Tell HN: Do not store any funds in PayPal or use them for anything critical | Hacker News Reader

Tell HN: Do not store any funds in PayPal or use them for anything critical

703 pointsciguy295 comments

I know this has been covered over and over, but I always thought there must be more to the story when someones account was permanently banned. Well, it happened to me, one of the most plain and boring consumer users of PayPal ever.

I have used PayPal for over a decade, usually once or twice a month to make small purchases when buying something off Craigslist or Facebook marketplace. I also occasionally use it to split dinner with friends. I don't use it for business and I don't use it for anything sketchy.

I recently received an email from PayPal saying that my account had been permanently banned. No appeal, no reason given. I logged in separately to make sure this was a real email, at first I thought it must be phishing. It was real.

The only thing I can think of which might have precipitated this. I got a few invoice requests though PayPal a while ago from people/businesses I had never heard of. This is a well known and documented scam where they spam invoices en-masse and hope some people pay them accidentally (I did not pay them, but the PayPal UI makes this very easy to do and there is no way to decline or dismiss the requests).

Not a big deal for me since I don't use PayPal for anything critical, but I figured a reminder was in order in case anyone still thinks it won't happen to them. If it could happen to me, it can happen to anyone.

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To anyone who got problems with PayPal, you may be interested in reading this [1]. It is how an American attorney got his PayPal account back after it was locked for no reason, with all the steps explained. It was sent here on hn months ago.

[1] https://jessesingal.substack.com/p/i-fought-the-paypal-and-i...

Thanks for this. I won't be using PayPal ever again but hopefully it can help someone in need.

Most useful link of the year.

Summary: This person initiated arbitration per PayPal’s user agreement (a simple process), and PayPal decided to reinstate his account before the hearing occurred.

I wrote and posted on HN about my experience taking a home warranty company to arbitration a few months ago. My experience was the same as this lawyers and IANAL. The company settled immediately for almost all that I asked for and paid the arbitration cost.

There are legitimate reasons companies pushed for arbitrtion. Namely streamlining and keeping away frivolous lawsuits, but there's the side bonus (for them) of scaring people away. Like that author described, companies make arbitration out to be this big, scary, unwinnable process, but it's really not like that at all.

Who chooses the arbitor? If the company chooses the arbitor, that's a clear conflict of interest. That's my issue with mandatory arbitration. After the fact that the arbitors' decision is legally binding in court.

Minor nitpick, the judge can usually decide to override an arbiter, but they almost never do. It's rarely actually legally binding.

> Minor nitpick, the judge can usually decide to override an arbiter, but they almost never do. It's rarely actually legally binding.

Your second phrase does not follow from the first one, at least I can't follow it.

If the judge doesn't override the arbiter most of the times, doesn't that implicitly make arbitration... legally binding?

In my opinion, no. Practically speaking it's binding, and the judge's decision is legally binding, but the arbitration itself is not _legally_ binding in that subsequent judges in many jurisdictions can choose to ignore the arbiter with zero repercussions in law or precedent.

They are specified in the clause. True, if it was a private company I would hesitate. However, there's at least a couple of 501c3 non-profit arbitration associations. The majority of clauses I've read uses one of them.

Thankyou for writing about your experience. I hope I never have to consult it, but I'm glad it's there.

I can tell you that sometimes it IS big and scary, although not unwinnable.

Unfortunately I can't share the details, but someone I know filed a wrongful termination case against a large tech company. They dragged it out for two years with motion after motion, running up his legal bills every month. He hung in there and won eventually.

So don't assume they'll just roll over and settle.

That sounds like court ordered arbitration or court monitored arbitration. That's different from my experience and that lawyer's arbitration. The later is a arbitration you agreed to enter into when you entered into the civil contract. There's no motions filed between the parties nor the arbitrator to the court in those.

The thing is... what if you're not in the States?

I guess you would have to read their terms of service for your country. They probably still contain instructions about what to do, even if those could be different.

This happened to me when I was using paypal income to pay my rent while I was in school. They only locked up a few thousands dollars but that was life-or-death kind of money for me at the time. Taught me a very expensive lesson about never keeping money in paypal and never giving paypal your bank information. USe credit cards as your buffer between paypal and you. Paypal is like fire - you can harness it usefully, but it will burn you if given the chance.

Great and succinct analogy, that was helpful

If you have to give PayPal banking information make sure it's a separate bank from your "main" one - it should be easy enough to get a free online bank account you can use as an intermediary.

Thank you for this. I just removed my main bank account with them.

I knew not to rely on PayPal to not lock my account but I never really thought about them withdrawing incorrect sums from my bank account.

Will be removing my bank account from it right now.

Another reason to remove your bank details is one-time login codes. PayPal is testing a feature that lets users log in using a 6-digit code sent over SMS, bypassing both password and TOTP/hardware authenticator, and the feature can’t be disabled.

I refuse to use SMS as a second factor, so using it as the _only_ factor for what is effectively a bank account is absolutely batshit insane. They’ve completely lost their mind.

https://www.paypal-community.com/t5/Managing-Account/How-do-...

Like google, they badly want your mobile number, for tracking and additional Pii/identity purposes. This is what it boils down to, not security.

I cannot log in without a phone any more to paypal. At all. My mobile phone doesn't even work on my property, I live in a rural area, with no cell phone service for 1km.

I have a phone. Email. I could set up 2fa via the internet.

Nope.

Because of course, cell phones are always reachable?!

> I cannot log in without a phone any more to paypal.

I use TOTP with my account just fine?

I suppose they might have an old account that does not have a phone number attached to it and PayPal won’t let them log in without providing one?

Receiving SMS via the Internet is possible by enabling WiFi Calling. It is a game changer for locations with good wired Internet but poor cell coverage.

Of course it doesn't change the fact that using SMS for security should be illegal.

I have an old-ish paypal account with no phone number attached and while they prompt me every time I have not supplied one. There was a period of a month or two a couple of years ago when I couldn't use paypal at all without providing a phone, but I was quite willing to live without paypal. Mysteriously when I tried to log in a few months later it let me.

> Because of course, cell phones are always reachable?!

I don't get what you're supposed to do when travelling? Incur international texting charges?

People enforcing SMS login/MFA don't care. As someone who's frequently away my home country, I often find it difficult to log into services that are necessary for my survival (like banking), let alone regular apps which more and more frequently are ditching email address signup in favour of mobile numbers (BeReal, Artifact etc).

At _minimum_ I need to swap the physical SIM card in my phone which for some reason breaks iMessage for a few days every time I do it. However roaming doesn't work in every country, so, sometimes I'm just fucked.

eSIM could make the first problem easier, but it actually makes it harder. With a physical SIM, if I lose or break my phone I still have my home SIM so I can still access SMS on a new phone. With eSIM, if I lose or break my phone my home SIM is lost along with it. No problem, just provision a new eSIM, that's the whole point right? Well, one of my telcos doesn't support eSIM yet, but they enforce SMS MFA, so I can see where this is going. I'll only be able to provision a new sim if I have access to the old one. Absolutely braindead. Another of my telcos doesn't allow eSIMs to be provisioned digitally; you need to obtain a physical QR code from a shop or have it posted to an address within the country (they won't send one overseas). It's actually unbelievable how telcos have managed to make eSIMs less convenient than physical SIMs. Anyway, this means I need to return to my home country if I lose or break my phone because without SMS I won't be able to access banking.

This is beyond infuriating, but I'm an edge case so no one cares. It should be illegal for critical services, banking/finance/govt etc to depend on SMS.

Do you get charged for _receiving_ texts when traveling internationally? Maybe it's different here in Europe, but as far as I know, I only get charged for active things - sending texts, making calls, accepting calls. Passive things - receiving texts, getting calls (but not accepting them) - do not incur any charges.

It depends on the telco. I have a telco that requires me to have an active roaming plan to receive SMS/calls. Which is about $5 a day from memory (I don’t use it overseas). Another telco has no requirements and no charge to receive SMS/calls overseas as long as the number is active.

That's weird - PayPal has been doing the opposite to me: Making me do both reCatptcha and hCaptcha in addition to my password and TOTP. Seriously, who the fuck needs not one captcha after valid login information but fucking two.

I'm not sure how folks regard privacy.com (the domain is a little... lofty?) but I use that to present my bank to PayPal as if it was a credit card. I change charge limits on the fly to be just a bit more than I need.

Revolut offers free (disposable) virtual debit cards and isn't limited to just the US.

(No affiliation; I'm just a happy customer.)

Isn’t Revolut just for Europeans?

Not exclusively European countries, but also not the whole Europe: https://www.revolut.com/change-country/

I was able to get my hands on one of their cards, but it was useless to me as I couldn't actually put any money on it from my unsupported country.

Ah but it is available in USA…I didn’t know that!

they closed their Canadian operations a couple of years ago. good riddance.

Revolut seems less trustworthy that PayPal. And there appears to be a lot less protection for you as their customer.

> Revolut seems less trustworthy that PayPal

Why?

> And there appears to be a lot less protection for you as their customer.

They have EU banking licenses (depending on where you are a different one applies to you), but they are a regular bank with all the protections that includes for a customer - if they go bankrupt, your money is guaranteed up to a certain extent; they can't just close your account and keep the money like PayPal do, etc. etc..

They may have the licenses, but do they actually do business under them? They did not in the past. So it always looked just like a fun ploy to gain some credibility.

> They may have the licenses, but do they actually do business under them? They did not in the past

What do you mean? They provide banking services, they cannot do that without a banking license to do it under. They used to only have one, in Lithuania, and use it for all operations, but now they have a bunch more and the most appropriate applies (e.g. I'm in France, and I'm under the French one).

Companies can provide money services without a banking license. A lot of companies do.

When I duckduck the question, even revolut has this in their FAQ: https://megous.com/dl/tmp/bbebf0d88acb54d8.png

It's possible to have a license and not use it.

Wise offers free virtual cards as well.

Tried them once.

- Basically none of the banking functions were available outside the app

- The app itself was buggy. There was some sort of "vault" or whatever they called it that had attractive interest rates (the reason I signed up), and after wasting hours of my life over a few weeks with customer support I decided it would never work

- Unlike any other bank-like service I've used, you can't just get mailed a check and close the account. Neat idea maybe, but at the time the app was buggy and wouldn't let you withdraw fully if you had anything in savings because of some sort of minimum balance nonsense

- You can't use the app if they think your phone isn't sufficiently secure. This is more on Apple/Google for caving to that bullshit, but IMO an app with its own security model shouldn't have any clue how you access your phone

- Deposits were capped to like $10 for the first day, $100 for the second, and so on. I don't remember the exact schedule, but it meant that instead of just depositing an old 401k I had to design over a period of time a series of increasingly large deposits of some other money (just like a fraudster would do? ELI5, what are they actually preventing?) just to be able to throw a check into the account

- Deposits to and withdrawals from Revolut took an obscene number of days, nobody on either side of the transaction could tell where the money was (magically available in neither account), and the transactions were 10x longer when I was trying to leave

And on and on. Like, I'm sure they're fine on average, and they're probably better than when I tried last time, but I haven't had a worse banking experience yet anywhere by a longshot. The basics for an online bank are logging in, depositing money, and withdrawing money, and neither the basics nor the fancy features they sold me on were very functional.

Happy to hear the virtual debit cards work for you :)

I've been using their app for years, it's pretty helpful. I really wish they used a different name, though.

I got halfway through the "Privacy.com" sign up process and discovered they wanted my online banking username and password to access funds, with some ridiculous alternative like mailing a paper check

Yeah... that's FinTech. I find it soothing to consider how little I trust my bank with those credentials when I'm handing them over.

At the very least one would expect the bank to be salting and hashing - PrivacyDotCom presumably has to keep the plaintext in some form in order to use them!

As a secondary concern, the bank has occasional 2fa, and definitely does some kind of anomaly detection. Primed by the ickiness of the user/pass request I just had a mental image of some hacky Selenium script on an AWS IP address filling out the login form and getting my online banking disabled proactively.

privacy.com is just like VPNs. It's not private; you're "just" moving the pieces. That's not to say that these things aren't useful, but caveat emptor.

This. They can and will steal money out of your account if your cards don't work.

didnt know companies can just take money from your account. broken bankings system

The only two things you need to take money out of an account are the routing number and account number.

There are a lot of checks on top of that which individual banks may or may not implement or care about, but at the end of the day those two numbers get you 99% of the way there. And for an organization the size of PayPal they're really going to be given the benefit of the doubt by banks.

So why aren’t criminals doing this to drain accounts all the time? They traffic in stolen credit cards, why not banking info?

I think that was why Donald Knuth stopped issuing checks for rewards for people finding errors in his books -- people would post images of the checks online to brag about having received them, and then criminals would initiate fraudulent ACH transfers.

Also not sure why that's not more common in comparison to credit card fraud.

Edit: I guess credit card fraud can be easier to cash out (for physical goods or services), while ACH fraud requires mules to act as intermediaries to receive the fraudulent deposits, which might be harder to come by and sustain.

I'm sure they do, but it might be less common because it takes more effort to launder than credit cards.

There's millions of retailers that accept credit info in exchange for goods and services.

You can't use ACH to buy Wal-Mart gift cards.

They certainly try. But it's not like there are no protections in place.

The US banking system can be summarized as "withdraw first, ask questions later." The whole system is based around auditing after the fact. If at the end of the day (or week, or month), the numbers don't balance out, a flag is raised, and someone investigates it. And in many cases, there is a waiting period before you can access funds transferred.

Outside the US, people find this whole thing crazy, but that's how it is and it actually works well enough. My understanding is that banks are moving to a more modern system, but it's a slow process given how much is built around the current system.

they do 100%. back in June i got charged $30,000 by a fake "home depot". I disputed the charge, but that wasn't fun. the cs reps told me it was not through a debit card but via acct+routing number which got leaked somehow.

Because you have to transfer it to another bank, and the banks are actually quite good at tracking and reversing it.

But it does happen; google "check cashing scam" to find how they mule it out.

In Australia they technically need a direct debit authority, but PayPal is above the law in Australia so our dispute process is through our local bank. It works, but it's very tedious and the bank will try to push you towards the PayPal dispute process. It's much better not to link it to a bank account at all, use a credit card because that way it's two US corps fighting with each other when there's a problem.

must be some US thing, because this is literally crazy to think about to allow withdrawal without authorization

might also be a reason why US banks always seem nosy as fuck, calling people about transactions, blocking stuff, etc. instead of just giving the account owner a safe way to perform transfers/authorizations/set limits

hadn't considered this, thanks

What free online banks would you trust more than (rightfully untrustworthy) Paypal? Adding a free online bank account sounds like a way to add more points of failure.

The main argument for another small bank account to interface with PayPals of this world is not that it cannot fail, but if it does it is an easily survivable event.

Why is it easily survivable any more than Paypal taking money out of your regular bank? If you don't pay it, the bank will come after you.

PayPal cannot take more money out of your account than what is in the account. If you have $500 in an account the bank will not let PayPal withdraw $5000 from it. It's not different from writing a check for $5000, which will just bounce.

The bank is not in the business of allowing overdrafts and then somehow collecting the difference.

  > The bank is not in the business of allowing overdrafts
  > and then somehow collecting the difference.

But one's main bank is? I don't see how the intermediary is any different in that regard?

No bank will honor your check for more money than is in your account. The amount in your account gives a hard stop on the amount you can lose.

Having a separate account with enough for the current Paypal transaction (that you refill from the main bank account as needed, in a few mouse clicks) means you limit your losses from a transaction gone wrong with a major company.

Can a malicious player try pulling money from your main account? Absolutely. But the chances of a large company, like Paypal, hitting you like this on an account not registered with them is zero. And your bank's fraud protection should stop an attempt to pull a large sum from your account by an unknown company in a sketchy country.

The point is to have a bank account with nearly no balance, so PayPal can't drain it, or if they do they don't get much. Then you can transfer cash from PayPal to that account, and then from that account to your real bank.

But if that intermediary bank account has a negative balance, you cannot just ignore it. The bank _will_ come after you for their money. So far what does it protect you?

When PayPal goes to make the withdrawal, the bank doesn't have to let them and give the account a negative balance. Usually you can turn off overdraft and withdrawals will bounce if the funds aren't there.

This doesn't stop PayPal from reversing a previous inbound transfer they decide shouldn't have happened, but it ought to stop PayPal unilaterally deciding they would like some of your money.

So why not turn off overdraft from one's main bank account?

Can US bank accounts get overdrawn? If they can the intermediary doesn’t help it just gives you debt and bank charges.

Oh, boy, can they ever! And the fees can be hefty. Even with a credit union back in the early 2000s, we were talking $10 _per day_, I don't expect it has gotten any cheaper.

Yes, and banks routinely charge $35 for each transaction on an overdrawn account. This is particularly easy to do if multiple people share a bank account with a low balance.

They also sometimes sequence transactions largest to smallest when settling to maximize the number of charges[1].

[1] https://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-b...

The law was changed to forbid this, though that's not to say they don't sometimes still "allow" it to happen.

At least at Wells Fargo, it's simple to set up a second checking account. I use that for all my book-related expenses and (heh, heh) royalties.

Very good advice. Paypal can be convenient, and even necessary, for certain websites that only accept paypal as payment (yes, they exist). I keep $5 in the bank account I have connected to paypal for exactly this reason.

> never giving paypal your bank information

Why?

Because they can pull funds from your account and it'll be a hassle to get it back if not authorized. If you must, you tie it to a burner deposit account you can immediately sweep into our out of at your discretion. Sending funds? Sweep just enough in from another account. Receiving funds? Sweep out as soon as the funds land via ACH.

Have there been any examples of PayPal stealing money from people's bank accounts?

I literally just selected your question and searched brave: https://arstechnica.com/tech-policy/2022/01/paypal-stole-use...

The article you linked talks about Paypal holding funds, not about Paypal taking money from bank accounts.

Happened to me in 2007, they took 750 GBP from my back account. I complained, it was never explained what happened. They paid the money back to me over a period of about 4 months. It was utterly ridiculous.

I vaguely recall this happening to a guy who scammed someone then got charge-backed after withdrawing from Paypal, he somehow got the bank to reverse his transaction to Paypal and kept the funds. I think this is why Paypal stop you from withdrawing/spending your incoming payment for a few weeks in some cases.

Sort-of happened to me. Someone sent me a large amount of money unsolicited. (5 figures.) This wasn't a scam, just a very dumb woman who can't remember her teenage son's email address even though I've haf the address longer than he's been alive. I logged-in and canceled the erroneous transfer to return her funds to her, but unbeknownst to me a small automatic charge for a domain name had gone through since I received the money. Ordinarily I keep $0 in my Paypal account and Paypal automatically deducts the funds from my bank account. But apparently when reversing a transaction instead of covering any shortfall from my bank automatically, they charged me a $100 insufficient funds fee and THEN deducted the fee + shortfall from my account. Absolutely infuriating.

That thing where recurring payments subtract from your PayPal balance before the assigned payment method is, as you put it, absolutely infuriating. It put me off of PayPal so hard.

This happened to me. An eBay buyer lied that the item I sold was never delivered. eBay sided in their favor, I was scammed by the buyer. My PayPal account went negative and bank account was debited of a few thousand dollars while a freshman in college. I hate PayPal.

Meanwhile, I've had a package marked as delivered that never actually showed up. eBay wouldn't help me. USPS wouldn't help me without info from the seller. Seller never gave me the correct info that I requested, nor followed up with USPS.

Seems random who gets screwed in these situations.

Honestly it boggles my mind that USPS can just mark something delivered with no actual evidence of delivery (signature, photograph etc.) and it's just taken as fact.

If you'd have played dirty and initiated a refund, then sent a box of nothing back, you'd have won in the end. All eBay cares about is delivery receipts. Not saying you should actually do that, but OTOH an experienced eBay seller knows how it will play out so if they could be convinced you were about to do it (without, you know, giving them evidence to send to eBay), it might light a fire under them to contact USPS and trace the delivery.

There looks to be several in this thread alone.

Yes I temporarily lost £350 via paypal and eBay. I sent some amateur radio equipment to someone via UPS tracked fully insured. Was signed and delivered. The buyer decided to return it immediately (suspicious) but I had no choice. I received the item back and it had a different serial number. The buyer had stolen a working radio and replaced it with a broken one. I contacted eBay and they told me to work it out with the buyer and they couldn't do anything. The buyer did not respond and opened a case against paypal. I provided evidence to paypal and paypal sided with the buyer because as far as they cared, both deliveries were signed for. Then because I didn't have any money in paypal they took it out of my account instead. The bank allowed this and it caused an unauthorised overdraft that cost me another £30. I closed that bank account and removed it from paypal immediately.

The buyer listed the radio I had sent him immediately on eBay for way above a reasonable price. I took screenshots and made a police report. Didn't hear anything back in a week. Considered small claims but I'd have to potentially travel to the claimant's area which is a good 3h drive each way at the time.

So the buyer/reseller was in Ipswich which is 15 miles or so from my brother-in-law so he went round there and recovered it for me. My brother-in-law is an ex army (Gulf War vet) 6'5" bouncer. The guy did not argue with him. He was told he could come and collect the broken one at his cost from Bristol. He never did.

I now run a mule account on ebay managed payments and do not accept paypal for anything and do not send anything until cash is cleared from the mule account into my main account.

Edit: also worth pointing out that ebay do not allow sellers to leave negative feedback for buyers so you can't even rate or report the buyer publicly. If you leave any comments in a positive feedback other than sucking dick, they will remove the feedback.

In most of Europe there is an "undo" button in online banking next to such debits to get the money back no questions asked (for a few weeks after the transaction), as per regulations. US banking should copy this maybe.

This makes so much sense

Paypal can just pull money from an account without any kind of authorization on the US? That's a quite bad procedure.

If I unlink my bank account, how can I get my money out of PayPal?

Create a second account with your bank that is only for PayPal withdrawals.

please no one say crypto ;-)

but I definitely have the same question, I always deposit anything sent to me via paypal, venmo, whatever right away so there's zero balance.

good luck telling a bank to un-authorize someone from being able to deposit or remove money from your account though, I had to call them up and they didn't even seem to know how to do it.

somehow it isn't just a checkbox, it seems to me like revoking that permission should be vastly easier than providing it...

link to a not main account and only setup one way transfers from one to the other i.e. You have your main account, and you have your paypal receivables account.

Paypal receivables account has no overdraft protection and not overdraft allowance. If a withdrawl over the value of the account comes in, it is denied.

Connect that account to paypal.

Next, in the Paypal receivables account, setup an external transfer from the receivables account to the main account. You will have to validate the ownership of the second account usually by posting two small transactions that were auto posted to the account as part of the validation process. This takes a couple days. Once that is done, you can transfer money from receivables account to main account but not the other way.

Transfer money out of paypal to the receivables account, transfer money from receivables to main. Use a credit card to spend money with paypal.

You can set up two way transfers if you need to put cash into that account for transactions and you still get a similar level or separation, I just prefer to use a CC instead because they'll help you out if you want to dispute or reverse a transaction and paypal may not.

> Paypal receivables account has no overdraft protection and not overdraft allowance. If a withdrawl over the value of the account comes in, it is denied.

Note that this may not work everywhere in the world. For example, in Australia, the legacy direct debit system will happily put an account with no overdraft into negative balance.

I’m not sure if the modern replacement (PayTo) has the same behaviour. In any case, legacy direct debits will probably stick around for years.

The best option is to simply avoid PayPal.

Yep, have experienced similar surprise negative balances with Visa debit cards in New Zealand as well.

Maybe, but if you were going to pay your rent with the money on Thursday, at least it's not gone.

>The best option is to simply avoid PayPal.

Unfortunately certain vendors only accept Paypal. For example, I like to watch billiards, and Accu-Stats (one of the largest PPV billiards sites) only accepts Paypal. So, unfortunately, my choice is either to bite the bullet and use Paypal or be prevented from watching the events I'm interested in.

Thanks!

My bank (BoA) allows me to have multiple checking accounts so long as you satisfy the initial deposit requirement, and maintain sufficient balances in other linked accounts, so this looks like a good way forward. I think I'll switch other apps to use this new receivables account to contain their potential blast radius.

double check your statements now and then - if you don't already. i had a biz acct and my home account, and would get dinged "service charges" on home account if it was below ... $500 for too long. Biz account had 30x that in there - far more than their min requirements, and I was told they were 'linked'. 2x in 3 years, they "got unlinked" and I was getting various $39 service fees on the home account. "Oh, so sorry, here... we linked again - we'll waive the fee"... months later... same thing. Less for you specifically OP and more just a general warning.

Heh, I keep having my auto pay disabled on my card and my wife's card, just one day the card doesn't work and the payment has been missed.

It happens every 10-18 months, enough that I assume there is a substantial amount of money being produced by charging a late fee and interest and people not noticing. They never put it back either, have to call and spend a couple hours with them.

My lease favorite bank.

This is a good approach in general, having a spending account where you pay anything directly, email transfers, cash withdrawals, etc., And then a true savings account for things like salary direct deposit. The Firewall between them is you making manual transfers. It's like CI/CD with a human approval step before going to GA

Spend it.

Actually you don't want to use credit cards between yourself and PayPal. They play a finger pointing game that can last months. Been there. I eventually had to small claims the CC company (MBNA Europe, now LLoyds) which took weeks. They didn't contest the claim or even turn up and judgement was made in favour in their absence then they did nothing until bailiffs were appointed then wrote the whole account off and closed it. Had numerous run ins with paypal unfortunately as a seller and a buyer.

to the extent possible, it may make sense to just have multiple banks/accounts anyway. i use a big megacorp bank, my wife has money at a small local bank, we have other money in some online accounts. most stuff is handled day to day via one main account, but I've had cards suspended out of the blue in the past, and having 'all eggs in one basket' seems to be what often bites a lot of people when something causes a bank to freeze/suspend an account.

Paypal stranded me in Atlanta when I rented a room for a week and they denied the charge. So I called their customer service and got the worst customer service experience of my life. The rep would talk over me, literally speak gibberish, and then hung up.

That was the end of my interactions with PayPal.

I couldn't even get them to speak to them. Their system denied my payment dispute (for which I could show obvious fraud) instantly--within 20 seconds. And then when I called they refused to talk since it was denied.

Luckily I paid through my credit card on Paypal since I disputed it through them. If I had linked my checking account, they would have help a fraudster steal 700 dollars from me.

Interesting thing happened to me a couple of years ago.

I went to another state to pick up a car I had bought. I needed to pull $10k of my own money in cash out of the my banks to pay the seller. I checked with the banks before I left to make sure it would be OK.

I arrived in Utah to meet the seller and we go to the bank to do the transaction, and my banks suddenly don't want to let me cash out that much money. I ended up having to kludge the transaction together with some my cash and credit card advances. I didn't quite make the full sale amount so the seller let me take the car and sent me the pink slip later.

Second fact: online banking used to do instant bill pays. Now anything above a trivial amount has to be scheduled. It didn't used to be that way.

Combining these two suggests to me there is a liquidity shortage in the retail banking system. Paypal may be under the same liquidity pressures and using fuzzy TOS reasons to hold money because they don't have the liquidity to handle all of their transaction demand.

It's not liquidity, it's fraud protection

Liquidity to support your 10k transaction seems unlikely. More likely fraud and CYA by the banks

The bank workers told me they don't keep a lot of cash on hand to minimize robberies.

The thing I wonder about is why did online banking start requiring scheduled payments for anything over a $100 or so about five years ago? Now they often make me wait a few days to clear a payment, unless it's internal to the bank itself (e.g. my checking account to pay off my same bank cc account).

I'm sure they're investing my money short term and the holds give them more time and flexibility to do so. However, tying up account money in short term invesments means their liquidity will be reduced.

If you were PayPal would you not invest user funds overnight (or longer) based on projections of inflow/outflow? If not you'd be cheating your shareholders. However the temptation to hold on to user funds as long as possible would be constantly present. That's almost certainly what's happening.

Yet another post from 23 days ago: https://news.ycombinator.com/item?id=34597862

I'll repeat the advice I gave there: run away from PayPal as soon as possible. It's not worth the risk.

Except the horror stories are appearing with Stripe now. Really, the only safe way to transfer money is with traditional banks. But they have higher transaction fees and are slow, so maybe an occasional loss to Paypal is actually better than accumulated wire transfer fees in the long term.

I can only hope that FedNow works as promised and maybe, just maybe, we may have something a bit better than our current situation

Paypal vs wire fees is often the choice, unfortunately. I earn residuals from a company that only allows those two options. But when the money lands in Paypal, I immediately transfer it out, and I've considered going with wires just out of pure paranoia. Amazing that Paypal chugs along even with its hideous reputation.

Businesses don't use Stripe or PayPal to transfer money, they use them to accept card payments. Bank transfers are much cheaper, but customers want to pay with their cards.

I have the opposite experience with PayPal as a seller. Never had any issues with blockage. I did have some issues with customers trying to scam and sellers have a dedicated email support with a real person at PayPal that actually helps. Same with eBay. You must get to the right person that actually cares. I run a small company 20-30 people and the amount of times that I have to correct my employee responses to customers emails is insane no matter how much I train. It is a principal agent problem. No one cares about your business more than you do and with PayPal serving MILLIONS of people it reinforces support to care less rather going above and beyond to help. Oh and with scammers I learned by selling online that everyone is a scammer until proven innocent. People that you would’ve never think of being a scammer turn out to be scammers.

Obviously PayPal works for lots of businesses. Will just say though that any support/ account manager contacts you have in PayPal become useless when a walled off trust and safety team permanently suspend your account.

Everyone has no problems with PayPal, everything is running smoothly just until they get banned and can’t access their funds and they get to deal with the support bots.

Not my experience at all. PayPal locked my account for 6 months because of a single false customer complaint. I offered to simply reimburse the customer but nothing I said made any difference. RUN AWAY FROM PAYPAL.

I don’t understand why PayPal isn’t regulated like a bank. You’d think after thousands of horror stories where PayPal literally steals people’s money, someone would step in and enforce them to provide a minimum level of service when closing an account, ie a way to get your funds out.

It's the greatest scam. PayPal isn't a bank -- even though it looks like a bank and acts like a bank, but it crucially IS NOT a bank -- and thus, has none of the same protections of a bank.

I can't remember the exact legal/technical wizardry they've used to get around this, but this has always been a crucial part of the PayPal business model. It's not a bank, it just makes people think that it is one.

As others have said, don't keep any money in PayPal and if possible, try to attach a secondary bank account to your PayPal account to limit your exposure. I've had a PayPal account since I was a teenager and knock on wood have never had any problems, but I always immediately transfer the money out of PayPal as soon as possible.

When I was a teenager there was no reason not to transfer the money out immediately. It was understood it was a middleman that allowed us to accept payment online without a merchant account. So we treated that way. It felt like a hack. It still feels like a hack, but as you say they've taken on the look of a bank. Once they started offering cards you could use to debit from your account etc, people started leaving the money behind more and more.

Apparently in the EU PayPal is registered as a Luxembourg bank:

https://en.wikipedia.org/wiki/PayPal#Offices

But, I've heard several times they have most of the law firms in Luxembourg on retainer. So, it's extra difficult taking them to court (with representation), due to "conflict of interest" with this majority of Luxembourg law firms.

There are many further examples of their EU legal approach here on HN, if that helps. eg:

* https://news.ycombinator.com/item?id=32742258

* (lots more from a quick search)

Lobbyists and donations to politicians. Like every other de facto monopoly in the present US economy, they've gamed the rules and spent money to avoid being regulated.

This happened to OP 5 months ago...

https://news.ycombinator.com/item?id=32855559

Upvoted because I think it's a good find and does being into question the OPs motives. But there is enough evidence out there to suggest absolutely minimising PayPal's access to your funds regardless.

It isn't just paypal though, it is literally every traditional banking institution out there. People get locked out of their accounts (or even better, funds withdrawn by the government), all the time. I've had it happen to me.

This site also has a very very US focused attitude, especially around banking and finance. I wish comments from people from other countries with far deeper issues would speak up more so that people on this site would get a better understanding of what happens to them and why this is a bigger issue than just paypal.

> It isn't just paypal though, it is literally every traditional banking institution out there. People get locked out of their accounts (or even better, funds withdrawn by the government), all the time. I've had it happen to me.

The fundamental difference with all these Internet-centric companies is they have no useful support channel, nobody that will talk to you, you're just arbitrarily blocked with no recourse, your money is stolen, end of story.

Traditional banks have branches where you can at least go talk to people. For example in the last year I've been helping an elder relative manage their banking and that has led to the account being blocked a handful of times (somewhat sensibly, as I can see how some of it could've been perceived as unusual activity). But they have a branch with actual humans (no AI bots) so I go in and explain and provide paperwork and all is fixed. By now I'm on first-name basis with one of their support agents so I can just call them directly, they know and remember me and all the circumstances of the account and have the authority to fix things.

Traditional banks don't make it easy to send money to a friend, pay for your electrician or purchase something online. They use services like Zelle to do this and it is a prime example of a case where you can't claw back funds.

How does it bring into question his motives? Did he say anything contradictory in this post? He did say it happened recently, but 5 months is still recent -- He may have simply been reminded of the pain of that experience recently

The more that someone posts about their single bad experience, the more bad experiences people will remember, since they likely won't remember if it's the same person posting about the same experience multiple times.

Although admittedly, in this case it looks like their previous post was just a comment somewhere, not a full Tell HN post like this one. So I wouldn't get too bent out of shape over this case.

Most of the examples noted elsewhere in this thread (https://news.ycombinator.com/item?id=34914880) are examples of people getting scammed and temporarily not having access to the amount they were scammed out of. I'm not sure how anywhere else like paypal would be able to handle this kind of situation any differently.

I was trying to escalate via internal contacts and waiting to hear back is all. Once I heard back that even someone internal was unable to help I figured I'd just post a reminder for everyone here.

Yeah, I didn't really doubt that you where genuine. It would have been less open to misinterpretation if you'd mentioned having posted previously or including details of the timeline in the original post is all.

I didn't post about it...I commented on another relevant post around the time it happened. I don't think previous comments really require disclosure. It really seems like you are phishing for something here.

really appreciated. we have to defend the fort every day .

Correct. They provided no way to appeal, but I had escalated internally via a friend of a friend who worked there. I was waiting for their response, and just heard back that even someone working there was unable to get in touch with the team that could handle this (Or maybe there is no internal way to mitigate bad algorithm decisions).

I know PayPal spun out of Ebay a long time ago and that PayPal is especially evil and sociopathically unscrupulous but...

EBay just banned my account last week for listing a Macbook Pro with stock image, removing it to adjust the title, relisting it with a photo of the "About this Mac" to show that the specs were correct. (Can't think of anything else that would even be remotely related).

Also, the messages component of the Ebay web app was completely down the whole time so it made it impossible to respond to any users that were asking questions about the MacBook Pro. Completely insane. Apparently making listings is "harmful to the [Ebay] community"

It's just algorithms out of control all the way down. They are probably ok with some number of false positives, but they don't account for how much these situations erode customer trust across the board.

But also, this just happened to me: https://news.ycombinator.com/item?id=34840250

and thankfully backed up all my critical data, but still have not been able to get a hold of anyone at Amazon.

It seems like our ability to interact with a corporate entity has become an afterthought + that all the machinery driving customer interactions (UIs, special support chat hidden, dark patterns everywhere...) have become a total impediment to actually getting something fixed.

Meanwhile, my stolen phone was for sale on a prolific local seller's account (IMEI was listed, but two digits transposed - looks like a genuine error, but also stifles searching, fails checksum. Every other phone for sale by same seller has the same thing).

100+ phones. Mostly "activation locked", all "no charger, no accessories".

50+ laptops, all "no charger, no accessories".

All blatantly stolen goods.

That is insane! How did you even manage to find them with digits transposed? By local seller, you must mean actually local to you? Sorry you got your stuff stolen, I once had a Giant e-bike stolen in Jersey City, so I know how much it sucks. I firmly believe everything should have some kind of tracker if it is more than $2K in cost.

Pretty much everything you get from Apple is trackable. That's both good and bad; depending on who you ask, but they know where every device is, as soon as it's turned on.

That's why I wonder at folks stealing iPhones and iPads. They are basically unsellable.

This is from mid-2021, so not sure it's reliable (any more):

https://9to5mac.com/2021/07/07/brazilian-criminals-detail-ho...

Still... :(

And there's this, which is current:

https://archive.is/eEt4B

Funny you should ask. I’d put a message on it, some guy with more cojones than me calls me and says “I think I have your phone, I bought it on eBay. Since you’ve presumably got a new phone now, can you get it unlocked for me?”

Nah bud. How do I know you are not the person who stole it? So I guess he went back to the seller, asked for an exchange. Seller said no, so he said “I have all your information, and I have the legit owner, so give me a different phone or I give him your info to take to the police.” Seller exchanges the phone and guy gives me the info anyway, including the listing.

I take all the above discoveries to the police. Who, I kid you not, first say “he’s probably not the person who stole it”, though I could have sworn selling stolen goods was still a crime, and said as much. They declined to get involved.

Can you buy your own phone and chargeback after you receive and confirm it is indeed yours (jave original paperwork to show)? Get law enforcement involved if they fight?

See also from today: "I created an eBay account and bought an item, today I got indefinitely suspended" https://news.ycombinator.com/item?id=34912314

>I know PayPal spun out of Ebay a long time ago and that PayPal is especially evil and sociopathically unscrupulous but...

I thought it was that PayPal was built, then bought by eBay so the could double dip.

ebay banned my account recently because I decided to list a vehicle for sale and noticed my address was old (I moved 3 years ago). I updated the address at the time I listed the vehicle and they auto-banned my account. The only way to log back in was to use SMS to verify a landline number I had associated with the account 20 years ago. Their support was no help and just kept asking me to verify my phone number. Oh well, the fees were too high anyways.

I went through a Kafkaesque experience with PayPal's Know Your Customer verification process. They screwed something up internally and decided that my company was in a different country.

https://www.cogini.com/blog/paypal-know-your-customer-failur...

Sounds like par for the course.

I had to find the god damn CTO's email address to spam him a couple of times before my issue was fixed.

I'm out of the country, I complete 4x $20 payments to a friend I'm visiting. I try to do the 5th and it wants to me to "Add a Mobile Number" to verify my identity.

Brilliant PayPal. You already have my email+mobile on file. It says confirmed. I have 2FA enabled. And now, to verify my identity, you need me to enroll a "new" phone number. How in the **, exactly, is that going to verify my identity. And how screwed up are your systems that your left brain and right brain are out of sync.

Granted, I basically have to call them every 2 years for some similar sort of "your website just told me to go F myself, can you press the magic buttons to fix it since you can't, you know, actually fix your systems.".

EDIT: The clencher to this story is calling PayPal and getting the sweetest older lady from Texas that, without asking me any further verification questions, pressed a button and said "okay, try again", and wouldn't tell me anything else. Only to hit the same issue ~24 hours later.

I have a story like this for Schwab. I have a story like this for both my credit unions. Capitalism driven banking baby. What a joy.

Maybe I am just too young to understand PayPal’s history and place in the payments world, but it seems like it’s really a nightmare payment platform with only one major benefit: it’s very friendly to issuing chargebacks to purchasers.

With that in mind, it doesn’t even make sense to me why payment receivers accept it, because there would be huge adverse selection in who uses PayPal - if the only value add is that it makes it really easy to chargeback, your customers using it are probably much more likely to chargeback.

Of course chargebacks can be justified, but they can also be used to steal things. In the old school internet where everybody was afraid of handing over credit card details it might have made sense to use PayPal - maybe it still does in countries with low CC adoption - but it doesn’t seem to be generally useful outside of that context, except for chargebacks.

And then on top of the chargebacks you get all the jank inherent in a really old legacy product working in a regulated space, that is also integrated with tons of other payment platforms owned by the same company, which likely share a lot of policies/code in a way that creates tons of bugs and edge cases.

You could sign up for an account, put a button on your website, and get payments presto. I think this was pretty innovative 20+ years ago. I suspect a Visa merchant account gave more grief then for someone making 100/month selling knickknacks.

We just had this happen too https://news.ycombinator.com/item?id=34803684

This problem will only go away with regulation. Sadly the minds in our industry are so focused on "disrupting the system" that little progress has been made. In the US, Venmo, paypal, etc. are still a thing and in most of the world - they simply aren't. Government regulated banking and an interchange standard is the way to go here. In Iceland where I previously lived, anyone could transfer reasonable amounts of money to any other person for free, through a government run banking system, regardless of what bank you had. I am normally against government intervention, but this is a case where a single standard and rule actually makes sense. The only people it doesn't make sense to are those trying to circumvent fees which should only be applied to business transactions. The argument against it is the cost to transfer money internationally, but.. those same benefits are the problem with systems like this - no regulation

The west should follow how revolutionary India's UPI system is. Even illiterate vegetable sellers use it in the villages - it's fast, reliable, cross-banking and does KYC stunningly well.

If your money isn't in either cash in your hand or in a fully regulated bank somewhere then you're probably fucked.

When doing business I expect to be paid by direct bank to bank transfer, regardless of how small the amount is. Even between friends, we send bank transfers. No cheques, no 3rd parties, no escrow.

Don't use the PayPal mafia? Is it 2005? PayPalsucks.org has been online for 20 years. Yelling into the void. I do agree, though. https://web.archive.org/web/20040325150958/http://www.paypal...

It’s nuts that they can ban you without explanation. There should be a regulation that when somebody gets banned that they

* are notified of the ban * there is an explanation * some process to appeal

This will get even worse the bigger the tech players get. They can afford to throw a lot of people under the bus because they are only a small percentage of users.

It is because of regulation that they are closing accounts without explanation. I used to run a debit card program with about 250K active accounts.

The account closures are driven by the BSA/AML process (and briefly by operation chokepoint). By law, we are not allowed to tell the account holder the reason for the account closure - this is to prevent scammers (and the overwhelming majority of closures were of shady accounts) from learning the detection pattern and changing their behavior.

So, don't blame the banks/card programs - blame the regulators.

Crazy! What's the relevant law?

Sure, let's blame the regulators. Companies could still implement a process to appeal though.

In these cases, has anyone had luck getting their money back via either arbitration or small-claims court?

I am sure their user agreement gives them some leeway to hold the funds for some period of time, but I would be surprised if the law allows them to permanently keep the money, with no legal recourse.

The email I got said my funds would be held for 180 days after which they may be released at PayPals discretion. I am guessing their discretion almost never releases the funds. Thankfully I had no funds in PayPal since I had always heard the warnings.

I have deleted my account with them based on previous shady stuff they were pulling. Had to create a new account in order to get paid from other websites (turbsquid, cgtrader, thingyverse...)

Most of these websites only uses PayPal as a method of payment, kinda forcing the user to do the same.

Be the unreasonable minority. It takes 3% of a population to flip the script:

https://medium.com/incerto/the-most-intolerant-wins-the-dict...

Tell them you can't purchase with them because they don't offer alternative payment.

> Tell them you can't purchase with them because they don't offer alternative payment.

it's the other way around, in my case, they pay me using PayPal.

I will never use Paypal ever again. I created my account when I was still at university, around 2005 I think. They wanted a phone number for verification so I gave them my home phone number (if I remember correctly, they didn't support mobile numbers in my country at this point). Later, they added mobile number support so I added my mobile and moved on. 16 years later, I get a 2FA prompt on login and they will only accept my original home phone number as the phone to use. I haven't had that number for 13 years at that point, there was no way to use it. I called them and asked if I could verify with _any_ of the other numbers on my account but they refused, and said the only thing I could do was close the account.

Luckily the only subscription linked to it was my Nintendo Switch online account, and that was easy to fix. I didn't have any funds stored in the account luckily, but there's no way I'm risking anything else with them given the experience I had with customer support.

I can't think of a business I've worked for where PayPal hasn't done something like this in some way. Best thing I can recommend is complain to your state regulatory agencies. Even a one week suspension can be a major headache and revenue hit. It's incredible to me that they haven't been hit with more scrutiny given US banking regulations.

Happened to me. I did absolutely nothing nefarious; I'm the most boring person you can imagine. It was clearly some internal logistics they screwed up. When I called them they said "they couldnt tell me the reason why" and that was that.

And people say crypto is a scam.

The truth is trust no banks—I had Mercury Bank and First Republic help someone steal over $120,000 from me—I'm not kidding!

Trust no one-distribute your money in lots of places so if one is crooked you are not dead.

Spread out is key.

Franchise Tax Board of California felt like I owed them taxes (which I didn't) and emptied one of my bank accounts without even giving any advance notice. Luckily it was a smaller one. A year later and I still haven't gotten my funds back, even after having my accountant spend hours on the phone with them and them promising to give it back.

And you're right... people on this site time and again keep going after crypto as being a horrible scam... yet they keep on using Paypal. Well, if you hate crypto so much, what would be a better solution to the Paypal problem?

Op posted this before: https://news.ycombinator.com/item?id=30269141

> And you’re right… people on this site time and again keep going after crypto as being a horrible scam… yet they keep on using Paypal.

I go on about (most) crypto(-related things) being a horrible scam (because it is) and also have avoided PayPal since very early in its existence, except in the very rare instances where a business for which there is no alternative requires it, which I’ve run into exactly once in the last decade (was a more common problem in the early 00s.)

The world isn’t a dichotomy between crypto and PayPal.

> which I’ve run into exactly once in the last decade

anecdotal evidence isn't really worth much, sorry.

there is a reason why this story is trending on HN 5 months after the op originally got banned. it is because this keeps happening over and over again to untold numbers of people. the thread is full of endless amounts of similar complaints. you're here responding to the comments at the bottom of the page. you can choose to ignore all of that and make it personal to your experience, or you can listen to the warnings and try to find solutions that help others beyond just yourself.

> The world isn’t a dichotomy between crypto and PayPal.

really, because you said so?

> Franchise Tax Board of California felt like I owed them taxes (which I didn't) and emptied one of my bank accounts without even giving any advance notice. Luckily it was a smaller one. A year later and I still haven't gotten my funds back, even after having my accountant spend hours on the phone with them and them promising to give it back.

Ugh, sorry to hear you are going through this.

It's astonishing how incompetent (and/or corrupt) some organizations with power are.

Anyway, more fuel for my fire to make things better.

If crypto worked, had a stable valuation, and low transaction tariffs, it would be a very valuable thing.

But the people creating and maintaining crypto wants neither of the above, because they all detract from its value as a scam.

> If crypto worked

I have never had a problem sending someone crypto (I'll admit though, offramping can be a b*tch). I often lose hours of my life on hold with banks when they block a payment and/or freeze an account for a regular transaction.

> low transaction tariffs

If you avoid BTC and ETH and use something like XLM or NEAR you can get dirt cheap fees and fast settlement times.

> stable valuation

Yes I 100% agree with you there.

> But the people creating and maintaining crypto

I would agree with you and say perhaps between 30% and 90% of people creating and maintaining crypto only care about short term gains, but I'm an optimist and think the minority that believes in it will triump in the end.

People have been warning against keeping too much funds in PayPal since 2004. Consumer protection is nearly nonexistent.

> Consumer protection is nearly nonexistent.

Surely you can take them to court (if you have time to burn)?

I'm sure it's possible, but they probably count on having more money for lawyers than most of their customers.

If it's less than the small claims maximum, it's absolutely worth taking them to court. They probably won't even show up and you'll get a default judgement in your favor. Usually the horror stories are tens of thousands of dollars (far past the small claims threshold) and believe me when I tell you that suing someone, especially someone with deep pockets, is a clusterfuck nightmare.

> suing someone, especially someone with deep pockets, is a clusterfuck nightmare.

Absolutely correct.

Even worse, winning the lawsuit does not mean you'll see the money. It only gives you the right to do things like attach liens onto their assets. You have to actually do all that footwork (and pay the associated expenses) yourself.

So suing is a clusterfuck nightmare, and after winning, collecting what you're owed is a second clusterfuck nightmare.

I'm sure their EULA has an arbitration clause

If they don't show up to defend their EULA in the small claims court it doesn't matter what they put in there.

any money for lawyers and court fees.

I remember reading paypalsucks.com around that time, closing our accounts and never looking back. It's sad that nothing has been fixed, a total failure of government, but if there was someone standing on the same street corner selling poisoned snake oil for 20 years with a pile of dead bodies all around them each clutching a bottle of the scammers poison, you'd think that at least after the first decade people in the neighborhood would learn to stay away.

Examples of paypal being shitty abound. Why do people keep falling for it?

If you are in Europe most countries let you bring them to small claims court if you have funds trapped in the account.

>small purchases when buying something off Craigslist or Facebook marketplace

Seems like this is might be the case of it? I'd imagine one of these people turned out to be scamming people they'd ban accounts that have transacted with them?

> I don't use it for anything sketchy.

Sending money to strangers seems sketchy to me. I certainly wouldn't do it. shrug

Anyway, PayPal isn't "special" - you risk being banned from literally any financial institution for seemingly no reason. You can read a million stories about people being banned from credit cards and banks online.

I don't see where the OP said he was sending money to strangers.

But even if he was, what's sketchy about it? I've purchased things from strangers and sent them money with PayPal before. Is that not legit?

I’m gonna be that guy: cryptocurrency fixes this.

It might prevent you from being banned without reason, but it also eliminates the ability to claw back scammed money.

You mean the PayPal buyer protection program? How does it work?

I mean using cryptocurrency to pay for things.

How does using crypto eliminate the ability to claw back scammed money? There are services that use crypto as payment rails and also offer scam protection.

Then we're back to being at risk of being banned for no reason, though. Can't have it both ways.

What mr_mitm says. Also, once you're using services like that, what's the point of using cryptocurrency at all? What is it buying you?

Zelle is in the US, backed by major banks, and good luck with a claw back.

"But Zelle’s terms are clear: You can’t cancel a payment once it’s been sent if the recipient is already enrolled with Zelle. And if you send money to someone you don’t know for a product or service, you may not get your money back for a product or service that’s not delivered."

https://www.elliott.org/problem-solved/how-to-get-your-money...

That page explains exactly how to do so, via legal protections.

The difference with crypto is that you're not going to be filing a Regulation E dispute against someone on the other side of the planet.

>That page explains exactly how to do so, via legal protections.

"Since Regulation E is virtually unknown outside of the financial services industry, few people — let alone customers — know the process of filing a claim."

Oh come on. Zelle and the banks are literally banking on the fact that they are protected by exactly these sorts of unknown processes. Are you really advocating for more of that?

> The difference with crypto

The difference with crypto is that contracts, written in code, can be used to do escrow that don't require a third party centralized company like Zelle to handle the transfers. They also work across borders. No need to tie up the US legal system with 'Regulation E' cases over $1700 rent payments or having to hire lawyers to sue banks.

My point is that, we can work to make this stuff better, or we can keep the status quo of having to learn about 'regulation e'. I'm on the side of working to make this better.

The article in the OP is a great example of why removing humans and relying on code is fraught with issues. The problem is that money is often used to exchange for value and things outside of a computer, where smart contracts have little to no reliable mechanism for determining fulfillment of contract conditions. Although, I'm sure smart contracts will be of great use for moving around digital goods.

The code can still involve humans, if that is the escrow system you'd like to use. It just doesn't have to involve a centralized entity. For example, I can imagine an escrow system where you can have third party arbitration, by anyone who wants to participate in the system. Incentivized by the two parties involved.

People say that crypto is just re-inventing what already exists and a lot of it is doing that... I'm ok with that. What exists is not always the best solution.

I agree that is the ultimate solution. But crypto is not necessary to facilitate such an arrangement. As soon as a human can override the outcome, you've negated the point of using mathematical proofs. Because now you're trusting in the human rather than the proof. You can't have it both ways. Either the ultimate authority is math, or it is a human.

You're conflating the need for consensus (ie: math) with the need for arbitration (ie: escrow).

They're all consensus mechanisms. If you use any other mechanism to come to a consensus off-chain, then there's no point to using the chain for consensus. You just have an overly complicated distributed database with bad data in it.

I have funds in my wallet. I choose to send them to you. That is human consensus on top of a blockchain, which is the settlement layer.

In the case of escrow contracts. The funds are in a contract. Those funds will be released to a specific wallet only when two humans agree to their human consensus. The blockchain again, is the settlement layer.

When I bought my house, it went through an escrow process. I had to pay some human paper pusher thousands of dollars to do something that really could have just been done by computers for fractions of a cent and in a matter of minutes.

Escrow is one area that you're going to have a hard time arguing with me that isn't a perfect use case for blockchain. I don't care if it is 'overly complicated'... nothing is more overly complicated than the current process today.

> contracts, written in code

I wish those were called something else. They aren't actually contracts in the sense most people understand the term. And, being code (and immutable, if I understand it), I don't find their existence reassuring from a safety point of view. But that's neither here nor there.

> No need to tie up the US legal system

As (highly) imperfect as it is, the legal system does, at least, provide mechanisms to correct injustices.

And I wouldn't touch that with a ten foot pole, either.

A paper check seems antiquated, no? My electrician just did $4k worth of work... am I supposed to drive to the bank, pull out $4k and then risk that being stolen before I give it to them? These seem like common problems.

I did use Zelle for that, required two payments since the limit was $2k/day. Also super lame... why can't I be trusted with my own money? "For your protection."

Perhaps your situation is different, but I can make such payments without using these sorts of services and without using a paper check. Those aren't the only two options.

My electrician accepted check, cash or zelle.

I'd love to know your magical way of paying him $4000.

> but it also eliminates the ability to claw back scammed money

I got scammed 500 USD using Wise, so it's not like these services help you in any way.

I don't understand the relevance, though. I'm not comparing cryptocurrency to other new services. I'm comparing it to the more traditional services.

That said, with things like Wise (which I'd never heard of until your comment), it pays to read the fine print and avoid the ones that don't offer any real protection for you.

Imagine paypal as a crypto exchange holding your keys. Same outcome. The issue is trust and paypal.

That's why we have decentralized exchanges.

Don't put your wallet in someone else's computer.

Does it?

https://en.wikipedia.org/wiki/Mt._Gox

I'm not batting for either team here, but you just linked one of the PayPals of crypto - ie a company that holds onto your funds on your behalf. So it's not really a rebuttal to their comment.

I did so intentionally. The fact that crypto has still 'PayPals' is exactly my point. Whatever mechanism of value exchange you come up with, there will be intermediaries who pop up to move it around in different ways. Crypto does not 'solve' this.

I know that you know exactly what they meant by “crypto solves this”, but you’re just be snarky here and that’s okay

You don't have to custody on exchanges.

You don't have to put money in a bank.

You do if you want to send it online.

And I need to use an exchange if I want my paycheck to become crypto.

No you don't need to, you can trade with an actual person if you wish

Yea keep the funds in a wallet, not in a fucking exchange. That's the entire point.

Not your keys, not your coins.

"Don't use an exchange, crypto solves this!"

"Don't use paypal, cash solves this!"

Both systems have the same problem, in that people need to use intermediaries to accomplish the transactions they want to accomplish. Crypto solves nothing, it converts problems into different problems.

Crypto definitely solves lots of problems for me and for many people I know IRL

Except I cannot give cash to someone who is not in front of me, while I can send crypto to anyone in the world. You don't need intermediaries to transact in crypto, that's the whole point

Cryptocurrency suffers from the same problems if not worse. There have been billions stolen in cryptocurrency due to no regulations and a lack of accountability. In many cases the one robbing the exchanges were the owners themselves...

No it doesn’t at all. It makes the problem even worse.

I can’t believe people still use PayPal in 2023. They’ve been known to be terrible for like 15 years.

Who you gonna call? Ombudsman!

https://en.wikipedia.org/wiki/Ombudsman

To close my account, I emptied my balance into a random purchase, and I still want to close my account, but because there are a few dollars in it, they won't close it without a bunch of additional PII and hoops. I don't care about the money, I really just want zero risk exposure to them in my life.

Maybe I should just try to get banned instead?

Thank you for the overdue reminder to finally get round to deleting my old paypal account!

(Not that they make it easy, mind you)

I was just commenting to a colleague about how ridiculous it is to still have a US payment/checking system that allows "pull" transactions from anyone with your account numbers, rather than a "push" system where you explicitly have to authorize sending money from your bank accounts. Like every other modern country you might think of.

Our ACH system (plus the uncertainty of money clearing, holding periods, fraudulent checks / debits) creates such bad side effects for everyone, this PayPal situation included.

I know there are some efforts to initiate a Fed-administered transfers system, but have no idea how it's going.

We (with US government as a mediating authority) don't seem to be in control of having an effective banking system, and it's just getting more confusing over time.

I get a ton of those fake invoices. I hope and suspect that isn't reason enough to ban an account.

I reported about my own similar experience a few years back (https://puntofisso.medium.com/paypal-closed-my-account-with-...).

What's really stuck with me is that it seems that anti-fraud legislation in many countries allows PayPal and, most importantly, traditional banks to accuse a customer of fraud and close their account without having to provide the actual reason that triggered the anti-fraud checks.

This is whey crypto, for all it’s awful flaws does have an advantage: no one can confiscate funds (by design) or be allowed to draw down arbitrary amounts.

Technical design. Obviously you can be coerced by force

design can be overruled by regulation. i started my account at Coinbase at a time when noone cared about who you are, so used an alias instead of my real name.

fast forward a number of years, and i cannot access my account anymore because KYC and other regulation requires identification, which doesn't match the account name. there were just over $100 in the account, but they are not mine anymore.

The problem here is a lot bigger than PayPal.

Consider people who sell through Amazon or even use Amazon for distribution. Amazon can arbitrarily decide you’ve violated their TOS, suspend your account and freeze any funds you’re due for things you may have already shipped.

You may be in limbo for months. It might be impossible to reach a human to resolve it if you’re not of sufficient size.

I get the need to combat fraud but what we have here is a financial incentive for companies to freeze and basically steal your money. Even if you eventually get it back just holding it has value.

That’s a problem.

I got banned from Paypal because I used an expletive in a support email after they removed the requirement that I login before making a purchase (paypal would assume my login status based on cookies or browser fingerprints). I did not ask for that feature and I did not want it - I wanted to have to login each time I use Paypal, I had no desire to remove security features from my account.

Well, I've been better off without Paypal, their ban did me a favor. Paypal will die in a fire of its own making.

I recently just closed my Paypal. You have to close your paypal credit accounts before they let you close it. They only approved me for $300, while AMEX approved me for $6000 last year, so not a big loss. They asked why and I said its a garbage service. I tried using it and it could not verify my identity, even though I uploaded a passport picture. I would suggest Stripe or even Coinbase commerce. At least no one can chargeback your stablecoin!

Stripe will do the same crap. Don't trust them, either. A few years ago they locked my business account with around $20k in it. On Christmas Eve. An account that had been in service for 5 years and had processed a few million in charges with not a single chargeback. With almost 0 information on what I needed to do to restore the service. And without providing any way to get in touch with anyone aside from support tickets, which took 20+ hours between replies.

A good reminder for me that I still need to move off of their platform.

I've learned from HN posts over the last 10 years that Paypal and Ebay are two of the worst places to do any kind of business, let alone hold any money there.

It's not intended to replace a bank. For one, bank-related regulations that protect consumers are missing from PayPal. It's best used for buying random nick-nacks, and never keep more than a couple hundred in your PayPal account.

Venmo etc. probably have similar risks.

Use a credit card for more expensive stuff. If you are not able to get a credit card for some reason, I'm not sure what to recommend as an alternative. Suggestions?

I'm developing an custom software service for an Australian customer; I'd like to charge them $1-5k/mo USD which I'd need to convert from their Australian currency. As the largest international money transmitter, Paypal is the obvious option, but I hesitate to do business with them because of years of posts like this.

Any other recommendations for invoicing Australians for software/SaaS from the US?

Probably a very unpopular opinion here in HN, but stablecoins (USDC, USDT) are among the best ways to send money internationally. It's so much better than SWIFT.

I'd like to see a total conversion rate once all fees are taken into account - I bet it's not actually that competitive when all is said and done.

Also, you're exposing yourself to a non zero risk of whatever exchanges you're using at the time to process your transaction/withdrawal go bust.

Coinbase is relatively trustworthy (publicly traded US company). I believe trading stablecoins has 0.001% fee, and ACH withdrawals and deposits are free[1].

And on the crypto side, USDT transfers on Ethereum (the most expensive chain) are usually less than $5. Currently about $3.40[2]

SWIFT is much more expensive and slower, feel free to check SWIFT numbers.

[1] https://help.coinbase.com/en/exchange/trading-and-funding/ex...

[2] https://etherscan.io/gastracker

Stripe, bank transfers or Wise.com should all be pretty good options.

Obviously Stripe: https://stripe.com

Or Wise, which will just give you a (virtual) account in Australia: https://ale.sh/r/wise

Don’t EVER use PayPal! They will routinely lock your account for 6 months based on a single false claim of your downloadable product not “being delivered”. With zero options to simply reimburse the customer or in any other way resolve the situation. They have done it for years and continue to do it. Don’t use PayPal!

Is anyone working on a payment service with escrow, or does another good alternative to PayPal goods and services exist already?

My new rule for any centralized entity is no more than 5k or 5 hours on there. Even my bank account has been mostly dumped today. I'm a crypto futures day trader and have been doing it for a full year 60 hours a week. Sums can start to explode in good market conditions - I just keep drawing stuff and throwing it elsewhere.

You should file an arbitration claim against PayPal (I have done this successfully in the past). My former employer FairShake makes this easy and lends credibility to your claim, otherwise you can go through the process (mailing a demand letter to the dispute address in their terms & conditions).

I had created a PayPal account and tried to use it to get money off from a gift card (read online that it might work). PayPal banned me for it even though there was possibly no other activity in the account. I was able to get it unbanned after reaching out to customer care. For them false positives is just the cost of doing business

I run an open source project and we're channelling out finds into PayPal. What's a good alternative to switch to?

There needs to be well-defined consumer rights when accounts get banned like this, from everyone of these companies. They shouldn't be allowed to arbitrarily ban without enough proof. They have gotten to the point where they are almost like utilities. Can we create a petition or a California Proposition to get this done?

My advice: Don't use Paypal ever again.

Well it seems like I don't even have that option anymore. Thankfully I don't need them anyway it's just a minor inconvenience. But I wanted to warn others who may be put in a bad situation.

> there is no way to decline or dismiss the requests

I used PayPal as a primary payment source for a business I had 10 years ago. I’m still receiving messages about someone “canceling a payment request” from 2010, so there is definitely a way to do so.

My story, I have created paypal account while I was below the age of their term of service. Let's say 1-2 decade later, I have been requested to provide my ID for KYC purpose. And then my account were banned...

Is it possible to setup PayPal to automatically forward received money to a bank account or a credit card, without allowing them any withdrawal rights on that bank account or credit card?

Would it be safe to use it that way?

Another year, another story (I could argue another week another story). Please keep in mind PayPal is NOT a bank, so use it as a transactional service, and that's it.

You also can’t report the spam requests via PayPayl’s UI. I received one of those requests, and the only way I could report the spam was via an email. PayPal is garbage.

> one of the most plain and boring consumer users of PayPal ever

Yeah it seems kindof arbitrary. I've abused my account doing weird stuff for years and it's still fine.

Stop using paypal period. Just stop giving them money. You don't have to worry about trusting them if you never ever do business with them.

I've heard these warnings about pretty much all payment providers, even stripe, Mollie but also banks.

Not sure anyone you can fully trust.

Had my PayPal account frozen by a tech support person out of spite. 2 week delay. Killed my whole project. Never again.

One thing to take note is that money in PayPal isn't FSCS protected - because it's not technically a bank.

everytime i see something like this I feel disgusted about using paypal. I'll definately sweep funds out of there even more frequently now. financial institutions that don't understand the value of trust, can't be trusted!

I just use Paypal as a proxy to a checking account. No funds are actually stored there.

People still keep money in their Paypal account? After all these years?

Bizarre. I was a pretty serious PayPal user back in the day (~150k/year through my eBay store) and every issue I ran into was fixed with a 15 minute call to support.

This was 10 years ago, to be fair, but have you tried simply calling support and explaining what happened?

I already closed my PayPal because of this and other stuff.

So PayPal just randomly steals people's money? WTF??

They grant themselves the right to steal your money (from your linked bank account, no less) in their TOS: https://news.ycombinator.com/item?id=33348913

Thanks. I'm going to deactivate my PayPal account.

"We've removed your card. We're still processing any pending payments on it."

It sounds like they've removed my card from the UI, but they can still charge it if they want.

In any case, I'm going to close my PayPal account and hopefully cancel that card within a few weeks.

Not your keys, not your coins. The government can do this with your bank accounts too.

I had a weird issue with them once.

I sent some money to a colleague's PayPal account who was collecting money for another colleague's leaving collection. I used the name of the colleague who was leaving as the note/reference on the payment.

A few days later I received an email from PayPal asking me to provide the date of birth of the colleague who was leaving and that the money would be held until the request was resolved. They claimed it was to meet regulatory obligations.

I called them and said I refuse to provide the info because I felt it breached GDPR laws and besides, it had nothing to do with them.

The money was eventually returned.

What about venmo? Same thing?

I canceled PayPal after 20 years the day they put out the TOS change to deduct $2500 from customer accounts for posting misinformation.

They subsequently claimed it wasn’t intended to be their policy. And then they said oh yeah it actually is our policy.

PayPal should die.

> I always thought there must be more to the story when someones account was permanently banned. Well, it happened to me, one of the most plain and boring consumer users of PayPal ever.

That self-exceptionalism? Yeah, most of everyone that hasn't already internalized not to use PayPal will do the same thing you did.

It's futile. Let me guess, do you use a Password Manager (bonus, other than LastPass?)?

Here's another futile one, you, yes, you, really need to make backups and replicate time-snapshots off-site.

> Here's another futile one, you, yes, you, really need to make backups and replicate time-snapshots off-site.

Yeah, but... you know... I'm like, busy and stuff. And realistically it'll never happen to me anyway.

> must be more to the story when someones account was permanently banned

UK banks do this as well, could be anything from having direct debits not sent despite plenty of funds in the account, so you lose things like domain names, websites, to being banned from accessing funds from your account and caught in a regulatory loophole with the banks refusing to talk to you. Their internet surveillance of customers is excellent!

I've been locked out of my bank account for 6 weeks with the banks refusing to talk to me, Cahoot (Satander), GiffGaff are the latest to mess me around, basically they can d546dcddb8d207a80fe40e762023fbee !

Because I remember what the employees of the state did to me as a kid. Scopolamine is used on infant age primary school kids right here in the UK.

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