I had just signed up for a PayPal account too, and was in the process of verifying my bank account. Now I think I don't want to get involved with these guys.
Mark Perkel learned this the hard way, when PayPal gave his account "limited" status after deciding it didn't like some of the content on his website. Furthermore, right before it shut down his account, it reversed a deposit that one of his clients had transferred to his PayPal account, but it did not return the money to his client's bank account after removing it from Perkel's bank account.
According to PayPal's User Agreement, (It's probably the Accessible Use policy regarding adult material that he violated.), if it chooses to make your account "limited," (PayPal has the authorization to do so at any time based on its own discretion), it can and will hold the funds in your PayPal account for 180 days.
Turns out that money is in limbo until Perkel writes PayPal in a secure email on its website and asks for this to be done explicitly. This is despite the fact that he asked them to do so over the phone. (And why wouldn't they have already done so anyway? - if they were reversing the transaction, when the money left Perkel's account, it should have gone back to where it came from.)
PayPal claims that they hold the money for 180 days to "protect ourselves from potential reversals" to the accounts. But there's a free speech issue here - why is PayPal going around making judgements about it's customers' websites anyway? Who's going to be next? Is your PayPal account something you don't want to keep too much money in at any one time, since they can freeze your account and hold it up for 180 days?
These are the questions going through my mind after listing to this MP3 of Marc Perkel talking to Paypal.
If you're listen to the MP3, and in a hurry, the relevant portion is at about 6 min 50 seconds into it. But if you've got a minute, listen to the whole thing. It's pretty interesting.
So Perkel may have violated their user agreement, but closing his account without giving him a chance to take his money out, and then holding on to not only the money he had in his account, but the money his client had transferred to him the day before the account was closed doesn't seem right.
Marc's started an anti-paypal website, to let people know about his experience, but I'm not telling you to boycott these guys necessarily. I just want you to know about this so you can make your own decision. Maybe there's a perfectly good reason why PayPal works for you. Fine.
(This MP3 might also have some great samples in it for you Dee Jay/Audiophile types. Don't say I didn't tell ya :-)
Here's some information for anyone who is interested in the news story about PayPal and their lawsuit settlement over freezing customer's accounts:
Here's the full text of the article in case the link goes bad:
Last modified: June 14, 2004, 4:38 PM PDT
By Paul Festa
Staff Writer, CNET News.com
Print story E-mail story Your take
PayPal has reached a preliminary settlement with some customers who accused the eBay unit of illegally freezing their funds.
The company on Friday said it will pay a total of $9.25 million to settle the federal class-action suit, $3.4 million of which will pay lawyers' fees and costs.
PayPal admitted no wrongdoing in settling the claims, which were filed in 2002 as part of two federal class-action suits that also alleged other customer service deficiencies.
Those two cases were merged, and a third case, pending in California state court, will be dismissed if the settlement agreement is approved.
"In this agreement, PayPal does not acknowledge that any of the allegations in the case are true," PayPal said in an e-mail to customers. The unit "entered into the settlement agreement to avoid further costs of litigation and to devote resources to more productive areas of our business."
An attorney for PayPal customers called the settlement a win not only in securing a financial reward, but in changing the way PayPal does business.
"I think we got it right," said Daniel Girard, a partner with Girard Gibbs & De Bartolomeo in San Francisco. "The settlement provides for cash recovery and also for a series of changes to the operating procedures at PayPal."
Between June and September 2003, while the litigation was still pending, PayPal released $5.1 million in frozen customer funds, Girard said. As part of the settlement, PayPal agreed to change the way it handled dispute resolution.
PayPal acknowledged that the settlement included an injunction mandating certain changes to the company's procedures, but maintained that the modifications had come about independent of the litigation.
"PayPal has always been looking for ways to improve customer service," said company spokeswoman Amanda Pires. The litigation "didn't really change the way PayPal has been operating. We have improved our customer service as part of our normal course of business."
PayPal claims 45 million member accounts around the world.
The settlement was the product of mediation, begun early last fall, before a court-appointed special master. Within a week, the parties plan to file the preliminary settlement with the U.S. District Court in San Jose, Calif., for approval.
The case involves PayPal customers who used the service between Oct. 1, 1999 and Jan. 31, 2004. European Union residents are excluded.
PayPal said it will publish the allocation plan in July or August. Customers will be informed of settlement terms within two months of the court's preliminary approval.
Here's the text from the website in case the link goes bad:
PayPal Sucks - Closed my Account - Keeping my Money
I'm in the process of building my PayPal sucks site and this blog entry is the first step. It's the art of being an asshole. I'm sure I'm not the only one that PayPal has ripped off and probably won't be the last - but I will be the one they remember the most.
I got an email today from PayPal that they are closing my account. The reason for closing my account is that they claim they don't like the content of my web site - specifically my site on Sexual Issues where I have my Men's Guide to Escort Services - a guide to interacting with hookers, The Nerd's Guide to Sex - a guide teaching men how to properly have sex with women, and The Shy Girl's Guide to Becoming a Whore - a women's guide to surviving the Bush Ecomony.
So - because they didn't like my web site content they not only decided to cancel my PayPal account - but to also keep my money for 180 days. And - I had transfered my money out of PayPal yesterday - but after closing my account today they reversed yesterday's transaction and are going to steal my money.
The people at PayPay are real mother fuckers. But I to am an asshole and I don't get mad - I get even. Whenever I get screwed by someone I use my talents of being a real prick to turn the tables on them and make them feel the heat.
PayPal claims that according to their End User Agreement that they have the right to close down my account for any reason whatsoever - without any form of recourse - keep my money for 180 days - and there's nothing that I can do about it. Well Paypal you on wrong about that because there's a lot to do about it.
I am a person who values free speech and fights hard against censorship and the Corparations like eBay who owns PayPay who think they can come in and tell ME what I can say on the Internet. Well I say - fuck you PayPal! I will not only keep my right to FREE SPEECH but I will use that right to expose you for what you really are.
Now - for those of you who are reading this - you probably don't entirely grasp the details of what I'm talking about. You think - this is PayPal - they have to be more ethical than that don't they? I say - yes they do. So I called them on the phone about it to get them to explain it to me in their own words. And I RECORDED THE CONVERSTATION IN THIS MP3 FILE SO YOU ALL CAN HERE IT FOR YOURSELF!
First things first. The file you are listening to is edited. But the important content is unaltered. I removed about 20 minutes of on hold messages so that you wouldn't have to sit through the wait time. The rest of it is everything that was said between me and PayPal.
What really fun about this is that I got them to say just exactly what they did to me and how they ripped me off and how they aren't going to do anything to fix it. What you hear is a real life detailed experience that I had and what PayPal's end user agreement really means to you - so that if you are thinking about doing business with PayPal - or you are already a PayPal or eBay customer - you might want to reread that user agreement and see if this is really what you want to be agreeing to.
In the recorded conversation - after getting them to plainly explain how they are screwing me - I anounce to them that I have recorded this phone call - and that I'm going to put it on the Internet. All of a sudden it is them flipping out and screaming about their rights - but - there's nothing they can do about it. You see - I'm not the only one who has no choice. When I dialed up PayPal - the very first thing their machine said was, "This call may be recorded." So - I recorded it. Listen to the squeal about their rights - but I don't give a fuck about their rights because they don't give a fuck about my rights.
The big corps think they hold all the cards - but there are things that we consumers can do to fight back. After all 0 this is a country of the people, by the people, and for the people. Not of big corporation who think they can enslave us and walk over us any time they want to. I want this web site to be a turtorial about how people like you and me can stand up to these motherfuckers and show them that the People rule. And we do that by taking money out of their pockets.
Now - there are plenty of other people out there with similar stories of being censored or otherwise ripped off be PayPal and the comment section is open for you to tell your PayPal story. Go ahead and put in links to other PayPay sucks sites and tell us who is better. It's time that the online community organized to move away from unethical corporations like eBay who owns PayPal and find services who will play ball with us on OUR TERMS.
And - I want you to let PayPal know that you saw this web site and let them know what you think aboiut it. Here is an Email Form to tell them - you saw it hear - you listened to the recording - and what you think about it.
One think to keep in mind is - PayPal is not a bank - nor do you have the protection that banks offer. They are also not a credit card company. They act like they are a fiscal instution but Master Card and Visa aren't playing moral police with me. And as you can see - if they decide to take your money - they just take it. Even if you transfer your money out of paypal the day before they close your account.
Also - if you are going to link to this page - don't use the blog url. Use this URL instead:
Here's another PayPal Warning Site I found.
Other PayPal Sucks Sites:
What is PayPal?
PayPal is an online service that allows you to email money to other people.
Why is my account access limited?
Your account access has been limited for the following reason(s):
# Jun. 13, 2004: In accordance with PayPal's User Agreement and Acceptable Use Policy, we have closed your account. Your funds may be held for 180 days from the date of your last transaction. After 180 days, you will be able to access your funds by requesting an online bank transfer or, if applicable, a check from PayPal. Please update your address or bank information as we cannot be held responsible for checks issued to an incorrect address. We do ask that you please remove reference(s) to PayPal from your site.
(Your case ID for this reason is PP-040-853-646.)
Posted by marc at June 13, 2004 07:59 PM | TrackBack
i feel for u mate.. i had my paypal account closed, and by the time i was able to come back to the civilized world to do anything,(was out in the outback) my money, my account all gone.The reason they gave me was inactivity on my account so they took it to themselves to close and wipe my money clean.Your reasons was more obsecure.. wat does an online content (what u write on the net) has anything to do with paypal?
screw them real good!
Posted by: ixnay at June 13, 2004 09:11 PM
Large corporations are all, repeat, all crooked. You will need a website the size of Siberia to contain all the "so and so sucks" information. Let me suggest:
They are Re-animated Companies. They take a company that has been sold (aka dead) and artificially re-animate it with money from absentee stock-holders. These Frankenstein's Monsters are ruling the world. Nice, huh?
They are evil incarnate. Whaddaya gonna do?
Posted by: Dancho at June 13, 2004 09:49 PM
the URL to the MP3 is 404, bro.
Posted by: drew niese at June 13, 2004 10:01 PM
As far as the reversal of transaction goes, I think you have a legitimate right to complain.
But I don't think you can call foul as far as PayPal's closing your account is concerned.
From the "User Agreement for PayPal Services":
"This User Agreement ("Agreement") is a contract between you and PayPal, Inc. and applies to your use of the PayPal™ payment service and any related products and services available through www.paypal.com (collectively the "Service"). If you do not agree to be bound by the terms and conditions of this Agreement, please do not use or access our Services.
One of the links is the "Acceptable Use Policy", and one of the examples of prohibited services/sites is "information sites or directories that provide links to adult sites or escort services".
PayPal isn't telling you what you can and can't say on the internet. They're not shutting your site down. Private companies *do* have the right to dictate what their services can and can't be used for.
PayPal didn't close your account because of something so arbitrary as "they don't like the content of your web site". They closed it because you broke terms of usage that you had agreed to when you signed up for their services in the first place.
Posted by: MadBlue at June 14, 2004 03:49 AM
Never, NEVER keep a large balance with Paypal. Damn, 6 months sure seems like a long time to keep somebody's money! That's a helluva float! Whatever happened to 30 days, 60 days, even 90 days? Okay, so 6 months go by and then what - They make your money disappear for inactivity like that poor Aussi who was outback!?
Posted by: richard at June 14, 2004 04:14 AM
Hey, that recording was funny as hell. Well, obviously, congress has to legislate laws to protect the consumer against paypal/ebay. I never use paypal when I put something up for auction on ebay. Hey, just imagine, ebay just closed my account for a bullshit infraction. That means that they probably would have frozen my paypal account too.
How's that song go... Alicia, Alicia...la la la la
Posted by: richard at June 14, 2004 04:35 AM
I don't buy keeping the money for 6 fucking months to cover potential complaints. I mean, what if they had already sent you the money; how would they cover their complaints then?
Posted by: richard at June 14, 2004 04:43 AM
If PAYPAL is acting as any merchant account, they reserve the right to hold funds to handle claims. As a businessman I am not totally bothered by this, if you agree to it. But, I do believe the owner of the account should earn ALL the interest from those funds. Now, I'll go listen to the tape.
Posted by: X-FREEPER at June 14, 2004 06:14 AM
"PayPal still faces probes by the FTC and other states regarding how it does business, including procedures dealing with times when product is not delivered after payment is received, and PayPal's account-freezing policies."
Posted by: Babylonian at June 14, 2004 07:51 AM
Mark, I was reading one of your err... other sites...lol....hey, I don't mean to burst your bubble but...BUT... the reason those escorts were telling you that you are so good in bed is because...err.......u were PAYING them and they wanted a tip plus more business in the future.
Posted by: richard at June 14, 2004 07:57 AM
While less than ethical, what PayPal did was perfectly legal. You agreed to their license agreement in the beginning, obviously without reading the whole thing (but honestly, who does?).
As for tape recording you conversation with PayPal... you're gonna wind up in serious shit. That's recording a phone conversation without expressly telling the other party that the call is being recorded is a felony. If they want to, they can sue you to hell and back if you post that conversation on the internet (like you did). If I were you, I'd get rid of it--it's evidence against you.
Posted by: Mance at June 14, 2004 10:35 AM
No, I think that since Paypal's own recording said that the conversation would be recorded puts Mark in the clear.
Posted by: richard at June 14, 2004 11:17 AM
Unfortunately, that's not true. The recording said that it is possible that the call may be recorded, but PayPal is required by law to notify all customers of such a recording. IF you argue semantics with a judge, it's not going to help you.
Posted by: Mance at June 14, 2004 01:14 PM
Dude... you got your Paypal logo right there on your site. Gotta get rid of that...
Posted by: Dancho at June 14, 2004 02:55 PM
your blog on Reagan must have offended Paypal.
Posted by: celery at June 14, 2004 05:51 PM
I don't have a problem with Paypal canceling his account, because they're notorious for not dealing with immoral (to them) stuff. Marc's site does push the comfort level (though I find it informative and hilarious, but that's just me.) And, anyway, that's their right. They can do business with whoever they want. And I can do business with whoever I want. No one's forcing people to use Paypal. Plenty of alternatives out there.
But I do have a serious problem with their holding his funds. They should freeze his account, so that he can only move his funds out, and do nothing else. But tying up his cash is, in my opinion, severely unethical. Not sure what can be done about it, though, except spread the word and cost them business. Worked for me. I avoid Paypal whenever possible now.
So--anyway. I'm starting up an Internet business later this year, and need reviews on digital currency, since Paypal is out. Was out a long time ago. I've heard this happen to lots of people. Anybody use e-gold or its competitors? What did you think?
And, yeah, I was wondering about the legality of taping people without their consent/knowledge. Anybody know the relevant statute? What kind of trouble has Marc got himself into?
Posted by: curt at June 14, 2004 05:58 PM
ELECTRONIC COMMUNICATIONS PRIVACY ACT
UNITED STATES CODE
TITLE 18. CRIMES AND CRIMINAL PROCEDURE
CHAPTER 119--WIRE AND ELECTRONIC COMMUNICATIONS INTERCEPTION AND
INTERCEPTION OF ORAL COMMUNICATIONS
I guess there are states that have a two party notification law..but most states require single...and since you consented at the beginning of the conversation...when they asked...not that there seemed to be a choice offered to you of a press 1 if you consent, or press 2 if you do not...seems to me when they announce it they are just telling you they are and you have no choice.
The recording of the call was good...
Posted by: minerva at June 14, 2004 08:14 PM
Marc, that was the most enjoyable hour I just spent, reading your page and listening to that recording.
Its time big business gets back to basics and realizes just where they get these big bucks from..US. The people. Our little pocketbooks feed their big executive salaries and its time they felt the pinch, just as we have to.
I am cancelling my PayPal account today. Not that my little amount will hurt them, but spreading the word will. I realize that PayPal was bought by eBay, but new auction sites are opening up daily. Competition is good!!!
And to anyone who wants to go the 'moral route', go right ahead! I've been with Ctyme hosting for two years and nothing on Marc's site bothers me at all. AND, I'm a 60 year old lady, widowed and mother to a wonderful young man. If it doesn't bother me, it shouldn't bother anyone!!
You go, Marc!!
Posted by: Nightwalker at June 15, 2004 03:13 AM
Enough paypal already.
You know, after everything the White House has put this country of ours through, Cheney, despite it all, is in Florida perpetuating the lie that there was a link between Al Qaida and Sadam Hussein! This clown makes me want to puke!
Cheney Claims al-Qaida Linked to Saddam
Mon Jun 14, 8:00 PM ET Add White House - AP to My Yahoo!
By MIKE SCHNEIDER, Associated Press Writer
ORLANDO, Fla. - Vice President Dick Cheney (news - web sites) said Monday that Saddam Hussein (news - web sites) had "long-established ties" with al Qaida, an assertion that has been repeatedly challenged by some policy experts and lawmakers
The vice president offered no details backing up his claim of a link between Saddam and al Qaida.
"He was a patron of terrorism," Cheney said of Hussein during a speech before The James Madison Institute, a conservative think-tank based in Florida. "He had long established ties with al Qaida."
Posted by: richard at June 15, 2004 04:09 AM
Paypal closed my account because i received one payment from adult sponsor. I dont put paypal logo or watsoever on my websites and they closed it, leaving $2,800 in it. And they will not restore my account anymore. Paypal sucks! I will not recommend to my friends.
Posted by: Justin at June 15, 2004 05:45 AM
Unbelievable. PayPal doesn't like YOUR free speech, and gets all whiny when you expose their idiocy.
Ass soon as I drain my account, say buh-bye, Pay-former-"Pal"...
Posted by: gino at June 15, 2004 06:19 AM
Hold the account for 180 days for reversals? Yeah Right!
I got ripped off on eBay, payed with Paypal. Suppose to come in 3 days (express). After 7 days didn't show up. Seller's eBay account NARU'ed. Couldn't contact seller so I filed a Buyer complaint to reverse the transaction to get a refund of my money. After a week of Paypal "investigation", Paypal said they couldn't refund my money because there is NO FUNDS in the account! Why coundn't they reverse it?!?!
Posted by: Mr. A at June 15, 2004 11:35 AM
That's because the person closed it of their own volition, so there is no waiting period for reversals. On accounts that have been limited for some reason or another, they install this waiting period because they believe that people who have done something to warrant a closing might have trouble with reversals.
Posted by: Mance at June 15, 2004 03:12 PM
"This call may be recorded."
Not a complicated concept!
"May" implies a grant of permission; "might" implies the possibility of something occurring. (If I say you MAY use the phone, that is very different than saying you MIGHT use the phone. One conveys my approval for your engaging in that particular activity; the other conveys my assessment of your future activities.)
Marc's right, PayPal's wrong, and they (to be frank) are more fucked than Anna Nicole Smith if they think holding funds for 6 months is REASONABLE.
In the age of electronic banking, 180 days is an ETERNITY, and completely indefensible.
In my opinion.
;)Posted by Lisa at June 16, 2004 10:51 AM | TrackBack