PayPal Turns Bradley Manning Defense Account Back On; Claims It Was A Paperwork Problem

from the that's-not-what-they-said-originally dept

PayPal's decision to cut off the account of an organization that was collecting funds to help with Bradley Manning's defense got a lot of attention -- so much that PayPal came out with a blog post explaining that it was just a paperwork problem on the part of the organization, Courage to Resist. Because of this, they've reinstated the account:
We recently placed a temporary limitation of the Courage to Resist organizationís PayPal account as they had not complied to our stated policy requiring non profits to associate a bank account with their PayPal account (for the vast majority of non-profits, this is not an issue).

In a press release issued today, the Courage to Resist organization claimed that their resistance to follow our policy is because PayPal sought to withdraw funds from their checking account.  To be clear: PayPal cannot take such action without the authorization of an account holder, nor does it ever take such unauthorized actions.

Upon review, and as part of our normal business procedures, we have decided to lift the temporary restriction placed on their account because we have sufficient information to meet our statutory 'Know Your Customer' obligations. The Courage to Resist PayPal account is now fully operational.
While it's good that they've done this, not all of this makes sense. Courage to Resist claims that they repeatedly asked for an explanation and for the specific policy that they had violated. If it was just a matter of associating an account with a bank account, why didn't PayPal just tell them that in the first place?

Filed Under: bradley manning, paypal
Companies: paypal

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  1. icon
    David Liu (profile), 25 Feb 2011 @ 2:59pm

    Re: Response to: David Liu on Feb 25th, 2011 @ 2:04pm

    I'm willing to bet that an increased amount of donations due to the whole situation triggered some flags and required extra confirmation.

    PayPal didn't just block them out of nowhere for no reason. From what I can tell from statements on both sides, PayPal requested that CtR (Courage to Resist) link a bank account to the PayPal account. I assume this helps prevent fraud and/or helps PayPal get more information on the company, which they were obligated to do (look up "Know Your Customer", a government regulation). It's quite possible that the amount of donations through the account before were never enough to require PayPal to do this due dilligence (since obviously PayPal doesn't do extra checks on EVERY account they have).

    The problem that caused the whole snafu was that CtR refused to give the bank information, which then resulted in the shutting down of the account. On one hand, CtR definitely had reason to be suspicious of PayPal, since PayPal refused to handle donations to WikiLeaks, but PayPal also had its hands tied by government regulations in this account (because of Know Your Customer obligations).

    So Paypal had no other choice but to shut it down. Of course, with a public outcry supporting CtR as a legitimate business for helping Bradley Manning (rather than some fraudulent business claiming as such), that probably provided enough to fulfill the KYC obligations, allowing PayPal to reinstate the account.

    That's my take on the whole matter. Not some malicious intent, but rather stupidity and silliness.

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