So I just came across this story: http://www.deadspin.com/sports/adam-kno … 227699.php

(Digg link: http://digg.com/world_news/Paypal_Doesn … ceive_Aid)

These kinds of stories are a dime a dozen. I've been debating for months whether to keep my PayPal account. I don't use it a lot - pretty much only when I have an eBay transaction, which are becoming few and far between. And I certainly don't keep a standing balance in my PayPal account. But beyond that, I simply don't trust them with my bank account and credit card information anymore.

My question to you guys is, "Have any of you cancelled your PayPal account simply on moral grounds?" I am very close. I really don't want to hang around until this crap happens to me.

What a terribly depressing story. PayPal sucks sometimes.

I still have my account though.

Ramza

There are a couple of alternatives that are gaining steam:

https://www.neteller.com/home/index.jsf

http://www.firepay.com/_default.asp

But, of course, as long as eBay owns Paypal, they will do whatever they can to make sure that people use Paypal for as many eBay auctions as they can.  Paypal is still the acknowledged standard, but I hope that changes in the future.  Until other payment methods become more widespread, though, I'm afraid that's what I'm stuck with.

How the hell did they set up their account as for a Non Profit Organization?  I think Paypal is just freezing funds so they or the government can investigate whether it constitutes as fraud, etc.  I think if the account was set up correctly in the first place, there would have been no such problem.

I recall SomethingAwful having a similar problem in response to the Katrina disaster.

http://en.wikipedia.org/wiki/Something_ … n_incident

They have no idea why the account was set up in that manner. It was addressed in the post:

One of the things I don't understand is why they won't release the money to them now, but have no problem releasing it after 180 days. What's the difference? Do they just want the money to sit there so they can earn interest on it? Bah.

Yep, I remember that. Damn shame...

paypal is probably not trying to screw them, but if they get caught in the middle of a tax status debate, it could implicate their service if the account in question was audited for a violation

I would agree that PayPal is probably not *trying* to screw them. But PayPal gets themselves into these messes because they refuse to follow standard banking practices by pretending they don't act like a bank. (See: paypalsucks.com.) This is the same company whose TOS were invalidated by a court.

There was a happy ending to this story afterall.

http://deadspin.com/sports/adam-knox-fu … 227996.php

they didnt hesitate to issue me a 1099-DIV for participating in their money market

Paypal acts arbitrarily in this regard.  In some cases, they will observe banking standards, but in other cases, they do not.  That is the basis of the complaint that Paypal acts like a bank but is not a bank.  As a result, Paypal can do "whatever it wants."

Paypal is especially lax in mediation procedures.  Banks have mediation procedures that are deemed fair and reasonable, if bureaucratic.  Paypal's mediation procedures are not considered fair and reasonable by those who got screwed over.

While many people are not screwed over by Paypal, the ones that are screwed make up a significantly noticeable number, even if they are a small percentage of the overall Paypal subscriber base.  Using Paypal incurs greater risk than if dealing with a bank.