Shane Drew

Being a small business is hard enough. Like most small businesses, we do whatever we can to encourage clients to pay their accounts in a convenient form.

Cheques are fast becoming a thing of the past. Cash payments are pretty rare too. 

Business clients are increasingly relying on electronic payment facilities in their day to day accounting procedures.

Mums and dads though are favoring payment portals like paypal. I don’t have an issue with that. Paypal is painless, gives good reporting and is a safe transaction in most cases.

I do have an issue with their resolution ‘skills’ though. There are as many nightmares that come out of the dispute process as there are happy endings, but that is perhaps the subject of another post.

The problem, I think,  lies with their monopoly of the system. No competition really is a bad thing. The added negative is that they are owned by ebay, in itself cause for concern, given its history of trading and payment anomalies.

Recently I had my ‘paypal verified’  business account frozen. Clients can still pay into my paypal account, but I was frozen from transferring the funds to my cheque account, stopped from paying my own suppliers with paypal money, and basically held to ransom by the monster that has become the paypal entity.

Their reasons, as stated in an email;

We’re required by Australian anti-money laundering laws to confirm your identity once your PayPal account balance reaches $1000.

Please help us confirm your identity by providing some information about yourself.

IMPORTANT INFORMATION REGARDING ANTI-MONEY LAUNDERING & COUNTER TERRORISM FINANCING LAWS IN AUSTRALIA & HOW IT MIGHT AFFECT YOUR PAYPAL ACCOUNT

We are writing to you because your PayPal account balance has reached a balance of $1,000.00 AUD and a partial limitation has been placed on your account in accordance with Australian Anti-Money Laundering & Counter Terrorism Financing laws. This means that while you can continue to receive payments, you are unable to withdraw funds or make payments until we have verified your identity.

What should I do?

1.  Login to your PayPal account.
2.  Click on ‘Resolution Centre’ and complete the steps listed.

Once all the steps have been completed and our agents have been able to confirm your identity, the limitation on your account will be lifted within 2-3 business days and full access will be restored to your account.

This requirement came in on April 6th, 2011, the same day I was notified.

The problem I have is that, 3 days later, my account was still frozen, and the resolution centre kept telling me there was no problem with my account. Every time I wrote to Paypal to see what was going on, I got the standard reply – check the resolution centre. I decided to ring them in America. Guess what. They told me to check out the resolution centre and follow the prompts. WHAT PROMPTS!

I decided to write to them and highlight some of their, shall we say, short comings in the overall ‘competency’ scale of 1 to 10.

I had an email back thanking me for my patience. I wrote back and said that my patience ran out several days ago.

I immediately had an email back telling me what I needed to do to unfreeze my account.

It reads like, coincidently, a laundry list;

Your business PayPal account was limited and the steps below help you lift this limit so that you can continue running your business

To verify your business details we need to:

• collect Business documents
• verify the Verifying Officer*

Please note the information on your documentation must correspond with the information registered on your PayPal account.

For Incorporated Associations we require the following business documents to verify the account:

• Certificate of Incorporation issued upon registration. Note: This must contain the Unique Identification Number of the Association.
• One of the following: 

1. Notice issued by the Australian Taxation Office advising the tax concession status of the non-profit organisation;
2. or Constitution
3. or Rules of the Association
4. A bank statement in the name of your organisation for the bank account attached to the PayPal account
5. Schedule of Details of Primary Contact and all office bearers (e.g. President, Vice-President, Secretary, Treasurer, and Public Officer)  
6.  A Letter of Appointment for the Verifying Officer signed by the Chairperson, Secretary or Treasurer
7. An Authorisation Letter signed by the Verifying Officer nominating all additional person(s) accessing the PayPal account

To verify the Verifying Officer we require (must not be the same document for all 3 verification):

1. One document to confirm Verifying Officer’s Name
2. A separate document to confirm Verifying Officers Date of Birth
3.  A separate document to confirm Verifying Officers Residential Address

Accepted documents to confirm Name and Date of Birth are:

•  A current Australian or foreign driver’s licence or permit (both sides)
• An Australian passport (not expired by more than two years);
• A current foreign or United Nations issued passport, including photograph and signature;
• A current Australian Proof of age card – issued under a law of a State or Territory;
• A current national identity card – issued for the purpose of identification (Any Country);
• An Australian birth certificate issued by the State or Territory;
• An Australian citizenship certificate;
• A citizenship certificate issued by a foreign government, if not in English, accompanied by an English translation prepared by an accredited translator.

Accepted documents for Proof of Residential Address are:

• A current Australian or foreign driver’s licence or permit (both sides)
• Utility Bills e.g. Electricity, Gas, Water, Landline phone bill (issued within the last three months);
• Notice of Council Rates (issued within the last three months);
• Tax Assessment provided by the Australian Taxation Office (issued within the last twelve months);
• A Centrelink Statement that records a financial benefit paid to you (issued within the last twelve months).

A “Verifying Officer” is also the Primary Contact/Business Owner whose details were provided on sign up. Please note that a Verifying Officer cannot sign the Letter of Appointment.

 A driver licence can only be used once to verify either the name and DOB or the residential address.

Please ensure that the documentation you provide is valid and legible.
Scanned documents should be in colour (if possible) and actual original size.

I don’t really think its different to what a bank requires when opening a business account. The point is though, it is NOT a bank. Paypal is no different to a company like Western Union transferring my money to a friend overseas.

The point is: I have no idea who will have access to my documents once they are sent. I have no idea what will happen to these documents once they have been sighted. I don’t even have a face or a full name to the person that will be responsible for the safe passage of my personal information. I can’t get a signature from anyone to say they accept them. I can’t hold anyone responsible if my details are sold or leaked to illegal activity.

What are my options?

On the Paypal website, they say very clearly that the request for information can not be appealed. Effectively, I’m held to ransom. If I want my money released, I must conform. They kindly give me 45 days to act on the request, and if no documents are forthcoming, my account is frozen and I have no access to my funds.

If you have a paypal account, I’d suggest you keep your balance well below $999 so you don’t trigger the new laws.  

I don’t actually have an issue with the powers that be attempting to limit tax dodging or illegal activity, but in their mindless blind panic to plug perceived laundering loop holes, and perhaps catch the odd thief, they are creating a bigger problem by exposing the legitimate businesses that use Paypal to fraud on a much larger scale.

Still, we assume that bureaucrats and politicians have some level of common sense, but that’s another discussion at another time I guess.