After Trouble, PayPal Making Changes to Verification Policies

Getting verified can be difficultOnline payment systems are the life-blood of many small businesses operating on the web. Having a simple, safe and easy to use system for collecting sales is vital to anyone working online. PayPal was the at the forefront of providing money services in the earlier days of the internet. The company still has a large share of the market, although there are competitors now. In the past year or so – in the name of security – PayPal has made some changes to its verification process and ran into a lot of trouble. Don’t fret, changes are coming!

PayPal’s Verification Problems

One situation where PayPal took a lot of social media flack involves a man named Jay Lake. According to Anthony Ha at TechCrunch, Jay Lake, an author, “has been fighting cancer since 2008” and wanted to raise money for better treatment options. He used PayPal and the campaign he started to raise money was succeeding rapidly.

It went “way past the $20,000 goal.” But then, “PayPal froze the account associated with the campaign, blocking Lake’s access to funds.” Now, what on earth would be the reason for blocking a fundraiser’s access to funds? In an effort to fight fraud, PayPal’s security measures and policies often kicked in and prevented some legitimate individuals and businesses from accessing their funds without jumping through hoops unheard of on the internet.

I for one tried to use my PayPal account a few months ago to pay for a small purchase online. Turns out they wanted me to scan something along the lines of two forms of photo ID and my social security ID card. I have never used PayPal to spend more than probably $100 and this instance was probably for a $20 purchase. But now I believe my account is frozen, a) because I don’t have a readily available scanner, and b) because I think to demand that of long-time customers is outrageous. So do a lot of other people and businesses.

Fortunately for Jay Lake, fans and his own efforts on social media, mostly on Twitter, forced PayPal to respond, and they apologized and unfroze the account. Victory for the people and power to social media! But the story isn’t over.

PayPal’s Has “Aggressive Changes” Incoming

This morning an interesting news piece by Julianne Pepitone was posted to CNN Money. Julianne writes that PayPal “is promising to roll out a massive overhaul of its system within the next several months.” Yes, after over a year of criticism, upset customers and businesses, and social media pressure, PayPal is responding to its customers’ concerns.

Customers appreciate security, but not at the expense of excessive amounts of time and paperwork to correct an error. It’s too costly, especially for businesses using the service. Operating online is supposed to be easier, not frustration-inducing!

Julianne writes that for some it took “months to resolve” frozen accounts. The frustration has been serious, especially as competitors like Square, Google Wallet, Amazon Payments, and others have been growing rapidly over the years. PayPal cannot afford to follow a policy that alienates its customers when a mistake occurs.

Julianne quotes PayPal’s senior director of communications, Anuj Nayar, stating, “These are not minor – these are aggressive changes.” Good. They need to make up for all of the issues people have had over the years. I for one always loved using PayPal before I ran into problems with my account. Guess who has an Amazon Payments account now? Let’s hope PayPal creates a system that is still safe, but also reasonable and easy for customers.

Have you ever run into an account freeze issue with PayPal? Do you use PayPal for your business?


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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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    1. Update: I received an automated email from PayPal on Jan. 22 telling me my account has been restored. I guess they are serious about aggressive new changes!

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