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Comment by ru999gol | Hacker News Reader

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.

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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.

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.

> 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...

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.

PayPal works for me, when Stripe wouldn't.

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