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Comment by justinde | Hacker News Reader

This is a familiar situation.

I run a SaaS platform where I sell plugins for WordPress. Recently, my PayPal account was suspended, and a balance of €80,000 was frozen. The stated reason is a violation of the Terms of Service. However, no specific explanation has been provided — neither what rule I allegedly violated, nor how I violated it.

I’ve searched through the lengthy documentation, but without clear guidance, this is an impossible task. My support tickets are no longer being answered, and your phone support refers me back to written communication — which, again, receives no response.

This lack of transparency and accountability is extremely concerning.

Due to repeated experiences like this, I now use fintech platforms only as proxy banks. All funds are immediately transferred to a traditional bank account, and only daily operational expenses remain within the fintech environment.

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Keeping funds in Paypal seems nuts. I've also had experience with them just closing the account ~12yrs ago but fortunately only had 10EUR on it.

These days I'd only use Paypal if they didn't offer any better options and then only as a proxy to debit/credit card (which has purchase protection so no need to deal with Paypal itself ever).

I am genuinely surprised to find out that some people leave large sums of money in these types of non-bank services. Why don’t people move the money out? Is it too much trust of the competence of these organisations?

Perhaps because they try to look like banks to their customers.

Paypal even has a banking license where I live. A paypal transfer may or may not be a bank transfer, I don't know, but it has a banking license so I can understand it if people assume that they can trust it like a bank.

So, financial ignorance. They're being "soft-defrauded" by the marketing of "looking like a bank".

I'm not saying victims are dumb; they're ignorant, and the solution is self-education. Hopefully before you start leaving 5+ digits in their care...

I beg to differ.

Banks have particular protection in the modern financial system. When states grant that, they should IMO protect banks against impersonation.

Reminds me of the crazy situation with that fintech "bank" that went under. They were basically a ledger over a real bank. The real bank was FDIC insured, but the protection for the underlying doesn't necessarily mean anything for your 'virtual' account in the ledger. FDIC would only help you if there was some insolvency in the under-layer.

Bunch of customers were screwed by the bankruptcy of the upper layer. Maybe there is some hope for at least the FDIC cracking down on this deceptive fintech trick in the future.

https://www.usatoday.com/story/money/personalfinance/2025/04...

Once the money moves to your bank it becomes official. You need to pay taxes etc.

Quite some years ago I sold a Wordpress plugin at a marketplace called Binpress. They paid to my business Paypal account. It had a $3500 balance and I didn't log in to Paypal for a while. After 2 years I tried to recover my account. It was blocked and there was no way for me to get access. I tried every possible way.

That sounds like a small claims court case, if not suing PayPal for outright theft.

I'm not a lawyer, but theft under pretenses of "protecting your account" (from being accessed by you, that is) is still theft.

In the UK, similar situations are common when “someone” flags any transaction to or from you as suspicious, at which point they need to freeze it, report it to an appropriate branch of an organisation, and… wait. That organisation most of the times doesn’t respond, so the hold expires in about two weeks, and then everything resumes working.

The thing is, noone can be told of this freeze/hold, that would be mean tipping off the party that made the suspicious transaction - from what I gather, it’s actually illegal to reveal it’s frozen, so they invent all kinds of meaningless/dumb reasons why the transaction (or the account) can’t be used right now.

So, lack of transparency and accountability IS the purpose of the system in that case.

> noone can be told

Great article on how the US does that: https://www.bitsaboutmoney.com/archive/debanking-and-debunki...

  No, the bank cannot explain why SARs triggered a debanking, because disclosing the existence of a SAR is illegal. Yes, it is the law in the United States that a private non-court, in possession of a memo written by a non-intelligence analyst, cannot describe the nature of the non-accusation the memo makes. Nor can it confirm or deny the existence of the memo.

  It’s not just illegal to disclose a SAR to the customer. It is extremely discouraged, by Compliance, to allow there to be an information flow within the bank itself that would allow most employees who interact directly with customers, like call center reps or their branch banker, to learn the existence of SAR. This is out of the concern that they would provide a customer with a responsive answer to the question “Why are you closing my account?!” And so this is one case where in [Seeing like a Bank] the institution intentionally blinds itself. Very soon after making the decision to close your account the bank does not know specifically why it chose to close your account.

Having worked in Fintech for several years, THIS is the main reason why I moved the majority of my liquid assets to cryptocurrencies.

For all the things people want the. To do, the most important one to me is the "not your keys, not your coin".

I don't trust banks as neither. One time a bank i use to get paid decided to "block" my accounts for 'suspicious avtivity" (i made a transfer to an account number they deemed high-risk). I ended up having to go to a specific physical branch, and literally BEG the clerk to activate the account where they had MY FREAKING MONEY.

I've learned since that, once you give it (lend it actually) to banks, it is not your money.

The idea that I have to not lose a private key file to access my own money is terrifying, and on top of that, if someone else gains access to that file, they will steal my money is just a horror show on top of that. I also worked at a FinTech for a few years but it's not relevant. What is relevant is how much you trust your own opsec and the level of organization you have for your own files. I can believe that some people find self-custodial ownership of significant amounts of crypto reassuring, but I do not.

xtracto doesn't understand security. An individual with crypto must not advertise that they have any or they will be spear targeted (up to and including lead-pipe analysis by distributed anonymous resources). https://archive.ph/PJTZP

Internet anonymity might be a temporary defence, until AI doxing analysis improves or one's government decides to change their rules (good luck securing against that).

I don't have any crypto: firstly because I lack the opsec skills. Also because I travel to other countries, and the best defense is to actually not have anything worth being stolen (or limited financial exposure e.g. my physical wallet was stolen last time I was in Brazil).

People immensely more skilled than I will ever be, still have security failures (e.g. Troy Hunt fell for a phishing attack recently).

Hope you're considering a lawsuit? €80k is no joke.

Paypal lawyers went over this situation thousands of times. If they would have any trouble with it, Paypal's behavior would already be different. AML/KYC and other bank regulations are so ridiculous and vague that it seems perfectly normal according to them to withhold somebody's money for a long time without even providing any explanation.

The most likely reason they don't have trouble with it is that the only consequence if they do get sued is that they have to actually have someone look at the case and release the money. All it costs them is a few minutes of their lawyer's time.

In cases where the victim just gives up, which seems incredibly common, they get to steal the money and they avoid the cost of having to review most cases, so it's obviously still a winning strategy.

Good news, actual banks in many countries also do the same thing.

It's easier to get justice from a local bank in your country, or to at least talk to a real person face to face than from PayPal Luxemburg or wherever they're located.

I doubt. It seems that payment providers have god-like rights from the government and don’t feel stressed by a few lawsuits here and there. I had a business account at a larger/largest Dutch bank, and have got the middle finger treatment all the way. From impossible to resolve typo in my company name (made by the bank), entirely wrong UBOs name on the payment card to the eventual account freeze for 4years while KYC was looking into this. Fun times

Yeah, the anti money laundering laws can give financial institutions god like powers and appeals can take a long time.

>It's easier to get justice from a local bank in your country, or to at least talk to a real person face to face than from PayPal Luxemburg or wherever they're located.

Is it, really?

It would not matter to the local court where PayPal's HQ is.

PayPal needs to be licensed in your country to handle money transfers. They can lose the right to operate in your state if they aren't compliant with the laws.

In the US, the licenses are required even on the state level: e.g., here are the requirements for California Money Transmitter License:

https://www.jwsuretybonds.com/states/california/money-transm...

Fraud and theft are one fun way to lose such a license.

I doubt they have a license to operate in all countries where the service is accessible/used. And yes, it is way easier to get justice from a local bank, a letter from a lawyer is usually enough if it ever gets to this point in first place, whereas for PayPal&co good luck with ever getting a response. Filing a lawsuit against a foreign company and getting anything out of it is even more of a gamble.

>I doubt they have a license to operate in all countries where the service is accessible/used.

Really?

I doubt you have tried checking all countries' regulations. Or any, for that matter.

Because there isn't a country where money transfers aren't regulated. Go prove me wrong.

To save you some effort: in the US, you need to have a money transmitter license issued by your state, e.g. in California'

https://dfpi.ca.gov/regulated-industries/money-transmitters/

>Filing a lawsuit against a foreign company and getting anything out of it is even more of a gamble.

Are speaking from experience, or hypothetically?

In any case, filing a lawsuit and raising a complaint with the regulator is an action that can cause the foreign company in question to lose the license to operate in your state.

And unlike your local bank, they don't have direct ties to politicians.

> I doubt you have tried checking all countries' regulations. Or any, for that matter.

I checked it for my country before writing anything. They don't have a license, nor does Revolut for that matter. I'm not pulling this out of my ass, go check it yourself: https://www.bsi.si/sl/nadzor-bancnega-sistema/izdana-dovolje... (Hint: look in the 4th column where the 2nd column says "Dovoljenja za opravljanje storitev bank in hranilnic")

They definitely do business here, just like Revolut, which has the authorization to do banking in the UK, but not here.

> To save you some effort: in the US, you need to have a money transmitter license issued by your state, e.g. in California'

That's the US, not the entire world.

> In any case, filing a lawsuit and raising a complaint with the regulator is an action that can cause the foreign company in question to lose the license to operate in your state.

They _don't_ have it in the first place, there's nothing to lose for them, only for you as their customer. Furthermore, there's no legal entity of theirs in my country which the court could liquidate to pay me back in such a case. Please consider the fact that not every country has the same legal system as the US before you start lecturing me on how the legal system of my own country, which I dare assume you don't live in, works.

> And unlike your local bank, they don't have direct ties to politicians.

But they have ties to international politicians, which is no better.

Welcome to paypal.

I had to create a paypal account because an online shop used it as the only method for payment, first time I could pay without registering but the second time they forced the use of an account so I registered.

I still used my card to pay, I didn't add any funds to the paypal account or did any other transactions or anything else really but after some time they froze my account for violating ToS. No actual reason, nothing. And it's next to impossible to find any support contacts, just redirects to useless FAQs everwhere.

Oh how I dream of paypal going bankrupt. The world would be a better place.

You violated the doctrine of low agency. You are too agentic.

Aren't they too under-agentic?

(Also, TIL the word "agentic" is real.)

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