PayPal horror stories: Getting uglier each day

[Lashiec]

Looks like PayPal should not be your payment service of choice if you intend to do some serious business, or you suspect your little pet project might hit the big time.

Markus Persson, game developer, is the latest example of a worrying trend. After achieving huge success with the unconventional Minecraft, with more than 500,000 registered users, and 100,000 licenses sold for the "premium" version, and the accompanying buzz in major gaming sites, Markus decided to pursue the idea of setting up its own videogame company, to offset much of the burden of supporting Minecraft, so he could focus on continue to develop Minecraft, as well as having the means to back a completely different gaming project.

Problem is, the vast majority of the money intended to fund the new company is now blocked by PayPal. And we're not talking about hundreds or even thousands of dollars, but a staggering 600,000 €. What's more, if PayPal detects something suspicious during their reviewing process, PayPal keeps all the money, and Markus will have to start again from almost zero.
via Rock, Paper, Shotgun

[mouser]

Sounds frustrating but this is surely wrong:

What's more, if PayPal detects something suspicious during their reviewing process, PayPal keeps all the money, and Markus will have to start again from almost zero.

it's fine to be upset over paypal's bad tech support, but i think this is just another case of a company that is being paranoid before paying out large amounts of credit card orders for fear there is fraudulent activity, which is paypal's modus operandi.  the idea that this guy made 600,000 euro in one week seems like it might spook any payment processor, and he should be proud and happy to get such amazing business. if only more us could be 1/10th as lucky.

but i think it's unfair to say paypal is going to keep his money -- i don't think there is a chance in hell of that.

[Eóin]

This truly is a sad story, but PayPal is not a bank and using it for such large sums of money seems crazy to me.

[mouser]

having a payment processor review a payout of $600,000 euro that came in during a 3 week period, doesn't even enter the universe of issues i consider sad or terrible.  i'd basically file that under the "i'm so happy i could cry and so what if it takes them another month to sort it out".

[Lashiec]

True that. I missed Markus last minute clarification, so I thought the 600,000 € were accumulated through Minecraft entire existence. Still, it's perplexing how many licenses were sold in so little time, considering the game has been available since May of last year. The game has been referenced in the media more than it's usually been for the past week, but that's because of Markus intent on starting his company as well as his visit to Valve headquarters in Washington.

I mean, the fan videos showcasing the game are pouring out as usual :D

[Gothi[c]]

Yeah, I agree with mouser.
I think even a bank would investigate that much of a gain in such a short period.

[nudone]

yeah, think i'd be just crying with happiness too - PayPal could keep the money for months if need be - provided i got it in the end.

[J-Mac]

PayPal has been pretty darn good for me. The very few issues I have had have been resolved satisfactorily IMO and were resolved quickly. I realize that this is of no comfort to anyone having bigger difficulties with them - that can happen with any company. But this is certainly not a reason to start yelling about how "ugly" they are. With the extremely vast amounts of transactions and money they handle the complaints I have read about do not seem disproportionate. Maybe I'm just not seeing it.

Thank you.

Jim

[Renegade]

I have had no serious issues with PayPal, and I've been using them for years. They've been quite good.

Now, for 600k Euro? JEEZ! They are a payment processor. It's not cash from a bank. Of course they're going to hold back for things to clear up. It's pretty normal. Most companies have 30, 60, or 90 or more days payable on accounts. There's no way they'll just keep it. Now, if you had a 600k running balance over a period of time, and took out 600k, then that wouldn't be a concern given the account history. But 600k in a week? They'd better hold it back. It's suspicious.

I don't think he has anything to worry about. I think he's just skittish because of the amounts involved, and probably just a tad paranoid. Can't blame him though. If I were in the same situation, I'd likely lose my mind and freak out completely!

[tranglos]

But 600k in a week? They'd better hold it back. It's suspicious.

-Renegade (September 10, 2010, 11:22 PM)

My problem with this is as follows: It's only suspicious if it's you or me.

Banks (PayPal isn't one, but is sufficiently bank-like for the purposes of this thread) launder money by the truckload all the time and they don't even get to admit wrongdoing. Last July it was Wells Fargo and Wachovia (the full deal here, short version here), and somehow that wasn't suspicious.

But if you or I write a piece of software that gives us our 15 minutes of Internet fame and fortune, that's suddenly suspicious, and the bank or PayPal will now "investigate". Ha ha, only not funny.

PayPal has been a major problem for charities. There are plenty of small charities that get a piddling little streamlet of donations all the time, then something big happens, like a flood or an earthquake somewhere, or maybe a political event, and suddenly, for a short while, the money starts pouring in because a lot of people become concerned. To PayPal this is suspicious too, and charities have been locked out of their money for long periods of time.

The idea of an online payment processor was a great one. The idea that PayPal gets to be a cop and an international IRS in one is ridiculous. The idea that they get to hold on to your earnings while they are checking you out is downright insane. At least until you and me get to investigate PayPal back. And all the banks too.

(Not that I expect ever to be in Markus's shoes, have half a million EUR coming in by special delivery. Alas, no. Just on general principle.)

[J-Mac]

Damn! Just read that Wachovia/Wells Fargo story. I hadn't heard about that at all. Didn't make big news though I don’t understand why.

Thanks!

Jim

[Renegade]

@tranglos

You're absolutely right.

PayPal should be subject to regulation as banks & finance institutions are, but then again, they need to be regulated. Deregulation there led to the sub-prime crisis. Let an idiot run around with a knife & someone will get hurt... The industry is a disaster.

I'll stick to my guns on the entire banking & finance industry being completely wrong. My wife vehemently disagrees with me though (she's doing her PhD in finance).

[kyrathaba]

Since when does PayPal require you to enter a credit card's full number to confirm anything?  I don't want that sort of info stored in one of their databases!  Surely there are other ways of confirming this?  Email validation, etc.

[tranglos]

Since when does PayPal require you to enter a credit card's full number to confirm anything?  I don't want that sort of info stored in one of their databases!

-kyrathaba (September 26, 2010, 07:57 AM)

They have always stored full CC info in their database. That is so that you do not have to supply the number to each and every vendor you're buying from. It's probably better to give it to PayPal once than to dozens of big and small sellers everywhere.

Why they would want the CC number to change your physical address though is a completely different matter. I've no idea. You could try their help and FAQs, they are pretty exhaustive.