PayPal, the E-bay owned merchant payment processor, announced yesterday that they are implementing changes to increase usability and ease an issue with frozen funds.
Online filters in use by PayPal, while successfully restricting fraudsters and spammers, have unfortunately mired legitimate users in lengthy delays in getting access to their money.
PayPal is a billion dollar industry, and leads the way in performing payment processing for online vendors, auction sites, and other commercial users. However, individuals, businesses and charity organizations have all experienced frustrating delays due to PayPal’s enigmatic verification process.
PayPal is committed to making changes, but few details were immediately released.
“These are not minor, these are aggressive changes,” said Anuj Nayar, PayPal’s senior director of communications. “This is a fundamental shift in our business operations.”
Without going into specifics, Nayar stressed transparency will be a major focus. “We want to be clear about how people can get out of the [frozen funds] situation,” he said. “We need to get better about helping people, or explaining why actions are being taken.”
PayPal has an automatic 21-day lockdown on accounts that are suspected of fraudulent activity. In order to release the freeze, account holders are often required to produce hard copy paper documentation, such as several months’ worth of sales records.
For larger businesses transacting with PayPal over time, this may be relatively easy to produce. However, smaller online users, charities, fundraisers and others may not have this type of recordation, leaving PayPal with an option to hold the account for up to six months while they investigate.
Some perturbed users have taken their rants online via blog posts, websites like paypalsucks.com, and a Tumblr called “Conferences Burned by PayPal.”
PayPal’s overzealous fraud detectors snared science fiction author Jay Lake, who discussed his frozen account with TechCrunch last week. Lake, who is battling advanced colon cancer, used PayPal to secure money donated for an experimental genome-sequencing therapy.
Lake’s fundraising, after being live for just five hours on January 10, pulled in over $20,000 in contributions. However, at 4 p.m. Pacific time the next day, Lake tried to transfer the money into a bank account. In an online reply, PayPal alerted him that all funds were frozen.
“They wanted me to provide receipts, shipping information, business paperwork,” Lake told CNNMoney. “That obviously didn’t apply to me, but there was no way to bypass the process. I called, and they said appeals take 24 to 72 hours to get going. I asked, ‘How I do prove I’m not conducting transactions?’”
PayPal restored his account by 6 p.m. and tossed in a corporate donation.
“We are committed to getting back to being the center of our customers’ financial lives,” PayPal’s Nayar pledged. “Big changes are coming.”
“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.