PayPal Change of Policy

[snobahr.livejournal.com]

PayPal is updating its Terms of Service - and this impacts Restricted Activities:

Section 10.3
If a PayPal user engages in any restricted activities as defined by the PayPal User Agreement, we’ve added language to Section 10.3 that allows PayPal to suspend your eligibility for PayPal Purchase Protection and/or PayPal Seller Protection.

The revised section 10.3 reads as follows:

10.3 Actions by PayPal - Restricted Activities. If PayPal, in its sole discretion, believes that you may have engaged in any Restricted Activities, we may take various actions to protect PayPal, other Users, other third parties, or you from Reversals, Chargebacks, Claims, fees, fines, penalties and any other liability. The actions we may take include but are not limited to the following:

1. We may close, suspend, or limit your access to your Account or the PayPal Services (such as limiting access to any of your Payment Methods, and/or your ability to send money, make withdrawals, or remove financial Information). Use the Report Form link to request information in connection with an account limitation, hold or reserve – to access the Report Form, go to https://www.paypal.com/us/webapps/helpcenter/helphub/home/?dwf=neg_infolimit
2. We may suspend your eligibility for PayPal Purchase Protection and/or PayPal Seller Protection (Emphasis mine)
3. We may contact Users who have purchased goods or services from you, contact your bank or credit card issuer, and/or warn other Users, law enforcement, or impacted third parties of your actions;
4. We may update inaccurate Information you provided us;
5. We may refuse to provide the PayPal Services to you in the future;
6. We may hold your Balance for up to 180 Days if reasonably needed to protect against the risk of liability or if you have violated our Acceptable Use Policy;
7. We may take legal action against you; and
8. If you violate the PayPal Acceptable Use Policy, then in addition to the above actions you will be liable to PayPal for the amount of PayPal's damages caused by your violation of the Acceptable Use Policy. You acknowledge and agree that $2,500.00 USD per violation of the Acceptable Use Policy is presently a reasonable minimum estimate of PayPal's actual damages considering all currently existing circumstances, including the relationship of the sum to the range of harm to PayPal that reasonably could be anticipated because, due to the nature of the violations of the Acceptable Use Policy, actual damages would be impractical or extremely difficult to calculate. PayPal may deduct such damages directly from any existing Balance in the offending Account or any other Account you control.
9. PayPal, in its sole discretion, reserves the right to terminate this Agreement, access to its website, or access to the PayPal Services for any reason and at any time upon notice to you and payment to you of any unrestricted funds held in your Balance.

There's also a clause about them texting/calling you, earlier on the linked page, that part of their terms of use is that by contacting them via phone gives them the right to use that phone number to contact you for whatever business-related reason they can come up with.

Comments

[wuvvumsoc.livejournal.com]

I'm not great with legalese, but is paypal going to fine people $2,500 every time they break the rules (in general), or is it like for abusing things such as the chargeback option and the send as gift option?

[amocin.livejournal.com]

^ I would like to know this as well, I have a hard time understanding things that are written like this.

[starcharmer.livejournal.com]

I'm pretty sure it's when you do things like dodging fees. They say they can't reasonably estimate how much exactly you "stole" from them by skirting fees [aka having payments sent as a gift], so they will simply charge a flat $2,500. Breaking rules that don't screw PayPal out of money would just cause a suspension or account freeze, I'm sure [depending on severity of the rule broken].

For many artists, that would be a lot, but I bet for full-time marketplace sellers, it would be a fair estimate.

Either way, I'm sure it's mainly meant to scare users into following the rules [which they shouldn't have to be scared into following anyway].

[wuvvumsoc.livejournal.com]

That would make sense. They can't estimate the "damages" by using their services to your gain without letting them have a cut of the fees, so they just assume $2,500 at minimum. Hopefully this stops the people who try to fee dodge!

[starcharmer.livejournal.com]

Exactly. I doubt if you broke some minor rule that didn't hurt them directly, they'd try to get $2500 out of you for damages to their business. But if you're directly causing them to lose money in some way, they'll have a problem with it and this clause now covers what they'll do about it.

I've seen it going around a lot on FA, so yeah, hopefully the people who are doing this will see the warnings and stop.

[amocin.livejournal.com]

Ahh, so not a problem for me, I dont dodge fees or anything like that. Thank you for explaining.

[celestinaketzia.livejournal.com]

"Paypal's damages" makes it sound like they're out to recoup losses. It may be best to contact Paypal directly on this, but in some cases Paypal will pay the victim back at a loss. Now they're seeking to get their money back and then some.

[protocollie.livejournal.com]

i suspect, from the wording, that this refers to things that are in violation of the AUP that may also be illegal (I do know that paypal specifically calls out illegal activities as prohibited in its AUP.) paypal may be liable for its involvement in an illegal purchase/money transfer/money laundering, and i'm sure this is partly to go after you for the cost of defending themselves (or paying court fees, fines, etc.)

not that i'd say i trust them, but i suspect that is the place the wording is coming from.

[snobahr.livejournal.com]

How sad is it, that even though I read through the updated terms, I only skimmed over the $2,500 part, because, frankly, I'm too honest with myself to try to screw a company in a financial agreement. Because I'm so honest, because I wouldn't engage in that sort of activity (hell, it's in our business's statement that all transactions through PayPal must be done as goods/services, or else we will refund the "gift" and in some cases, decline doing online business with those people who get huffy about it... Not that anyone has apparently batted an eye at it, as we haven't had to enforce it), I have no expectation of it being applied to me/my husband's business.

However, I think, if brought to court, the $2,500/violation wouldn't stand, depending on the situation, of course.

Think about how many artists on FA want payments sent as gift, and the amount of traffic that generates in their PP logs... Ooof.

Edited to complete a statement, because I got sidetracked. CHOO CHOO!

[armaina.livejournal.com]

I think the 2,500 fee is less 'any infraction' and more a scare tactic and warning and will likely be levied against significant abusers of certain policies. It's left open like that so that they don't have to list every single infraction or amount of infractions that might cause that the fee to be charged.

I wouldn't be surprised if they were getting tired of the amount of chargebacks they've had to deal with.

[houndofloki.livejournal.com]

It essentially sounds like if you get caught trying to skirt Paypal fees, i.e asking buyers to send funds as a "gift", Paypal might hit you with a $2,500 fine to recoup that lost money. $2,500 probably sounds way high as a commission artist - but you have to remember that most of Paypal's users are online marketplaces/career Ebay sellers/etc who very well may have ducked that much in fees.

That's how I'm reading it, anyway.

[laughsatthunder.livejournal.com]

I'm seeing it the same way. Basically, cut it out, stop using "gifts" when it's "services".

[kazeno-taka.livejournal.com]

I really wish there was a way to turn off the ability to receive payments as gifts :( I rarely ever get money from friends/family as a true gift, and every once in a while a client will pay me via 'gift' in a misguided way to try to save me from paying fees. What they don't understand is that the fees are my responsibility as a seller and I could get in serious trouble by accepting 'gift' payments that are actually merchandise payments.

I've been utilizing PayPal invoices more to avoid stuff like this, but for tiny payments, usually I just ask the person to PayPal me.

[sbneko.livejournal.com]

You could try payment requests instead, it's what I do. It's similar to invoices, requesting the money, but all you do is add email and amount, rather then fill up a whole sheet of info. So it's really quick.

[reskas.livejournal.com]

Hey, I'm just curious if maybe you have an answer to this current situation I'm in. I had a commissioner request that I send as a gift instead of invoice because invoices send as an echeck which supposedly doesn't work for them.

If I can request payment/ have them send payment as goods and services, what should I be doing with those methods to make them equal the protection that invoices provide? Thank you if you can help.

[celestinaketzia.livejournal.com]

That is not true about invoices. Invoices allow you to pay with a credit card, debit card, or a Paypal account.

You can send a money request, but it's been years since I've personally sent one.

Also, keep in mind that invoices do not provide any more protection than regular payment methods in terms of chargebacks. Unfortunately, a client will still be able to insert bone-headed things into the comment section unlike invoices on other methods.

[reskas.livejournal.com]

Thanks for the clarification Celestina. I had tried to figure out why she was having that problem, but that seemed a bit off. Apparently there had been a bug like that in the past from what I found, but only with ebay invoices. The account that asked me was only a day old too so I was a little wary.

I also haven't done a money request in a long time. Would just be nice to have an alternative just in case invoices are a problem in the future- but like you said I have no idea why they would be.

I had hoped being able to specify exactly what was being delivered to the buyer through invoices would give a bit more seller/buyer protection than a request or send, but I guess it's just a matter of providing buyer protection and just taking it when we get boned.

[lauralien.livejournal.com]

I think it's also important that Paypal has extended Buyer Protection to intangible items - But the same does not yet apply to Sellers.

Copy-pasted from Paypal's update page:
Section 11.4
Although we are expanding PayPal Purchase Protection to buyers for intangible items, Seller Protection will not apply to intangible items. We are including a note in this section about this. In addition, we are adding a definition of Proof of Delivery for intangible or virtual items or services which can help a seller win a buyer’s Item Not Received Purchase Protection Claim.

(And further down this section....)

"Proof of Delivery" for intangible or virtual items or services is documentation satisfactory to PayPal that the item or service was provided to the buyer such as proof of download including the date of fulfillment.


I think this is pretty interesting. I'm glad to see them beginning to acknowledge intangible goods and/or services. Hopefully one day we'll see this expanded to protection for sellers as well.

[thaily.livejournal.com]

"Proof of Delivery" for intangible or virtual items or services is documentation satisfactory to PayPal that the item or service was provided to the buyer such as proof of download including the date of fulfillment."

I hope they also accept the customer saying "Got it, thanks." or uploading it elsenet as proof of delivery.

That rule is actually real.

[dragontripmon.livejournal.com]

Actually someone called paypal about this and from the tmumblr about it.... Yes it's real. And this is from one of the art resource blogs i follow.

From the art resource blog.
http://helpfulharrie.tumblr.com/post/118987349041/2-500-paypal-fine-is-real

The original response.
http://cry-of-the-ancient.tumblr.com/post/118877576490/2-500-paypal-fine-is-real

[rahnt.livejournal.com]

Please excuse my ignorance on this subject.

So say if someone commissioned me for a piece of digital art that was $30 and the fee for that was, I dunno $2. If I sent them an invoice for $32 to offset the fee and in the end I still get my $30 is that considered fraud?

I've heard of a couple people doing this and don't want to risk doing it myself in case :/ anybody have any ideas?

[celestinaketzia.livejournal.com]

You would have to advertise them at $32 to begin with to be in the clear. You may not tack on a fee for using PayPal.

[rahnt.livejournal.com]

Thanks for clearing that up :)