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Paypal Won't Release Funds To Slain Soldier's Family
Posted by
samzenpus
on Wed Jan 10, 2007 09:42 PM
from the why-think-when-you-have-policy dept.
from the why-think-when-you-have-policy dept.
robustyoungsoul writes "Popular sports blog Deadspin established the Adam Knox Fund for the purpose of raising money in honor of the fallen soldier who was killed in Iraq. They took the donations through a PayPal account.
Turns out now, however, PayPal will not release the money due to the way the account was set up on their end."
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Yea, Paypal Sucks, but this is a bit dramatic. (Score:5, Insightful)
That isn't quite true, they are holding the funds until mid April, probably due to somebody screwing up. I'm not convinced that it was Paypal's mistake to begin with.
"Paypal Doesn't Want Slain Soldiers' Families To Receive Aid"
Come on now, yea, there may have been a mistake made, but it has nothing to do with the money going to a Slain Soldiers' Family.
Why the need for so much drama?
Re:Yea, Paypal Sucks, but this is a bit dramatic. (Score:5, Insightful)
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Re:Yea, Paypal Sucks, but this is a bit dramatic. (Score:5, Insightful)
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Re: Yea, Paypal Sucks...and that's on a good day (Score:5, Insightful)
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Re: Yea, Paypal Sucks...and that's on a good day (Score:5, Funny)
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Re:Yea, Paypal Sucks, but this is a bit dramatic. (Score:5, Insightful)
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release the funds... (yet) (Score:5, Informative)
A more accurate summary should have indicated the money is frozen by policy for 180 days. So, paypal is not saying they won't release the money, they won't release it until April 13.
It probably sucks for the people who raised this money, but it also sucks for paypal that too many people set up these kinds of things with intent to defraud.
Hopefully with the noise raised and ruckus caused by sites such as slashdot, the resolution will become before April 13.
FTA:
Hopefully Adam's family and platoon isn't so depleted to not be able to function until April 13. Hopefully if this is so, paypal will figure out a way to disburse earlier.
Meantime, deepest regrets and best wishes to Adam's family for their loss.
Re:release the funds... (yet) (Score:5, Interesting)
180 days from today is July 9th.
180 days before April 13th is October 15th.
And (just for completeness) April 13th is 93 days from now.
Is someone's math wrong at paypal? Or is this being reported months after the fact? Or what?
Parent
Re:release the funds... (yet) (Score:5, Informative)
Mod parent down--this is not accurate, let alone insightful. PayPal is not a registered financial institution (bank, savings/loan, credit union or any similar) and therefore unable to collect "float" interest on deposited monies.
This works two ways of course--as they are not a bank, the FDIC has less regulatory power over their daily operations than over more traditional financial institutions, hence reduced reporting requirements, transparency, sanction ability, etc. They do work with banks [paypal.com] but are not a primary deposit institution themselves.
They've certainly got a well and truly lousy track record when it comes to funds release and management--but investment float isn't one of the drivers of this. Were it, there'd be a half-dozen regulatory institutions over them very quickly.
(And yes, I do speak from experience in the financial services industry, before the flamers start in...)
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Re:release the funds... (yet) (Score:5, Informative)
In the typical case PayPal is not being paid per se when monies are transmitted to it. Rather, it's acting as a very limited management agent--it has no asset claim on those monies. It does, as we all painfully know, have considerable transfer and refund control on your deposits, per their terms of service. But they can't treat them as controlled assets--it's not their money to directly profit from.
Even though not regulated as a bank, their investment cash flows are subject to the same statutory control as anyone else's. About the best they could do would be to offer to invest it for you, return profits to you, then collect a "management" commission on the invested funds. In truth, however, that gets them perilously close to bank-dom and the associated governmental oversight, which they pretty clearly want to avoid.
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I suspect..... (Score:5, Funny)
No one wants that kind of bad PR.
Seems innocent enough. (Score:5, Insightful)
While I hate large corporations ripping people off as much as the next guy, I don't think this says anything that bad about PayPal. This is my guess at what happened:
So it doesn't seem the company is trying to rip anybody off or laugh over the graves of the dead. In this case.
Re:Seems innocent enough. (Score:5, Funny)
So it doesn't seem the company is trying to rip anybody off or laugh over the graves of the dead.
It seems like you've never used Paypal before.
Parent
Re:Seems innocent enough. (Score:5, Insightful)
PayPal Contact: "It sounds like these are charitable donations. Is this non-profit?"
Deadspin: "We're not making a profit off this, no."
Each party walks away thinking something different. Hijinks ensue.
This is why I'm convinced that corporations ought to be obliged to record all phone conversations with their customers, and produce them on request.
Parent
Perhaps similar to the Somethingawful Katrina fund (Score:5, Interesting)
After more than $20,000 had been donated in a day, PayPal froze the account. PayPal insisted that they would be unable to donate the money that had accumulted before the freeze to the Red Cross, tho bizarely said they could donate it to the United Way. After finding that the United Way had a reputation for inefficiency, SA finally just threw their hands up in disgust and told PayPall to refund the money to the donaters.
Wikipedia has a brief writeup of the issue in their SA article, at http://en.wikipedia.org/wiki/Somethingawful [wikipedia.org]
The reason why Paypal does this (Score:5, Informative)
To make things clear, the types of accounts that is:
A) New accounts
B) Unable to provide documents
C) Receiving many funds from many separate individuals
If you can't guess already.... accounts created by phishing scams!
The fact that this person is not a phishing scam is a travesty on the part that they were suspended, but the FACT REMAINS that they have no possible means to prove their innocence.
Yes I said prove their innocence. This is a company, not a trial. Likewise, they haven't been found guilty either. The reason for the 180 suspension is obvious:
If the people who sent them money start to increasingly cancel their money payments, then, bingo, the account is a scam. If they don't after a given time, say... 180 days, then hey the account is legitimate.
Paypal sucks, but not in this particular case.
Re:The reason why Paypal does this (Score:5, Insightful)
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Re:The reason why Paypal does this (Score:5, Insightful)
So why didn't they outline the fact that these things would be "red flags" when it comes to recovering money from them?
Why would they let someone set up an account in that way when it is obviously going to create problems with the recovery of funds?
Obviously, the account never should have been able to be set up as a charity without documentation identifying it as such if it's going to create these kinds of problems down the line. The problem is clearly of PayPal's own devising by allowing the account to be set up as such a trap in the first place.
To make things clear, the types of accounts that is:
A) New accounts
B) Unable to provide documents
C) Receiving many funds from many separate individuals
If you can't guess already.... accounts created by phishing scams!
Even if the person who set up the account requested the wrong type, PayPal should have either not set the account up in that way without the proper documentation, or outline the ramifications of not being able to produce said documentation when the money is withdrawn. I think it's obvious that they didn't do either of those things from the reaction of the site, and the "ho-hum should've known better" reaction of a lot of users here.
These people can provide a lot of documentation, just cannot prove they are a charitable organization, because they aren't, never were, and never should have ended up with an account of that type, but because of PayPal's corporate policy of setting up interest-traps like this (they obviously want to trap as much money as possible by luring people into setting up PayPal accounts in such a way that they will enter a "suspended" state which they can then collect interest on) they are now unable to collect their funds.
If PayPal were interested in helping people not be ripped off, they would demand all of the information required to draw down from a PayPal account at the establishment of the account, not when someone tries to withdraw their hard-earned (or hard-earned, then donated) cash from PayPal.
Paypal sucks, but not in this particular case.
This particular case highlights exactly why PayPal does suck. Because they encourage their staff to use legal technicalities to bar people from receiving money they have a legitimate right to, because it is more profitable and legally prudent to do so than not to.
PayPal sucks because as a corporate citizen they are psychopath with a pathological money addiction.
The same reason every other large corporation sucks.
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Dramatic overstatement isn't it? (Score:5, Insightful)
This site was not nonprofit, and was having the funds sent to their own, private account.
Yes it's sad, but ask yourself the following: could you trust a nonprofit paypal donation if you knew that they only had to casually mention that they were nonprofit? That they didn't have to prove it?
There's nothing stopping the people who run that website, other than personal honor, from pocketing the cash and giving the finger to everyone who donated. And THAT is why PayPal has those policies. I'm surprised that they'd even hand over the cash after 180 days in fact.
It's sad, yes: but in the future, they should know to make an actual nonprofit organization with its own account. Doing such a thing isn't that hard: you just have to apply, and make a seperate checking account. My club at High School did it, and the people in that club were a bunch of idiots, especially in High School (myself included).
not the first time (Score:5, Insightful)
Just remember.. (Score:5, Funny)
Mod Story Down (Score:5, Insightful)
PayPal is doing what they have to, giving themselves time to investigate to make sure it isn't a scam. Scams like this are rampant, both with soldier funds and hurricane relief funds.
Considering the guy did NOT set this up as a non-profit, he is going to be in for a rude shock come tax time. Once PayPal releases $20,000 to his PERSONAL BANK ACCOUNT the bank will file a "suspicious transaction report" with the gov't. I wouldn't be surprised it HIS BANK didn't then freeze the funds for 30-90 days.
Assuming it is then released, the IRS is going to count that $20K as INCOME and will want 20-33% tax from this person. All his protestations of "but I gave it to the widow's family as a gift!" won't amount for shit.
Sure, he meant well, but he is going to be a living example of "The Road to Hell is Paved With Good Intentions" because PayPal is only the beginning of his descent.
I had sympathy. (Score:5, Insightful)
Re:Thanks, Slashdot! Worst Paypal scam yet! (Score:5, Informative)
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Re:lily tomlin predicted this one... (Score:5, Insightful)
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