[thelist] How do you extract money from people over the internet?

Erik Heerlein erik at erikheerlein.com
Tue Sep 6 23:40:41 CDT 2005

> It happens... but it's much less frequent for merchants.  The only 
> time they freeze accounts is when the buyer files for reversal 
> claiming they never got the product, etc.

There was a time before PayPal was owned by eBay where PayPal was 
pretty ruthless in shutting down accounts with no explanation and 
sitting on the money with no apparent recourse for getting your money 
out. They were not technically a banking institution and thus were not 
held to the same FDIC rules that other banks were and their customer 
service had a tendency to just ignore people.

Consumers had little recourse and one trick PayPal used was that 
although they might "freeze" an account, they would still allow money 
to be deposited (by a customer of yours) but you couldn't take any 
money out. Thus they could earn a pretty penny on interest on the 
accumulating money while they "checked into it" for months. Meanwhile 
your customer is saying, "Where is the product I ordered? I paid you 
through PayPal." but you haven't really been paid.

Once eBay bought PayPal and more competition arrived, I believe things 
were cleaned up although I don't know if the FDIC plays a role now or 
not. But that's the back story as I understand it.

My suggestion is to read the fine print.

Erik Heerlein
erik at erikheerlein.com

More information about the thelist mailing list