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Paypal, Google adwords, and many other services, do use statistical predictors to determine what is likely to be fraud. Many innocent people get flagged by them. This is a known and accepted risk of using such services.

The fact is, if Paypal were not permitted to statistically discriminate, they wouldn't exist. Is it really a moral travesty that they are using nation of origin as one of the predictors?

It's unjust, particularly because "being a Nigerian in Nigeria" is not a condition that most people in that condition can simply elect to remove themselves from. Consider the situation from a Rawlsian veil of ignorance perspective.

This is a broader issue than access to Paypal.

There's lots of reasons it's not great to be a Nigerian in Nigeria - fixed elections, corruption, violence, low standard of living, tension between the north and south, nasty tropical diseases, relatively lower education opportunities, weak arts community, flowover from ethnic tension in neighbouring states.

In the scale of things, concern over ability to make internet payments is probably pretty low, and a concern that would be pressing only to a small elite in the country.

Frankly, I agree. The thrust of my comment was more on backing up the assertion that treating Nigerians this way is actually unjust, immoral; not that it doesn't make business sense, or that it's a relatively small slice of the larger pie, etc.

I'm guessing there is all sorts of online commerce you don't engage in due to the risk of scams. Is that also unjust, due to the fact that your attempts to avoid a scam might deprive some legitimate people of your business?

That's a distinctly different question, for several reasons.

(1) Concentration of power: there's a qualitative difference between a large organization making an absolute and sustained decision on a corporate basis, and many distributed small organizations or individuals making ad-hoc iterated decisions on a case by case basis. Normal statistical variation means that in all likelihood, the market will simply be smaller, not all but extinguished.

(2) Your guess may be incorrect: I find it difficult to recollect an attempted online commercial transaction that I aborted owing to fear of a scam. Now, if you knew my personal circumstances, perhaps you'd be able to direct my attention to such cases; in lieu of that, can you be more specific in your guess, and at least give me a few examples? A few points on my behaviour: it's my personal policy never to buy anything in direct response to any advertisement or inducement, whether in person, over the phone, via email, or online, if I do not have a prior independent non-commercial relationship with that entity. I will pay more for a service or product that I have found myself rather than accept a similar service or product for a lower price if that service or product was directly advertised to me; I infer that the extra expenses in reaching me directly will be more than recouped via means that are not immediately obvious to me, such that the savings are probably illusory. Any time I have ever engaged in online commerce, it directly or indirectly started out with a Google search for the product or product category in question, or for a store name found either in a previous search, by recommendation, or an online version of a brick-and-mortar store.

(3) Freedom of action and the rewards to that action: most Nigerians in Nigeria have little scope for changing their situation to evade these policies; from the original position, I would not like to be in their situation. In converse, the problem of not being able to find customers is distinctly different: one may choose to sell something else, to a different market, and via a different medium. One of the risks of creating a business is that there may not be a viable market, but one of the rewards is profit when the market is viable. The risk / reward correspondence with consumers doesn't seem convincing: at best, the consumer can obtain what they wanted at a fair price; the upside is very limited.

Try explaining that perspective to your spouse after you lose money in a 419 scam. "But honey, I didn't know that this Nigerian was a con-artist. I had to give him a chance!"

You know, this is exactly the same reasoning (prejudice on the basis of generalizing a correlation between a behaviour and a shared attribute) as exhibited by racists. In the same way as it is not fair to discriminate against black people on the basis of a higher relative proportion of criminal convictions, it is similarly not fair to discriminate on the basis of someone being a Nigerian in Nigeria on the basis of 419 scam incidence.

That's not to say it may not be effective, on average, in limiting losses. But effectiveness is something distinct from fairness.

> That's not to say it may not be effective, on average, in limiting losses. But effectiveness is something distinct from fairness.

As long as businesses will be required to eat the losses caused by attempts to be 'fair' I predict this situation will continue.

Would it be just to subject the users of paypal to the millions of scams coming out of Nigeria for the benefit of the handful of legitimate users?

If PayPal is as good at keeping your money safe as they profess, it shouldn't make a difference, right?

You're making a utilitarian argument, but it seems predicated on some kind of zero sum, that the only way of protecting the world from Nigerian scams is to prevent consumers in Nigeria from being able to buy things from elsewhere. I question that assumption.

They are not doing a statistical determination. There is no algorithm behind it that indicates when a country is safe to do business with. They have just switched off Nigeria. There is no appeal. There is no review.

While I very much sympathize with your viewpoint I've been peripherally involved in analyzing a bunch of e-commerce traffic and I'm sorry to report that of all the charges coming from Nigeria over a substantial period of time there was not a single one that was actually legitimate.

I'm sure there is at least one person in Nigeria that goes against the flow here and that is an honest person simply trying to get by but with the odds that bad you really can't fault the conclusion that Nigerian traffic so risky that the risks far outweigh the benefits.

Merchants typically run a very fine line between operating their business and having their accounts yanked due to 'excessive fraud', any measures they can take to protect themselves from this happening will be implemented without any remorse, it's a survival thing.

For the record, yes, we block Nigerian transactions, and several other countries besides.

> all the charges coming from Nigeria over a substantial period of time there was not a single one that was actually legitimate

How can dis even be possible? You mean not even one out of the possible millions in a day is legitimate? Haba!

No, it means that Nigeria already has a very low number of people that are going to be paying customers for online services and that those people are completely drowned out by the number of Nigerians that attempt to commit fraud.

It's sad, but it's really true.

The possible millions make use of free services they're not possible millions of e-commerce consumers.

You wish. If Nigeria had millions of legit e-commerce consumers the situation would be quite different.

There's a contradiction in terms in what you've just written.

There will never be "millions of legit e-commerce consumers" from Nigeria if the main e-commerce gateways such as PayPal continue to block the entire country.

They've already been excluded before they've started.

It's not a contradiction, it's a deadlock.

Are you disputing the claim that P(scam | from nigeria) >> P(scam | not from nigeria)? Keep in mind, a scam rate of even 1% would put Paypal Nigeria way into the red.

Obviously, a "which country to do business in" decision is not done by algorithm. That doesn't mean Paypal isn't using objective metrics to make that decision.

And for those charges not covered with paypal protection (for whatever that is worth) either a merchant or a foreign buyer would be at a loss.

    What I dislike about the attitude of many businesses
    towards Nigeria is the way they just dismiss the
    country with a wave of their hand.

I've thought about it before, and wish it was easier to do and that there was more of it.

I get lots of ssh connection attempts and spam from the third world. I don't regularly communicate with anyone there. It would fabulous if there was a way I could tell my servers to block traffic from vast ranges of IP addresses that are known to be located outside of the first world.

Some people wouldn't be able to email me or read my website, but it would be a good tradeoff for me.

    Think of it this way: imagine that paypal suddenly
    decided to exclude Arizona from using Paypal because
    it has a higher statistical likelihood of fraud.

They're an independent business. They're free to choose who they deal with.

It won't work.

The scam artists and the spammers will learn how to spoof their IP address. Or, just start using VPNs and proxies. It doesn't matter to them as they will find a way around, precisely because their livelihood depends on it.

On the other hand, the genuine users will be the one who suffer. They simply won't have the inclination to spend their entire time trying to engage in subterfuge against your "defenses". They'll throw their hands up. Grumble a bit. Say fuck you for a while and just give up in sheer hopelessness.

At the end this won't punish the sp/cammers. You'll end up targeting whose only crime is honesty. I don't think that's what you want.

There's a saying where I live that sums this up; "locks only exist for the innocent".

You can't spoof an IP address and expect to get the traffic back.

They could use VPNs and proxies, and that would shift the focus from the third world to VPNs and proxies in the first world.

If those operators don't comply, you could have them IP filtered also. But also - we have better options for dealing with nasty traffic when the originating IP is in the first world.

    It doesn't matter to them as they will find a way
    around, precisely because their livelihood depends
    on it.

That's no more true than it would be to say that having high levels of organised crime is inevitable because people's livelihoods depend on it. It may be true that it's inevitable that you'll have a little bit, but not that it will be universal.

    On the other hand, the genuine users will be the one
    who suffer.

True, but genuine users suffer from the current mess. There's a culture of nastiness about the internet. That wild west culture. I think it will be civilised one way or another. I'd rather do it through something like IP filters than watch the community migrate into gated communities like facebook.

The problem with fighting crime is escalation. In the real world, the mafias have to face logistical problems to create a response, but on the internet escalation is just a hack away. That's what I was trying to say. The solution, then, is not to "fight" crime, but to weed it out and choke it to death.

If you make just the right investments in nigeria then over time this will change. Everything else is temporarily. You might even figure out a way to use machine learning to statistically weed out the spammers visits by looking at how and where they click (bots and humans), but that peace will last for only so long.

The lasting solution would be to address the root cause of this, which is something I just don't know and understand. (I might not know what the solutions are, but I can see what isn't a solution)

Companies don't have a moral responsibility to do anything, but they have fiduciary ones to their shareholders. If a significant amount of harm was being generated from Nigeria, it's easy to understand why the country is cut off.

What is PayPal dominating? The number of sites that accept credit cards dwarfs the (overlapping) number of sites that accept PayPal for payment.

Nigerian issued credit/debit cards (mastercard/visa) don't work internationally, so can't be used to pay for online items.

Why is that?

Fraud prevention. All the payment processors are in the same boat.