deskthority

Hello,

I was a collector for 7bit's Round 5 and Cherry MX group buys, and have just gone through the experience of having my PayPal account restricted. Knowing a *whole lot* about the process now, and what ticks PayPal off, I thought I'd post here and let you all know how to do things properly.

In my case, PayPal's wrath got triggered because of a drastic and sudden increase in the amount of payments coming in, to an account that had averaged maybe one incoming transaction a year for the past ten years -- if that. I got some emails, some phone calls, some demands for invoices, and so on. With one exception, everyone that I talked to was perfectly polite, but they are under the gun from the credit card companies; they are responsible, as the payment processor, for making sure that "products" are appropriately "shipped" and "delivered". Accordingly, if you cannot provide such documentation (that is, tracking numbers), as will often be the case for someone collecting money in a group buy, your account gets restricted until you either provide all of the demanded tracking numbers, or until all of the incoming transactions are past the date that the "buyer" can demand a refund. When your account is restricted, it's like the Roach Motel -- money gets in, but it can't leave -- for 180 or 305 days, depending on who you believe.

The good news is I got the straight skinny from someone there who literally walked through with me on the phone how to avoid this happening again.

So, here are the things you need to do and need to know in order to be a successful PayPal collector.

• Have a savings/checking account ready to go before you collect money. Capital One 360 savings accounts are nice, because you can open up new sub-accounts for each group buy to keep the funds straight.
• If you collect more than $20000 AND more than 200 transactions in a single year, PayPal will report you to the IRS. Do not let that happen, because the tax bill will be large, and good luck convincing the IRS that you made no money off of this. Especially if you collect for multiple group buys, don't lose track of this.
• Do not keep a positive PayPal balance. Transfer money out to the safe savings account often. In my case, there was warning of the upcoming restriction, but you never know.
• Only accept money paid for a service. This is really important. Reject any payments that are marked as being paid for purchased goods. If you look in PayPal at the transaction and see a drop-down list where you can mark the payment as shipped, reject the payment. Any rejections will will cost you the $0.30 transaction fee; I recommend working with the group buy coordinator so that people that pay incorrectly get that fee added to their invoice. Doing this will prevent PayPal from demanding tracking numbers that you cannot provide for a purchased good that you did not sell -- and the inability to provide this was the root of my troubles.

In my talks with 7bit, he suggested (not unreasonably) that I should not tell PayPal anything when they called, but I ended up going for honesty. If you sound like you're doing something shifty, they are likely going to treat you like you're doing something shifty. I was totally up-front with them and they seemed totally happy with my explanations of the source of the money, where it was going, the invoice from Signature Plastics that I sent them, and so on. However, in the end, they couldn't get around the fact that I needed to provide shipping information to keep them happy in case someone with a credit card complained to them.

Hopefully this will save someone else from having the same troubles that I did. Good luck!

Great info, we should sticky this.

do you have a business or personal paypal account?

Thanks for info.

If Bitcoins wouldnt be so volatile yet, it might be an alternative for intercontinental groupbuys? I am not much into this digital currency, but what i understand is that its the most easiest (currently restriction free) way to make payments globally.

Wonder what else they do with all this personal information they collect about you.

BimboBB wrote:If Bitcoins wouldnt be so volatile yet, it might be an alternative for intercontinental groupbuys? I am not much into this digital currency, but what i understand is that its the most easiest (currently restriction free) way to make payments globally.

Bitcoin itself are very easy to send worldwide without problems, it works great, and also very fast. Getting the real money in an out is the not so easy part of it. So probably you have to send someone 20.000$ to buy currently about 25 BTC, or sell the 25 BTC for real money. That only works with the "normal" money transfer options you have - and with all its problems when handling greater amounts. Of course you could buy or sell the Bitcoins via localbitcoins.com with cash, or use some other money services (like OKPay, etc.).

matt3o wrote:do you have a business or personal paypal account?

Personal account. It doesn't seem to make a difference, probably because personal accounts can be used for e.g. selling on eBay or selling things you've made yourself.

madhias wrote:

BimboBB wrote:If Bitcoins wouldnt be so volatile yet, it might be an alternative for intercontinental groupbuys? I am not much into this digital currency, but what i understand is that its the most easiest (currently restriction free) way to make payments globally.

Bitcoin itself are very easy to send worldwide without problems, it works great, and also very fast. Getting the real money in an out is the not so easy part of it. So probably you have to send someone 20.000$ to buy currently about 25 BTC, or sell the 25 BTC for real money. That only works with the "normal" money transfer options you have - and with all its problems when handling greater amounts. Of course you could buy or sell the Bitcoins via localbitcoins.com with cash, or use some other money services (like OKPay, etc.).

Yeah -- I'm not a fan (at all) of BitCoins, but I recognize that they would help defray this kind of problem. They are too volatile, though -- over the course of the Round 5 group buy (which won't be over until the end of February), they have varied wildly in price. So unless you are super diligent about changing them out for money right when you get them, you could end up with significantly less than the person originally paid you.

If it's U.S.-to-U.S. you can use Google Wallet. But I'm not sure at which point you catch their triggers, too. It's well worth reading http://www.androidpolice.com/2013/06/08 ... old-times/ to see the kinds of things that can happen with other payment processors.

jefferai wrote:

matt3o wrote:do you have a business or personal paypal account?

Personal account. It doesn't seem to make a difference, probably because personal accounts can be used for e.g. selling on eBay or selling things you've made yourself.

personal accounts are subject to more strict regulation. Once you have confirmed and verified a business account (which involves some paperwork) you are pretty risk-free (as much as a paypal account could be)

matt3o wrote:

jefferai wrote:

matt3o wrote:do you have a business or personal paypal account?

Personal account. It doesn't seem to make a difference, probably because personal accounts can be used for e.g. selling on eBay or selling things you've made yourself.

personal accounts are subject to more strict regulation. Once you have confirmed and verified a business account (which involves some paperwork) you are pretty risk-free (as much as a paypal account could be)

Perhaps, but I don't think they'd be much happier with business accounts that also can't show proof of shipping for purchased goods.

Requiring payment for a service seems like the right approach regardless of the type of account.

I run several larger groupbuy now, and after some minor similar troubles with my first buy that was extremely small in comparison to the 200-400 unit buys I have been doing I have had no problems with getting my account locked up. I do have a 'premier' account since it has inherently larger transfer limits.
After my first buy, not adding any tracking info within a specific time frame, if at all hasn't caused me any grief.
Your points about having a fully verified bank account linked, and making sure to lift withdrawal limits in advance is highly important to avoiding problems.
Lately though, I have been seriously looking into creating my own site for groupbuys so I can just link a payment system directly with my banks online payment API and avoid using any other middle man services at all.

IvanIvanovich wrote:I run several larger groupbuy now, and after some minor similar troubles with my first buy that was extremely small in comparison to the 200-400 unit buys I have been doing I have had no problems with getting my account locked up. I do have a 'premier' account since it has inherently larger transfer limits.
After my first buy, not adding any tracking info within a specific time frame, if at all hasn't caused me any grief.
Your points about having a fully verified bank account linked, and making sure to lift withdrawal limits in advance is highly important to avoiding problems.
Lately though, I have been seriously looking into creating my own site for groupbuys so I can just link a payment system directly with my banks online payment API and avoid using any other middle man services at all.

Sure -- I don't mean to imply that everyone collecting money for PayPal will have problems -- but that you *can*.

The more important takeaway following on from that is that you can avoid having your account restricted even if you *do* catch the notice of their fraud department, by not allowing payments for non-services. Just require payments to be labeled as payment for services and it should help keep your account in good standing even if they start digging into your activity.

zingapaga wrote:Individual consideration. It doesn't seem to matter, probably because personal records can be used for e.g. promoting on eBay or promoting things you've made yourself.

Wuh...? Don't follow what you're saying here...

Could be a spamvertisement. The user only has 1 post.

Awesome post, thanks a bunch jefferai! It's worth a necro.

There is some irony to having Ivan giving advice in this thread

Quite apart from the fact that Btc is a volatile digital currency, it offers great anonymity and security features. As for me, Btc is the best payment method contrasted with others. Plus, you can store it using online wallets and download special app for increasing security level xxxxs://www.bestxxxxxxxxx.com/xxxxxxxxx/best-porn-xxxxxxx

bengh wrote: Quite apart from the fact that Btc is a volatile digital currency, it offers great anonymity and security features. As for me, Btc is the best payment method contrasted with others. Plus, you can store it using online wallets and download special app for increasing security level xxxxs://www.bestxxxxxxxxx.com/xxxxxxxxx/best-porn-xxxxxxx

The biggest thing about Btc as a GB currency is that if something goes wrong, you have zero recourse. I'd never pay in Btc for a Group Buy, personally.