#101 Edited by swedmiro (49 posts) -

A bit late to the party but I do have some insight. PayPal is avoided to almost all cost when setting up online stores. PayPal had a very bad rep for holding back payments for every little complaint from customers. This is of course good for the customer but is hell for the store and i have personal exprience from helping store trying to get payment for goods delivered. Let just say that from people in the online store "community" noone is surpriced that PayPal is causing troubles.

EDIT: don't drink and write

#102 Posted by bluefoxxy (227 posts) -

@jokful said:

@bluefoxxy said:

I said it at the Evo article you wrote, and I'll say it here. Stop this horse shit dude. You are making me not want to come to GB and renew my subscription. Everyone else I'm cool with. Brad gets on my nerves sometimes, but he's knowledgable. I have the upmost respect for all the crew at GB. But you. You are unique. You are right most of the time but FUCKING HELL when you are wrong, it is so far off, I can't stand it. You are the Glenn Beck of GB when you write these fluff pieces.

umm some dude into fighting scene said the fighting games article was great so you're wrong.

Some dude huh? Totally valid then. I thought everyone were smart here? Every day I'm being proven wrong.

#104 Posted by GaspoweR (4174 posts) -

@bluefoxxy: What is your problem with the EVO collusiong rule article?

#105 Edited by randombattle (87 posts) -

PayPal does this shit with personal accounts all the time too. They can and will just lock your account and in most cases just take your money and never give it back. They are the worst fucking company on the planet for money management and I'm honestly surprised no one has used them yet.

#106 Posted by zkillz (97 posts) -

So when the next huge crowd funding failure occurs and Paypal isn't able to reimburse backers because they let the developer run away with the money, what are the odds we'll see another article criticizing Paypal for not having any oversight or fraud prevention?

#107 Edited by bluefoxxy (227 posts) -


The article I'm talking about was his "When Passions Flare, Lines Are Crossed" story.

It talked about sexual harassment and how cross assault was a reflection of the FGC as well as how much of a fluff article it was just to raise tension and cause a flurry of useless discussion.

#108 Edited by archimedes83 (39 posts) -

Very good article Klepek.

#109 Edited by JordanaRama (259 posts) -

Bravo on the excellent article, Patrick. This is some shiiiiiiit. Thank you for bringing it to light.

#110 Edited by PurplePartyRobot (217 posts) -

I have no disagreement with PayPal's practices regarding "locking accounts down" in the interest of potential fraud. PayPal, as a transaction processing business, ends up flipping the bill if things go south and the seller commits fraud or does not produce the product as stated. "Locking down accounts" helps to mitigate the risk PayPal would potentially incur as the result of fraud.

What I do have a problem with is PayPal's practices concerning freezing the accounts of sellers with legitimate causes. Yeah, okay-- I can see PayPal needing additional documentation concerning the product to instill confidence that the seller is legitimate.The part of it that breaks bad for me is what happens afterwards. If the seller "checks out", why not give the party the money at that point? Shit, if PayPal has decided that the seller has provided sufficient information to prove their legitimacy, then why leave the account frozen? I don't think the reason of the final product not meeting expectations would is a viable reason in this scenario; the seller, in this case the developer, already has a deep obligation to the buyers to produce a quality product, and if the developers are legitimate, they will more than likely make damn sure that the end result satisfies the project backers. If developers can prove satisfactorily prove their legitimacy to PayPal, then the developer's account should not be frozen.

#111 Posted by GaspoweR (4174 posts) -

@bluefoxxy: I thought out of all the articles in regards to that particular issue (Cross Assault) at that time, that was probably the most neutral-toned out of all of them (Evan Narcisse's article about the issue I found to be even more inflaming). I found Brad's comments about it on the Bombcast to be more irritating (considering that he was being very judgmental about it) then Patrick even. Since then he had covered more topics about the more interesting aspects relating to fighting games in general since that time.

#112 Posted by TehBuLL (665 posts) -

Fantastic article Patrick. Learned a lot.

#113 Posted by McGhee (6128 posts) -

The only time I've had to use PayPal in many, many years was when I was selling something on Ebay. Otherwise, I never use it because it's just a pain in the ass.

#114 Posted by hxcaleb (105 posts) -

I'll be sure to use Amazon payments from now on when it comes to this sort of stuff.

#115 Edited by MATATAT (646 posts) -

@bluefoxxy: Chargebacks can only occur if the product is never delivered or if a product is significantly different than what was advertised (also unauthorized access to the card, but that's an entirely different issue). Yeah they should protect themselves from chargebacks but they also are opening the door for people to claim chargebacks by restricting resource access causing a product not be delivered on time. They're kinda fucking themselves over.

If PayPal is deciding at any time to release funds based on the current state of the product then they inherently become a producer in some way. I do disagree with Patrick in saying the fault lies with PayPal. Honestly PP shouldn't be involved at all. It's policies aren't set up to deal with financial capital at any scope, it was designed to handle small scale private transactions. If they indeed want to be in that space then they have to step up to the plate instead of fumbling around with all this budgeting bullshit.

#116 Posted by Tiangou (4 posts) -

As much i think this is a crappy situation, i don't out right think paypal is wrong. Moving around such large quantities of currency with ease may give way to money laundering i would think. Then again what do i know.

So where is indiegogo role in all this? Don't they take a cut? If so, why aren't they obligated to take action?

#117 Posted by PoisonJam7 (516 posts) -

@patrickklepek Very interesting story. You may also want to look into Kickstarters that get cancelled after successful funding and the hassles the developers have in trying to refund their backers. Specifically, I'm talking about this game, but I'm sure there are more. Apparently Kickstarter has no tools in place to make this an easy process.

#118 Edited by umbaglo (60 posts) -

@bluefoxxy: Please explain how holding the money hostage from the person receiving the money is going to stop chargebacks. Please explain how fraudsters using a fake or stolen credit card justifies demanding information about business practices and timetables. Please explain how this isn't as simple as explaining to purchasers that if you are investing in a project, then a nil return is still getting what you paid for.

I don't think anyone is honestly arguing that chargebacks and fraud are not serious concerns. But the reality is that the demands being made by PayPal seem to not be targeted towards minimizing these concerns, and are instead designed to keep money in PayPal's bank account longer so they can get free interest on it. Or worse, free money period.

#119 Edited by tourgen (4568 posts) -

Paypal is a bank. They need to be fully regulated as a bank. This is exactly why we have banking regulations.

#120 Posted by Lydian_Sel (2519 posts) -

This comes as no surprise, paypal's customer support is atrocious! Multiple times I've had to get in touch with them to resolve money issues and their answer is almost always "Not our problem".

I really hope a public eye on this sort of behavior will force them to rethink they way they conduct themselves.

#121 Posted by Xeiphyer (5684 posts) -

The crazy thing about Paypal is that they aren't a bank. People trust them with so much money but they aren't tied to any restrictions like a bank is. They can fuck you around all you want.

I just hope the company becomes more honest in the future.

#122 Edited by joshwent (2846 posts) -

@tourgen said:

Paypal is a bank. They need to be fully regulated as a bank. This is exactly why we have banking regulations.

No, they're not. PayPal is an escrow service that holds money from one party until it can be transferred to an intended party, allowing the sender and the receiver to exchange while having their actual bank info remain anonymous. They're the middle-man between banks that allows cash transfers in ways that many banks can't or won't.

Although it's really besides the point. As I said earlier in this thread, in any bank that is regulated they must report any transaction over $10,000 to the federal government. This can result in that money being being withheld exactly like PayPal has done until the source of the funds and the use can be established. Regulations don't mean stop the mean people you don't like and help the ones you do.

#123 Edited by RenegadeDoppelganger (447 posts) -

@mars said:

I've never understood the worlds love affair with PayPal. I'm not a fan.

You are basically 3-4 click away from buying anything on the internet. It is just about the easiest way to pay for purchases. You don't need to enter your credit card info every goddamn time. It's pretty appealing if you do a lot of shopping online.

#124 Posted by Homelessbird (1006 posts) -

@bluefoxxy: Paypal had every opportunity to make all the necessary credit checks before these Kickstarters close - they have a very clear timeline and promises they are making to their customers. You may be "in" the industry, but if you read this entire article, it seems fairly clear that Paypal is having trouble communicating with its users, at the very least. Which should be hardly surprising.

Locking down these funds isn't a horrible thing to do as a payment processing firm, but they should be much more communicative with their clients, do their credit checks and profiles BEFORE they accept half a million dollars from customers, provide workarounds and solutions, and most importantly be up front about the way their business works. It is not inherently difficult to do these things, and it's not unreasonable to say that the fact that Paypal seems to not care very much is a shitty thing.

#125 Posted by Cybexx (1315 posts) -

The main problem is that crowdfunding is treated the same as the purchase of a product. But the reality is that you are not actually purchasing anything while backing a project. You are giving a gift of cash and maybe if things go well for the project you are getting a gift in return.

And it has to be this way otherwise the whole thing doesn't work. Yes that means that someone could run away with your cash but you have to take that chance which is why you should never back anything that seems suspicious and you should never use money you can't afford to lose.

Paypal needs to treat crowdfunding similar to how it treats charities, there is no refund.

#126 Posted by Viking_Funeral (2180 posts) -

PayPal has been nothing but trouble for me. So much time and money wasted.

#127 Posted by Lazyaza (2311 posts) -

As an artist who basically survives due to PayPals existence I am constantly in a state of worry they may randomly cut off my finances some day "just because". Really wish their was an alternative service that did the same as they do without all their bs.

#129 Posted by jasondesante (617 posts) -

paypal isn't a publisher and if they are going to be douches about it then they need a taste of their own medicine.

#130 Posted by c0l0nelp0c0rn1 (1959 posts) -

@mars: It allows me to transact business over the internet in a semi-secure way. I don't have a credit card, and if my debit card number has been stolen it would be real bad for me.

#131 Posted by Demoskinos (16436 posts) -

This is why I refuse to use Paypal. I don't like them being the mediators of my money like that. I've heard all sorts of horror stories relating to people getting accounts and money hijacked because Paypal suspended accounts for really crazy reasons.

#132 Posted by Tackchevy (284 posts) -

They just need a policy change: if you want to fork over money to crowdfunding, it's all on you. Don't cry and file a case if the people disappear or deliver inferior results.

They'd save a lot of internal effort, bad PR, and apparently a lot of customers time as well.

#133 Edited by sir_tonk (30 posts) -

@mars: What're they going to use instead, bitcoin?

#134 Edited by Will_3rd (64 posts) -

Never use PayPal as a payment processor period, just a greedy and lazy company.

As the article states they just put their foot in it every time, no excuses for their poor company policies and lack of customer care.

#136 Posted by Kinapuff (248 posts) -

@bluefoxxy: Would you mind starting off with "I'm a screaming, raging child because I don't like Patrick" instead of ending with it next time? It'd save us all some time.

#137 Edited by subsalicylate (43 posts) -

@patrickklepek Did you do into any research into whether PayPal's actions are legal? Has anyone thought about suing? Are its actions permitted under the terms of service?

#138 Posted by subsalicylate (43 posts) -

@patrickklepek Something seems wrong the following sentence from this article: That “just because” is PayPal fears chargebacks from upset fans if a project falls through or doesn’t live up to expectations.

Perhaps there should be a "because" before "Paypal".

#139 Edited by DocHaus (1723 posts) -

Funny how the people at Paypal wring their hands and go "oh there's just so many international fraud regulations to consider!" and yet the moment they spot bad PR on the horizon suddenly *POOF* all those regulations disappear and the money that they had to spend so much time investigating is magically all kosher!

EDIT: As for alternatives, some crowdfunding sites have begun using "WePay" and there's others considering "Dwolla" for their services. Cheaper fees and less bullshit to deal with. The downside being that, of course, neither has the widespread marketing or exclusive deals with anyone big.

#140 Edited by Aquablak (219 posts) -

I can appreciate that PP would be concerned about fraud, etc., but they're going about this in an entirely underhanded and shady manner. Sitting on hundreds of thousands of dollars or more, collecting interest (I would imagine), and doling out funds as they see fit, is not their place. Fans want to give these developers, etc. their money, and PP has no right to withhold those funds, especially after everything checks out. I'll be avoiding PP as much as possible, until they change their policies.

Great article, Patrick.

#141 Posted by sirdesmond (1316 posts) -

I have heard nothing but horror stories about Paypal for years. Add this to the long list. What a terrible company...

#142 Posted by TPoppaPuff (343 posts) -

I certainly understand where you're coming from Patrick, but I don't think you're looking at this from all angles. As the owner of a company that sells online and takes almost 3/4ths of our payments through Paypal, I can tell you first hand that fraud is a huge concern for Paypal, on all sides. In many cases, if someone is defrauding the consumer, Paypal is left holding the bag. The credit card companies will demand the money from the seller (the fraudster) and Paypal has to cough it up. Period. In this case, they could be held liable for the whole amount. That's a big loss, even for Paypal.

On top of that, the internet is FULL of scammers. We have to deal with fraud on our website on a daily basis. It's a huge problem. Paypal probably loses a ton every year due to fraud, and any time someone is gathering $80,000 all of the sudden, with no history with Paypal, and for potentially nebulous reasons, they have reason to be cautious.

Is there a better answer than what they are doing? I don't know. They could, and maybe should, just say, no you can't gather that much cash here. Find another way to get the money. Then it's up to the receiver to decide if that's worth it to them. I just think you probably should consider this a bit more deeply than just reflexively looking at it from one side's perspective. Things are usually more complicated than they seem, especially when talking about moving this kind of money. Where I'm from, you can buy a house for that kind of dough, and there is ultimately a higher degree of risk involved from Paypal's perspective.

Then they shouldn't offer Kickstarter or IndieGoGo their services, especially considering their entire issues could be resolved by just visiting the page of the games.

#143 Posted by TWISTEDH34T (109 posts) -

@patrickklepek Interesting story, I was really unaware of this (as were a lot of people I bet). Keep up the good work!

#144 Posted by HypnoToadBrwowrowrow (1714 posts) -

Always knew there was a reason I avoided PayPal. This is very unethical.

#145 Posted by selbie (2114 posts) -

Awesome work Patrick. PayPal needs to wake up and smell the shit.

#148 Posted by John1912 (2165 posts) -

In principle what Paypal is doing sounds like kind of a good thing, though it is CLEARLY not their place to be shoving their nose in. If there is over-site it should come from the crowd funding web site. Paypal is just a middle man for holding funds. They have no business withholding money for any reason relating to how a company spends the funds given to them. Thats got to be fairly illegal I would think.

#149 Edited by HypnoToadBrwowrowrow (1714 posts) -

@john1912: Well the problem is that there hasn't been a lawsuit of this kind, I don't believe. That's why many are saying there needs to be a lawsuit against this so that a precedent is set against this practice.

#150 Edited by Nethlem (471 posts) -

@noelveiga: Like many others have pointed out already, Patrick has come late to this party, because this behavior by PayPal, is well known and documented and has been for many many years.

Considering how long this has been going on I'd guess the answer to your questions would be: No they do not follow up, the policies in place seem to be responsible for this behavior, them not changing them over all these years being clearly a sign of them wanting the policies to work this way.

They are also not subject to banking laws, because they do not give any actual credit. They are just playing middle man, holding funds of other people as a "payment processor", this allows them to circumvent being subject to banking laws.

There is also a very easy and obvious explanation why this has been happening for so long, and it's gonna keep happening further: PayPal finances itself by getting interest on all the money it's holding, just like banks make interest of the people's money on their accounts.

But unlike banks, PayPal has the "power" to simply withhold these funds and as such generate even more interest. Every bit of money they hold back, even for just one day, means more money for them. It's profitable for them to hold on to that money for as long as possible and make it as hard as possible for customers to remove that money from their accounts.

Sure this is gonna generate bad press, but that hasn't slowed down PayPal's growth at all, it's quite the opposite, their customer numbers keep growing as more and more people arrive in the modern internet economy.