PayPal Stops A Payment Just Because The Payee's Memo Included The Word 'Cuba'

from the read-the-news-lately? dept

Earlier this year, we discussed how a Treasury Department watchlist under the purview of the Office of Foreign Assets Control was mucking up all kinds of legitimate business because some partakers in said business had scary sounding (read: Islamic) names. Everyone began referring to this watchlist as a “terrorist watchlist”, as most of the stories concerned people, including American citizens, who either have names that are close to the names of terrorist suspects worldwide or because certain banks can’t tell when someone is writing the name of their dog in the memo section, mistaking that name for the name of an Islamic terror group, because why not?

But as it turns out, this hilariously frustrating example of bureaucratic ineptitude isn’t limited to global terrorism. It also apparently applies to decades old embargo rivalries, too. Mark Frauenfelder details a wonderful story about how his wife, a book editor, used PayPal to pay for a book review about Cuba, only to have the payment suspended and the notices from PayPal begin to fly.

Carla included a message to Ben in the Paypal transaction, which read, “Hi Ben – Your Castro’s Cuba review is up! Thanks so much! Carla.”

As soon as she pressed the send button, she got a pop-up message on the PayPal site that informed her that the payment was being held for review. This had never happened before and she had no idea why PayPal was holding up the transaction. Last night, an email arrived from PayPal. It turns out, the problem arose because Carla’s message included the forbidden word “Cuba” (and/or possibly “Castro”).

Mark embedded the entire email PayPal sent in his post, but you’re not going to find much useful within it. It basically just says that using words like “Cuba”, which is a country oft discussed in the United States, and “Castro”, which is a crazy common last name, triggered the company’s compliance controls to meet OFAC requirements. As such, PayPal is asking Carla to write an essay for the class explaining why she would dare write those words in a payment for a book review.

To ensure that activity and transactions comply with current regulations, PayPal is requesting that you provide the following information via email to compliancetransactions@paypal.com:

1. Purpose of payment 0B463347YT949791N attempted on August 16, 2016 in the amount of $30.00USD, including a complete and detailed explanation of the goods or services you intended to purchase. Please also explain the transaction message: “Hi Ben – Your Castro’s Cuba review is up! Thanks so much! Carla.”

Read that part of PayPal’s email. Now read it again. This is bureaucracy at its finest, with a $30 payment triggering all kinds of alarms because of a friendly message about a review. Two things stand out to me. First, exactly what kind of nefarious deeds are both carried out for thirty dollars and then signed off with a friendly memo in the payment section like this? Second, if PayPal is really concerned here, exactly what are they expecting to learn from the “complete and detailed explanation” they are requesting from Carla? Would a Cuban operative using their system do anything other than lie in this explanation? Is the OFAC so strict that it requires these checks, but so lax that the checks amount to the honor system?

Or is it possible that government oversight has reached a level at which it does no good other than to serve as a useful reminder of what a pain in the ass it is?

Filed Under: , , ,
Companies: paypal

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “PayPal Stops A Payment Just Because The Payee's Memo Included The Word 'Cuba'”

Subscribe: RSS Leave a comment
54 Comments
Anonymous Coward says:

This has actually caused a whole shitload of grief for my mother who owns a Scuba business with “Scuba” in the name. Paypal flags her payments CONSTANTLY to the point of detriment to the business. She’s had to close down her Paypal account as a result. She has been on and off the phone and email with them and they refuse to do anything about it.

art guerrilla (profile) says:

Re: Re:

a SCUBA bidness with SCUBA right there in the name for everybody -including tourists, for dog’s sake!!- to read it ???
what kind of terro-symp commie quisling IS yo mama ? ? ?

secondarily, if i am remembering correctly, these are some crunchy lefty activist types, so it could very well be they are being targeted by Big Bother; the trigger word bullshit may just be cover for explicitly targeting them…

Anonymous Coward says:

Government monitoring, not corp bureaucracy to blame

Or is it possible that government oversight has reached a level at which it does no good other than to serve as a useful reminder of what a pain in the ass it is?

This is clearly due to government overreach in every aspect of our life. What is PayPal to do, miss a “suspicious” payment and risk heavy fines or even jail time from the government?

Anonymous Coward says:

Re: Government monitoring, not corp bureaucracy to blame

Paypal is positioned such that they know, or reasonably should know, that this system is stupid and broken. They may be legally required to implement the current system for now, but it would be in their own interest to lobby for the regulations to suck less and for them to implement the restriction in the least obnoxious way legally permitted. There is no sign that they are doing either of those. Thus, they are guilty by association.

TKnarr (profile) says:

Unfortunately Paypal may not have any alternatives. They’re required by law to check against the government’s OFAC lists, and if the query returns a match they’re required to red-flag the transaction. OFAC controls the algorithm used to match names against the list, and you aren’t allowed to ignore a “match” result regardless of why you think it matched. OFAC’s lists are of course murky at best, typically out-of-date because of lag updating data, and prone to false matches, but the payment agency’s not permitted to take that into account and OFAC doesn’t care because they aren’t held responsible or liable for the errors. (Yes, I’ve had to write code to handle OFAC queries per regulations. No, it’s not as bad as you think. It’s worse.)

The only way that’ll change is if consumers start lighting fires under the politicians over the issue of rules that do more harm than good but are defended by ignoring the harm done.

Anonymous Coward says:

This is exactly what happened to me and I spent a MONTH trying to get Paypal to fix the issue. I had to constantly restate everything to multiple people who always claimed they were taking notes but then the next person would ask me the same questions. Then for no reason, Paypal restricted my business account. This happened without warned while I was trying to conduct a sale. They never would explain exactly why, just gave me generic possible reasons – none of which applied. Then they wanted all kinds of proof and information – some already provided and some none of their business (they don’t need to know my inventory levels). At the end of the day I closed the account. But not after having to give them some info so they would just lift the restriction so I could close the account.

David (profile) says:

Welcome to Minecraft

I used paypal for a little while. But stopped when they withheld $300k from Notch because nobody could make a game, publish on the internet, advertise it by word of mouth and game press then accept payment by paypal. How unbelievable was that? So they kept the money.

Notch finally got paid, but it looks like let’s make a little cash on the side scam by paypal – to me.

To make it even more bizarre remember that Minecraft was coded in Java.

Julian Perry says:

Actually PayPal can get really creepy.

I’ve been full-time VPN since Australia’s Orwellian Data Retention act was enacted last year.

I had the temerity to buy a Music CD on Paypal last year whilst using the VPN, triggering an account lock. I then received the following (edited for privacy/brevity) email from Paypal. (My name has been changed to “Nastyperson”)
It wasn’t a phish, I did verify it’s bon fides directly, and spoke with PP several times on the matter.
—-

Dear Mr. Nastyperson.

As part of our security measures, we regularly screen activity in the PayPal system. During a recent screening, we noticed an issue regarding your account.

To meet financial service industry regulations, we need more information to help confirm your identity. To provide this information, please go to the PayPal Resolution Centre.

To find the Resolution Centre, log in to your account and click the Resolution Centre subtab. Click Resolve under the Action column and follow the instructions.

• Please answer the following questions (which can also be answered fromthe Resolution Centre by logging in to your PayPal account):

1. Do you hold a position of public trust or political office?
2. Are you associated with or related to someone in the public trust or political office?

If you answer YES to either of the above listed questions, please provide:

1. Details as to who the individual is; and
2. This person’s political or public trust position; and
3. How you are related or affiliated with this person.
* One document to confirm name and date of birth for Mr Nastyperson.
—–

Yes – Paypal locked my account because I used a VPN to access it – and confirmed that this would likely happen again if I used a VPN.
and Yes, the would not unlock my account unless I revealed any association with anybody I knew in public office.

It came as no surprise that the operator I spoke with did not even know what the term “Orwellian” even meant.

terrifying.

Anonymous Coward says:

When are people going to learn to not put a damn thing in the memo area when sending money or making any kind of transaction through Paypal, send the person an email or something later but for the love of god do not do it on Paypal. They are notorious for doing incredibly stupid and ridiculous things like this which only creates a huge hassle for the people sending and receiving the money.

David says:

What's up with Cuba anyway?

I thought the U.S. were unfreezing relations. Now I know this won’t help the North Korean “relations” or anything, but why are they still meddling with Cuba?

I mean, they are even trying to overtake Cuba on its core embargo trigger, civil asset forfeiture (granted, Cuba robbed the business rather than the middle class, but the principal offense is pretty much the same).

John85851 (profile) says:

Just don't put anything in the comments

I know PayPal takes it’s instructions from OFAC, but come on. Do they really honestly think the following scenario will happen:
Note for payment: Thanks for your review of Castro’s Cuba.
PayPal: Your comment includes flagged words. Although you have no history of sending money to Cuba in the past 10 years of doing business with PayPal, please write an essay about why this transaction should be allowed.
Sender: You got me. I’m actually a Cuban sympathizer looking to overthrow the Castro regime and return Cuba to a democracy. And I would have gotten away with it if it weren’t for that meddling comment!

So, like other posters are saying: let this be a lesson to everyone to NEVER including a comment when sending a payment- simply send the recipient a separate e-mail saying the payment was sent. Or if you must include a comment, make it generic like “Payment for services”.

Seb says:

I can´t even delete my account in protest.

As part of our security measures, we regularly screen activity in the PayPal system. During a recent screening, we noticed an issue regarding a recent transaction.

In connection with the issue, PayPal’s Compliance Department has reviewed your account and identified activity that we have a couple questions about.

To resolve the compliance inquiry in a timely fashion, PayPal is requesting that you provide the following information via email to compliancetransactions@paypal.com:

On November 05, 2018, you sent a payment (2T711731JD8974915) for the amount of $55 for, “Cuba Debt.” We’re trying to understand

  – Please provide a sales receipt or other documentation pertaining to this transaction.

Please go to the Resolution Center to provide this information.  To access the Resolution Center, log in to your account and click “Help” at the top of any page then, click “Resolution Center.”

In order to prevent risk for us and our customers, we have limited what you can do with your account until the issue is resolved. Please note that we reserve our right to terminate our account relationship and close your PayPal account if we are unable to resolve this issue.

We thank you for your prompt attention to this matter. We apologize for any inconvenience.

Sincerely,

PayPal Compliance Department

Add Your Comment

Your email address will not be published.

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...