PayPal Hates Conferences – Especially OpenCamp(openca.mp)
openca.mp
PayPal Hates Conferences – Especially OpenCamp
http://openca.mp/blog/paypal-hates-conferences-especially-opencamp/
15 comments
>Open question to HN: how could PayPal do a better job of handling the situation?
By simply being up front about their terms. If they don't care about events then they should set a policy not to support them, it's that simple. Don't lure people in and then make their lives a pain in the ass once you're holding their money. They know better than anyone how they can make events work, if at all.
I agree, PayPal is often over criticized considering the spectacular international fraud resolution and prevention work they do that goes, mostly, unthanked. True, we should remember the alternative is processing the payments ourselves, but if you are going to offer a product, offer a good one or not at all. Especially when so much money is at stake.
By simply being up front about their terms. If they don't care about events then they should set a policy not to support them, it's that simple. Don't lure people in and then make their lives a pain in the ass once you're holding their money. They know better than anyone how they can make events work, if at all.
I agree, PayPal is often over criticized considering the spectacular international fraud resolution and prevention work they do that goes, mostly, unthanked. True, we should remember the alternative is processing the payments ourselves, but if you are going to offer a product, offer a good one or not at all. Especially when so much money is at stake.
I agree, PayPal is often over criticized
If what's described in the linked article is correct, they deserve the criticism. There's fraud prevention, and then there's organized harassment and extortion. The examples given are of the latter, and if it were me I'd just hire an attorney and file a lawsuit with enough zeroes in the damage claim to get wide press coverage and, thus, the attention of someone who's actually accountable.
If what's described in the linked article is correct, they deserve the criticism. There's fraud prevention, and then there's organized harassment and extortion. The examples given are of the latter, and if it were me I'd just hire an attorney and file a lawsuit with enough zeroes in the damage claim to get wide press coverage and, thus, the attention of someone who's actually accountable.
The definition of quoting out of context...
As I mentioned, to criticize PayPal's inflexibility in situations like this as "harassment and extortion" is melodramatic and misunderstands both the work they really do, and the number of times you aren't saying this about the people on the other end of the transaction.
As I mentioned, to criticize PayPal's inflexibility in situations like this as "harassment and extortion" is melodramatic and misunderstands both the work they really do, and the number of times you aren't saying this about the people on the other end of the transaction.
Step one of the process was repeated demands for verification, re-verification and re-re-verification, which in my book is harassment; there's a level of verification that's reasonable to protect against fraud, and there's a level of verification which adds nothing to the protection and serves only to frustrate.
Step two was "you don't want to play our game? Fine, we'll lock up your money". That's extortion, plain and simple. Given the reported background behind it, there is nothing reasonable about it. And no matter how much good work they may do in other cases, it provides no excuse for the conduct described in this case.
Or, more succinctly: there's a very good reason why Paypal has such an abysmal reputation, and it's not because they're portrayed unfairly in cases like this one.
Step two was "you don't want to play our game? Fine, we'll lock up your money". That's extortion, plain and simple. Given the reported background behind it, there is nothing reasonable about it. And no matter how much good work they may do in other cases, it provides no excuse for the conduct described in this case.
Or, more succinctly: there's a very good reason why Paypal has such an abysmal reputation, and it's not because they're portrayed unfairly in cases like this one.
>And no matter how much good work they may do in other cases, it provides no excuse for the conduct described in this case.
That's just not true. It completely disregards reality. In a fantasy world where life is totally fair you are correct. Back in the real world, failure rate is a VERY relevant stat, and is never expected to be 0. The system and processes in the company have been optimized to handle certain types of cases extremely well. They will fail on other cases (like this one).
My argument is that they should change their policy to simply not support the cases for which their system isn't perfected, but you are using a volvo and expecting a porsche. But just because this one case was a failure does not mean the system is failing in general. It's not, there is a reason PayPal is so successful.
That's just not true. It completely disregards reality. In a fantasy world where life is totally fair you are correct. Back in the real world, failure rate is a VERY relevant stat, and is never expected to be 0. The system and processes in the company have been optimized to handle certain types of cases extremely well. They will fail on other cases (like this one).
My argument is that they should change their policy to simply not support the cases for which their system isn't perfected, but you are using a volvo and expecting a porsche. But just because this one case was a failure does not mean the system is failing in general. It's not, there is a reason PayPal is so successful.
I call this the "wash my Ferrari" problem. If you do a good job, you make $10. If you scratch the paint, you're out $10,000. Not a good risk.
Excellent description.
Excellent description.
From reading many of these stories, it's clear that PayPal wants to cap their risk.
From reading this story, there are two possibilities:
1. A Paypal employee is just being petty and vindictive, or
2. Paypal simply wanted to get rid of OpenCamp's account and used ongoing harassment through (re-re-re-re-)verification as a means to goad OpenCamp into giving cause for freezing/closing the account.
If it's (1), the employee in question should be terminated and OpenCamp's account restored. If it's (2), Paypal should be on the wrong end of a lawsuit.
From reading this story, there are two possibilities:
1. A Paypal employee is just being petty and vindictive, or
2. Paypal simply wanted to get rid of OpenCamp's account and used ongoing harassment through (re-re-re-re-)verification as a means to goad OpenCamp into giving cause for freezing/closing the account.
If it's (1), the employee in question should be terminated and OpenCamp's account restored. If it's (2), Paypal should be on the wrong end of a lawsuit.
Make the organizers purchase insurance? Don't refund the customers, in case the conference doesn't happen?
Everybody has caught on to paypals so called "fraud protection", which often involved going to ridiculously elaborate steps to prove fraud.
For a pair of pants I bought, I had to actually go to a retailer and get them to write a letter with their letter head, proving that they were a cheap copy. There is absolutely no reason a retailer would waste time doing this, why would they. They have a business to run, and are not doing a charity.
So now most savvy people purchase on paypal with their credit card, and when paypal pulls something like this, they just do a chargeback or threaten to do a chargeback.
Paypal are incredibly inflexible at times, their site is horrible, but they still have some advantages.
For a pair of pants I bought, I had to actually go to a retailer and get them to write a letter with their letter head, proving that they were a cheap copy. There is absolutely no reason a retailer would waste time doing this, why would they. They have a business to run, and are not doing a charity.
So now most savvy people purchase on paypal with their credit card, and when paypal pulls something like this, they just do a chargeback or threaten to do a chargeback.
Paypal are incredibly inflexible at times, their site is horrible, but they still have some advantages.
If I book a place at a conference I don't understand why it's any of PayPal's problem if the organiser runs off with my money and the conference is cancelled? What's the legal backing there? Is this some quirk of US American law?
If I pay by credit card then I can recoup the money from them - but they're supposed to insure themselves to mitigate the effects of the risk going bad, again what's that to do with PayPal?
It sounds like PayPal are being screwed by credit card companies and not by event organisers.
If I pay by credit card then I can recoup the money from them - but they're supposed to insure themselves to mitigate the effects of the risk going bad, again what's that to do with PayPal?
It sounds like PayPal are being screwed by credit card companies and not by event organisers.
Follow the money.
You book a place at a conference using PayPal. PayPal transfers money to the organizer. The organizer withdraws it, buys a lot of beer, never organizes the conference.
You used your credit card to pay for the ticket, so you call your credit card company and request a chargeback. The credit card company takes the money back from Paypal IMMEDIATELY (this is standard in all merchant agreements), pending an investigation. Ultimately, PayPal gets left holding the bag.
Sure, credit card companies count on losses for fraud, but in most cases, they get their pound of flesh. In this case, it's PayPal's flesh.
You book a place at a conference using PayPal. PayPal transfers money to the organizer. The organizer withdraws it, buys a lot of beer, never organizes the conference.
You used your credit card to pay for the ticket, so you call your credit card company and request a chargeback. The credit card company takes the money back from Paypal IMMEDIATELY (this is standard in all merchant agreements), pending an investigation. Ultimately, PayPal gets left holding the bag.
Sure, credit card companies count on losses for fraud, but in most cases, they get their pound of flesh. In this case, it's PayPal's flesh.
> Open question to HN: how could PayPal do a better job of handling the situation?
Be open and honest in their position on (non-established?) conferences. I think it's likely that the author is spot-on about PayPal's motivations, and that they're doing everything they can within their TOS to get the client to terminate the agreement. So here they are with their pants around their ankles and their only recourse is to de-pant their client. Sounds like bad faith to me, but just try proving it in court.
Be open and honest in their position on (non-established?) conferences. I think it's likely that the author is spot-on about PayPal's motivations, and that they're doing everything they can within their TOS to get the client to terminate the agreement. So here they are with their pants around their ankles and their only recourse is to de-pant their client. Sounds like bad faith to me, but just try proving it in court.
Loved the Ferrari problem definition :)
Had to tweet it. Didn't have room to credit you, but that was pithy summary of meaty problem.
Two lessons meet and have a baby: what you want is a Maserati problem but not a wash my Ferrari problem.
I would like to know what EventBrite's take is on this (they are the ticket management agency this and most events seem to use, the facilitator of the payment to PayPal, and lead generator to PayPal).
The issues PayPal are raising (Events are risky, don't make PayPal much money) are the same for every one of EventBrite's customers.
On their own each event is powerless against the might of PayPal, but in aggregate EventBrite has some leverage against PayPal given the amount of business they send PayPal's way each year.
The issues PayPal are raising (Events are risky, don't make PayPal much money) are the same for every one of EventBrite's customers.
On their own each event is powerless against the might of PayPal, but in aggregate EventBrite has some leverage against PayPal given the amount of business they send PayPal's way each year.
I am one of the co-founders of Guestlist. Wee are not event close to the same scale as Eventbrite, but I can give some insight.
Of all the events hundreds of events we have hosted we have only ever received one complaint from a purchaser. Somebody was apparently using our service to sell "power leveling" sessions for a game the he never received the service after he paid. The ticket price in this case was $20 I believe.
At the same time we have moved over $700,000 in the last 12 months all through PayPal. $20 is a very small percentage so I don't really see events as a high risk. Of course, EventBrite is much larger and they probably attract more scammers.
We exclusively use PayPal as our payment processor and have yet to run into them closing down somebody's account. Our main trouble with PayPal lies in their terrible interface and people being able to override the pingback url.
Of all the events hundreds of events we have hosted we have only ever received one complaint from a purchaser. Somebody was apparently using our service to sell "power leveling" sessions for a game the he never received the service after he paid. The ticket price in this case was $20 I believe.
At the same time we have moved over $700,000 in the last 12 months all through PayPal. $20 is a very small percentage so I don't really see events as a high risk. Of course, EventBrite is much larger and they probably attract more scammers.
We exclusively use PayPal as our payment processor and have yet to run into them closing down somebody's account. Our main trouble with PayPal lies in their terrible interface and people being able to override the pingback url.
They shouldn't be able to override a pingback URL if you're using encrypted URLs. The issue I'm finding is that many shopping carts and libraries aren't using encrypted URLs. :/
people being able to override the pingback url.
Why is this a problem? Someone overrides the URL; an IPN gets lost; they don't get what they paid for.
Or am I misunderstanding what you're saying?
Why is this a problem? Someone overrides the URL; an IPN gets lost; they don't get what they paid for.
Or am I misunderstanding what you're saying?
I'm founder of StageHQ.com and as Guestlist we're tiny compared to Eventbrite. Anyway in our first 10 months we've served nearly 1M$ in tickets using only PayPal as payment gateway.
In this time we've had some problems regarding people configuring their own Paypal account, Paypal's usability, and other minor issues, but we've not heard about this kind of treatment from any of our customers.
In fact an event with more than 3K attendees celebrated in Paris and collecting +100K€ has been using Stage and Paypal as its unique payment gateway with no major problems. The paypal's behavior detailed by opencamp organizers totally sucks but I can't refer it as usual from our experience.
Our main reason for using Paypal is simplicity. Open a merchant account is far from be an easy or even possible step for many small, casual event organizers. We could provide our own payment gateway but this would probably force us to change our pricing model that currently is a fixed, not percentual, fee of 1$.
In this time we've had some problems regarding people configuring their own Paypal account, Paypal's usability, and other minor issues, but we've not heard about this kind of treatment from any of our customers.
In fact an event with more than 3K attendees celebrated in Paris and collecting +100K€ has been using Stage and Paypal as its unique payment gateway with no major problems. The paypal's behavior detailed by opencamp organizers totally sucks but I can't refer it as usual from our experience.
Our main reason for using Paypal is simplicity. Open a merchant account is far from be an easy or even possible step for many small, casual event organizers. We could provide our own payment gateway but this would probably force us to change our pricing model that currently is a fixed, not percentual, fee of 1$.
The problem is that PP empowers bureaucrats (like the "Kathleen" identified in the OpenCamp story) to act capriciously, without reference to pre-established (and pre-published) standards and policies.
One commenter below the OC story describes how he has used the PP/EventBrite combination successfully and comfortably for a couple years. That's great for him (for now).
The problem is the unpredictability of how PP may treat any customer in the future, without regard for their past performance/association with PP (as in the OC case).
Personally, given the number of (unresolved/unexplained) horror stories I have heard with PP, I would not advise anyone (ANYone) to risk any business connection with PP (beyond what they are perfectly happy to lose) - no more than I advise people to take their retirement funds to a casino.
One commenter below the OC story describes how he has used the PP/EventBrite combination successfully and comfortably for a couple years. That's great for him (for now).
The problem is the unpredictability of how PP may treat any customer in the future, without regard for their past performance/association with PP (as in the OC case).
Personally, given the number of (unresolved/unexplained) horror stories I have heard with PP, I would not advise anyone (ANYone) to risk any business connection with PP (beyond what they are perfectly happy to lose) - no more than I advise people to take their retirement funds to a casino.
Perfect timing. I'm about to open early-bird registration for an event ( http://www.mathsjam.com ) and we're emailing people on our "registered interest" list to ask how they want to pay. We were going to offer PayPal, but this has convinced us otherwise.
We will now not offer PayPal as an option.
For reference, we will offer direct bank transfer and cheques in advance. We are also dealing with the venue, and they may offer CC facilities, but that's still being negotiated.
I understand PayPal's position, but I'm not going to run the risk of having them continue to accept money on my behalf, then not give it to me.
We will now not offer PayPal as an option.
For reference, we will offer direct bank transfer and cheques in advance. We are also dealing with the venue, and they may offer CC facilities, but that's still being negotiated.
I understand PayPal's position, but I'm not going to run the risk of having them continue to accept money on my behalf, then not give it to me.
How is the YC-funded competition doing? ( WePay, right? http://wepay.com/ )
> Does WePay allow international (non-US) payments? Not right now, but we hope to soon.
So, still very limiting.
So, still very limiting.
Yeah, might as well use a merchant account. Not cheap but still...
PayPal figured out awhile ago they have millions of users and that every customer is easily replaceable.
Anyone that thinks having an account for quite some time or is doing $xxxx in business per month is some kind of safety net is kidding themselves.
Anyone that thinks having an account for quite some time or is doing $xxxx in business per month is some kind of safety net is kidding themselves.
What sensible alternatives are there for PayPal with international money transfers? Is a plain wire transfer too expensive? In Europe, I'd just do a BIC+IBAN transfer to another European country.
European banks have arrangements which make that economical, but transfers between e.g. Japan and the United States or the UK and the United States cost about $60. Also, American banks put consumers through a wringer to actually effect a transfer, since it is one of the highest fraud risk operations a bank is capable of and typical American consumers do international wire transfers very seldom.
http://www.amiando.com/ seems to be pretty popular among event organizers these days, there's a couple of other providers also specializing in the event ticketing market. In fact I think Amiando even did the Launch48 event which was sponsored and hosted by PayPal.
We used Amiando for the Frozen Rails conference (http://frozenrails.eu) and we were pretty happy with their service.
We've used amiando for the MIT Enterprise Forum in South Florida. They are an absolute pleasure to work with.
True, but don't confuse ticket management for payment gateway. They are two separate steps.
Honestly, EventBrite or Amiando should offer their own payments system as they easily have enough traffic to make it worthwhile I would have thought.
Honestly, EventBrite or Amiando should offer their own payments system as they easily have enough traffic to make it worthwhile I would have thought.
My bad. Both have moved on since I last reviewed their offerings (and ran an event).
Which then prompts me to ask... why is OpenCamp not using EventBrite's own gateway then? PayPal thus circumvented.
Which then prompts me to ask... why is OpenCamp not using EventBrite's own gateway then? PayPal thus circumvented.
Both of them have their own payment gateway option. Eventbrite charges an additional 3% for this service.
Amiando does offer the payment gateway.
Interesting - I'm planning a conference soon and this makes me a bit nervous. Good luck with your fight!
Amazon Payments might be an option https://payments.amazon.com/
Seems like the market is there for a PayPal alternative. It would be an interesting start-up. I'm putting together a Wiki soon to spec out the project.
Seems like the market is there for a PayPal alternative. It would be an interesting start-up. I'm putting together a Wiki soon to spec out the project.
Having recently talked with some people at Paypal, I would never want to deal with the regulatory challenges they have to deal with. The challenge is dealing with that and fraud. Square might be on to something with requiring credit checks, but then you're narrowing your market. Do you have some ideas for dealing with these considerable hurdles?
They chalk up more than $250 million in annual fraud losses as a cost of doing business - there's a network of fraud artists that have cut their teeth on the PayPal network.
Being the innovator, PayPal grew up with these fraudsters, building an in-house database of knowledge about how to handle them as they cropped up one by one.
If you're talking about building a PayPal competitor at this point, you're launching at a point when there isn't going to be as much investor interest in your startup combined with a mature fraud ecosystem prepared to shut it down.
And those are only the problems we know of.
Being the innovator, PayPal grew up with these fraudsters, building an in-house database of knowledge about how to handle them as they cropped up one by one.
If you're talking about building a PayPal competitor at this point, you're launching at a point when there isn't going to be as much investor interest in your startup combined with a mature fraud ecosystem prepared to shut it down.
And those are only the problems we know of.
I've been making a list of how PayPal and other companies are "regulated" by the states. eg. Transfer of money regulations.
I think credit checks are overrated, as far as fraud mitigation. The relative risk profile would need to be determined. That said, OpenCamp represents a relatively low risk to PayPal in real terms. They have the event booked with the Hotel, They have real organizer profiles.
I think credit checks are overrated, as far as fraud mitigation. The relative risk profile would need to be determined. That said, OpenCamp represents a relatively low risk to PayPal in real terms. They have the event booked with the Hotel, They have real organizer profiles.
I've read too many of these horror stories, and I've come to the conclusion that I will never, under any circumstances, use PayPal for anything other than small personal transactions. Even then, the fees are almost enough to make it not worthwhile at all.
But despite the long term and multi-account relationship we enjoy, they’ve gone so far as to force me to send them copies of my drivers license and social security card to some strange physical address
after what kind of verification?
after what kind of verification?
Get a merchant account and take payments yourself. PayPal isn't worth it for anything more than selling your junk on eBay.
They seem to support "Power Sellers" very well, selling physical goods, and screw everyone else.
[deleted]
Have a talk to a lawyer friend and see if it amounts to harassment/invasion of privacy? and if it does see if they will have a little talk to them about it.
Hate on PayPal all you like, but next time, try opening a merchant account to charge credit cards directly. You'll need...
1. to incorporate and file an LLC agreement
2. to go in person to open a corporate bank account
3. display photo ID, in person
4. show proof of residency
5. show proof of business address
6. get checks for that biz acct
7. fax/paper mail all sorts of notarized stuff to ANOTHER company to open a merchant bank account
8. rinse and repeat to open a credit card processing account, fax/paper mail
9. talk with reps on the phone because something inevitably goes wrong
10. Pay a total of about $1200 for all the above services,
11. not to mention at least 2-3 hours of traveling around, even if you live in a city where it's all available nearby.
You will also likely be subject to a personal credit check since your business is brand-spankin-new.
So, yes, PayPal didn't treat you all that nicely... they treated you exactly like you'd be treated if you set up to open your own CC processing.
FTR, we've had no problems selling tickets to all our events, but we didn't open a brand new PayPal account to do it - we used our longstanding one. Sounds like you opened a brand new PayPal account, right? I assume that since you mentioned that you had another, longstanding account. That's like saying "I have good credit, but my friend Joe doesn't, so we applied for the credit in Joe's name." It doesn't transfer.
Also, just in case you think you should use Google Checkout instead - if you think PayPal is bad, brace yourself, since Checkout is 100x worse:
http://slash7.com/2009/03/26/google-is-evil-worse-than-paypa...
1. to incorporate and file an LLC agreement
2. to go in person to open a corporate bank account
3. display photo ID, in person
4. show proof of residency
5. show proof of business address
6. get checks for that biz acct
7. fax/paper mail all sorts of notarized stuff to ANOTHER company to open a merchant bank account
8. rinse and repeat to open a credit card processing account, fax/paper mail
9. talk with reps on the phone because something inevitably goes wrong
10. Pay a total of about $1200 for all the above services,
11. not to mention at least 2-3 hours of traveling around, even if you live in a city where it's all available nearby.
You will also likely be subject to a personal credit check since your business is brand-spankin-new.
So, yes, PayPal didn't treat you all that nicely... they treated you exactly like you'd be treated if you set up to open your own CC processing.
FTR, we've had no problems selling tickets to all our events, but we didn't open a brand new PayPal account to do it - we used our longstanding one. Sounds like you opened a brand new PayPal account, right? I assume that since you mentioned that you had another, longstanding account. That's like saying "I have good credit, but my friend Joe doesn't, so we applied for the credit in Joe's name." It doesn't transfer.
Also, just in case you think you should use Google Checkout instead - if you think PayPal is bad, brace yourself, since Checkout is 100x worse:
http://slash7.com/2009/03/26/google-is-evil-worse-than-paypa...
From reading many of these stories, it's clear that PayPal wants to cap their risk. For a brick-and-mortar business, their risk is the difference between sales that have been billed and product that has been received by the customer. That might account for a week or two worth of sales volume on a rolling basis, so a business doing $100k a year of PayPal transactions will typically only have $3k-$4k at risk, which is on par with what PayPal will earn by serving such an account over 18-24 months.
For a conference, however, there might be six months of revenue for pre-registration before the actual event takes place. If the event planner then absconds with the money, PayPal could be on the hook for the entire amount, which has long-since been withdrawn and spent. Take that same hypothetical $100k business for a conference, now all $100k of it is at risk, and PayPal only stands to make $2,500 or so off of that.
It's pretty clear that the credit card companies have PayPal by the short-and-curlies, in the sense that PayPal themselves will be on the hook for any chargebacks.
I call this the "wash my Ferrari" problem. If you do a good job, you make $10. If you scratch the paint, you're out $10,000. Not a good risk.
Open question to HN: how could PayPal do a better job of handling the situation?