Imagine being unable to buy food because an algorithm determined that “you violated our community standards” and there’s no way to contact them. One or two stories like that will kill Libra stone dead.
If Libra ignored these rules, they'll put these guys (or at least a part of their offerings) out of business
This is called money laundering, people go to jail for it.
I'm one of them.
This already exists. If your bank's AML algorithm flags certain transactions, your account will be frozen, with no explanation (they legally can't tell you why they did it, it is an offense). You will be asked to produce some documents whilst they and potentially law enforcement investigate. Again, you won't be told why or how long it will take. Usually, if you haven't done anything wrong, you'll have no access to your money for 1-2 months.
Now, here's the kicker. Those flagging algorithms aren't very good. They don't work on any sophisticated social graphs.
They're based on a bunch of simple rules -- maybe you made a large cash deposit, or wired more money than usual, or received a bunch of small transactions (maybe you're selling drugs?). The flag is raised, the account is frozen and you're shit out of luck trying to get an explanation or buying things for a few months.
Given we still use banks, I'm sure "you violated our community standards" won't be the straw that broke the camel's back.
That depends entirely on how much trust there is.
Lots of people don’t trust their governments, but most do; ditto corporations. A government can be arbitrary and capricious in ways that corporations cannot, but most of us live in democracies and even those of us that don’t most live in countries that follow the rule of law.
I assume all large corporations care about rule of law, but I also assume they outspend governments on lawyers looking for legal loopholes, and corporations are not normally democracies. I don’t trust Facebook basically at all, I wouldn’t trust Google with money, the only reason I trust Apple with money is they’ve outsourced it to an actual bank, and I am only grudgingly willing to trust PayPal for occasional small transactions.
The banks themselves? Well, since the financial crisis I assume any given one will go under so I have several and distribute my money between them.
Of course, I’m unusually cautious.
Not to defend Facebook in any way but, isn't that already the case with a bank system automatically blocking your card for no valid reason and no way to call them over the weekend for example? (happened to me a few times)
Prepaid wallets with offline/anonymous use are a thing, already used for over a decade in some countries. It’s not easy to build in any way, but it’s already a reality.
But that's my "main" bank. My secondary bank is not as user friendly and thus don't get an equal cut of my business.
In all cases where my bank has blocked my card, they've been contactable (24/7), though to be honest, they've always contacted me in less than a minute after my card has been blocked, so I've never had to do this. I'm in the UK for reference, as I know experience will vary from bank to bank and place to place, as you've already identified.
In the case of Libra, you have no recourse if Facebook decide to block your account. You just have to hope that someday your case will be reviewed. Paypal seem to be just as bad, so it's not only Facebook who would have this problem, but I also avoid Paypal for that same reason.
And if you dare pointing out how incompetent they are they'll just close you account and leave you in the wild.
This seems very likely to happen.
> One or two stories like that will kill Libra stone dead.
This seems sadly very unlikely to follow. I doubt even a "juvenile starved to death"- or "kid stranded because bus ticket purchase was denied"-story would put a dent in this project.
Don't get me wrong, I think it should, I just don't think it very likely.
With 1 billion users, a serious bug/pattern that affects 0.1% of the users - harms a 100 000 people.
But their voices still drown in the crowd, as far as I can tell.
Imagine being unable to buy food because (an algorithm at) Visa or MasterCard decided that you violated their (community) standards. Oh wait, we don't have to imagine anything, because that's the world we already live in.
Not only do these corporations ban some individuals, some of them (Paypal, Square) seem to be taking aim at outright banning the sale of certain goods that are otherwise considered to be legal.
Visa won't stop your card over a nude Pic on Facebook - but Facebook might suspend your account and your libra over it.
Note that for example in Norway (probably Europe?) every card transaction is run through a check for money laundering and criminal/suspicious activity in real-time.
You touch your card, central authority can decline the transaction. (I have a friend that used to work on this system, implementing rules).
But they don't check your tweet history (although, I'm sure the intelligence services do, and I assume they have a secret, quasi-legal "terrorist" watch list that probably is linked to this system somehow).
But we've already seen that you can effectively be "banned" from the financial system in the United States. Just look at Alex Jones and what California is trying to do against the NRA.
Regardless of what you think of them, it is very obvious that they are canaries. It should be very obvious to everyone that there is a political movement trying to weaponize the financial system against their opposition under the guise of re-defining terrorism and hate speech.
That is mostly happening through the proper channels, that is the police and the judicial system do the policing and the legislative system makes the rules.
That in itself isn't a safeguard against abuse - but the other aspect is the privatization of utilities, and self-moderation that these companies do.
In between is the credit rating system, which allows for pretty arbitrarily denying banking services to individuals.
Still, if you are paid in a regulated currency, you still have an option to use cash. An access to legal tender.
With something like Libra, a private corporation, with a horrible track record wrt complaints/customer service can vanish your money because a friend shared a picture on your "wall", or some other entirely arbitrary thing that leads to account suspension.
You don't have to go out of your way to purchase fertilizer, diesel and nails - you could do a million different completely innocent things and still be locked out of your money - with no real recourse - including a viable legal recourse.
Member banks of VISA can. Remember that VISA is a limited-liability partnership founded by banks.
So they literally cannot flag your bank details over such things?
Do you mean that visa employees can flag your account over personal reasons?
This is basically what happens in real life too. There are people that cannot buy food because "they violated community standards". This Libra thing is totally aligned with the world!
Unfortunately not. The problem is that only few people are affected by such problems. Privacy issues and unacceptable EULAs are similar, not enough people get actual problems with them, hence companies can get away with them.