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Comment by rationalbeats | Hacker News Reader

All those things are great, but I stopped using them when I realized they can freeze my money, or remove money from a linked checking account for whatever reason they decide and I have almost no recourse except to hire a very expensive lawyer or hope I can start a viral campaign about my money being stolen by Pay Pal.

And since they are not a "bank" they are not regulated by the same laws as other banks, and credit cards.

Bottom line, they lost my trust, and nothing that you have listed regains that trust for me.

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That isn't a PayPal thing, it bubbles up from the banks underwriting every PayPal account (Wells Fargo and Chase). It's standard practice in the regulated banking industry, not a sign of a lack of regulation.

My real merchant account, at a company many startups probably use to accept their payments, was flagged as high risk at one point when a string of chargebacks came in from stolen cards someone used over the course of a month. All my processing was funneled into a reserve account and those funds, thousands of dollars, were held for exactly 180 days (6 months), as that's the window in which chargebacks can still occur from previously processed payments.

If you hold this opinion against PayPal, then you should hold it against the entire credit card processing industry. It stems from the root: Visa and MasterCard's Operating Regulations.

The fact that you knew they were held (and would be held) for exactly 180 days puts them above PayPal.

PayPal holds funds from a suspended account for exactly 180 days. It's the same policy because it comes from the same source.

> We may close, suspend, or limit your access to your Account or the PayPal Services, and/or limit access to your funds for up to 180 Days if you violate this Agreement, the PayPal Acceptable Use Policy, or any other agreement you enter into with PayPal

-- PayPal User Agreement

They can remove funds from your account for any reason and in any quantity. Not freeze. Remove. Your only recourse is to pursue them in court.

Of course, they put a wonderful provision in that agreement you quoted. You can only pursue them in court in the state of California and Nebraska. Ask me how I know.

Is that how a bank would act? I don't think so.

Is that how a bank would act? Yes, that's exactly how they act. When you get a chargeback, they remove the funds (and a chargeback fee) directly from your bank account. That's the only place they could come from, since you don't hold a balance like you do at PayPal. Settled payments get deposited into the account, refunds and chargebacks and fees get withdrawn, once a day 5 days a week.

As for restricting venue, yes, that's also something banks would do. It's a standard term in most contracts, let alone most merchant service agreements. Here's the agreement for First Data, one of the world's largest merchant account providers. It's also the same agreement you sign for Intuit Merchant Services. You've probably heard of Intuit; QuickBooks, Quicken, TurboTax, Mint, etc. It restricts venue to Ontario.

http://www.firstdata.com/downloads/international/fdims-1202....

PayPal does not have the ability or authority to steal people's money "for any reason and in any quantity". That's ridiculous. You're spreading lies while admitting not to know how it works anywhere else. We don't do that here on HN.

> Is that how a bank would act? Yes, that's exactly how they act. When you get a chargeback

I wasn't talking about chargebacks.

> PayPal does not have the ability or authority to steal people's money

They have the ability and they couldn't care less about having the authority to do so. Largely, because the majority of their customers can't pursue them in court. They also limit any arbitration to 10K. If you read the user agreement, it's all right there, in black and white.

> You're spreading lies while admitting not to know how it works anywhere else.

I sincerely hope you keep a balance with them. So that you can find out from experience, as I did.

I do keep a balance with them. I have for the past 12 years.

http://i.imgur.com/FWgxP.png

You've obviously had a bad experience with them. That sucks, really. And I won't tell you not to hold a grudge against them for whatever that was. It helps no one to use that as an excuse to claim they haven't innovated as a company in 10 years, that they have unlimited rights to steal, that their contract isn't essentially identical to other merchant services agreements, and then to wish ill on me personally for pointing that out.

Like I said, you'll find out. I heard the same stories and dismissed them. I kept a balance with them in the 6 figures because of the relatively high interest rate I was getting in the money market account (when they had it). Then they froze my account. No biggie, right? I'll just wait 6 months. Still getting the high interest rate. Before they unfroze the account, they took a chunk out of it. Only about 10%, but it was still quite a bit of cash. No explanations, just email stating the obvious. My recourse? Nothing. They refuse to speak to you, only by letter. Letter gets a response 6 months after the fact and it's just a form letter pretty much acknowledging receipt. Like I said, you'll find out. If you do business with a local bank, at least you can take them to court if there's a problem. With PayPal? Good luck.

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