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posted by janrinok on Sunday January 16, @03:18PM   Printer-friendly [Skip to comment(s)]
from the customer-service dept.

PayPal stole users’ money after freezing, seizing funds, lawsuit alleges:

PayPal is facing a class-action lawsuit alleging that the digital payments company violated racketeering laws by freezing customer funds without offering an explanation.

When users contacted PayPal about the frozen funds, they were told they had violated the company's "acceptable use policy" but weren't told how that violation had occurred, the lawsuit says. What's more, it alleges that in at least one instance, PayPal said that a user would "have to get a subpoena" to find out why.

"PayPal violates its own Agreement by failing to provide adequate notice to users whose accounts have had holds placed on them," the lawsuit says. When PayPal does let users know it placed a hold on their funds, "it does not inform such users why such funds are being held, how they can obtain a release of the hold, and/or how they can avoid future holds being placed on their accounts."

It also says that PayPal takes the money for itself after a 180-day hold period. "PayPal's user agreement and acceptable use policy cannot be used as a 'license to steal,'" the complaint says.

[Ed. Note: one of the payment options to subscribe to SoylentNews is through PayPal. We practice safe operations and periodically withdraw funds from our PayPal account and deposit them to our bank account. We use the same technique with Stripe. To my knowledge, we have not had any problems with any of our payment processors.--martyb]


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  • (Score: 3, Insightful) by EJ on Sunday January 16, @03:22PM (7 children)

    by EJ (2452) on Sunday January 16, @03:22PM (#1213143)

    I hope you mean "the INSTANT they are deposited to your PayPal account."

    • (Score: 0) by Anonymous Coward on Sunday January 16, @06:09PM

      by Anonymous Coward on Sunday January 16, @06:09PM (#1213178)

      oh yeah, every time someone pays $10 they stop eating dinner and run over to the computer.

    • (Score: 2) by krishnoid on Sunday January 16, @07:35PM

      by krishnoid (1156) on Sunday January 16, @07:35PM (#1213215)

      Absolutely! As long as you pay via PayPal to subscribe, and juuuust before they periodically withdraw their funds from PayPal and deposit them to the bank account.

    • (Score: 2, Informative) by Anonymous Coward on Monday January 17, @12:56AM (4 children)

      by Anonymous Coward on Monday January 17, @12:56AM (#1213286)

      ...and by "deposit them to our bank account" I hope you mean "transfer the funds from the account with ScamPal attached to an account to which ScamPal has no access." ScamPal can and has sucked people's checking/savings accounts dry while stealing their money.

      ScamPal LOVES to get access to accounts with direct deposits or other automated payments going to them. When they freeze your ScamPal account they also freeze your bank account so that no money can be withdrawn until they lift the freeze. (This freeze only affects withdrawals, allowing deposits to continue into the account.) After setting the freeze they'll periodically check the account balance, and if they find more money available they'll lift the freeze, suck out the money, then reinstate the freeze.

      Attaching ScamPal to your one and only checking account is like raw-dogging a crazy meth addict.

      • (Score: 0) by Anonymous Coward on Monday January 17, @02:38AM

        by Anonymous Coward on Monday January 17, @02:38AM (#1213309)

        Attaching ScamPal to your one and only checking account is like raw-dogging a crazy meth addict.

        I knew there had to be reason I liked PayPal so much!

      • (Score: 4, Insightful) by mhajicek on Monday January 17, @04:09AM (2 children)

        by mhajicek (51) on Monday January 17, @04:09AM (#1213323)

        Don't link an account, link a credit card.

        --
        The spacelike surfaces of time foliations can have a cusp at the surface of discontinuity. - P. Hajicek
        • (Score: 2) by kazzie on Monday January 17, @06:03AM

          by kazzie (5309) Subscriber Badge on Monday January 17, @06:03AM (#1213336)

          It used to be (decades ago) that you had to link a bank account if you'd received a payment and wanted to withdraw funds. At least that's how I ended up linking one. It's no longer my main account, though.

        • (Score: 0) by Anonymous Coward on Monday January 17, @10:12AM

          by Anonymous Coward on Monday January 17, @10:12AM (#1213366)

          Don't link an account, link a credit card.

          In Germany, and other nations, you must link a bank account even if not used as main payment method. This is for regulatory purposes.

  • (Score: 5, Informative) by tekk on Sunday January 16, @04:35PM (4 children)

    by tekk (5704) Subscriber Badge on Sunday January 16, @04:35PM (#1213154)

    Everyone's known for years that you always need to *NEVER* hold a balance in your paypal account because they pull this stunt all the time. Maybe this'll change that.

    • (Score: 2) by Beryllium Sphere (r) on Monday January 17, @04:07AM (3 children)

      by Beryllium Sphere (r) (5062) on Monday January 17, @04:07AM (#1213322)

      The only ways I could find to get money out of my Paypal account were to link it to my checking account or to give them my SSN for a Paypal Cash account.

      In the early days there were horror stories about Paypal grabbing money back from people's checking accounts. If they're still doing that, well, my checking account is at a member-owned credit union unlikely to take their side, but it's still a risk.

      • (Score: 2) by tekk on Monday January 17, @05:24AM (2 children)

        by tekk (5704) Subscriber Badge on Monday January 17, @05:24AM (#1213331)

        It may just be because I *do* have a bank account linked but at least for me it gives me the option of them mailing my a paper check with my balance. it might only be available if you have a threshhold amount in there, though.

        Honestly it was probably a bad idea to allow paypal to hold a balance regardless. That's what put us in this situation in the first place, though I can imagine it would've complicated things in the old days where they'd have to work something out with credit card companies for letting you get *paid* via your credit card.

        • (Score: 2) by Beryllium Sphere (r) on Monday January 17, @04:49PM (1 child)

          by Beryllium Sphere (r) (5062) on Monday January 17, @04:49PM (#1213411)

          I like that last idea. Suppose they paid your balance as a credit on your credit card. Then if they tried to steal it back, you'd have all the credit card dispute protections on your side.

          I was just sure that I had read about them using fine print that allows them to reverse transactions and making unauthorized withdrawals from people's bank accounts. Mistaken?

          • (Score: 2) by tekk on Monday January 17, @05:16PM

            by tekk (5704) Subscriber Badge on Monday January 17, @05:16PM (#1213418)

            I mean, it wouldn't surprise me. They certainly have the ability *technically* speaking: all banks care about is that they had still-valid debit card/routing info once and they're authorized to charge for all time.

  • (Score: 5, Insightful) by Barenflimski on Sunday January 16, @05:14PM (5 children)

    by Barenflimski (6836) on Sunday January 16, @05:14PM (#1213163)

    I've had multiple people tell me these same stories over the years. I've heard of a few cases where PayPal froze accounts and gave little or no reason as to why.

    In all of the cases I've heard, the money was less than $1,000. But for most folks, that is a sizeable chunk of change.

    What I don't like about this is the corporatization of our laws. I suspect that what is going on is that PayPal's financial folks say something like, "We made our policies based on laws so that we don't end up treading into an area where we would get investigated by the governments of the world for being part of organized crime and/or money laundering, and so we seize funds in any case that might break our Terms of Service."

    The problem is that they have foregone any sort of legal process. They've internalized the decision with little recourse. Their policies make asset forfeiture a built in process in the United States, and by doing this they are creating what the courts would call "precedent."

    I fundamentally disagree with the idea that these corporate companies should have any power over our personal lives, yet we live in a world where they control everything that people do. Got a job? Don't act "strange" in public, sign the NDA, get a drug test, and we still may fire you because we just don't like the way you look or smell. These guys sterilize life on earth.

    PayPal and others, needs to be sure to use the tools available to legally freeze funds that have been prescribed by the people, if they are going to act as government agents. If the tools are not available to quickly (2 or 3 days) handle determining if they can legally freeze funds, then we need to rescind those laws immediately, and make it illegal for PayPal to determine whether or not a crime has taken place.

    It is just too dangerous and harmful to the human soul to have government overlords with one set of laws to rule the people, and then corporations with an even more conservative set of rules and laws. I'd argue up and down that this is one of the many pillars that have destroyed what is left of freedom and community in the United States.

    Companies like PayPal need to stay in their lane.

    • (Score: 3, Informative) by pkrasimirov on Sunday January 16, @11:05PM

      by pkrasimirov (3358) Subscriber Badge on Sunday January 16, @11:05PM (#1213273)

      Got a job? Don't act "strange" in public, sign the NDA, get a drug test, and we still may fire you because we just don't like the way you look or smell. These guys sterilize life on earth in USA.

      The Earth is bigger.

    • (Score: 2) by PiMuNu on Monday January 17, @11:27AM (3 children)

      by PiMuNu (3823) Subscriber Badge on Monday January 17, @11:27AM (#1213370)

      For me it happened just because I didn't use paypal often and didn't store much money. My account got deleted, my money "vanished".

      Paypal = scummy crooks. Hope they get criminal charges.

      • (Score: 2) by RS3 on Monday January 17, @04:59PM (2 children)

        by RS3 (6367) on Monday January 17, @04:59PM (#1213412)

        If you have documentation, please contact your local DA's office (if you're in USA- not sure about other countries). You may have a criminal case to press. A few states in the USA allow ordinary citizens to directly file criminal charges, called "private criminal complaint", so you might not even need DA.

        That said, INAL, but if you're not in CA (or NE or GA or FL or AK or wherever PayPal is based), it might not work across state lines, and federal agencies (FBI, SEC, etc.) might not be willing to help, but please try- it's the only way to stop these criminals.

        I guess I'm very lucky, but didn't know it. I've used PayPal to buy things, but haven't sold or otherwise received money through them, except, one time someone I did work for decided to pay me through PayPal. PayPal's process for receiving the money into my bank account was onerous, even though money goes from my bank, through a debit card, to PayPal no problemo. They said it was due to federal banking regulations. But, when I asked on the phone, they sent me a paper check for the full amount. Whew!

        So far, no problems with PayPal.

        • (Score: 3, Informative) by PiMuNu on Monday January 17, @05:48PM (1 child)

          by PiMuNu (3823) Subscriber Badge on Monday January 17, @05:48PM (#1213429)

          It was only a few $ (well GBP). I have other things to do with my time, I'm afraid, so I just write them off and hope everyone else does too.

          Nb: skype did the same thing a few years back.

          • (Score: 2) by RS3 on Monday January 17, @07:19PM

            by RS3 (6367) on Monday January 17, @07:19PM (#1213448)

            Very wise. But share your experiences, as you have here. There's great power in PR, perception, reputation, etc. Thanks.

  • (Score: 4, Informative) by Rosco P. Coltrane on Sunday January 16, @05:19PM (7 children)

    by Rosco P. Coltrane (4757) on Sunday January 16, @05:19PM (#1213164)

    Paypal froze my account in 2001 - and I was far from the only one to whom it happened. I demanded an explanation, appealed, threatened them, then finally gave up because I only had $300 on my account, and sucking up the loss was cheaper than paying an attorney. Besides, they weren't FDIC-insured, so I had essentially zero chances of winning anyway.

    They never gave me an explanation, and - crucially - never gave me my money back.

    That was 21 years ago. The $300 lesson I learned back then was: it'll be a cold day in hell before I open a Paypal account again.

    • (Score: -1, Flamebait) by Anonymous Coward on Sunday January 16, @06:17PM (1 child)

      by Anonymous Coward on Sunday January 16, @06:17PM (#1213182)

      Now Paypal is hunting "White supremacists" (anyone opposed to the admitted White Genocide well under way) for the Jews. Truly they are scum among scum.

      https://money.cnn.com/2017/08/16/technology/paypal-alt-right-accounts/index.html [cnn.com]

      https://odysee.com/@ETKE21:8/pbry68WhiteGenocideIsReal-InTheirOwnWords:0 [odysee.com]

      • (Score: 1, Informative) by Anonymous Coward on Sunday January 16, @07:33PM

        by Anonymous Coward on Sunday January 16, @07:33PM (#1213212)

        Angry incel is dumb, news @ 11

    • (Score: 2) by krishnoid on Sunday January 16, @07:41PM (2 children)

      by krishnoid (1156) on Sunday January 16, @07:41PM (#1213217)

      Which makes me wonder -- how does PayPal handle it if someone *does* hire an attorney? You'd figure an attorney could semi-automate this process by saying "Whatever information you sent to PayPal, send to us as well, and we'll litigate it for you if they seized more than $1000, flat fee of $150." Unless PayPal forces arbitration [citizen.org], which, yeah.

      • (Score: 4, Insightful) by Runaway1956 on Sunday January 16, @07:53PM (1 child)

        by Runaway1956 (2926) Subscriber Badge on Sunday January 16, @07:53PM (#1213225) Homepage Journal

        You'd figure an attorney could semi-automate this process by saying "Whatever information you sent to PayPal, send to us as well, and we'll litigate it for you if they seized more than $1000, flat fee of $150."

        You sound as if you've never met a real lawyer. If a lawyer deigns to listen to you talk for ten minutes, he's going to bill you $150 when he tells you that he won't take your case.

        --
        Our first six presidents were educated men. Then, along came a Democrat.
        • (Score: 2) by krishnoid on Sunday January 16, @08:07PM

          by krishnoid (1156) on Sunday January 16, @08:07PM (#1213231)

          I was thinking they'd reassign it to an intern/paralegal/legal secretary. So yeah, maybe not litigate it, more "send up to two angry letters back and forth on your behalf."

    • (Score: 0) by Anonymous Coward on Sunday January 16, @08:30PM

      by Anonymous Coward on Sunday January 16, @08:30PM (#1213238)

      There's a SpaxeX Internet Satilite in your name.

      Thank you

    • (Score: 0) by Anonymous Coward on Sunday January 16, @09:01PM

      by Anonymous Coward on Sunday January 16, @09:01PM (#1213249)

      Do you have any ideas about why your account was frozen? In particular, did you ever get an email like the one I pasted-in below?

      I had an incoming PayPal payment (USD $400) frozen once, but it was resolved in a few days. It was from Europe and the abbreviation of their organization name was one letter different from a well known international terrorist group. Here [with some bits "de-identified"] is the initial email I received from PayPal:

      Dear [AC],

      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:

                1. Purpose of payment [transaction #] attempted on May 11, 2017 in the amount of $400, including a complete and detailed explanation of the goods or services you intended to sell. Please also explain the transaction message: [XXXXX, Xxxxxxxxxx]

      Please go to our Resolution Center to provide this information. To find the Resolution Center, log in to your account and click the Resolution Center subtab. Click Resolve under the Action column and follow the instructions.

      If we don't hear from you by May 25, 2017, we will limit what you can do with your account until the issue is resolved.

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

      Sincerely,
      [......]
      PayPal Compliance Department

      I sent in a written explanation, including the expansion of the suspicious-looking acronym, and also the URL for that same org. Everything was back to normal in a couple of days. No more problems, balance never frozen, just the one transaction.

      I've mostly stopped using PayPal this year, for a different reason. It's the new Federal rule that payment processors like PayPal have to file IRS Form 1099-MISC for account holders that receive more than $600 in a year. I was receiving more than that every year, but it went straight to an informal non-profit. I ran these payments through my PayPal account for convenience. Last thing I need to be getting is a 1099-MISC for income that isn't mine (IRS will demand I pay taxes on the amount)! At some point that non-profit org may get their own PayPal account.

  • (Score: 4, Insightful) by FuzzyTheBear on Sunday January 16, @06:11PM (2 children)

    by FuzzyTheBear (974) on Sunday January 16, @06:11PM (#1213180)

    just don't use it. it's always been a scam , forever will be a scam . keep away from it. i never use it.

    • (Score: 2, Insightful) by didymus on Sunday January 16, @07:43PM

      by didymus (16209) on Sunday January 16, @07:43PM (#1213218)

      Not for nothing they are called The Paypal Mafia! [wikipedia.org]

      "Nice little balance in your account. Be a shame if something were to happen to it!"

    • (Score: 2, Informative) by Anonymous Coward on Monday January 17, @12:17AM

      by Anonymous Coward on Monday January 17, @12:17AM (#1213281)

      Even as a buyer, I get an uneasy queasy feeling around the PayPal logo.

      I feel as I am just another soul wandering into some businesses money trap and I face either considering the transaction a sunk cost or I will have to chase good money after bad with legal fees.

      I feel the best thing to do upon seeing the logo is to quickly back outta there. I consider it a gang logo and I am food .

  • (Score: 4, Interesting) by dltaylor on Sunday January 16, @08:17PM (1 child)

    by dltaylor (4693) on Sunday January 16, @08:17PM (#1213235)

    I use PayPal as an alternative to credit cards for recurring payments, including my Soylent News subscription. I never have to worry about CC expiration. Sometimes I also use them for 1-time buys because there are too many (well, 1 is too many) retailers who do not secure the CC data. Their access is limited to a separate account at my financial institution, into which I add funds as needed. In the event of a PayPal "accident" or mistake, my exposure is strictly limited.

    What other business, not credit card issuers, will allow me long-term payment processing for Soylent News and Netflix, as well as a single point of access for EBTs so that my EBT data is not scattered all over the planet? My only debit card is also tied to the same account, but it does have an expiration/reissue date, so I would rather not use it.

    I have used Zelle, for example (out of the same "PayPal" bank account), so I would be willing to work with them, or someone like them, if I can automate the process as easily as PayPal.

    • (Score: 2) by RS3 on Monday January 17, @05:16PM

      by RS3 (6367) on Monday January 17, @05:16PM (#1213416)

      Very similar story here. My bank offers a Visa debit card attachment to an account, so I opened an account just for that purpose: bank account -> Visa debit -> PayPal -> whoever. I only feed it when I need to buy something. I don't think they require a minimum balance, and they have always auto-renewed the Visa card, although I've had some hassles with getting it reauthorized (or authenticated or whatever you have to do to make the new card work).

      I haven't really looked into other payment systems like Venmo, but they seem to be rising up fast, competing with PayPal. Authorize.net, Stripe, WePay, Square, Braintree, 2Checkout, GoCartPay, Zelle, ...

  • (Score: 2) by krishnoid on Sunday January 16, @08:35PM

    by krishnoid (1156) on Sunday January 16, @08:35PM (#1213239)

    Jeez, who do they think they are? "Hey, use us for your payment needs! We'll help you out!" Sure, that sounds like a pleasant interaction [youtu.be] based on mutual trust.

  • (Score: 5, Insightful) by Thexalon on Sunday January 16, @08:49PM

    by Thexalon (636) on Sunday January 16, @08:49PM (#1213245)

    PayPal likes to kind of pretend it's a bank, but it isn't regulated like a bank, and does a bunch of stuff that would be completely 100% illegal for a bank to do.

    So yeah, don't leave money in that account, ever.

    --
    Alcohol makes the world go round ... and round and round.
  • (Score: 2) by looorg on Sunday January 16, @09:18PM (1 child)

    by looorg (578) on Sunday January 16, @09:18PM (#1213252)

    Probably part of the usual AML (anti-money laundering) issues again. They have to "know" their customers or they can or are basically forced to close their access and account and by that seizing all the things associated with said account.
    So if you sell some dodgy stuff via ebay (seem just selling things below what ebay considers to be "retail price") or just get paid from the wrong people or accounts yours could be closed to. Guilt by association or receiving money from the wrong sources.
    That said what kind of idiot keeps $400k in their paypal account? She should have known better.

    Your bank could in theory do the exact same thing as Paypal here. If the bank thinks they don't know you as a person or customer they can freeze your account and close it.

    • (Score: 0) by Anonymous Coward on Wednesday January 19, @12:18AM

      by Anonymous Coward on Wednesday January 19, @12:18AM (#1213723)

      No, the bank can't do that. What they do is report you to the FBI who then order an account freeze and asset forfeiture. The bank doesn't get to keep your money, it goes to the government.

  • (Score: 0) by Anonymous Coward on Monday January 17, @05:47AM

    by Anonymous Coward on Monday January 17, @05:47AM (#1213334)

    Remember who started them.

  • (Score: 0) by Anonymous Coward on Monday January 17, @04:16PM (2 children)

    by Anonymous Coward on Monday January 17, @04:16PM (#1213401)

    One of the issues is that, when you are entitled to a refund, everyone points fingers now about who owes you the refund and no one wants to give you the refund you are entitled to.

    Woman Can't Get $9,875 Taxi Fare Refunded
    Steve Lehto
    https://www.youtube.com/watch?v=qKu1ttrn4Zo [youtube.com]

    (In this example Paypal was also used).

    Is Paypal/the payment processing company responsible for giving you your refund, is it the taxi cab company, is it the bank - they all just keep pointing fingers at each other.

    • (Score: 0) by Anonymous Coward on Monday January 17, @04:27PM

      by Anonymous Coward on Monday January 17, @04:27PM (#1213407)

      (and, for those that don't click the link, basically, apparently someone moved the decimal point over thrice with respect to what this lady owed for a taxi cab fare. The bill should have been, after taxes, like $9.87 but instead was $9875 and this lady can't seem to get a refund).

    • (Score: 0) by Anonymous Coward on Tuesday January 18, @05:52PM

      by Anonymous Coward on Tuesday January 18, @05:52PM (#1213617)

      It's also interesting how Taxi cab drivers are under a 1099 but the taxi cab lobby is lobbying for Uber to be under a W2.

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