PayPal Freezes Diaspora's Account

from the sad dept

PayPal has an unfortunate reputation for arbitrarily shutting down accounts for various organizations, without much rhyme or reason. The latest is that it has frozen the donation account for Diaspora, the heavily hyped up effort to create an open source, distributed Facebook alternative. Diaspora kicked off with a ton of money via Kickstarter, but (as we worried) the project has proven to be more difficult to get off the ground than some expected. It recently sought more donations... only to discover that PayPal froze the account. Whether or not you agree with the project, it seems pretty ridiculous that PayPal just freezes such accounts. We hear stories of this way too frequently for it to be a mere mistake. The world desperately needs more payment processing options, because the ones out there today are woefully limited. Thankfully, there is at least some movement in that arena. We've been hearing a lot about Stripe -- a Silicon Valley payments startup, with funding from some original Paypal folks -- and, it's nice to see that they quickly jumped in to help Diaspora. Still, the more payment solutions out there, the better off we'll be.

Filed Under: diaspora, frozen accounts, payment processors, paypal
Companies: diaspora, paypal, stripe


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  1. icon
    B's Opinion Only (profile), 19 Oct 2011 @ 4:14pm

    People seem to forget that Paypal isn't a bank. It is a private business that has no federal oversight, no deposit insurance, no requirement to adhere to any sort of banking laws, and NO way to speak to a human when they screw you over.

    Of course Paypal can arbitrarily freeze your funds indefinitely without recourse - it's in the contract you agreed to when you signed up. You DID read it, right?

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