PayPal Promises That It's Changing Its Evil Ways In Wrongly Freezing Legit Accounts... But Does So Almost Immediately Again

from the whoops dept

Last week, of course, there was a big story about PayPal freezing Mailpile's IndieGoGo funds, and then making absolutely insane requests for details about their project, including detailed financials and itemized budget of the project. After the story got some press, PayPal quickly changed course, released the freeze (and contributed $1,000 to the campaign themselves). A PR person from the company reached out to us, and I sent back a series of questions, and was told that answers would be forthcoming. Except, they weren't. Yesterday, I was told (1) that the company spokesman "is unavailable this week" and (2) that they "cannot provide any specifics on a customer account due to PayPal's privacy policy." That seemed odd, because nothing in the questions I asked involved violating any privacy issues. I merely pointed out that IndieGoGo has been around for quite some time, and this couldn't be the first time this came up, so I was hoping for a further explanation over why Mailpile set off the alarm bells.

Instead, the PR person pointed me to two links. The first was a blog post from PayPal's President, David Marcus, promising a more "customer first" approach that avoids those kinds of "false positives." The post -- which was written a few days before PayPal froze Mailpile's account -- notes that the company had gotten away from a customer-centric focus, and they were hearing too many media stories about terrible experiences people were having because of PayPal's screwed up process. There are two specific promises in that blog post which it appears that PayPal totally flopped on when it came to MailPile. First, it insists that they need to "take more risks," by which he means "catch more bad guys and way fewer good guys." In fact, he claims that they've already "tweaked" their system and "Hundreds of thousands of customers who may have experienced holds last year based on our policies are no longer impacted."

The other promise is that PayPal would "be human." It notes that the company has changed its policies and now "gives the benefit of the doubt to the seller." Once again, that didn't seem to work at all when it came to Mailpile. Meanwhile, while I apparently didn't qualify to speak to someone at PayPal, they did send someone out to talk to other sites like Ars Technica and Security Ledger, where they just kept pointing back to that Marcus blog post about how they're really working hard to do a better job.

Except, apparently, they've still got some kinks to work out.

Because here we are, just a few days later, and (oh look!) Paypal has done the same damn thing to yet another IndieGoGo campaign, telling the makers of Yatagarasu Attack on Cataclysm that they've frozen their account until the game is actually released. PayPal even told the company that they have no option to discuss this and only to contact the company "closer to the release date beginning next year." In this case, the whole situation is even more ridiculous, because the developers had "already provided PayPal with documents providing the bona fides of Nyu Media, the developer, and the campaign."

Of course, a few hours after the media started picking up on this, PayPal once again admitted the error and reversed course. However, relying on media attention as the check and balance in your broken algorithm doesn't seem like the most effective of systems.

I think PayPal might want to go back to tweaking those algorithms. Especially that "be human" one.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Vidiot (profile), Sep 10th, 2013 @ 10:42am

    Wrong decision, and wrong again

    "Of course, a few hours after the media started picking up on this, PayPal once again admitted the error and reversed course."

    Exactly how automated and hands-off can this shutdown process be, that whenever a second look is requested, human overseers immediately overrule the decision? Or are these decided by interns? Intern-bots?

     

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  2.  
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    Rich, Sep 10th, 2013 @ 10:44am

    Re: Wrong decision, and wrong again

    Intern-bots? I think they kicked my butt in a FPS once.

     

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  3.  
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    Rikuo (profile), Sep 10th, 2013 @ 10:46am

    First, wouldn't Yatagarasu need the money in their Paypal account to complete the game?
    Second...I read the letter and it talks something about making sure no-one's scamming Paypal. Thing is, these stories always end up with PP releasing the funds more or less immediately after a media shitstorm. If there were actual security or criminal concerns, then releasing the funds immediately would actually be a bad thing, since then you're not sure about the money. Since PP is releasing the money more or less immediately, then it's pretty obvious there are no such concerns.

     

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  4.  
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    SolkeshNaranek (profile), Sep 10th, 2013 @ 10:46am

    Good old Paypal

    They have all the arrogance of big business, all the empathy of Mitt Romney, and willingness to help that's on par with a disconnected 800 number.

     

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  5.  
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    That One Guy (profile), Sep 10th, 2013 @ 10:50am

    Re: Wrong decision, and wrong again

    Could be as simple as a few managers or higher ups forgetting that their whole job is to act as a middle-man for the money being transferred, and instead deciding to indulge their egos by trying to 'manage' the recipient's business as well. Then when people without such ego problems see what the idiot employee's actions are doing PR wise, they quickly jump into damage control mode and try and pass it off as 'just an accident'.

     

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  6.  
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    Anonymous Coward, Sep 10th, 2013 @ 10:51am

    I'm more concerned about their blocking wikileaks donations

    Wikileaks is a bigger concern then Paypal doing this stuff to Indiegogo projects. At least they get their accounts unlocked after a few hours of bad PR for PayPal, Wikileaks isn't so lucky years later, Paypal and others in that case are basically engaged in censorship.

     

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  7.  
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    Anonymous Coward, Sep 10th, 2013 @ 10:52am

    Come to think of it, its not a bad idea for automatically identifying gaps in your processes. Write a web scrape and monitor popular social media sites for your company name with words like "FUCK YOU", "WORST SERVICE", "SCREWED", "DISPUTE" etc. and automatically flag accounts which are gathering the most attention for a expedited review.

    Maybe I should patent it?

     

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  8.  
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    Ninja (profile), Sep 10th, 2013 @ 11:06am

    Don't do business with PayPal would be the way to go. The issue is: what are the non-American alternatives that are as versatile as PayPal is? I wonder if flattr could take them on this front?

     

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  9. This comment has been flagged by the community. Click here to show it
     
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    out_of_the_blue, Sep 10th, 2013 @ 11:15am

    Artificial leopards can change their spots, but are still predators.

    Those all-powerful algorithms! Used to explain without explaining.

    Then there's the characteristically revealing notion that all a profit-hungry mega-corporation needs do is pretend to "be human". Actually, corporations need heavy regulation to (get and) keep them worried about executives being tossed into jail. Back in the days when corporations were heavily regulated (and income taxes were high as 90%), the economy was great and social justice was increasing. It's no coincidence trends have reversed under the "laissez-faire" do-nothing libertarian/fascism since. The "efficiency" canard no longer flies as excuse for letting corporations run wild, because any corporation defines "efficiency" as maximizing its profits, not serving customers.

    Anyhoo, specifically here: we're left to yet again wonder WHY Paypal consistently does this. In my opinion, a large cause is deliberately exerting control to see how much they can get away with.

    And again, WHY isn't there another corporation competing with Paypal? Why just the ONE in a manifestly lucrative area? -- In my opinion, just that puts notions about "the Internet" being a free market in question.

     

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  10.  
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    Anonymous Coward, Sep 10th, 2013 @ 11:19am

    Free clue: Paypal is evil

    How many times must this lesson be taught? Really, I have no more sympathy left to expend on people who haven't, by September 2013, grasped this. If you use Payal, you DESERVE to be ripped off. You DESERVE to lose your money. You DESERVE to suffer.

    Why?

    Because that's what they do.

     

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  11.  
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    jackn, Sep 10th, 2013 @ 11:27am

    They should do like other processors and require a rolling reserve. This is not uncommon in the real world and it could be applied equitably and consistently. Also, it would minimize the risk that paypal is worried about.

    Of course, alot of people are going to thing this evil, but they will always think that - and those types won't be in business long.

     

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  12.  
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    Lord Binky, Sep 10th, 2013 @ 11:37am

    I find it odd, paypal says it puts in place these things to protect itself from the various liabilities that apply to them from the many countries they operate within. Maybe I'm mistaken but I believe those countries don't have secret laws that are applying to paypal, so why is it paypal can't publish the rules they require their customers to follow. They say it is so that the rules aren't circumvented to do nefarious deeds, but how is it they get clear rules for their behavior but they can't provide clear rules for others? Obviously they are just that bad and figuring out what to do, but that still is beyond the point in the process that paypal should release it's rules so people know what NOT to do, including those villainous sorts that the rules are there for.

     

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  13.  
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    PRMan, Sep 10th, 2013 @ 11:59am

    Wait, when was that?

    "the company had gotten away from a customer-centric focus"

    Was that 5 minutes after Elon Musk invented it?

     

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  14.  
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    PopeRatzo (profile), Sep 10th, 2013 @ 11:59am

    Don't use PayPal

    I run a non-profit and I would never use PayPal for anything important. Now that there are lots of alternatives, I am comfortable pointing our donors away from PayPal until they reform themselves.

    It's been over a year now. I won't use PayPal for anything important.

     

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  15.  
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    Anonymous Coward, Sep 10th, 2013 @ 12:04pm

    the problem with PayPal is that it thinks it is 'too big to fail', just like the banks. on top of that, they are not in the least bit interested in the customer and being in cahoots with ebay now has made things even worse. when ebay started, it was a good idea and people used it because they could get a pretty good deal. that changed and money became the most important thing, instead of being an important thing. PayPal joined the scene and then people had to pay two fees to two companies that were actually part of one whole. fees went up, service went down! and there it stayed. try getting any sense out of a PayPal rep. you'll be more than lucky!

     

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  16.  
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    Mongusa (profile), Sep 10th, 2013 @ 12:17pm

    Sounds like a business model

    PayPal is freezing those accounts so they can hold onto the money and profit off the interest. It's a business model.

     

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  17.  
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    PlagueSD (profile), Sep 10th, 2013 @ 12:25pm

    Well, if you take the quote, "To err is human..." then PayPal is well on their way to being "more human".

     

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  18.  
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    Do_I_care, Sep 10th, 2013 @ 12:26pm

    This is why nobody wants Paypal touching their bitcoin with a 10 foot pole.

     

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  19.  
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    Anonymous Coward, Sep 10th, 2013 @ 12:33pm

    Payfall should be the name of people who trust PayPal.

     

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  20.  
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    wec, Sep 10th, 2013 @ 12:58pm

    Did you ever think that invest that money like a bank and the longer they keep it the more money they earn?

     

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  21.  
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    Anonymous Coward, Sep 10th, 2013 @ 1:43pm

    Yeah right

    These sleaze bags don't give a fat furry rat's ass about anything except making money and trying to look non-sleazy.

     

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  22.  
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    Jeffry Houser, Sep 10th, 2013 @ 2:02pm

    Dreamfall Chapters..

    They've done it to Dreamfall Chapters by Red Thread games too. Dreamfall Chapters was another Million+ funded Kickstarter project. I think they're using Paypal to sell tickets for putting on a conference.

     

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  23.  
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    Rekrul, Sep 10th, 2013 @ 3:39pm

    PayPal is run by criminals. Someone should file criminal charges of theft against them.

     

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  24.  
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    Dan Tobias, Sep 10th, 2013 @ 6:12pm

    When did they ever have a "customer-centric focus"? The Paypal horror stories of bogusly frozen accounts and great difficulty getting any human being with authority to fix the problem to take notice go back over ten years.

     

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  25.  
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    BK, Sep 10th, 2013 @ 8:13pm

    I had never heard anything bad about paypal before this, but I'm glad I read this...crazy!!

     

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  26.  
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    Anonymous Coward, Sep 11th, 2013 @ 12:18am

    Definition of PayPal:

    A place where you deposit money, but have no idea when, or if, you'll ever be able to withdraw that money again.


    See:

    Blackhole
    Account Freeze
    Stress

     

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  27.  
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    Anonymous Coward, Sep 11th, 2013 @ 2:32am

    Re:

    That's not entirely fair. It's all a risk/reward tradeoff. The obvious risk is a media shitstorm and to shut that down they have little choice. This doesn't mean the original freeze reason wasn't legitimate.

     

    reply to this | link to this | view in thread ]

  28.  
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    BapstPR, Sep 11th, 2013 @ 8:56am

    Re:

    You don't get out much, do you?

    You wouldn't happen to have any rooms for rent under that rock would you? I wouldn't mind relocating myself.

     

    reply to this | link to this | view in thread ]

  29.  
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    Anonymous Coward, Sep 12th, 2013 @ 3:34pm

    Boycott paypal.

     

    reply to this | link to this | view in thread ]


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