Daily Archives: January 12, 2013

Jay Lake v. PayPal

Last night, just before close of business, PayPal locked up Jay Lake’s account because of suspicious activity, namely, about $50k rolling into his account in the space of about two days because of two separate fundraisers (one of which you probably know about from here). Fair enough; the company has an interest in making sure its services are not being used for nefarious ends. But then it looked like they would have no one available to deal with the issue on their end until Monday at the earliest, and that rather emphatically was not fair enough — you don’t freeze up someone’s account and then go “whoops, sorry, no one here to deal with the problem we just made for you.”

The good news is that Jay has friends, and they have Twitter, blogs and Facebooks accounts, and combined they made enough¬†noise¬†online to get PayPal’s attention and have it resolved in a couple of hours. Jay has all the details and some personal thoughts on the experience, which I really recommend people read as a useful piece on what can happen when a community and a corporation get into a tangle online. Here’s also a TechCrunch piece on it, with quotes from PayPal folks.

My thoughts on the matter run similarly to Jay’s: It’s great that once Jay’s friends shook the tree online, PayPal put his account in focus and resolved the problem quickly. It’s a fine case study in how a company can turn a potential bad PR event — and it could have been very bad indeed, since most of the people complaining were writers, with native audiences and the ability to call down the attention of media — into an example of how quick, smart response can make the company look good.

But it’s also the case that Jay was in the position of calling on several dozen friends with large online footprints to be upset on his behalf — at least one of whom was able to ping someone at the executive level in the company. That’s great for him, but left unasked is the question of what would happen to someone who was not Jay. To quote the man himself:

Yet I cannot help wondering how this would have gone without my own social media footprint and widespread network of friends and fans. Would I be looking at weeks of paperwork and a continually frozen account, as my friend has experienced? Fame, even as modest as my own ration, is itself a significant form of privilege. That privilege was exercised in spades late yesterday afternoon.

PayPal’s famously dropped the ball on the fraud detection front several times in its history, and still has requirements that make it difficult to unlock frozen funds. PayPal has a right (and responsibility) to keep its service from being used for scams and other such things. But it’s in its interest to make it easier for every legitimate user — not just the ones with lots of noisy friends — to deal with the service’s systems. That includes having people to talk to and address a frozen account on a Friday evening as a matter of course, not as an exception.

I don’t have any particular ax to grind with PayPal: I’ve been using the service for more than a decade and I’ve not had a problem with them that I can recall, and I think they provide a good service for a fair cut. But as a person who does use the service and appreciates the convenience of it, I really am puzzled why at this point they still seem to find themselves stepping onto the same landmine over and over when it comes to freezing accounts. I hope they get it figured out. I really do appreciate the speed with which the company dealt with Jay’s issue. It would have been better if it could have been addressed with the same speed, without all of us raising our voices to complain on his behalf. Some people who use the service won’t have that. They’ll still need their money, however.