Paypal has started banning accounts selling anything Bitcoin-related

https://bitcointalk.org/index.php?topic=448847.0

by scottcanoni • 12 years ago

208 78 12 years ago

scottcanoni5• 12 years ago

They are banning the sale of non-physical items. So miners/hardware, even your GPU :) is safe to sell. Basically if it can be shipped in a box, it's fine.

Vires in Numeris! Long live Bitcoin!

officialjunk2• 12 years ago

Wonder where casascius coins fit in this... https://www.casascius.com/

nwh4• 12 years ago

Banned. Did you not read the linked post?

I got called from paypal because i sold a few casascius coin

pnathan2• 12 years ago

They are banning the sale of non-physical items

Can you link me to the seller policy? I have an app I'd like to sell (no bitcoin involved - except maybe taking it...maybe), and I've been wondering about the seller policy, but couldn't find it.

dangrossman• 12 years ago

There's no ban on selling non-physical items. They have a very small list of prohibited services which includes currency exchange:

https://www.paypal.com/webapps/mpp/ua/acceptableuse-full

dualogy• 12 years ago

They are banning the sale of non-physical items.

If that were the case, thousands of ISV, SaaS, indie mp3/ebook vendors etc. would be up in arms already, wouldn't they?

tlrobinson• 12 years ago

I think they meant non-physical Bitcoin related items, i.e. Bitcoins.

alexeisadeski3• 12 years ago

Makes sense. Expansive anti money laundering laws in US are probably the cause?

Mandatum• 12 years ago

Also the amount of scamming involved in the virtual currency market is pretty substantial. I assume they're doing this to curb the headache that's generated.

valar_m• 12 years ago

Or, perhaps Paypal is a company whose interests aren't well served by the availability of electronic money transfers with little or no transaction costs.

lisp-and-seo2• 12 years ago

Now that's a conspiracy theory.

nwh4• 12 years ago

That was predictable, Bitcoin is a huge source of chargebacks and fraud. My bank had issues with people stealing online banking credentials and using them to buy Bitcoin, there's a bit of a blanket ban on that sort of service now I think. It's a fairly common occurrence for sellers on localbitcoins too, I've talked to sellers before who have been ripped off to the tune of thousands of dollars due to similar situations.

dclusin• 12 years ago

So this is why coinbase takes so damn long to fulfill buy btc orders.

laureny• 12 years ago

That was predictable, Bitcoin is a huge source of chargebacks and fraud.

It's also a potential huge competitor for PayPal.

nwh4• 12 years ago

I sincerely doubt it. PayPal is an escrow service, Bitcoin includes one in the protocol but it's by no means the easy user protection PayPal provides.

kalleboo• 12 years ago

It's also a potential huge market for PayPal if they decided to get into it.

citricsquid2• 12 years ago

This is incorrect. The CEO of PayPal David Marcus has already denied these claims:

    To clarify: we have no policies against using PayPal to sell Bitcoin mining rigs. 
    We don't support any currency txn whether fiat or BTC for a host of regulatory 
    issues. But we treat BTC and any FX txn the same way. We're believers in 
    BTC though.

There was a communication error in January but it was retracted within hours: http://i.imgur.com/GMC0fsd.png

https://twitter.com/davidmarcus/status/422632561882316800

https://twitter.com/davidmarcus/status/422632849670299648

sillysaurus2• 12 years ago

Is the Bitcointalk poster lying, then? One of these two stories can't be true, and the poster has no reason to lie... (Not that people on the internet need one.)

dustcoin• 12 years ago

Neither the bitcointalk poster nor Paypal's CEO were lying, although the poster's conclusion is now proven to be incorrect.

The OP was selling casascius coins, which contain bitcoin private keys (digital currency) and are therefore against the terms of service. The CS rep the OP talked to incorrectly communicated that ALL bitcoin related items were banned. Later Paypal and their CEO issued a statement clarifying that only digital currencies themselves were banned.

citricsquid2• 12 years ago

I doubt they're lying, what they are doing is mislabelling their experience as representative. Low level PayPal employees have previously made mistakes that has resulted in people who are selling mining equipment finding their accounts suspended, however these are misinterpretations of the rules by the lowest level of PayPal employees. The David Marcus statement was in response to a story (almost identical to the story of the bitcointalk poster) from a couple of weeks ago.

http://www.reddit.com/r/Bitcoin/comments/1v12p4/well_done_pa...

http://www.reddit.com/r/Bitcoin/comments/1v3qhw/update_well_...

Grue3• 12 years ago

You really think somebody would do that? Go on the Internet and tell lies?

Seriously, it's an anonymous Internet forum. Anything without proof should be assumed as false.

scottcanoni5• 12 years ago

Paypal is banning any account which deals in currency exchange. They are still allowing hardware such as Bitcoin mining devices. The gray area are Casascius Coins which they are banning because it involves currency exchange even though it is sold with a physical item.

By the way, my post title was changed by someone else. Paypal is NOT banning anything Bitcoin related, they are only banning Bitcoin exchanges for fiat currencies.

vog• 12 years ago

By the way, my post title was changed by someone else

Sadly, this is a well-known issue on HN:

https://news.ycombinator.com/item?id=6216685

Although that open letter received a lot of attention, nothing has changed since then: No transparency which admin "corrected" the title, not even an indication that this kind of manipulation happened at all. So you as the submitter receive all complaints about the crappy title.

@pg: Note that I fully understand that we HN submitters should not be encouraged to use link-baity names for our submissions. And that we should prefer the original title wherever feasible. But some articles' titles are crap. Some are uninformative, some are misleading, and some titles are even wrong. If it is recommened to remove link-baity numbers from titles ("10 Ways To Do X" -> "How To Do X"), why isn't it equally feasible to replace misleading/wrong titles with informative/correct titles?

whitef0x• 12 years ago

So are all those posters on bitcoin trying to scam David Marcus? Supposing they are, what would be their motivation to do so?

To deface paypal? Seems unlikely

julespitt3• 12 years ago

I guess David Marcus didn't (nor anyone else at Paypal) read the FinCEN regs because Bitcoin exchange is not considered "currency exchange" for regulatory purposes because FinCEN says it's not a "currency."

Sigh.

anologwintermut• 12 years ago

They likely did, you clearly did not: "... a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency"[emphasis mine]

from http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001....

That particular section may or may not cover Paypal, but certainly you don't get out of the money transmitting rules by not dealing with "money."

gamblor9562• 12 years ago

Sigh.

As the other responder pointed out, Paypal would be a money transmitter under FinCEN regulations. What FinCen was saying is that Bitcoin and other digital currencies aren't "currencies" in the legal sense because they have no government backing. However, they are "virtual currencies" in the sense that they otherwise function and behave as true currencies. Consequently, the FinCEN regulations apply to Bitcoin and other digital currencies.

FinCEN further stated that miners and persons who are using Bitcoin in non-currency transactions(i.e., paying for services, physical goods, or non-digital-currency intangible goods) are not subject to the FinCEN regulations because they aren't exchanging one currency for another, directly or indirectly, and they aren't functioning as commercial money transmitters.

coldtea2• 12 years ago

This is incorrect. The CEO of PayPal David Marcus has already denied these claims

It might very well be incorrect, but "the CEO denied these claims" is very low proof in my book.

ck2• 12 years ago

I assure you, he has no idea what his underlings are doing.

They most certainly kill things dealing with crypto-currencies.

The questions is it overly-sensitive anti-fraud, or overly-sensitive anti-competition.

corin_• 12 years ago

He's not denying that they don't allow trading of any currencies, including BTC. What he says they allow is selling BTC-related products (such as mining machines).

doubt_me• 12 years ago

Even though they are able to keep money from these banned accounts its probably just to get back from all the scammers involved

Check out number 4

https://www.paypal.com/webapps/mpp/ua/acceptableuse-full

miw-sec-work• 12 years ago

This doesn't make sense -- from Feb 11th 2014 ebay will be allowing Virtual Currency to be sold in its own category.

This is eBay policy, so papal will have to fall in line.

jfoster4• 12 years ago

FYI - there are categories on eBay which have a format (Classifieds) whereby the transaction is to be handled offline: http://pages.ebay.com/help/sell/formats.html#classified

An example use-case is the Real Estate category.

kvanderd• 12 years ago

Paypal is the worst way to process payments, no one should use them (use any of the alternatives). Paypal will never support anything like Bitcoin unless they absolutely have to because it involves "risk". I wish consumers weren't so use to the easy checkout process, because they're terrible to develop with and will stifle virtual currency adoption.

jliptzin2• 12 years ago

No surprise. My personal experience with paypal: Apparently I am permanently banned for life because I refused to cover my "negative balance" that resulted from a scammer buying my old laptop on ebay, claiming he never got it (despite having proof of delivery), then somehow reversing the Paypal transaction just by speaking to a representative. He used a brand new ebay account, mine was at least 7 years old with 100% positive feedback. Have they resolved this issue yet? I keep hearing similar stories from friends, who have obviously stopped using ebay/paypal for this reason.

So Paypal customer support apparently just does whatever they want to do, at the individual agent level.

aestra• 12 years ago

This sucks and is pretty much a known scam. Ebay and paypal don't do what they want so much as just automatically side with the buyer. The buyer could have also claimed they got a defective product. I guess the only way to protect yourself is to purchase insurance.

jvm2• 12 years ago

This is a 'feature' of the credit card system, it has nothing to do with PayPal.

If you buy something with a credit card, you can chargeback by claiming a defective product and get your money back from the card companies. Then the card companies go to the seller to get their money back. In this case, the credit card companies only have a relationship with PayPal, not you, so they come to PayPal to get their money back. PayPal fights them but if they lose then they pay up, then they come to you to get the money back from you, and you obviously refused to pay. You can imagine what this kind of thing does to PayPal's business.

Paypal were the ones that ended up getting screwed in that transaction. Just be glad it wasn't you.

jliptzin2• 12 years ago

I understand chargebacks. This wasn't a chargeback, it was a straight up Paypal reversal. And if you count not being able to use Paypal for anything as a penalty, then I got screwed too.

hackerboos• 12 years ago

This happened to me.

Sold a Blackberry on eBay and shipped with tracking. The seller claimed it didn't work with their network and despite me listing it as 'no returns' sent back a different (cheaper/older) Blackberry to me.

I told eBay and they told me to contact the police but not before returning the money to the buyer and putting my account in the red.

I immediately removed all my bank and card details from Paypal and requested my account be closed.

I waited a week and opened a new account using new card and bank details. Thankfully they've never linked the 2.

dingaling• 12 years ago

and despite me listing it as 'no returns'

'No returns' in eBay World means 'the buyer keeps the item and receives a refund' if the item is not as described / non-functional etc. Or even if the buyer bought it in error.

It doesn't mean 'all sales are final', as many sellers appear to think.

rqebmm• 12 years ago

The obvious conspiracy here is that David Marcus asked that a bunch of bitcoin related accounts get frozen, then bought a shitload of bitcoin as soon as it tanked before eBay "hastily" declared they "believe in bitcoin"

StuartWalker• 12 years ago

Interesting to see Paypal say they are believers.

kolev2• 12 years ago

The President is - he owns bitcoins, duh. He's either doing this for personal benefits or he's just a wolf in sheep's clothing.

jccooper• 12 years ago

Amazing that the author has--and is keeping--$6k in PayPal. Even after they threaten to ban and freeze him.

They're well-known for freezing accounts at a whim, and as a merchant I keep nothing in PayPal longer than a day. I don't keep anything in there as a buyer either; they're perfectly happy to fund purchases directly from a bank or CC account. It's just plain safer if PP has as little of my money as possible.

nolok• 12 years ago

And even if you don't worry much about paypal freezing funds on a whim, it does not make any sense to me to let your money sleep there.

scottcanoni5• 12 years ago

Agreed, I see no reason to hold a balance on Paypal.

marcosdumay• 12 years ago

I'm more amazed by how they can just "freeze" other people's money, with no repercussions at all. I'd expect the police to get involved fast every time they do that.

pearjuice2• 12 years ago

The more power to them. In 9 of the 10 cases Bitcoin is used for either illegal or fraudulent cases.

ionwake• 12 years ago

Hi - out of interest, where did you get this statistic from?

pearjuice2• 12 years ago

I pulled them straight out of my ass but it's unlikely I am wrong. Seeing how there is basically no real reason to spend your bitcoin on legal activities (1. because the price fluctuates too much and 2. because nothing valuable can be bought with Bitcoin yet) the only reason why you would be spending this coin is when you want to make semi-anonymous transactions in the illegal circuit.

patrickg_zill• 12 years ago

While I support the idea of Bitcoin (and have some Dogecoin), I do realize that the central banks (note I did not say government) will act swiftly and mercilessly to crush any true competition.

Look at what happened in the Worgl experiment - http://en.wikipedia.org/wiki/W%C3%B6rgl - once the idea gained traction the central bank outright banned it, so that other towns considering it, could not start up a competing currency.

Can Bitcoin be banned? Not without crushing the Internet; but if made illegal (or just subject to very onerous reporting requirements) such that businesses in the USA could not easily use it, it would stop Bitcoin's growth dead.

adobriyan• 12 years ago

There is no real government backing Bitcoin.

There is no real economy backing Bitcoin.

At some point you need to convert BTC to real money for taxing and what not and this conversion is the perfect place to ban it if so desired.

Nice experiment currently backed up by blogging.

nhaehnle• 12 years ago

The history of Wörgl is a bit debatable. There are some accounts that state that their alternative currency quickly devolved to essentially circulating within the city hall, because others became disillusioned about it, in particular its loss of value.

The problem is: I cannot find the link to this article anymore, because searches invariably turn up tons of positive articles that all use suspiciously similar wording - kind of as if somebody with an agenda was consciously working on copy&pasting similar texts all over the internet.

At its core, the idea underlying the Wörgl experiment is actually very simple and most likely true: When a monetarily sovereign government isn't afraid of spending, they can do good things.

You don't actually need an artificially value-losing currency for that, you just need the political will for spending.

interstitial• 12 years ago

Oh, the humanity! The nerds and their hoarded pseudo-currencies trying to fleece their IT-ignorant neighbors as payback for having to always fix their PC! If the nerds can't find a Greater Fool to dump their pumps, what next?

tomasien• 12 years ago

Two things:

1. I don't see how Bitcoin being sold on Paypal is competition to Paypal. Why wouldn't Paypal love to be a place where people sell bitcoins down the road? Bitcoin is a competitor to money, not to Paypal.

2. I've talked to reps at Paypal who have told me transacting BTC using Paypal or even in apps that use Paypal but transact money in other ways is against their TOS.

lucasrp• 12 years ago

Everytime some financial institution tries to promote fear by freezing accounts, they show why bitcoin is so superior.

andyhmltn• 12 years ago

There are calls on that forum to start 'boycotting' paypal as they have 'gone too far.' The sad thing is: PayPal have been doing stuff like this for years. I've had hundreds of GBP held by them for months for no reason. When I say no reason: I mean that the agent that finally solved it for me admitted there should be no reason this has happened.

kolev2• 12 years ago

I lot of people violate PayPal terms of service and then they whine about it. I've been using PayPal as a merchant since 2000, I've been getting nice emails with advance notices when policies change. I wish others had such system in place as well!

Paypal has started banning accounts selling anything Bitcoin-related

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