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Paypal Won't Release Funds To Slain Soldier's Family 337

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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Paypal Won't Release Funds To Slain Soldier's Family

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  • by lecithin ( 745575 ) on Wednesday January 10, 2007 @09:43PM (#17550272)
    "Paypal Won't Release Funds To Slain Soldier's Family"

    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: (Score:2, Insightful)

      Why the need for so much drama?


      Why, because then no here will read it! Who wants to read about a story regarding Paypal if it doesn't shed Paypal in a bad light?
      • by Korin43 ( 881732 ) on Thursday January 11, 2007 @12:27AM (#17551896) Homepage
        No it's not that. Paypal sucking isn't news. It has to be "Paypal hates soldiers and America!" to get to the front page by now ;)
        • by xappax ( 876447 ) on Thursday January 11, 2007 @12:37PM (#17557794)
          Perhaps a more factually accurate title would be Paypal sees enforcing their bureaucratic - and in this case illogical - corporate policies as a higher priority than allowing a legitimate charity access to its own money.

          To me, even this fairly factual description is still pretty angering. I think that hyperbole often cripples the arguments of people who have truly good points, because everyone just thinks "Oh, they're just exaggerating!". In this case, the actual situation is fucked up enough that there's no need to inflate it with unsupportable claims.

          Say it plain, and let the Slashdot trolls take care of the hyperbole :)
      • by fahrbot-bot ( 874524 ) on Thursday January 11, 2007 @02:05AM (#17552678)
        Who wants to read about a story regarding Paypal if it doesn't shed Paypal in a bad light?

        Umm, are there stories that show Paypal in a good light? I haven't heard / read any...

        • by Richard_at_work ( 517087 ) on Thursday January 11, 2007 @05:53AM (#17554012)
          They were definitely helpful when some miscreant recently got hold of my Paypal login details somehow and transfered several thousand dollars around the world. I had a paypal account handler on the phone within a minute of ringing their (UK) number, she raised disputes on all the items, they were confirmed within 48 hours as problem transactions and they had all been cancelled within 72 hours.

          My account was usable again a week later, but that was mainly my fault for cancelling the direct debits and cards linked to the paypal account the morning I discovered the activity, so I had to reset up the paypal - bank account conduits.

          Funny thing is, I actually made money from all this :) Because the vast majority of transactions made were done through the direct debit system, Paypal could not stop them at that time, so we were waiting for them to fail. During this period tho, Paypal preempted themselves and applied a balance readjustment to take into account currency exchange rate changes, giving me over fifty dollars. The direct debits failed, no money actually left my bank account so no funds were needed to be returned, but Paypal point blank refused to admit that the fifty dollars wasnt mine, so by their admission I gained money!

          All in all, I have had excellent customer support from Paypal and all the other anecdotal websites around dont match my experiences.
          • by jandrese ( 485 ) <kensama@vt.edu> on Thursday January 11, 2007 @09:37AM (#17555338) Homepage Journal
            Your story is typical when I ask around at conventions/with friends. It seems to me that a lot of the "Paypal sucks" stories come from people who were scamming or trying to launder money through the service (or doing activities that looked a lot like that) and discovering that Paypal actually pays attention to what's going on with their accounts. It doesn't help when the "Paypal Sucks!" type sites offer suggestions for alternative online payment systems that are known to be scams.
            • by @madeus ( 24818 ) <slashdot_24818@mac.com> on Thursday January 11, 2007 @10:23AM (#17555918)
              They took money out of my account they shouldn't have, due to a screw up entirely of their own making (it wasn't an error on my part, or another user trying to scam me and I certainly wasn't trying to scam anyone or up to anything remotely unusual or nefarious).

              They wouldn't refund it and told me not to contact my credit card company (Mastercard) and sent me a cookie cutter response saying they would ban me from using Pay Pal if I reported the problem to Mastercard (as Mastercard policy explicitly said I should, given the nature of the transaction). Which is an 'interesting' way of doing business to say the least. As the only way to actually get a refund, I did tell Mastercard, I told them about everything Pay Pal had sent me, and told Pay Pal of this and instructed them to close my PP account.

              Even after I had closed my account I kept getting junkmail from them (which I couldn't unsubscribe from, as I'd closed my account - which in turn prevented me from unsubscribing). Slick.

              This has, to my surprise as much as anyone, been the sort of story (along with mysteriosly delayed releases of funds) that I've heard more of from people that success stories. I've met quite a few people who no longer use Pay Pal for their business because it's been such a hassle to deal with. It's ridiculous that they are not subject to stricter regulation.
        • by loraksus ( 171574 ) on Thursday January 11, 2007 @07:06AM (#17554392) Homepage
          Is there any need to ask rhetorical questions?
    • by sexyrexy ( 793497 ) on Wednesday January 10, 2007 @10:22PM (#17550718)
      Because it just takes a few stories like that to get picked up by major news orgs or large aggregators like Slashdot to twist PayPal's arm into rectifying the situation quickly.
    • Re: (Score:3, Insightful)

      Why the need for so much drama?

      Ad revenues?
  • by yagu ( 721525 ) * <yayagu@[ ]il.com ['gma' in gap]> on Wednesday January 10, 2007 @09:43PM (#17550274) Journal

    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:

    Anyway, so, unless Paypal can see reason, we won't be able to send the legitimately raised money for a legitimate cause to Adam's family and the goods to Adam's platoon until April 13. We find this unacceptable.

    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.

    • by mooingyak ( 720677 ) on Wednesday January 10, 2007 @10:59PM (#17551094)
      One thing that confuses me here is the 180 days and April 13th...

      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?
    • A more accurate summary should have indicated... blah blah blah...

      A more accurate summary wouldn't have angried up my blood enough!

      It may be a necessary policy (meet some kind of legal/tax obligation), it may be a practical policy (they need time to deal with all the database changes and paperwork). The lag seems exceptional and it might just be an asshole policy (you screwed up! Guess we'll collect interest on your money for a nice long time. Hey man, what can you do, we have "policies.")
    • by pla ( 258480 ) on Thursday January 11, 2007 @06:33AM (#17554232) Journal
      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.

      A problem, I think we all agree, but not PayPal's place to fix it.

      PayPal doesn't handle the taxation aspects of charity. They don't guarantee legitimacy. They balk at giving the very refunds they claim they've held the money to cover.

      So what exactly does "charity" status mean, other than a flag on an account that effectively translates into "Thanks for the 180 day interest-free loan" (or "less than going MM rate" if they used a PayPal MM account)?

      Nice try, but PayPal should not have done this. I know their terms give them basically the right to tell you to take a hike and keep your money for any reason, but this will hurt them. Their long history of ripping people off traditionally hasn't received enough press to harm them. Ripping off a charity for a dead soldier's family? This could (and hopefully will) make the cover of the NYT (on a slow news day), and dozens of other major newspapers.

      Time for PayPal to go under. They've played games long enough.
  • by User 956 ( 568564 ) on Wednesday January 10, 2007 @09:44PM (#17550286) Homepage
    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.

    "Paypal: We don't care. We don't have to."
    • by Zonk (troll) ( 1026140 ) on Wednesday January 10, 2007 @10:19PM (#17550678)
      If PayPal wants to continue pretending to be a bank, they should be regulated like one.
      • That's ok, since they're only pretending, the government regulations are also pretend!
      • Re: (Score:3, Insightful)

        by DerekLyons ( 302214 )

        If PayPal wants to continue pretending to be a bank, they should be regulated like one.

        Which won't change as much you might think - banks can, and do, freeze funds, refuse transations, etc... etc... on a regular basis.

        A few years back we had a virtually identical case locally. A local families house was burnt out - and a helpful neighbor collected cash and checks (made out to the neighbor) to help them out. Said neighbor took a sackful of checks and cash down to the bank and deposited it - two da

  • by ezratrumpet ( 937206 ) on Wednesday January 10, 2007 @09:48PM (#17550350) Journal
    I suspect that PayPal will release the funds within 24 hours of the /. report.

    No one wants that kind of bad PR.
  • by traindirector ( 1001483 ) * on Wednesday January 10, 2007 @09:49PM (#17550362)

    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:

    1. Deadspin starts PayPal account. Despite their claims to the contrary, they set it up as a non-profit, not informed or not paying attention to the fact that documentation of being a non-profit organization is required.
    2. Much money is deposited into the account. Paypal likely doesn't take as big a cut because the fund is marked as a non-profit organization.
    3. They try to withdraw the money. Yes, it's for a noble cause, etc., but an organization like PayPal with such strict rules because of their sheer volume of transactions can't make exceptions (often) unless the issue rises above the first few rungs of the company. Plus, it probably goes beyond PayPal to federal regulations in dealing with non-profits.
    4. The fund starters make a big deal about it, pay whatever additional fees they would have had to pay otherwise (or maybe PayPal lets them off the hook to show how good a company they are), and all is again in balance.

    So it doesn't seem the company is trying to rip anybody off or laugh over the graves of the dead. In this case.

    • by Anonymous Coward on Wednesday January 10, 2007 @10:09PM (#17550580)

      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.

    • by Dolohov ( 114209 ) on Wednesday January 10, 2007 @10:32PM (#17550814)
      I suspect that part one went along the lines of,

      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.
      • by Dun Malg ( 230075 ) on Wednesday January 10, 2007 @11:15PM (#17551262) Homepage

        I suspect that part one went along the lines of,

        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.
        Are you kidding? That'a a nice imagination you've got! You think there's a mechanism for actually talking with a person at PayPal to set up an account? PayPal doesn't have a phone number! Well, they do, but it's near impossible to find and the only time it's answered is between 6 and 7am Tuesdays, by the janitor. Everything is online. Deadspin filled out a webform to open their account, just like everyone else.
        • Re: (Score:3, Informative)

          by Dolohov ( 114209 )
          The article sounded like they had been talking on the phone extensively, though probably only after problems arose. I can't speak to how useful or reliable it is, but I found this pretty easily:

          PayPal Customer Service Agents are available to help you during the following times:

          4:00 AM PST to 10:00 PM PST Monday through Friday
          6:00 AM PST to 8:00 PM PST on Saturday and Sunday

          Call us at: 1-402-935-2050 (a U.S. telephone number)


          This is the first non-toll-free customer service line I've seen in a very long time
  • by 6350' ( 936630 ) on Wednesday January 10, 2007 @09:51PM (#17550392)
    SomethingAwful.com ran into a similar problem when they set up a paypal donation fund, to collect money for the Hurricane Katrina relief efforts. They intended to give the money to the Red Cross.

    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]
  • by Gnpatton ( 796694 ) on Wednesday January 10, 2007 @09:53PM (#17550410)
    The reason why Paypal does this is because creating a charity account without being able to provide documents proving your charity status is suspect. It's a red flag. Another red flag is having a new account suddenly receive a massive amount of funds from many individuals.

    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.
    • by 644bd346996 ( 1012333 ) on Wednesday January 10, 2007 @10:05PM (#17550540)
      It strikes me that they have already proven their innocence beyond the point that paypal has a right to know about. The fund in question was set up (possibly improperly) with an explicit, legitimate purpose that all donors can be expected to know about. That means that it is not phishing. Furthermore, there is no evidence that potential phishing is any part of the dispute. The only issue is that paypal is treating the account as belonging to an official, regulated charity, whereas the deadspin folks were doing an impromptu fundraiser.
      • BZZZZT! WRONG! (Score:4, Insightful)

        by raehl ( 609729 ) <raehl311@@@yahoo...com> on Thursday January 11, 2007 @03:27AM (#17553238) Homepage
        The fund in question was set up (possibly improperly) with an explicit, legitimate purpose that all donors can be expected to know about. That means that it is not phishing.

        No it doesn't. All it means is that the person who created the account CLAIMS it's not a phishing scam. Someone who was running a phishing scam would say EXACTLY THE SAME THING that these people are saying. They would CLAIM that they were running a charity donation drive for a soldier's family, they would CLAIM that they were going to send the money to them, and then when Paypal put the money in their bank account, they would wire it to Russia.

        The way you do this RIGHT is you set up a separate, legal, non-profit entity, and in the ARTICLES OF INCORPORATION state that the purpose of the organization is to benefit John Smith's family, and that funds may only be distributed for that purpose, and then you open an account in that organization's name, not in your personal name. Then when you advertise that you're a charity, sign up for a charity paypal account, and people pay you through paypal and paypal says you're a charity, you can actually get your money right away.

        Paypal is doing the right thing here. There is simply no other way that paypal can offer a donate to charity function without this policy. Does it suck for this partciular 'charity'? Yes. Is it ENTIRELY their fault? Absolutely.
    • by steeviant ( 677315 ) on Wednesday January 10, 2007 @11:35PM (#17551446)
      The reason why Paypal does this is because creating a charity account without being able to provide documents proving your charity status is suspect. It's a red flag. Another red flag is having a new account suddenly receive a massive amount of funds from many individual.

      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. :)
      • Re: (Score:3, Insightful)

        by um... Lucas ( 13147 )
        A couple points... If they did set up the account as a non-profit/charity account, that's not paypal's fault for allowing that to happen.

        It takes simple paper work but a decent amount of time to become an established 501c(3) charitable organization. Often times a disaster or other circumstance will occur that necessitates setting up a non-profit to try to help raise the funds... These organizations want to raise money while the cause is still fresh in people minds, even if it means that they're not formally
  • by Vthornheart ( 745224 ) on Wednesday January 10, 2007 @09:55PM (#17550458)
    Lesson learned to all: if you're going to claim you're a nonprofit organization, BE A NONPROFIT ORGANIZATION.

    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).
    • The only claim that deadspin is a non-profit comes from paypal. The original blog post did not claim that they are a non-profit, and even said that the deadspin people would spend the money to buy goods to send over to Iraq. They even labeled their fund as "slapdash." Anybody reading the original blog post should understand that deadspin's integrity is the only thing that will get the money all the way to the soldiers.

      If there are any laws prohibiting informal charities, paypal is responsible for pointing t
      • The only claim that deadspin is a non-profit comes from paypal.

        The only claim that Paypal screwed up comes from deadspin. Why would PayPal arbitrarily make an account a non-profit? I think deadspin messed it up, and is now trying to pin the blame on Paypal. Something smells fishy.

  • Big surprise... (Score:4, Informative)

    by supersocialist ( 884820 ) on Wednesday January 10, 2007 @10:01PM (#17550502) Journal
    PayPal did the same thing when Dan Savage of the Savage Love sex column took up a collection for charity. PayPal refused to release the funds to him and would only donate them directly to United Way, a charity with a very questionable reputation. Don't take charity through PayPal, people. They're sketchy enough when you're buying and selling like they want you to.
    • by FFFish ( 7567 )
      Sketchy? As in "we'll give you a kickback if you send all charity donations our way" sketchy?

      That would cement one's name in net-journalism history: the person who documents a "sketchy" Paypal-United Way connection.

      Y'know, a bounty system for "evil doing" leaks about corporate behaviour would be really quite awesome. I'd kick in a few bucks as reward for the fellow who can document to a legal standard, the mis-doings of business. It'd help remove the turds from the pool.
  • by TrappedByMyself ( 861094 ) on Wednesday January 10, 2007 @10:02PM (#17550516)
    the CEO of Paypal must be a Michigan grad...
  • not the first time (Score:5, Insightful)

    by Nutty_Irishman ( 729030 ) on Wednesday January 10, 2007 @10:06PM (#17550548)
    Not the first time the company has hindered someone using paypal for a charitable cause. http://www.paypalsucks.com/forums/showthread.php?f id=3&tid=9630&old_block=0 [paypalsucks.com]. Also is the wired article http://www.wired.com/news/technology/0,68788-0.htm l [wired.com]. I particular find this line a bit unsettling:

    Kyanka said he asked PayPal to donate the money directly from the account to the Red Cross. However, PayPal declined, saying it has an exclusive charity relationship with United Way of America.
    Umm... I can understand having exclusive relationships with, say, Pepsi or Coca Cola. However, it seems refusing to donate to one charity because you have an exclusive relationship with another charity almost implies that there is some financial benefit for you to donate money to one charity over another. Not to point fingers, but it's a bit of a gray area there...
    • Re: (Score:3, Insightful)

      by Aladrin ( 926209 )
      I think you should make a correction to your post. PayPal was NOT doing the donating to charity. They were simply a vehicle for the funds. It was NOT PayPal's money and never was.

      PayPal refused to transfer the money to any charity except United Way (which I personally loathe due to their methods and policies). That's like saying they have an exclusive relationship with Microsoft, and they can't transfer any funds to Apple but they'll send them to Microsoft instead.

      The fact that UW and RC are charities i
  • by andy_fish ( 557104 ) on Wednesday January 10, 2007 @10:15PM (#17550638)
    No matter what the "factual" details are, if you're on the same side of a dispute as a dead soldier's family, there's no possible way you can be wrong.
  • I didn't see anywhere that the donors were forbidden to retrieve their donations, or the account holder unable to refund all donations. If either of these were possible, then all the effort spent in complaining could be replaced with retracting the money and sending to a new account ( paypal or otherwise ).

    The article has a post by someone who mentions haveing a charity account problem with Paypal in the past where they told PayPal to refund everyone's money. If that's possible then the money could be pul
  • Mod Story Down (Score:5, Insightful)

    by chill ( 34294 ) on Wednesday January 10, 2007 @10:22PM (#17550724) Journal
    Read the article, and it will be obvious that the person who set everything up is not only and idiot, but they are rude and foul-mouthed as well.

    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.

    • The truly ironic thing is this guy probably intended all the money to go to the family where as most legitimate charities keep between 1/3 and 2/3s of the money for expenses. I can't recall which one but I remember a few years ago reading a story where one of the biggest couldn't prove they had given any money to the people it was intended to go to. A lot of charities do good work but just as many "legitimate" ones are in the business to raise money not hand it out. Any charity that keeps more than 1/3 of t
    • I don't think your predictions are accurate. Tax payers are entitled to receive gifts up to $10,000/year from any individuals tax free. Now maybe someone gave a single gift of more than $10,000, it's highly unlikely. What's more likely is that he received many small gifts from many different people, which would be completely tax free. Now once he receives the money, if he gives it in one lump sum to another taxed entity, it would be subject to gift tax. But hopefully he's smart enough to use other peop
      • by chill ( 34294 )
        Actually, I think the limit is now $12,000, but it will take a creative accountant to make this work. That is gonna cost him, unless the accountant does it pro bono.

        God help him if he mentioned anything anywhere about "tax deductible" or even "charity".
        • There's no tricks to be played by an accountant. If what you've received is under $10k, you don't even have to declare anything on your taxes. And it's not like PayPal is filing a W2 on your behalf. Additionally, I've transferred well over $10k between accounts (including accounts that weren't in my name -- like mortgage escrow accounts) without being contacted by the feds. So I really don't think he has to worry about anything.
    • Re:Mod Story Down (Score:4, Informative)

      by autophile ( 640621 ) on Wednesday January 10, 2007 @11:49PM (#17551578)

      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.

      No, no, no!

      You can receive any amount of money as a gift, and it is NOT TAXABLE. This is why tips are a special category of income. You might think a tip is a "gift" to your server, but the IRS says it's a tip, not a gift, and thus taxable. There used to be these little cards that you could leave on top of your tip that said "This money is a gift, and not a tip". But I don't think they work :)

      When you are the one doing the giving, then YOU are the one who has to pay a "gift tax", unless it's under the annual exclusion which is (this year) $12,000 per person you gift. Anything over the annual exclusion goes into the "lifetime estate exclusion" bucket -- so if you pass your estate on to someone after you die, they get to pay taxes on it if the amount of the estate is (this year) $2,000,000 MINUS the lifetime estate exclusion.

      WTF does this all mean? These guys can take in $20k and give it to two people without anyone having to pay any taxes at any time. Which is why you were wrong.

      If, on the other hand, he gives the full $20k to one person, then $8k is above the exclusion, which means his eventual estate inheritor can now only inherit $1,992,000 tax-free. So he probably still doesn't have to worry, but he shouldn't make this a habit.

      I'm not an accountant, but I play one on the Internet!

      --Rob

  • Someone could always get a loan (maybe against their house) and then send the money a little late. A loan would probably be 20-40 per 1000 borrowed. That really isn't that much to fix this, frankly.
  • by Nova Express ( 100383 ) <lawrenceperson.gmail@com> on Wednesday January 10, 2007 @10:32PM (#17550824) Homepage Journal
    I run a business selling science fiction first editions on the side [rr.com], and eBay is one of my selling venues.

    Over the past few years, eBay has been slowly tightening the screws to get people to switch to "Business" accounts (i.e., the ones they get a percentage of every transaction on) as opposed to "Personal" accounts. First they made it so that you couldn't accept credit card payments on your personal account. (OK, fine, credit cards charge fees.) If you received a credit card payment on a personal account, you had the choice of upgrading the account or denying that charge. Then they made it so that you couldn't sell on eBay accepting paypal and NOT take credit cards, which meant you had to get a business account. (Not so fine.)

    But what really pissed me off was the fact that, sometime in October 2006, they changed the rules again without bothering to tell anyone. They disabled the Deny button for PayPal payments for eBay auction if you had a personal account designated for that auction, and also made it impossible for the Payee to cancel the transaction! Before I just denied the charge, then sent a bill from the my business Paypal account. But now neither I nor my winning bidders could cancel the transaction! And both eBay and Paypal customer service (the phone support of which has been is a pay call to a call center that's re-routed to India) refused to do anything about it. I finally had to wait until it aged out of the system after 30 days, because I refuse to upgrade with a metaphorical gun to my head.

    There was no e-mail or account notice of this on Paypal or eBay, just an update to the Terms of Service buried somewhere on their respective websites.

    Thanks a lot, eBay. Way to ensure that GCash has an audience ready and willing to switch from Paypal at the first opportunity thanks to your heavy-handed tactics. Ditto for a GAuction, when it comes...

    • We already have "GCash". It's called Google Checkout. Unsurprisingly, eBay will specifically not accept payment from them (and a few others).
  • I had sympathy. (Score:5, Insightful)

    by DarkkOne ( 741046 ) on Wednesday January 10, 2007 @10:33PM (#17550828) Homepage Journal
    Notice the use of the word "Had." I'm sorry, but responding to a problem like that with that sort of language is somewhat ridiculous. Paypal is supposedly following their own policy. You can respond to it by acting professionally, writing it up for the public, and then returning to PayPal and trying to get access to someone higher up the command chain, or you can do what they've done, and mouth off about it. Considering the way they reacted in text, I have a hard time believing that they acted professionally enough on the phone to make the PayPal representitive honestly feel they were there in good faith. As well, their request that people assault PayPal with phonecalls and other contacts is somewhat petty. Honestly, I'm not a fan of PayPal in the slightest, but this isn't the way to react to such things.
  • by duncan ( 16437 ) <chuckf410@NOspam.yahoo.com> on Wednesday January 10, 2007 @10:43PM (#17550930)
    Someone made a mistake. Possibly Paypal, possibly the organizers of the fund.

    My guess is that they had never set one of these up before and when setting up the Paypal account was asked many questions and they ticked of the wrong box.

    This is not unreasonable due to those who tend to set these accounts up as scams. But putting the hold it forces the legit people to justify themselves and the bogus people to jump through hoops.

    Now if you really want to be upset at someone it's the bankers who try to pull scams that caused these types of rules in the first place. The banking regulations that were tightened in the 90's. The Sarbanes/Oxley regulations that have caused increased accountability and paperwork.
    • Re: (Score:3, Insightful)

      by Shadyman ( 939863 )
      Only problem is, Paypal is not a bank or financial organization, and therefore do not have to comply with federal regulations.
  • Expect it to get bombed again... now that they've pissed off the military.
  • by thesolo ( 131008 ) <slap@fighttheriaa.org> on Wednesday January 10, 2007 @11:03PM (#17551124) Homepage
    Recently, my dog and my girlfriend were attacked by a Staffordshire terrier ("pitbull") that was allowed to run off of his lead. Due to the extremely high vet bills for my dog, a friend of mine set up a donation fund and created a new paypal account. I didn't know about it, and then was surprised with a nice gift from my friends to help me through a rough time; it was all very touching.

    However, Paypal would not let me associate my bank account with the account he created, since it was already associated with my account. So, we just forwarded the money in my friend's account to my account, where I then moved it to my bank account.

    Apparently this set off some red flags for Paypal. They called my friend not once, not twice, but five times, each time asking him to reiterate why he created the account, what the money was for, and why I was putting it in my account. Each time he told them what it was for, why it was set up, linked them to the donation web page, etc., and the next day, they would call him back. Apparently they never made notes of the fact that they called him the previous day.

    I'm very glad that I removed the money from my account as soon as possible, Paypal has been known to freeze accounts for various reasons, and it seemed like they were looking for a reason to do so in this case. The thing that I found most odd is that they put you through hoops to speak to a real person over there, but try to do something nice for someone, and they grill you like a criminal in an interrogation room.

    If Paypal weren't so ubiquitous, especially among eBayers, I would never touch it again.
  • by Opportunist ( 166417 ) on Wednesday January 10, 2007 @11:09PM (#17551202)
    Let's take a look at it from the PayPal perspective.

    1. An account is opened.
    2. A LOT of people pay towards this account, within rather little time, accumulating also a LOT of money.
    3. The amount should be withdrawn, all at once and also rather shortly after it's been set up.

    Where do I know that from... Ah heck, pick your favorite fraud scheme, I'm not teaching scamming 101 here.

    It certainly isn't in PPs intention to keep a soldier's family from receiving their money. But I can well understand that they want to make sure that it does INDEED go to the family and not to some con artist.

    Or we'll soon see headlines akin to "PayPal helps con artist to pull off scam", and people will get their undies in a knot because PP doesn't do jack against them and doesn't even try to stop these things from happening.
  • This is just another example of how they're an unaccountable batch of trouble.

    If your bank said "we have your money, but we're not going to give it to you for 6 months" you could work your way up the bank chain, or to the appropriate government agency.

    Same if your employer said "yeah, we owe you money, but we'll pay it out in June".

    Paypal? Nothing. They say no, and you're screwed. And they say no a lot. I think they just hired David Spade, actually...

    What tweaks me is that in other cases (the Katrina fund i
  • I just spent some time reading the articles on deadspin, along with a myriad of comments that really don't paint the complainers in a very good light either. Sure PayPal's policy might be annoying in a case like this, but name calling, mud slinging, foot stamping and whining is not the way to make your case. They're not keeping the money... they're following the policies they've put in place, and publicly posted, to protect their own interests as well as those of the vast number of customers they serve ev
  • This is a case where it sucks that I did in fact RTFA.

    I feel sorry for Adam Knox, his family, and his platoon.

    I don't feel a damned bit sorry for Deadspin. And I hope "The douche" who wrote the story on Deadspin "goes home tonight and is fucking beaten by Jason Kidd's wife" and then "have their entrails dragged through the street".

    And I wish Slashdot could learn to not hype stories where there really is no big story, and to check all the facts before they post it. But that's about as likely to happen as i
  • by dtfinch ( 661405 ) * on Thursday January 11, 2007 @12:38AM (#17552000) Journal
    The longer they can tie up your money, the more interest they'll make. They've locked countless accounts permanently, keeping the money for themselves. Blah blah blah. Rabble rabble rabble. This is nothing new. Hardly newsworthy. Beware the terms of service.
  • Inaccurate title (Score:3, Insightful)

    by digitalgimpus ( 468277 ) on Thursday January 11, 2007 @12:42AM (#17552036) Homepage
    This story smells.

    The site author neglects to disclose a few things:

    1. Are they paying taxes on the money?
    2. How did they disclose their tax status to *both* donors and PayPal?

    From the article, they are at fault, not paypal. It sounds like they tried to make some tax-free cash without setting up a non-profit.

    So if PayPal just gave them the money, and the IRS stepped in, then PayPal would be blasted for allowing this to happen.

    I'm not a fan of PayPal, but this story smells either: bogus, or skewed. Either way it's somewhat inaccurate and shouldn't be taken at face value.
  • by shaitand ( 626655 ) on Thursday January 11, 2007 @02:05AM (#17552672) Journal
    In a situation like this the money probably doesn't belong to the account holder yet. It probably belongs to the one who sent the funds. But in either case, the money most definately does not belong to Paypal. Paypal releases the initial funds after 6 months in these cases (a rather extraordinary length of time) but Paypal is not entitled to the interest garnered on frozen funds no matter what the circumstances. Whether the charity is legit or not, I want the interest on my donation for the time period in which paypal held the frozen funds returned.

    Whether you group those whose funds have been frozen by paypal, or you group those who donated the funds there is definately a class action to be made here. Paypal freezes accounts when they have accumlated large sums and then pockets the interest; they need to be stopped.
  • Nothing new... (Score:5, Insightful)

    by Skal Tura ( 595728 ) * on Thursday January 11, 2007 @03:38AM (#17553302) Homepage
    There's absolutely NOTHING new in Paypal doing this. They aren't regulated, so they can do what the hell they want to in effect. and you can notice this.

    On top of that, atleast in one point, even fscking janitors could get to see your account info there!

    It does get better tho... Rather than working honestly, in one case i had, i got a fraudulent order, found out about that myself
    a day later, e-mailed them about the transaction needs to be reversed. This got to happen due to the fact, that they do not require any authentication at all to deposit more into paypal, as long as you have username & password.

    I explained what has happened in detail etc. meanwhile, calming the victim down (who's account was stolen, victim of a phishing attack). I wasn't going to just send the funds to her, then the insane transfer fees would be lost etc. Total amount was approximately 150.

    Almost 2 months later, i finally got a word from there... Nope, they hadn't read my e-mails, it seems it was automated message, saying the funds had been refunded etc. but the thing is, who's money it was, never got it. She noticed my Myspace profile 6months later, and she hadn't got STILL got it, while paypal had taken the funds from me.

    In effect: Paypal decided to take the funds, without refunding them.

    Nevermind the insanely high fraud amounts with them! I dropped them, after using them years and years, guess they calculated the
    one time cash was worth to them more than continuing transfer fees.

    People, don't use paypal, there is honest companies out there to replace them... That being moneybookers!

He has not acquired a fortune; the fortune has acquired him. -- Bion

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