![]() "We are committed to getting back to being the center of our customers' financial lives," PayPal's Nayar pledged. The field that it once monopolized is now full of competition: WePay, Square, Stripe and smartphone-based systems like Google Wallet are only a few of the up-and-coming rivals. PayPal can't afford to be complacent much longer. "There's a guilty until proven innocent bias to it, and that needs to change," he said. He's familiar with the fraud protection process, and he thinks PayPal's has plenty of room for improvement. As a sideline to his writing, Lake consults with financial institutions about their communications systems - for example, the automated calls you receive when your credit card may be compromised. Ironically, Lake understands better than most what PayPal is up against. PayPal has multiple, complex security systems in place, and all of them need a fresh look. 2013 is going to be the year that we fix a lot of those pain points." "At a minimum, the fact that someone needs to mail in something to an online payments company is a problem. "We're fixing a lot of that," Nayar said. "We've made a commitment to be clearer with consumers on how they can get out of these situations," he said.įor example, the issue that Jay Lake faced - being asked to mail in receipts and other paperwork that doesn't apply to fundraisers? Nayar, the PayPal rep, said the company can't comment on specific cases. We finally got the money, but it was an untold amount of stress and sleepless nights." And even with all that paperwork, they still ended up holding $50,000. "They needed references and bank statements and tax records. "PayPal freaked out and froze our funds," Drumm said. After running a successful Kickstarter campaign, he launched an online store to sell his Printrbot machines. That's what happened to Brook Drumm, an entrepreneur who sells 3-D printers. Related story: 5 pay-by-phone apps tested "If it weren't for my small bit of fame, if I were the guy down the street, this could have taken months," Lake said. His account was restored by 6 p.m., and PayPal tossed in a corporate donation to Lake's fund. I asked, 'How I do prove I'm not conducting transactions?'"Īfter Lake fired off a sarcastic tweet at PayPal, his fans and famous friends lobbied for help. I called, and they said appeals take 24 to 72 hours to get going. "That obviously didn't apply to me, but there was no way to bypass the process. "They wanted me to provide receipts, shipping information, business paperwork," Lake told CNNMoney. Instead, he received an alert that his PayPal account was frozen. Pacific time the next day - January 11, a Friday - Lake tried to transfer the funds into a bank account. Just five hours after launching his campaign, he had $20,000 in contributions. Thanks to his own fame and the aid of friends like Neil Gaiman, Lake's fundraising effort went viral. ![]() Lake, who is battling advanced colon cancer, is raising money for an experimental genome-sequencing process. Nayar first discussed PayPal's plan for "big changes" in a TechCrunch article posted last week, after science fiction author Jay Lake found his account frozen. The Web is filled with enraged blog posts, websites like, and a Tumblr called "Conferences Burned by PayPal." But if you're running a fundraiser or selling tickets to an upcoming conference, you don't have that paperwork.Įven for those with extensive paper trails, the appeals process can take months to resolve. To get access to their money, users are often asked asked to provide the kind of documentation that a product seller would have, like several months' worth of sales records. The company routinely freezes funds for 21 days if it thinks there's a fraud risk, and its terms give it the right to extend the freeze for up to 180 days. PayPal customers have complained for years about the Kafkaesque nightmare of trying to pry frozen funds loose.
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