And yet this story keeps happening, over and over and over across the years. Remember the $1 million-plus raised for hurricane relief raised after Katrina that PayPal threw down the drain by declaring that they wouldn't release it until long after it mattered?
If PayPal has good reasons not to accept donations and crowdfunding, they shouldn't fucking accept donations or crowdfunding, instead of letting users get in deep enough to get screwed before dropping the hammer. Maybe it's buried in the small print that they don't expect anyone to read. The burden is on them to communicate effectively. They need to either openly refuse to accept those accounts in the first place, or else come up with a separate way of dealing with them that works for all involved. Holding funds in escrow should not be a complicated problem.
> Maybe it's buried in the small print that they don't expect anyone to read.
Maybe you don't expect people to read the fine print, but PayPal clearly does, and frankly if you are going into business then you should be making a point out of always reading the fine print.
> If PayPal has good reasons not to accept donations and crowdfunding, they shouldn't fucking accept donations or crowdfunding, instead of letting users get in deep enough to get screwed before dropping the hammer.
Money is money, so if you are dealing with people who apparently won't consider reading "the fine print" or even doing some trivial due diligence in the FAQ, you can't somehow not accept these use cases.
> Holding funds in escrow should not be a complicated problem.
Correct, it isn't. This is why that's what happened: PayPal doesn't just steal your money and leave, they put various restrictions on your account that mitigate the risks involved in your business.
The most simple thing that they can do, and which tends to be the first recourse (and thereby the one that, if you don't go insane with a public rant you can negotiate down from) is a 180-day hold.
If you call PayPal, however, and demonstrate that you shipped these products, showing some kind of documentation of shipment, PayPal will release your funds immediately. That is an "escrow".
"Maybe you don't expect people to read the fine print, but PayPal clearly does, and frankly if you are going into business then you should be making a point out of always reading the fine print.
Money is money, so if you are dealing with people who apparently won't consider reading "the fine print" or even doing some trivial due diligence in the FAQ, you can't somehow not accept these use cases."
Fine print is an odd problem. In a world of rational actors, yes, obviously everyone should read all the fine print all the time, just like everyone should every word of the manual for every product they buy. The problem is, a typical internet power user is signing up for new services on a weekly basis, and most of them have 20 goddamn pages of fine print of which 19.5 are useless, meaningless gibberish. Corporations train their users to not read fine print, because 99% of the time it's half an hour wasted to learn nothing of value, and then exploit that training to slide shit past the radar. I don't think it's unreasonable to expect a company that cares about its users' welfare to put the really notable bits up front in full-size print.
Just as an example, did you know that, by signing up for a comment account on any Gawker Media site (Lifehacker, Gizmodo, Gawker.com, Deadspin, io9, Kotaku, Jalopnik, Jezebel), you give them explicit blanket permission to sell any positive comment you make about a commercial product for use in that product's advertising? I bet you didn't, and Gawker counts on you not knowing that when you sign up.
I am going to repeat this, as I don't think you caught the key noun: if you are going into business then you should be making a point of always reading the fine print. You don't hear about "power users" running into serious problems with PayPal because "users" are the core of PayPal's risk model. In stark contrast, this failure of a situation is a business attempting to deal with over one hundred thousand dollars via PayPal... I have absolutely no sympathy for them--or any other business--that can't take a few minutes to read "the fine print", doing even basic due diligence into "am I allowed to use this service for this purpose"; reading the contracts you agree to for critical services like payment processing is fundamentally different than reading the terms of service on your Gawker account: you should understand what you are agreeing to in full, and should not be relying on some cribbed cheat sheet of "the big stuff" handed to you by the service (as you argue should be provided, in this and other threads). Business involves lots of agreements, these agreements have to deal with tons of complex contingencies, and if you don't take agreements seriously (and likely it you don't actively enjoy reading them) you simply shouldn't be in business.
So wait. You want Paypal to require everyone who opens a PayPal account to have to write up what it's going to be used for, and wait in a queue before you can receive funds so that they can review it to ensure that it's not something like crowdfunding, and then require that you either never change what you use your PayPal account for, or submit any changes back to them, so that they can re-review it and approve your new use?
As far as I know, PayPal allows anyone to open an account and start using it without any review (I've never received funds with PayPal, only sent funds, but I don't recall any extra hoops that would be necessary to receive them).
Likely what happens is that either certain kinds of activity cause an account to be flagged for a manual review, or someone gets cold feet about the crowdfunding campaign and does a chargeback, so PayPal looks into it to see what you were selling. When they see that you are in violation of their very explicit pre-sale policy: https://www.paypal-businesscenter.com/content/presale-policy... they hold your funds until you are within 20 days of shipping your product.
They have a lot of rules about what you can sell via PayPal, and there's no way they could possibly check what you are going to use funds for before each transaction, as you could start using an account that was used for permitted transactions for ones that aren't permitted at any time. So, they wait until an automated system, a complaint, or a chargeback notifies them that something is amiss, and then hold on to the money until they can resolve the situation.
"So wait. You want Paypal to require everyone who opens a PayPal account to have to write up what it's going to be used for, and wait in a queue before you can receive funds so that they can review it to ensure that it's not something like crowdfunding, and then require that you either never change what you use your PayPal account for, or submit any changes back to them, so that they can re-review it and approve your new use?"
Not at all. I want them to say up front, when you sign up for an account, which apparently-innocuous activities will likely get your funds suspended for long enough to be useless. After that, it's on you if you go ahead with it. They're obviously not communicating clearly enough right now, or this wouldn't keep happening.
Was the link I gave, about not allowing pre-sales for items that won't ship within 20 days, not clear enough?
It's not some little footnote hidden within a wall of legalese. It's a pretty clear statement of what they allow and what they don't.
And why would you think that crowdfunding counts as "apparently-innocuous"? Crowdfunding is an area that is ripe for scamming. You create a glitzy campaign, get lots of backers, keep promising something that never quite gets finished, and then disappear with the money.
Apparently, ever since the Ubuntu Edge crowdfunding campaign failed, there's been a whole bunch of fake knock-off campaigns, of people capitalizing on the interest and trying to trick people into funding things that pretend to be related but really aren't.
Any time you have some kind of "amazing new investment opportunity", there are going to be scammers. And when you get down to it, crowdfunding is just an "amazing new investment opportunity".
If PayPal has good reasons not to accept donations and crowdfunding, they shouldn't fucking accept donations or crowdfunding, instead of letting users get in deep enough to get screwed before dropping the hammer. Maybe it's buried in the small print that they don't expect anyone to read. The burden is on them to communicate effectively. They need to either openly refuse to accept those accounts in the first place, or else come up with a separate way of dealing with them that works for all involved. Holding funds in escrow should not be a complicated problem.