Don’t store cash in Venmo and PayPal, US regulator warns

https://www.cnn.com/2023/06/02/investing/payment-apps-safety/index.html

by thunderbong • 3 years ago

303 173 3 years ago

cnn.com

vezycash• 3 years ago

Forget insurance, paypal terminates accounts on a whim.

I've not logged into my PayPal account in at least a year but got a termination notice for policy violation.

That's the real threat.

LinuxBender2• 3 years ago

Adding to that their plans to engage in fining people for "misinformation" [1][2] They back-peddled but I would not be surprised to see them take another stab at it.

[1] https://www.forbes.com/sites/emilymason/2022/10/27/after-pay...

[2] https://jolt.law.harvard.edu/digest/paypals-misinformation-f...

tifik• 3 years ago

I would put "misinformation" into quotes, because iirc the policy was written so vaguely that it basically allowed them to fine you for whatever they disagreed with.

vwcx• 3 years ago

And it's been the threat for 20 years.

Wayback Machine (May 23, 2003): https://web.archive.org/web/20030523125359/http://paypalsuck...

AH4oFVbPT4f82• 3 years ago

They also like to suspend funds when they want or when it benefits them.

pavlov• 3 years ago

This is their entire business model. The service they offer is predicated on aggressive fraud detection with lots of false positives.

Don’t use PayPal if this doesn’t sound appealing.

zamalek• 3 years ago

I have heard this has happened so many times that I'm curious they consider terminated accounts as a source of revenue.

xp843• 3 years ago

Yup, and all because they are (and always have been) “not a bank” — just a tech company that you deposit your money into, who makes loans and investments with that money, and provides services to help you move that money around. It’s completely different, see?

jacquesm2• 3 years ago

In Europe they are a bank:

https://www.finextra.com/newsarticle/16927/paypal-gets-banki...

14zadz• 3 years ago

Meanwhile I’ve been trying to get them to close my account for over a year after they allowed fraud to occur and still tried to make me pay up even though my credit card deemed it fraud as well.

seydor• 3 years ago

In europe, they are a bank which means that deposits are insured

In any case, evidently Paypal has been more stable than banks.

There's a real need for digital payments and none of the regulatory frameworks in europe or america take that seriously. So people will keep flocking to those easy to use ubiquitous services

madsbuch• 3 years ago

In Europe you have SEPA. That insures that you can send EUR between all European banks instantly for free.

teetertater• 3 years ago

Receiving SEPA is not instant however, it usually takes 24 hrs or longer in case of weekends.

When I lived in Canada I really took e-transfer for granted and was surprised to learn it's not a thing in other places.

bunga-bunga5• 3 years ago

for free

YMMV. My main bank charges 0.5% up to 20€ or something. My second bank does not.

dsr_• 3 years ago

You can't say "Paypal has been more stable than banks" until you read the regulator's report.

Have you?

noAnswer• 3 years ago

"More stable" in what way?

It's the only bank/money service I used that terminated my account. I didn't used it very much. One day I got an email that I violated TOS. (At first I thought it was fishing. lol) They gave me 180 days to withdraw funds, though. (Which is nice of them. I guess.) My last payment/money transfer before the ban was a donation to OpenBSD. That shouldn't be illegal.

My boss used Paypal for several years for odd eBay sells. (Commercially, but only three, four times a year.) When they suddenly wanted to see copies of bills and passports. He eventually gave up, with still around ~100€ locked up.

charrondev• 3 years ago

There’s SEPA in Europe and Interac in Canada.

In the US I’ve had decent luck with Zelle in the past (my bank had support for sending with it), but recently I’ve just been using Apple Cash with family.

jt2190• 3 years ago

Source:

Consumer Financial Protection Bureau Consumer advisory: "Your money is at greater risk when you hold it in a payment app, instead of moving it to an account with deposit insurance", June 1, 2023 https://www.consumerfinance.gov/about-us/newsroom/consumer-a...

reaperducer• 3 years ago

Common sense. My accountant warned me about this years ago.

Just because it acts like a bank doesn't mean it's a bank.

gregschlom• 3 years ago

It's not really common sense if you need a professional to give you this piece of advice, though.

bombcar• 3 years ago

Banks are also more regulated than PayPal and when they screw you over you can complain to a banking regulator who can make their life hell.

droopyEyelids• 3 years ago

You're correct and I want to tell other readers that PayPal/Square are regulated by the CFPB and the CFPB is a very useful way for a regular person without a lawyer to fight back when something goes wrong.

lvl102• 3 years ago

Paypal and its CEO are the worst. They screwed over so many people during the pandemic.

matthewgrossman3• 3 years ago

I recently had my venmo account terminated out of the blue, and this is the best explanation they could give me:

We have systems in place that monitor activity on Venmo, but please note that we don't reveal information about our internal systems in order to keep these systems robust. However, I'd recommend looking over our User Agreement for information on our policies surrounding acceptable use and high risk activity.
I apologize that we're no longer able to assist you.

Thankfully I was able withdraw my cash, but I've been telling everyone I know to be careful when dealing with venmo; you really can't trust them

twelve403• 3 years ago

now that zelle has adoption I don't even know what venmo adds anyway

I still use the old paypal for juggling payment methods, like when I leave a credit card at a bar and cancel it, I don't have to punch in a new one everywhere, just paypal.

but cash transfers to people have been bank to bank anyway so no need for extra services there anymore.

mulmen2• 3 years ago

I can never get zelle to actually work. I get into some endless loop of email validation and can’t actually send anything.

somsak2• 3 years ago

be careful with Zelle, if you send to the wrong person / get scammed, there's no way you're getting that money back. With Venmo / PayPal, you have a much better shot.

https://www.aura.com/learn/zelle-scams / https://assets-global.website-files.com/6082ee0e95eb6459d78f...

pgwhalen• 3 years ago

What sort of account activity of yours was suspicious to them, do you think?

chrisbolt• 3 years ago

Here’s an example: https://news.ycombinator.com/item?id=33410044

Seems that Venmo thinks they should be enforcing sanctions against Cuban restaurants in the US.

matthewgrossman3• 3 years ago

My theory (which I included in my emails) was that I was receiving funds from people I hadn't transacted with before. For my wedding, I had requested money for a "housing fund", and many friends/cousins/parents'-friends/etc were gifting via venmo

raincom• 3 years ago

US Bancorp closed my checking account, because I used Zelle heavily. First, they terminated my Zelle; when I called the customer service, I was given two weeks to move my funds to another bank, as they gave a notice to close my account. This happened to another redditor too, who used Zelle frequently, and he banked with Union bank (in California), now owned by US Bank. US Bank closed his union bank account.

Banks don't want any risk whatsoever; they just want profitable customers. Frequent cash deposits, close the account; deposit money orders often, close the account; use zelle heavily, close the darn account; you don't use the debit card to purchase stuff, close the account.

iinnPP• 3 years ago

Paypal locked my account and won't do anything unless I provide data to prove something I care not to prove. All unsubscribe mechanisms are locked behind a login...

The result has been a complaint to the CRTC(Canada) for sending CEM emails without an unsubscribe mechanism. Oops.

Izikiel43• 3 years ago

And what happened afterwards?

lowbloodsugar• 3 years ago

Question: why are they not regulated like banks? They look like a bank to me.

mwsfc• 3 years ago

They are licensed as a money transmitter like Western Union. It is a lessor form of regulation. So while they look "bank like" in some things they are not legally a bank.

tgv• 3 years ago

They can ask to be considered a bank. That would require them to implement all those regulations. I'm sure they don't like the idea.

xp843• 3 years ago

Good lobbying. They just do everything a bank does without any of the obligations. Honestly I’m surprised some real banks have not tried to become like PayPal to allow more sleaziness.

neilv• 3 years ago

Also, I wouldn't give them direct access to my main bank account.

You don't want online fraud or some dotcom's Kafkaesque behavior to unexpectedly empty your main account of money that you need to pay rent, and have the dotcom simply refuse to talk with you.

In general, I try to minimize how much money I have sitting in dotcoms ('move fast, break things, disregard regulations, cash out' sociopathy). Relatively trustworthy are some traditional institutions (e.g., Fidelity Investments, some retail banks and credit unions).

toomuchtodo• 3 years ago

Good timing with FedNow going live, negating the need for these wallets. CFPB at the top of their game.

elforce002• 3 years ago

Cash is still king. I don't want to live in a society where few corporations and banks have control over the money supply.

cherrycherry98• 3 years ago

Agreed, we need larger denomination notes to keep cash usable. Despite decades of inflation the largest notes printed are $100 and it has been that way since 1969. Even $500 note doesn't get us back to buying power parity (it's about $800 btw).

sowbug• 3 years ago

The Bank Secrecy Act requires banks to file a currency transaction report when a customer makes more than $10,000 of cash transactions with the bank in a single day. "Structuring" aggregate transactions to stay under the limit can get you thrown in jail, and your money seized.

That law was passed in 1970. The amount hasn't been adjusted since then. It would approach $80,000 today if it had been indexed for inflation.

Don't know about you, but I don't foresee anyone sponsoring legislation to relax these reporting requirements, or otherwise making it easier to conduct private cash transactions with anything but toy amounts of money.

internetter• 3 years ago

I've been to places that only accept credit card and it's infuriating as a consumer, and confusing given my relationship to small businesses. Consumers expect the same price regardless of their method, but the card fees are painful. Especially given our (former) payment partner (but really the CC companies) are doing everything they can to take more money[0].

[0] https://news.ycombinator.com/item?id=34996006

JCharante2• 3 years ago

I've been to places that only accept cash and it's infuriating as well, so I boycott them. Cash is dirty and annoying to deal with for customers and merchants (as a young adult I used to work in a high-volume coffee shop).

Larrikin• 3 years ago

Cash is not king. If you're in the US and you're paying without using a credit card you're effectively losing thousands of dollars more than those that do. You can disagree that credit cards should have the ability to pay users cash back or offer travel rewards, but you are losing money by using cash.

kQq9oHeAz6wLLS2• 3 years ago

Why?

AH4oFVbPT4f82• 3 years ago

I learned this the hard way nearly many years ago. Sold an item via eBay, customer paid via PayPal. PayPal accepted the funds I shipped the product and thought all was well until PayPal takes the money back saying the customers card was stolen. So then I was out the item and the money. I don’t keep a cent in the account for a second longer than I have to now.

wcoenen2• 3 years ago

When you accept Paypal payments, you are accepting credit card payments. Credit card payments can easily be reversed. For the payer this is a feature, and for the payee this is a risk.

So this doesn't sound like a Paypal-specific issue. The same could have happened if you accepted credit card payments through some other entity like Square.

xp843• 3 years ago

Yes and no. PayPal and eBay are both notoriously “buyer-biased” - meaning the chance of a buyer dispute being resolved in the seller’s favor is basically none, while with a normal credit card, it’s possible for a seller to win if you have good evidence. It’s guaranteed that if you buy a laptop, even from a seller with a great reputation, and send them a picture of a box with a brick that supposedly was delivered, PayPal and eBay will both rule in your favor. They can afford to completely burn sellers like that (who may not even have a viable plan B) more than they can afford word catching on among consumers that you can simply lose your money to fraud on the platform.

pessimizer• 3 years ago

When you accept Paypal payments, you are accepting credit card payments.

When you accept Paypal payments, you get no access to the customer's credit card information or identification. This is either a legal interpretation that allows Paypal to push all of its risk down to its customers and make money for nothing, or the actual law is explicitly allowing Paypal to push all of its risk down to its customers and make money for nothing, but either way it's corrupt.

gnopgnip2• 3 years ago

With paypal as long as you ship to the paypal address and have proof of delivery you are covered under seller protection. Most other credit card processors don't provide this.

bunga-bunga5• 3 years ago

you are covered under seller protection.

I’m probably wrong, but doesn’t seller protection only protect you from PayPal disputes? i.e., not bank-initiated chargebacks and fraud reports.

bluGill2• 3 years ago

Always ship via US mail if possible, as then it becomes mail fraud which is a federal crime. You probably can't get anyone to investigate though.

cjpearson• 3 years ago

Wouldn't it already be wire fraud?

KingOfCoders• 3 years ago

A company I've worked for transfered all money out of PayPal each night.

booleandilemma• 3 years ago

Surely I can continue to leave the $20 I have in there?

StimDeck• 3 years ago

Assuming you can afford to lose it.

activiation• 3 years ago

Or you can send it to me ...

heliodor• 3 years ago

But industry trade group the Financial Technology Association, which represents both firms, defended the safety of the funds.
“Tens of millions of American consumers and small businesses rely on payment apps to better spend, manage, and send their money. These accounts are safe and transparent,” the group said in the statement. “FTA members provide clear and easy-to-understand terms in all their products and prioritize consumer protection every step of the way.”

I don't see where the defense is in that statement!

George83728• 3 years ago

The defense (lie) is here: "These accounts are safe and transparent,"

Safe: No, people lose their money to these companies all the time.

Transparent: No, these companies stonewall people after stealing their money. They claim this stonewalling is legally required by AML laws or to deny information to criminals, but no matter which way you slice it, 'transparent' is a lie.

digdigdag• 3 years ago

Instead of warning consumers, why not do what regulators do and, well, regulate? Here, you have entities storing unsecured funds and doing god knows what with it. In the interest of the public good, a just government and a conscientious regulatory body wouldn't busy itself warning anyone. Rather, they would be bringing down the hammer on these entities and making them an example of what happens to companies that try to destabilize the financial system.

nerdponx• 3 years ago

Maybe the problem is that they do not have jurisdiction to regulate these organizations, so the best they can do is issue warnings.

That or it's regulatory capture. Hard to say without knowing the details of relevant legislation and case law.

kevin_thibedeau• 3 years ago

They really should force US Paypal to become a bank. Clearly that is workable for their European operations.

LapsangGuzzler2• 3 years ago

a just government and a conscientious regulatory body wouldn't busy itself warning anyone.

Regulatory bodies issue warnings all the time, that's one of the most essential functions of a government. Why? Because we don't like it when the government unilaterally acts on our behalf.

Warning people is also the cheapest option here, which matters in a society that is constantly obsessed with government spending. There are tons of bank-adjacent services out there (pay-day loans are just one example) and it would cost a fortune in legal fees to force everyone that holds cash for customers to register as a bank.

This way, consumers know the risks and businesses don't need to take on excessive regulatory burden. How is that a government failure?

bumby3• 3 years ago

Not the same as govt failure, but possibly govt ineffectiveness. If all the govt did was warn, we may not have the mental bandwidth to process all that into rational actions. We rely on on institutions to act on our behalf to overcome this limitation. The question is really about where the risk threshold is that transitions their role from warning to regulating.

zzzeek2• 3 years ago

This way, consumers know the risks

going to guess most paypal / venmo users don't read the WSJ and likely missed "CFPB Director Rohit Chopra's Thursday statement"

even if 50% of paypal's users did, that means "the government" is servicing only those consumers that have lots of free time and motivation to be reading the business section. for those losers working 12 hour days who lose their money stored up in venmo someday, sucks for them!

nope, I like the regulation idea here.

Johnny555• 3 years ago

Because we don't like it when the government unilaterally acts on our behalf

We're not all libertarians and many of us believe that the government has a hand in promoting a well functioning society -- including regulating bank-like entities to be sure that they are a safe place to keep our cash.

While I know that Paypal isn't a bank, it's not at all obvious that my money is less safe stored in my Paypal account than in a bank and that if Paypal goes bankrupt tomorrow, I can lose whatever cash I have with them.

katbyte• 3 years ago

How is that a government failure

because the people with money there will call it that when they finally loose money, no matter how many warnings are issued.

lost_tourist• 3 years ago

We really have enough federal regulation on money to be honest. Just get your money out of venmo/cash app and put it into your bank account and there will be no worries.

Mistletoe• 3 years ago

This is such a bizarre take to have in 2023 when we just had the 3 of the top 4 bank failures of all time. Yes they were fully backstopped by the FDIC (even though they shouldn't have been) because they were the first out the door. The FDIC can't back them all.

https://www.bankrate.com/banking/largest-bank-failures/

xg15• 3 years ago

Fun fact: PayPal's EU branch is in fact a bank: https://www.telegraph.co.uk/finance/markets/2808982/PayPal-b...

babyshake• 3 years ago

At least require the apps to all have an option to automatically withdraw any funds sent to the balance, at least within excess of some marginal amount. Let them leave the option disabled by default, but at least it gives us a reasonable way of not needing to constantly remember to withdraw funds.

One additional benefit is it would put some pressure on the apps to offer practical incentives for users to maintain a balance instead of using the automatic withdraw option.

cam_l• 3 years ago

PayPal does this already, no? or is this another weird US only thing.

kmoser• 3 years ago

Here, you have entities storing unsecured funds and doing god knows what with it.

Your first mistake is assuming that when you transfer, say, USD $500 into your Paypal (or Venmo or...) account, your Paypal account now holds USD $500. Rather, you are effectively exchanging USD $500 for Paypal bucks. When you transfer your Paypal bucks back out to a bank account, you are effectively purchasing fiat currency with your Paypal bucks.

That Paypal shows your balance in USD (or whatever currency you use) is misleading; it's similar to a mutual fund balance which shows the current value of your shares in USD. You don't actually own USD $500; you own 500 Paypal bucks which have a current theoretical value of USD $500, and are thus not subject to banking regulations.

I'm not saying this is good, or that it should be this way, but rather that's effectively how it works.

Now, can somebody tell me why banking regulations don't apply to my airline miles? After all, I've earned them and they are theoretically worth USD, so shouldn't they be protected?

toast02• 3 years ago

Now, can somebody tell me why banking regulations don't apply to my airline miles? After all, I've earned them and they are theoretically worth USD, so shouldn't they be protected?

Are airline miles theoretically worth USD? Afaik, they exchange for flights on a X points = Y class flight basis, not on a dollar basis. Yes, you can usually buy more miles for USD, but price to buy isn't price to sell.

acdha2• 3 years ago

If that were true, PayPal would be able to generate an easy profit by saying “PayPal bucks” are worth $0.80. They have the ethics to do that but they don’t because they do in fact keep their books in real currency and if you transfer $100 USD they have a legal obligation to give you that amount.

What it’s not is an FDIC insured bank, so if they make a huge mistake you’ll be one of millions of people making claims against whatever assets they have left.

rasz• 3 years ago

Not in EU where Paypal was forced to become a bank.

butlerm2• 3 years ago

Your first mistake is assuming that ... your...account now holds USD $500.

Same mistake with making an uninsured deposit at any bank. A deposit at a modern bank is just a possibly insured low or no interest loan to the bank. It does not mean that the bank actually has sufficient assets to back it up or can liquidate them in time. It is bank money exchangeable for U.S. currency, but not U.S. currency. A large number of mostly business depositors at three sizable banks almost found that out the hard way in the past few months. If the FDIC did not stretch the law those businesses might be getting cents on the dollar months if not years down the road.

hurril• 3 years ago

This is true but it is also a distinction without meaningful difference. Transferring money from your account in Bank A to one i Bank B poses the same "problem." It's not Bank A bux to Bank B bux, it's $currency. But what actually happened is that an "excel sheet" in Bank A went from +$XXX,XX to +$(XXX,XX - 500) and the other's $(YYY,YY + 500); part of one bank's liability (their debt to you) was transferred onto another bank. Now Bank B owes you (at least) USD $500. Whether or not they see fit to make you whole that amount is akin to whether or not PayPal would.

Kicker: if it can't or doesn't want to pay you, that's a you problem.

arcticbull2• 3 years ago

You should review the money transmitter rules under which PayPal is regulated. They’re not the same as banks, they have a much narrower charter; but they are required to safeguard those dollars and that is what is represented in your account. There’s generally a small set of permitted investments that are intended to as closely as possible track dollars.

It doesn’t have a similar characteristic to a mutual fund balance, it’s closer to a money market fund.

shri_krishna• 3 years ago

It is really easy to tackle this problem. Do what the RBI (Reserve Bank of India) did and create a policy whereby PayPal has to payout funds to customers attached bank account in 1 day. RBI banned PayPal from holding funds. And not just PayPal but Stripe and every payment processor out there (unless you are using a MOR then this rule currently does not apply). Since implementation of this rule, PayPal and Stripe are forced payout funds every day for all funds collected from customers throughout the day. They cannot hold any funds. Once payout is initiated, it may take 3-5 working days for the funds to be realized in the account (which I blame SWIFT for being so damn slow).

retube• 3 years ago

What do you mean, "bring down the hammer" ?

cratermoon2• 3 years ago

So the regulator's solution is not to rein in the problematic behavior using their regulatory power, but to tell people to be individually responsible? It's OK for Venmo and PayPal to go on being predatory because why?

JumpCrisscross2• 3 years ago

the regulator's solution is not to rein in the problematic behavior using their regulatory power

What regulatory power does the CFPB have over PayPal in this matter? Particularly in respect of deposit insurance?

cratermoon2• 3 years ago

That's a fair criticism if we are looking at "regulator" to strictly apply only to the CFPB. However, the government of which the CFPB is a part is able to regulate financial institutions, but has not.

zakember• 3 years ago

The UPI system adopted by India sounds promising to solve problems like these, where users can use the app of their choice and connect it to the bank account of their choice.

Eventually, you have a system where bank-to-bank transfers happen instantly with no intermediary apps holding your money.

https://en.wikipedia.org/wiki/Unified_Payments_Interface

chaostheory• 3 years ago

This is harder to discern with Apple Pay since there’s now an Apple savings account backed by Goldman Sachs, an FDIC member

https://www.nerdwallet.com/article/banking/apples-new-4-15-a...

thoughtsimple• 3 years ago

"These apps are also not immune to the same type of panic-based bank run that closed down Silicon Valley Bank and others recently, the agency added."

I'm thinking that worrying about Apple going the way of SVB isn't much of a risk.

esafak• 3 years ago

I previously read here that you should not let them access your bank accounts, either, because they can somehow freeze them too. Is that true?

bluGill2• 3 years ago

They can't freeze them, but they can transfer money out. It would be illegal, but a lot of effort on your part to prove anything, and until it makes it through the courts you are out the money.

The above isn't just PayPal, it is anyone who has your account number.

slt2021• 3 years ago

it will be trivial to reverse unauthorized ACH debit from your bank account to paypal, just call your bank as soon as you notice, create a Fraud complaint case and they will take care of that (clawing money back from paypal/whoever fintech)

digitalsin• 3 years ago

My Wife has had a small home-based business for 10 years and her customers pay through PayPal about 50% of the time. It was going great until she had a major surgery and put her business on hold for a few months. When she was able to resume, PayPal decided, seemingly arbitrarily, to hold all customer payments for 21 business days going forward because her sales had dropped. That's all, that's the reason that was given to her.

As a small business, this is devastating and there is absolutely nothing that can be done about it unless she increases her sales back to what they were previously, which unfortunately is unlikely given the inflation and economy here in the US. Anyone who runs a small business knows that you need cash to buy more inventory, and if your liquidity is sitting in PayPal so they can get interest on it, your sales are going to slow way, way down.

In 10 years (nearly 11) she has had one customer complaint through PayPal. The customer said she never received her item because, according to the customer herself, it was stolen from her porch after USPS delivered it. In what world is that the seller's fault? Only in PayPal's (and apparently this particular customer).

That is an incredible track record given that period of time and the number of sales she has had (10s of thousands of purchases over that period).

Many of her customers have said they would go elsewhere if she drops PayPal as a payment provider, which will only make things worse (much of her business is repeat business, like 80%).

PayPal finds or manufactures reasons to hold the money you worked your butt off to earn so they can sit on it and, I guess, earn interest. You have no recourse. Zero.

Stay far away from PayPal.

jacquesm2• 3 years ago

This is actually the one thing that makes some sense in their fraud policies. It goes like this: if a business is growing then chargebacks that roll in later will roll in against a larger volume of transactions, so the merchant will be most likely flush enough to be able to pay the fees and roll back the charges. If there is a steady state then as long as things don't get into very high risk territory it should all still work.

But if a business shrinks then suddenly PayPal itself becomes exposed: the volume in sales could drop faster than the liability from recent sales that are still in the chargeback window reduces and at some point there may be the possibility that PayPal will have to cover chargebacks for the newly defunct merchant. To guard against this possibility any rapid drop in charge volume will result in an increase in the hold back time.

So while understandably very annoying it does make some sense.

(I can't believe I've found a reason to stand up for PayPal for once and I hate them with a passion but this is simply the way any party that uses a shared merchant account will deal with the problem, if you don't want to have this you'll have to bring your own merchant account along and then things will be a little bit easier, but VISA, MC and AMEX all have similar rules on their books).

logical_ferry• 3 years ago

I have used PayPal once or twice some 15 years ago when I bought some stuff on eBay, but never since, I never had any need afterwards. I didn't quite understand it back then, I was rather young.

Nowadays I buy from web shops when I need something, I give them my one time Revolut debit card number and that's it, risk free.

So my question is:

Why would someone use PayPal? What is the use case here?

silisili• 3 years ago

Many sites require PayPal for purchases, unfortunately. I'm not sure how many people just love using it otherwise...

whoopdedo• 3 years ago

You would use PayPal exactly the same way you use Revolut since they live in the same space. Neither provides insurance for deposits, which is what the CFPB is cautioning against in TFA. So I return the question to you. Why would someone use Revolut over PayPal? That's a rhetorical question, you don't need to answer.

(Law of the internet: if an opinion/review of a product mentions a competing product by name then it is in fact an advertisement for the competing product.)

PeterisP• 3 years ago

At least for me (in EU) both PayPal and Revolut are literally banks and both provide deposit insurance - most likely because they don't have a choice.

nottorp• 3 years ago

I can't pay for Crossover by credit card :) Don't know what payment processor they use but it failed twice for annual upgrades. Said card works fine on a lot of other places, big and small.

I could pay with PayPal though. Even though the same card is behind it.

Keeping any money on there though... no. Even though I'm in Europe.

mikece• 3 years ago

I have tried removing the several hundred still in a frozen PayPal account (for over three years now) but PayPal won't give me access to MY money nor will they tell me how to get access in order to remove it.

They are nothing more than common criminals in FinTech drag, in my opinion.

dylan604• 3 years ago

They are nothing more than common criminals in FinTech drag, in my opinion

What state are you in? Maybe you can use some of the fresh anti-drag laws to help /s

trogdor• 3 years ago

Initiate arbitration.

kccqzy• 3 years ago

I didn't need this warning, for the simple reason that cash stored in those accounts do not earn interest. A real bank account pays enough interest these days to justify the few seconds transferring funds to a bank account.

jrm43• 3 years ago

First to mention crypto?

Okay, crypto.

I'm of course not suggesting "crypto solves all the problems."

I am absolutely suggesting -- it feels like a lot of the haters of crypto forget how absolutely mediocre of a job everything else does with "money" too.

bunga-bunga5• 3 years ago

absolutely mediocre of a job

Yes but crypto has no customer protection. You make the transaction, your money is gone. Seller screws you? Oh well. Your key was stolen? Better luck next time.

There’s no perfect system because we’re all out scamming each other.

jrm43• 3 years ago

That says nothing against my point. If the "real thing" has little consumer protection as well, crypto comparatively becomes more attractive. There's ALWAYS risk.

piperswe• 3 years ago

The same issues arise when people store crypto in exchanges, crypto doesn't really solve this problem at all.

jrm43• 3 years ago

I said nothing about solving problems, more the opposite. If the "real thing" can't be relied on to an extent, then might as well go with the risky thing.

Dalewyn2• 3 years ago

I use PayPal because it's convenient (lots of places online nowadays accept them) and safer than giving out my credit card information directly (obvious reasons).

However, I'm well aware they aren't a bank in any traditional sense so I only keep as much money in my account as I am willing to lose to a random act of god.

Needless to say this has worked well for me.

zie• 3 years ago

I wonder if that regulator realizes that PayPal owns Venmo. Based on the comments, it doesn't seem that anyone here realizes that either.

cornfutes• 3 years ago

I was locked out PayPal and funds this week. I’ve been outside the country for over year, so my Google Fi access got cut off. I migrated my number from Google Fi to Google Voice, then discovered that PayPal won’t allow Google Voice numbers. Unfortunately, that phone number migration can’t be reversed. I spent hours on the phone with PayPal customer support but they said they can’t override the automated system. They also said they don’t have an escalation path to corporate. I am very skeptical about the current state of PayPal corporate and employees, and whether anyone even has ownership about these systems anymore. Venmo is an equal state of dire.

bunga-bunga5• 3 years ago

the current state of PayPal corporate and employees

I think PayPal has been in dire state for quite a while, both in regular time and internet time.

tabletcorry• 3 years ago

The article tacks on Apple Pay, which is a nice grab for attention since Apple Pay can’t store cash (Apple Cash does that) and no Apple product is discussed in the CFPB source…

bunga-bunga5• 3 years ago

Apple Pay can’t store cash (Apple Cash does that)

Being CNN, they probably don’t know the difference

tjpnz• 3 years ago

Given how happy PayPal is to outright steal your money this is good advice.

kkarpkkarp• 3 years ago

I learned this hard way (ok not hard way, I had balance of 2 USD at that time) when Revolut locked me out. They simply stopped releasing new version of their app for Android version I had. Day by day I lost access to my money.

I simply got error that I can't log in and I should update an app but there was not any update.

Took me two days to get to their support (I don't know how it is now, but at that time all ways was directing me to use support option in app which was not functioning). And support told me if I want to get my 2 USD I should buy a new phone.

2 USD is nothing to continue the fight but I've understood I don't want to give any money to such operator. I am not Revolut user for more than 6 years now.

xerxesaa• 3 years ago

And even despite this negative experience, I would say Revolut is still a safer choice compared to the apps listed in the article.

Theoretically, your Revolut balance should be safe from bank failure as it's FDIC insured through their partner banks (according to https://www.revolut.com/en-US/how-we-keep-your-money-safe/)

stefandesu• 3 years ago

I'm not sure how it is in the US, but if you cancel a bank account here in Europe, you're supposed to add your new bank account number so that they can transfer your remaining balance there. The issue with PayPal is that you don't have any rights when it comes to your money. If they lock you out, as far as I can tell, your money is just gone (or in order to even have a chance of getting it back, you'd have to go to court).

Don’t store cash in Venmo and PayPal, US regulator warns

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