eight months, lawyers and our local equivalent of a DA to get involved before PP realized they might not want to pursue it any further and released the assets. That doesn't mean that everyone of these stories is accurate, of course, but it indicates to me that not all is well in the PP HQ.

> And this would take months, and the bank wouldn't be able to respond to inquiries?

Yes. Legally they're not allowed to give any more information other than that the account has been frozen. Money launderers would be quite relaxed if they knew they just had to wait six months and they could take the money out.

> "Being concerned in arrangements which the defendant knows or suspects will facilitate money laundering is also an offence. To put it crudely, if Dave suspects that the money in John's account might be dirty then the Bank cannot allow John to move or access the money and he must file a report to the NCA." [2]

[2] https://www.brettwilson.co.uk/blog/frozen-bank-account-no-ex...

[Example from a bank:] https://www.ft.com/content/96840328-3b6b-11e9-b856-5404d3811...

PayPal works for me, when Stripe wouldn't.

No, you cannot. Federal law sets out how all banking must be done. There is always reciprocity. Since PayPal isn't regulated as a bank there is no directly applicable federal law. Instead, it's regulated on a state-by-state basis and the majority of the time you'd be hard pressed to figure out exactly who within your state you would have to file a complaint with. PayPal wants it both ways. It wants to act like a bank when it's good for them, but avoid all of the regulations. It's the worst of both worlds for the customer.

Anecdotally speaking, I know multiple people that have had funds frozen by PayPal after months or years of use. I know exactly nobody that has had a bank account frozen.

Yes, you can. Not all of these may be great examples, but the fact that this many were on the first page of a google search makes it pretty clear that this issue isn't isolated to paypal

https://www.reddit.com/r/legaladvice/comments/al27fr/bank_ac...

https://www.reddit.com/r/legaladvice/comments/basfne/online_...

https://www.reddit.com/r/personalfinance/comments/54zjq2/my_...

https://www.reddit.com/r/Bitcoin/comments/agpi87/bank_perman...

https://www.reddit.com/r/legaladvice/comments/71kk4p/chase_b...

https://www.reddit.com/r/povertyfinance/comments/8ad73p/anyo...

https://www.reddit.com/r/personalfinance/comments/9k7t1q/ano...

https://www.reddit.com/r/personalfinance/comments/4sbqv4/my_...

https://www.reddit.com/r/personalfinance/comments/9ty3fq/ban...

https://www.reddit.com/r/personalfinance/comments/7n1hhl/ban...

https://www.reddit.com/r/legaladvice/comments/ag9br2/suntrus...

https://www.reddit.com/r/legaladvice/comments/3zct1m/my_brot...

https://www.reddit.com/r/PersonalFinanceCanada/comments/8wgo...

https://www.reddit.com/r/personalfinance/comments/acr0ig/all...

https://www.reddit.com/r/PersonalFinanceCanada/comments/ajrj...

https://www.reddit.com/r/personalfinance/comments/3mxc2a/cre...

https://www.reddit.com/r/legaladvice/comments/8rb4dq/my_bank...

https://www.reddit.com/r/personalfinance/comments/92mpg8/ban...

https://www.reddit.com/r/personalfinance/comments/7un9nz/ban...

Notice how almost all of those cite "suspected fraud"? The bank will always be paranoid about fraud and if you do anything to freak them out, you're done. They're worse than cats when it comes to flipping out and skittering away. In the cases where resolutions are cited the customer receives their money back. This is due to federal laws regarding banking.

Contrast this with PayPal who needs no reason to freeze your funds and will hold them as long as they damn well please please federal banking law (for the most part) does not apply to them.

This even though they're regulated as a bank nearly everywhere else in the world. But then again this is the US and when do we ever do anything that makes sense?

I don't really believe this myself, but HN just loves it if you defend corporations doing evil shit. They are all gullible fools on here and I just had some fun manipulating them.

I too, wish governments would get their shit together and regulate them. The corrupt governments (especially US) of today wouldn't even regulate regular banks, quite the opposite.

Can you call them for me? They still have $10k frozen and been so for the last 16 months

If it’s that much, I’d recommend a lawyer

I think you got really lucky. The majority of people would probably need to contact a lawyer.

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