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PayPal Freezes MailPile's Account 443

Posted by timothy
from the saving-them-from-the-root-of-all-evil dept.
rysiek writes "Remember MailPile, the privacy-focused, community-funded FOSS webmail project with built-in GPG support? The good news is, the funding campaign is a success, with $135k raised (the goal was $100k). The bad news is: PayPal froze MailPile's account, along with $45k that was on it, and will not un-freeze it until MailPile team provides 'an itemized budget and your development goal dates for your project.' One of the team members also noted: 'Communications with PayPal have implied that they would use any excuse available to them to delay delivering as much of our cash as possible for as long as possible.' PayPal doesn't have a great track record as far as fund freezing is concerned — maybe it's high time to stop using PayPal?"
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PayPal Freezes MailPile's Account

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  • by queazocotal (915608) on Thursday September 05, 2013 @08:53AM (#44764589)

    It's well known that they do this sort of stuff - not regularly sweeping it out to a bank account is a really bad idea.

    • by FriendlyLurker (50431) on Thursday September 05, 2013 @09:56AM (#44765163)

      The sheer amount of hate that banks, financial services and operators like Paypal have generated in the population at large is amazing. Exorbitant fees, slow transfers, arrogant customer service, publicly funded bailouts for amounts that almost defy imagination, systematic fraud [google.com] reaching to the the highest levels of most governments of the world, few to no prosecutions of financial crime - the world of finance and banking it is a stagnated corrupt market that needs some serious competition, a bright light and a clean sweep.

      Bitcoin is a tiny flicker of a spark in the dark rotten world of finance - not even in its infancy. Sure like any currency it can be stolen or used and abused to perpetrate fraud. Sure it is damn inconvenient to use or exchange, hardly anybody accepts it - but despite all this there is an army of people and entrepreneurs [coindesk.com], early adopters with more joining every day that are willing to bend over backwards and work through the teething problems simply because it could almost possibly eventually bring much needed change to the almighty financial sector to which our economies now serve [nakedcapitalism.com] (as apposed to the other way around).

      If you think mass media can drum up a propaganda campaign so the Military Industrial Complex can have their profitable wars, wait till you see how far and loud the corporate media "journalists" will willing to go when the financial sector stands to lose absolute monopoly over our currency for online global payments.

      First they ignore you, then they laugh at you, then they fight you, then you win.

      • by fast turtle (1118037) on Thursday September 05, 2013 @10:29AM (#44765523) Journal

        Paypal isn't a bank according to U.S. Regulations. Otherwise their doing this would get them slammed by the Feds in a hurry as it violates many regulations. In fact, under the Feds, they would be slapped down for Money Laundring and I'd suggest the Project Devs push RICO Charges in Federal Court against Paypal (Racketeering/Corruption) which if successful would give them punitive damages of not triple but six to ten times the amount of the monies stollen and the profit Paypal is making from holding that money to play with it. How much money is Paypal making by holding those funds as they are - Stocks/Bonds market - 2+ percent per day? That's a lot of money when you look at the totals.

        It's this kind of action by Paypal that pushed me to drop all family accounts with them and to quit using Ebay. It's not worth the agravation and I did vote with my wallet.

  • "Maybe?" (Score:5, Insightful)

    by geminidomino (614729) on Thursday September 05, 2013 @08:54AM (#44764597) Journal

    "High time to stop using paypal" was years ago. They've been famous for this scummy behavior since even before ebay bought them and forced you to use them.

    • Re:"Maybe?" (Score:5, Insightful)

      by Anonymous Coward on Thursday September 05, 2013 @09:17AM (#44764761)

      Why does PayPal have any say in how the funds raised are to be spent? That is like the bank demanding an itemized weekly budget and a yearly fiscal and activity plan before they'll dispense funds from your account.

      • Re: (Score:3, Interesting)

        by erroneus (253617)

        It stinks of the government and/or IRS abuse. Forget boycotting business for its behaviour [read: complicity]. Isn't it time we start boycotting government a bit?

        • by jonwil (467024)

          I suspect a lot of what PayPal does (e.g. freezing accounts with "suspicious" transactions and refusing to unfreeze until you provide proof you are who you claim to be and proof of where the money came from/where its going to) has to do with the international rules designed to prevent money laundering.

          When you open an account at a regular bank, you generally need to show ID to prove you are who you claim to be (usually at least one piece of ID that can be linked back to government databases such as drivers

      • Banks do do stuff like this.

        Just one example - Wells Fargo instantly freezes the bank accounts of someone who files bankruptcy, until the bankruptcy trustee tells them to unfreeze them. WF claims that they are required by law to do this, though strangely no other major bank interprets the law that way and the feds have not prosecuted them. Lots of fun for example over a holiday weekend, for someone who is already financially in a bad way.

    • Re:"Maybe?" (Score:4, Informative)

      by orgelspieler (865795) <w0lfie&mac,com> on Thursday September 05, 2013 @09:25AM (#44764825) Journal

      What else is there? Look, if I see a vendor on eBay who doesn't use PayPal, my first thought isn't "oh, this person is a conscientious objector to PayPal's malfeasance." Instead, it's an instant scammer alert. The one time I used BidPay, I got scammed. Never again. On the other hand, it's way to easy for shitty buyers to screw you over on PayPal.

      I don't know what the other options are, though. Even on Slashdot, there seems to be a lot of "don't use PayPal" but not a lot of "use $SERVICE instead" as an alternative.

      • by BitZtream (692029)

        Okay, lets rephrase the question ...

        Why are you still using ebay? It hasn't been a worth while way to buy things since roughly 2006 or so.

      • by godefroi (52421)

        Just the one guy handing out his dwolla affiliate referral link. I thought those went out of style?

    • Re:"Maybe?" (Score:5, Informative)

      by NatasRevol (731260) on Thursday September 05, 2013 @09:54AM (#44765137) Journal

      High time was when I first read a few stories on here:

      http://paypalsucks.com/ [paypalsucks.com]

      In like 2006.

    • Re:"Maybe?" (Score:4, Insightful)

      by Jane Q. Public (1010737) on Thursday September 05, 2013 @12:57PM (#44766939)

      "High time to stop using paypal" was years ago.

      No, it wasn't. What passed years ago was "It's high time PayPal was regulated as a bank."

  • FE F1 F0.fm (Score:2, Insightful)

    by return 42 (459012)

    I smell the NSA.

    • Re:FE F1 F0.fm (Score:5, Insightful)

      by tgd (2822) on Thursday September 05, 2013 @10:42AM (#44765651)

      I smell the NSA.

      I don't. I smell Visa and MasterCard... which is worse.

      PayPal is on the hook for chargebacks when MaiPile doesn't deliver. They're on the hook based on their own internal policies, and the policies of the big card networks.

      Given how many of the crowd sourced projects never come to fruition, it doesn't surprise me that there's pushback from the companies that handle the payments. (Especially now that so many of them are pushed as more than a simple donation and are really a pre-purchase of a product or service.)

  • by Anonymous Coward on Thursday September 05, 2013 @08:56AM (#44764615)

    They will betray you.

  • by Isca (550291) on Thursday September 05, 2013 @08:56AM (#44764617)
    That's the only way to stop this nonsense. There will be new, different nonsense at that point but at least they will have to justify and backup what they do.
  • by Tukz (664339) on Thursday September 05, 2013 @08:56AM (#44764623) Journal

    I don't get it.
    I hear stories like this all the time.

    Why do people insist on using PayPal for high value accounts?

    • Why do people insist on using PayPal for high value accounts?

      Why do people use PayPal at all?

      PayPal has always done things I found objectionable. There was a period of time when some websites would only accept Paypal; but I haven't run into one of those in years. But back when I did, I'd make a point of telling the website operator they'd lost a sale because I refused to use PayPal (not that anyone cares what I did as an individual, but I figured if enough people did it things might change).

      • by c0d3g33k (102699) on Thursday September 05, 2013 @09:21AM (#44764795)

        Why do people use PayPal at all?

        Mainly as a convenient means to avoid giving credit card numbers to those I trust even less than them. Nothing beyond that.

        • by willith (218835) on Thursday September 05, 2013 @10:26AM (#44765477) Homepage

          That's insane. If someone steals my credit card number, there's fast and quick legal redress. The most inconvenient part is waiting for the credit card company to overnight me a new card.

          Paypal, on the other hand, can lift actual money right out of the checking account they insist on linking to my account and actually defraud me. There is literally no instance where simply using a credit card number is less safe than dealing with paypal.

        • The whole system is broken, that's what's missing here. A couple numbers and a name contains all the information needed to withdraw money from my account, that is the real problem and it is seriously backwards early 20th century thinking. There is no reason that information should fly around unencrypted, heck it's written in plain text on my credit card for crying out loud, why does no one think that is an issue!? The sad thing is that something like Google Wallet, that has enough brains to be password p

      • by JDG1980 (2438906)

        Why do people use PayPal at all?

        Because they want to buy and sell stuff on eBay?

      • by Rockoon (1252108)
        The sellers, not the buyers, are effected by paypals overly-liberal freeze-the-funds policy.

        Because of this, even though there are alternatives to paypal, most sellers continue to accept paypal or they will lose customers that prefer paypal.

        The policies of paypal will eventually put them out of business unless they change their ways, but its a long way down unless they start messing with the buyers too.
  • I cancelled my account years ago due to their fishy tactics.

  • It is a stupid service run by idiots who pull shit like this. It has been known for years. Why would anyone use it - at all?
    • by Surazal (729)

      Sometimes there are services that don't have another option for online payment *other* than PayPal. It kind of sucks, but there it is. Just make sure you never keep any money in the account. PayPal's been pulling this kind of shit for years. I'm surprised no one has taken them to court over it yet (or if they had, why it hasn't made the news).

      • by pipatron (966506)

        Getting such an account probably requires signing 30 pages of fineprint, making sure that anything you do can get your account banned.

        A bigger question is why. What do PayPal gain by "randomly" freezing accounts like this?

        • by Rob the Bold (788862) on Thursday September 05, 2013 @09:49AM (#44765085)

          A bigger question is why. What do PayPal gain by "randomly" freezing accounts like this?

          You'd think the goodwill hit would be more costly than the interest on the frozen funds for the time they hold the cash until forced to finally pay it back.

          They've already got your customers in check, but they go ahead and take an extra pawn, because -- why not? Who else they gonna play with?

          And yet, all this bad publicity -- for years and years -- and still no viable, widely accepted, competitor.

  • by OzPeter (195038) on Thursday September 05, 2013 @08:58AM (#44764641)

    Aside from the fact that PayPal holds the money, what right do they have to demand a business plan from an indiegogo funded project? Is there a business connection between PayPal and Indiegogo? Or is PayPal just performing a dick move?

  • As tiresome as it is to read the same kind of PayPal horror story, I hope they keep coming. The world needs to be continually reminded not use PayPal because of they way they treat their customers. Why people voluntarily continue to use PayPal is beyond me. There are an increasing number of less evil alternatives.

    I hope PayPal becomes a relic of the past, like AltaVista and other things I can no longer remember.

    • by drinkypoo (153816)

      Why people voluntarily continue to use PayPal is beyond me. There are an increasing number of less evil alternatives.

      People use paypal because people know about paypal. I use paypal to buy stuff because it works. Nobody takes google payments. I suspect there's two reasons for that, and only one is inertia. Everyone has a paypal payment module because it's easy. Not everyone has a google payments module, perhaps it's not as easy.

      I hope PayPal becomes a relic of the past, like AltaVista and other things I can no longer remember.

      Me too, but it doesn't seem likely. eBay/Paypal, it's a tight combination.

      • "Google Checkout is an online payment processing service provided by Google aimed at simplifying the process of paying for online purchases. Users store their credit or debit card and shipping information in their Google Account, so that they can purchase at participating stores by clicking an on-screen button. Google Checkout provides fraud protection and a unified page for tracking purchases and their status. According to a Google update[1] on May 2013, Google Checkout will be retired on November 20, 2013
      • There's one website I know of which had a choice between PP and Google Wallet. I don't even have a PP account because they're well known for this kind of crap.

  • This is nothing new. Paypal sucks when it comes to this stuff. If you still use it and this happens - you should have known better. Your own fault. Stop using them and maybe they will get the hint. Or maybe they will just go away.
  • by LoRdTAW (99712) on Thursday September 05, 2013 @09:07AM (#44764693)

    Paypal froze Notch's account after Mincraft went gold and began selling. Supposedly in just one day he managed to get over one hundred thousand dollars in sales which prompted paypal to freeze his account.

    This is thanks to the US patriot act [wikipedia.org], bank secrecy act [wikipedia.org] and possibly some other nanny state laws. Large transactions are red flagged and reported. The owner of the account must provide an explanation of what they are doing with the money. This is one of those risk mitigation plans we were talking about the other day which helps the US government find the "bad guys". Eventually paypal will unfreeze the account once they learn the money won't be used for terrorism, drugs, racketeering or other boogeyman bullshit. I feel safer already.

    • by nitehawk214 (222219) on Thursday September 05, 2013 @09:15AM (#44764751)

      Paypal froze Notch's account after Mincraft went gold and began selling. Supposedly in just one day he managed to get over one hundred thousand dollars in sales which prompted paypal to freeze his account.

      This is thanks to the US patriot act [wikipedia.org], bank secrecy act [wikipedia.org] and possibly some other nanny state laws. Large transactions are red flagged and reported. The owner of the account must provide an explanation of what they are doing with the money. This is one of those risk mitigation plans we were talking about the other day which helps the US government find the "bad guys". Eventually paypal will unfreeze the account once they learn the money won't be used for terrorism, drugs, racketeering or other boogeyman bullshit. I feel safer already.

      As if Paypal unfroze Notch's account out of the goodness of their hearts. No, the only way to get unfrozen is to have a huge crowd of fans making a big stink and generating lots of bad press. Does anyone remember Something Awful's Katrina fund [somethingawful.com]? Paypal will try to steal your money, or at least sit on it for as long as they can to make interest on it. That this is a surprise to anyone is a surprise to me. (yes, that is what I meant to say there)

    • by TheSpoom (715771)

      What? PayPal freezing accounts has nothing to do with bank regulation and everything to do with the fact that they're not a bank. Think of PayPal like a shifty uncle who offers to let you store your money in his safe. Store too much and he might decide to keep it, and there's not a goddamn thing you can do about it.

    • Paypal froze Notch's account after Mincraft went gold and began selling. Supposedly in just one day he managed to get over one hundred thousand dollars in sales which prompted paypal to freeze his account.

      This is thanks to the US patriot act [wikipedia.org], bank secrecy act [wikipedia.org] and possibly some other nanny state laws. Large transactions are red flagged and reported. The owner of the account must provide an explanation of what they are doing with the money. This is one of those risk mitigation plans we were talking about the other day which helps the US government find the "bad guys". Eventually paypal will unfreeze the account once they learn the money won't be used for terrorism, drugs, racketeering or other boogeyman bullshit. I feel safer already.

      Actually put this way, and after what's happened recently with the US going after bitcoin companies for money laundering...it actually makes sense for paypal to protect itself (from the government) by making a reasonable attempt to verify that the money passing through it is not obviously money in the process of being laundered.

  • by nitehawk214 (222219) on Thursday September 05, 2013 @09:13AM (#44764739)

    Shit man, that was 14 years ago. You know, when they started abusing accounts under protection of "not a bank".

    • by Stumbles (602007)
      Yep I remember that flack back then. But I don't really care. Haven't used them for anything in years and refuse to do any business involving them.
    • by Aryden (1872756)
      I had a card issued by the same bank that they use (METABank) and they denied me the use of the card for the account, they also denied my BoA account, my Ally account, my PNC account and my Wells Fargo account, they finally allowed my USAA account. The whole time demanding that I send them heaps of private financial and personal data that I was not ever going to send them. Just so I could access $25 in the paypal acccount...
    • Worse than this, I have friends that tell me, "Oh no PayPal is fine, just only use it for sending money, not receiving."

      No, just no. By supporting them you are helping perpetuate the scam that is PayPal. How do you think they make money? By getting people to use their service.

      Stop supporting people that make PayPal possible, and they will disappear.

  • I use paypal daily, but only because the transactions I make through it are small and meaningless.
    The second I do something like this where I have a large amount in there, I'm switching to another service.
    I've been hearing horror stories like this since they froze the Paypal account of the dude who made minecraft.
  • War on Privacy (Score:4, Informative)

    by sociocapitalist (2471722) on Thursday September 05, 2013 @09:31AM (#44764887)

    Anyone who is funding any project that the US government does not like should know better than to use Paypal at this point.

    Paypal is a tool of the US government, for whatever reason(s). and this is hardly the first time they use Paypal as an attack vector.

  • I do a lot of sales on ebay, and as such am required to use paypal. At least if I want to make sales. That said, I never let my paypal account go above $1000 (typicall not above $100), and it is tied to only one bank account that I never let go above $1000. My personal and business accounts are with a local credit union that has great service and lets me auto transfer funds between accounts as much as I like with no fees.

    It take a bit of diligence on my part, but this way if my account is frozen, or some

  • Seriously WTF?

    the bad news is, PayPal froze MailPile's account, along with $45k that was on it, and will not un-freeze it until MailPile team provides 'an itemized budget and your development goal dates for your project.'

    Since when is it any of PayPals business what people use their accounts for?

    Oh, right, because PayPal likes to act like a bank when it's convenient, and then loudly say "we're not a bank" when they don't want to do something a bank couldn't do.

    Yet another reason why I think PayPal are assh

  • Indiegogo (Score:5, Insightful)

    by TheSHAD0W (258774) on Thursday September 05, 2013 @09:55AM (#44765149) Homepage

    Considering how many Indiegogo campaigns this has happened to, I'm surprised the service hasn't switched to one of Paypal's competitors yet. Otherwise this is going to drive projects to Indiegogo's competitors instead.

  • by TheSkepticalOptimist (898384) on Thursday September 05, 2013 @02:23PM (#44767707)

    Care, no...

    Actually I do. I could care less about the project, who gives a fuck. Another bleeding heart FOSS is your friend bullshit waste of time and money.

    But clearly since PayPal provides a crowdfunding platform they have a right to ask for LEGITIMATE reason to continue to fund a project if there is some question to how the money is being used, or no real information about the progress of a project.

    I am tired of people rising to the defense of open source and crowdfunded projects without thinking. There is no reason to assume that you can be handed thousands of investor's money and then have no real business strategy, budget, or timeframe to deliver on your goals. If your investor asks for progress, you fucking provide it. If your investor is calling you out, you better cover your ass with legitimate paperwork.

    So suck it up MailPile. You thought you could create some crowdfunded bullshit project, take the money from tens of thousands of people that will just throw anything at FOSS out of some vapid belief it matters and then provide what; a reskin of some existing open source mail program and call it a day?

    Hey, if MailPile is legitimate and well organized that information should be trivial and readily obtained so feed it to PayPal and tell them to shut the fuck up. But if its a bunch of stoners thinking they got away with ripping off a bunch of retards through PayPal, they should guess again.

    I think PayPal is clearly in the right here to ask for some information about how the money is being spent considering they offered the opportunity to have this project funded through their organization.

    Bam

    https://developer.paypal.com/webapps/developer/docs/classic/lifecycle/crowdfunding/ [paypal.com]

    Time to RTF-Guidlines

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