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Paypal Reverses Payments Made To Indians

kdawson posted more than 4 years ago | from the money-available-but-not-to-you dept.

The Almighty Buck 509

bhagwad writes "Beginning January 28, Paypal has been reversing the payments made to any Indian provider of services. In addition, Indian users have been unable to withdraw their money to their bank accounts. As a result, a large number of Indian Paypal accounts have negative balances running into the thousands of dollars. The worst part is that users weren't informed beforehand — the funds were just whisked away. Indian providers have gone ballistic, with over 2,000 posts on a thread on the reversal of payments and over 700 posts on this thread about the delay in transfers. Paypal hasn't given any explanation to this behavior other than they're looking into it. Although Paypal claims in the above blog post that payments made for 'Services' are not being reversed, this is not true. All payments not made for 'Goods' with a shipping address have been reversed — in fact, the Paypal e-mail tells the Indian sellers to encourage their clients to lie and claim that they're paying for goods with a shipping address instead."

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509 comments

Makes me wonder... (5, Insightful)

lag10 (667114) | more than 4 years ago | (#31053956)

Why anyone trusts PayPal with their money.

Re:Makes me wonder... (5, Insightful)

Anonymous Coward | more than 4 years ago | (#31053984)

Nobody trusts Paypal, but there is no viable alternative. Not yet, anyway, but that can't take long in light of these shenenigans.

Re:Makes me wonder... (1, Interesting)

Anonymous Coward | more than 4 years ago | (#31054106)

How about just asking your bank to transfer the money to the other's bank account? So far it's always worked for me.

Re:Makes me wonder... (5, Informative)

witherstaff (713820) | more than 4 years ago | (#31054212)

That's not very convenient for instant or simple online sales. Also you normally get hit with a $15 wire transfer fee on top of it. For large purchases it's doable, for paying some coder by the hour it'd be a hassle.

Re:Makes me wonder... (1)

bvankuik (203077) | more than 4 years ago | (#31054376)

Sure but that is not what this is about. We are not talking about a payment for 8 hours. If you think that you can trust Paypal with thousands of dollars, then that will come back to haunt you. That is what banks are made for b

Re:Makes me wonder... (1)

bill_mcgonigle (4333) | more than 4 years ago | (#31054490)

Also you normally get hit with a $15 wire transfer fee on top of it.

Where's this? I never paid PayPal to transfer money to a bank account. I'm in the USA, though.

Re:Makes me wonder... (5, Informative)

brusk (135896) | more than 4 years ago | (#31054712)

No, it's a fee you pay for a regular wire transfer from one bank to another. Its absence is what makes PayPal so convenient.

Re:Makes me wonder... (1)

bhtooefr (649901) | more than 4 years ago | (#31054250)

In the US, that's impractical.

The only low-cost ways to transfer money are either PayPal (instant,) or mailing a check or money order via the postal mail system (several days.)

Wire transfers only make sense here when the amount being transferred is $1000+.

Re:Makes me wonder... (4, Interesting)

bvankuik (203077) | more than 4 years ago | (#31054206)

No viable alternative? What about a normal bank transfer? I used to pay an Indian guy via Paypal but their charges are pretty steep. So I informed with my local European bank for the costs and it turns out this is much cheaper. Problem fixed.

Re:Makes me wonder... (1)

bhtooefr (649901) | more than 4 years ago | (#31054266)

Not practical if the payment's coming from the US - my bank charges $40 for an international wire transfer, and that's not out of the ordinary.

Also, wire transfers are usually regarded as very insecure here, because when someone thinks "wire transfer," they think "Western Union."

Re:Makes me wonder... (0)

Anonymous Coward | more than 4 years ago | (#31054154)

I don't!

Re:Makes me wonder... (0)

Anonymous Coward | more than 4 years ago | (#31054176)

Why anyone trusts PayPal with their money.

The funny thing is; the last Slashdot story I read about PayPal causing problems for it's users had a guy claiming that Paypal shut down his business account years ago, and then when he went and started another business they shut down his other account for no apparent reason (other than they found out he was on their secretive black list). What's ironic is that this extra publicity Paypal is getting will probably end up driving more business towards Paypal. Sometimes there's no such thing as bad publicity.

Paypal is a bandwagon that everybody wants to ride. First they came for the Indians, but I was not an Indian...

Re:Makes me wonder... (4, Informative)

MikeFM (12491) | more than 4 years ago | (#31054194)

I don't. They arbitrarily started reversing all my payments after I'd shipped product and provided tracking numbers proving delivery. Cost me thousands of dollars and put me out of business. Now they want me to pay them $800 because they not only cleaned out my account but I guess gave away even more. And you pretty much have no recourse but to keep feeling out online forms asking what the frick is going on. Been using Google Checkout and Amazon Payments and they seem viable alternatives. I don't leave money sitting in accounts attached to order processing though because who knows what they'll do to you. Credit card / order protection is a scam. The venders get ripped for no reason. I think unless fraud can be proven there should be no refund and then it should become a legal matter. The credit companies charge fees but they don't cover any of the costs. It all comes from venders.

Re:Makes me wonder... (0)

Anonymous Coward | more than 4 years ago | (#31054318)

I'm sure you've thought of this, but it sounds to me like you should sue Paypal for everything they took from you, plus all the additional damages you've suffered (entire loss of your business), and probably lawyer's fees too. You may even be able to tack some kind of statutory damages on top too.

you're wrong (1, Interesting)

Anonymous Coward | more than 4 years ago | (#31054728)

I'm not sure how paypal is even legal frankly, they screw over both consumer and vender alike, but their biggest problem is their poor consumer protections.

Credit cards however were sensibly designed to provide a safe avenue for consumer level electronic transactions, which means they must provide strong protections for the consumer. If you don't like payment avenues that have consumer protection, then you should use older payment systems like certified check and cash.

In general, credit card companies sort out contested charges fairly reasonably and efficiently, and the fee they charge the merchant is pretty typical for banking related fees. I've seen only really two main exceptions :

(1) Non-profit organizations occasionally get some moron making lots of donations using stolen credit cards, which ends up costing the non-profit. I think the easiest solution here would be for fraud scrubbing services to donate their services to tax exempt organizations.

(2) A small company using digital delivery often sees enormous numbers of charge backs because purchasers habitually forget what they purchased. If this happens, the small business has usually failed to clearly indicating their name in the credit card billing line, often because they have recycled the merchant account from another business.

Re:Makes me wonder... (0)

Anonymous Coward | more than 4 years ago | (#31054338)

No one. But there isn't a single alternative for Paypal.

And please don't reply with bunch of US-only payment gateways. Thanks.

Re:Makes me wonder... (0)

Anonymous Coward | more than 4 years ago | (#31054470)

Errr, you haven't tried www.paymentgateway.us ?

Re:Makes me wonder... (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31054344)

Why anyone trusts Indians with money. They smell bad, make poor sysadmins and uninspired software engineers. God knows they're awful drivers too.

Paypal's unspoken motto (0)

markass530 (870112) | more than 4 years ago | (#31053970)

"Only do evil" Everything started out rosy in my time with paypal, but I ended up hundreds in actual money and thousands in potential sails. I mean paypalsucks.com is still going strong

Re:Paypal's unspoken motto (3, Funny)

markass530 (870112) | more than 4 years ago | (#31054010)

Should say loosing hundreds and thousands, yes I am an idiot for not reviewing the post first.

Re:Paypal's unspoken motto (1, Funny)

Anonymous Coward | more than 4 years ago | (#31054038)

sail
noun
1 a piece of material extended on a mast to catch the wind and propel a boat, ship, or other vessel : all the sails were unfurled.
  the use of sailing ships as a means of transport : this led to bigger ships as steam replaced sail.
  [in sing. ] a voyage or excursion in a ship, esp. a sailing ship or boat : they went for a sail.
  archaic a sailing ship : sail ahoy!

Re:Paypal's unspoken motto (1)

larry bagina (561269) | more than 4 years ago | (#31054066)

"losing". Also, "sales"

Re:Paypal's unspoken motto (3, Informative)

MollyB (162595) | more than 4 years ago | (#31054566)

Too late for lose/loose. It seems to be viral, perhaps intentionally to drive boomers nuts. Also on the 'endangered' list: affect/effect; their/there/they're; dissent/descent; and the biggie-- your/you're.
The cracks first started years ago when traffic crossings started omitting the apostrophe in "DONT WALK" signs decades ago. I knew things were pointing downhill even then.
Never saw a mixup of sales and sails, tho.

PalPal Sucks! (1)

Khris (1010709) | more than 4 years ago | (#31053990)

....and the unfortunate reality is that there is no other option to really challenge their dominance. The sooner a new player comes along that can really give PayPal a run for their money, the better. When that challenger arrives, my PayPal account will be immediately closed!

Re:PalPal Sucks! (2, Informative)

mysidia (191772) | more than 4 years ago | (#31054018)

What about Google Checkout [google.com] ?

Re:PalPal Sucks! (1)

EvilIdler (21087) | more than 4 years ago | (#31054062)

Is Google Checkout available to European users *and* merchants? At least one of the two was unavailable last time I tried to sign up.

Re:PalPal Sucks! (3, Informative)

mysidia (191772) | more than 4 years ago | (#31054280)

Seller terms [google.com]

The seller must legally be able to do business in the US, and have a US bank account (since Google is US-based).

The buyer does not have to be in the US.

Re:PalPal Sucks! (0)

Anonymous Coward | more than 4 years ago | (#31054396)

Availability

Google Checkout is available to U.S. and U.K. merchants. U.S. Google Checkout merchants must have a U.S. bank account and U.S. address, plus either of the following:

        * A Social Security number (optional) and a valid credit card
        * A Federal Tax ID/Employer Identification Number (EIN)

Buyers from many other countries outside the United States and United Kingdom can also sign up for the service and make purchases through Google Checkout. While their purchases will always be processed in the currency matched to your address (U.S. dollars for U.S. merchants or Pounds Sterling for U.K. merchants), buyers' credit cards will usually provide seamless currency conversion. Check the Location drop-down menu on the sign-up page to see if Google Checkout is available in your buyer's location.

Merchants in Austria, France, Germany, Netherlands, Spain, U.S. and U.K. can also use Google Checkout to sell applications on Android Market.

We're working towards making Google Checkout more widely available. At this time, however, we cannot provide any details regarding when Google Checkout will be available in specific countries.

Re:PalPal Sucks! (1)

Pliny (12671) | more than 4 years ago | (#31054446)

I'd suggest keeping an eye on it. Checkout is what Google is using for payments in the Android market, so you can bet they're busting their asses to get it up and running wherever their phones are. I know it's up in the UK....

Re:PalPal Sucks! (1, Insightful)

itzdandy (183397) | more than 4 years ago | (#31054068)

Ebay has given paypal a monopoly payments for their auctions. this is anti competitive and should be stopped.

Re:PalPal Sucks! (2, Informative)

Anonymous Coward | more than 4 years ago | (#31054366)

Ebay owns paypal.. so I don't see this stopping anytime soon.

Re:PalPal Sucks! (1)

ottothecow (600101) | more than 4 years ago | (#31054710)

yeah, at this point its not really anticompetitive anymore than amazon sellers being forced to use amazon's payment system to deal with customers.

Ebay just chose to continue using a different name for their subsidiary payment processor instead of naming it "ebay payments". They are providing an extra service by allowing paypal users to exchange money for other things as well (and admittedly, while I never keep a balance in my paypal account and only make credit card payments through them, paypal is quite convenient)

Re:PalPal Sucks! (1, Informative)

Anonymous Coward | more than 4 years ago | (#31054110)

Why switch from one evil company to another?

Used to be a PayPal Alternative (1)

JoshDM (741866) | more than 4 years ago | (#31054718)

supplied by Western Union called BidPay, but I think that's gone gone gone.

Banking Reform (5, Insightful)

PingXao (153057) | more than 4 years ago | (#31053998)

Banking reform in the US should include subjecting PayPal to all the rules and regulations that apply to banks. I find it strange how they've managed to avoid being classed as a bank all these years in the first place. Current regulations leave a lot to be desired, but making PayPal adhere to them would be a good first step.

Re:Banking Reform (1)

pizzap (1253052) | more than 4 years ago | (#31054084)

"As of July 2007, across Europe, PayPal also operates as a Luxembourg-based bank." (wikipedia)

Re:Banking Reform (2, Interesting)

kill-1 (36256) | more than 4 years ago | (#31054156)

Yeah, in Europe they claim to be a bank so they don't have to pay VAT on their service charges.

Re:Banking Reform (0)

Anonymous Coward | more than 4 years ago | (#31054278)

I dont know if it changed but I seem to remember reading something about low tax rates for businesses
based in Luxembourg where most of the income was being earned outside the country.

Re:Banking Reform (2, Informative)

kill-1 (36256) | more than 4 years ago | (#31054608)

That's pretty common. Most US companies doing business in Europe have a subsidiary in a tax haven like Luxembourg (Amazon, for example) or Ireland (Google).

Re:Banking Reform (0, Offtopic)

biryokumaru (822262) | more than 4 years ago | (#31054166)

In computing, a hyperlink (or link) is a reference to a document that the reader can directly follow, or that is followed automatically.

...

The most common example of hypertext today is the World Wide Web: webpages contain hyperlinks to webpages.

- Wikipedia [wikipedia.org]

Re:Banking Reform (1)

khallow (566160) | more than 4 years ago | (#31054204)

Banking reform in the US should include subjecting PayPal to all the rules and regulations that apply to banks. I find it strange how they've managed to avoid being classed as a bank all these years in the first place. Current regulations leave a lot to be desired, but making PayPal adhere to them would be a good first step.

Why should they be a bank? Their primary purpose is enabling transactions not the usual roles of banks. And to be honest, I see no point to treating banks like they are treated in the US. While such regulation delays the mean time between failure for banks, it does so by increasing the size of failures when they occur.

Re:Banking Reform (4, Informative)

BondGamer (724662) | more than 4 years ago | (#31054320)

Why should they be a bank? Their primary purpose is enabling transactions not the usual roles of banks.

Yeah, they only hold, transfer, convert, store, send, give cashback bonuses, interest, etc. They are nothing like a bank at all.

You don't seem to understand what a bank is. (1, Insightful)

Colin Smith (2679) | more than 4 years ago | (#31054616)

Yeah, they only hold, transfer, convert, store, send, give cashback bonuses, interest, etc. They are nothing like a bank at all.

This is not what makes a bank a bank.

What makes a bank a bank and the reason they are more tightly regulated (though that's laughable) is that banks create and destroy money. Banks are a form of privatised money creation.

Paypal on the other hand simply move money from one person to another. They neither create nor destroy money. I would argue that no matter how bad their customer service, their costs or the problems they cause individuals, the paypal organisation is economically far more benign than your local bank.
 

Re:Banking Reform (4, Interesting)

Tacvek (948259) | more than 4 years ago | (#31054374)

What Paypal does is actually very similar to what many banks do at least from the user's perspective. Both hold money in accounts, and provide ways to transfer money. Banks provide checks and debit cards for this purpose.

I will admit that Paypal does not offer loans, nor does it over things like savings accounts, but from a user experience they are very similar to a bank where they have only a checking account.

If Paypal does not bother to invest the money sitting dormant in accounts, then many regulations would have only minimal impact on them, since they would be keeping full reserves rather than fractional reserves. The regulations we really want are those that prevent banks from freezing accounts for no valid reason, and from interfering with valid transactions. The procedures already in place for banks on both of these points would really help protect users.

I will admit though that overall Paypal's primary purpose is more like that of American Express than a bank, but the way they do it is debit based rather than credit based, meaning a whole bunch of regulations that would not apply to AmEx could be applicable.

Re:Banking Reform (0)

socsoc (1116769) | more than 4 years ago | (#31054504)

Does it over other things besides savings accounts? Maybe it unders some of them too.

Re:Banking Reform (4, Interesting)

YrWrstNtmr (564987) | more than 4 years ago | (#31054420)

Why should they be a bank? Their primary purpose is enabling transactions not the usual roles of banks.

They hold user accounts - you can keep money there.
PayPal credit [paypal.com]
PayPal Money Market funds. [paypal.com]

Sure smells like a bank to me.

Re:Banking Reform (1)

nospam007 (722110) | more than 4 years ago | (#31054510)

"Why should they be a bank?"

They have been a bank for years based here in Luxembourg, because here the VAT is the lowest.

American Express (0)

Anonymous Coward | more than 4 years ago | (#31054276)

Them too

Paypal is not a bank (1)

Colin Smith (2679) | more than 4 years ago | (#31054282)

Banks create money.
Paypal moves money.
 

Re:Paypal is not a bank (1)

larkost (79011) | more than 4 years ago | (#31054364)

How do you figure this? In the US the only entitiy that "creates" money is the US Govenment (through the US Mint). Banks are only in the business of moving money between people (and businesses) in the form of loans and deposits. They then "make" their money by taking a percentage off the flow of money, which is simply them diverting money from the stream (moving, not creating).

All this is a simplification of course. But if you take all of the complex things that banks do (like investments or morgages) and strip away the facade you are still left the same features. It always has to be a net-to-zero game within a bank.

Re:Paypal is not a bank (1)

dmneoblade (848781) | more than 4 years ago | (#31054452)

High school economics. Lemme break this down for you, and anyone else who slept through that class.

  • You deposit $100 at the bank.
  • The bank sets $10 aside as a reserve
  • The bank loans $90 to bob, with interest

Now, while you still have your $100 (its in the bank), there is someone else running around with $90. Therefore, since you started with $100, and now there is $190 in the economy, $90 was created by the bank.

And just because bob eventually has to pay it back does not stop it from being created in the first place.

Re:Paypal is not a bank (2, Insightful)

socsoc (1116769) | more than 4 years ago | (#31054516)

It wasn't created. This is what caused the Great Depression, if you were asleep through that class.

Re:Paypal is not a bank (1)

dmneoblade (848781) | more than 4 years ago | (#31054740)

Actually what caused the great depression is that the market started getting rocky, so everyone pulled their money out at the same time... something which the banks were unable to do. And it turned into a cascading failure. Its a fine system if you can avoid mass hysteria.

Re:Paypal is not a bank (2, Informative)

bill_mcgonigle (4333) | more than 4 years ago | (#31054458)

How do you figure this? In the US the only entitiy that "creates" money is the US Govenment (through the US Mint).

It's called Fractional-reserve lending [wikipedia.org] . You deposit $100 into your bank and they led out $900.

If they're paying you 2% interest and charging 4.5% interest in their loans, their profit is (roughly) 4.5% * 9 - 2%. So, they're making 38% or so on your deposit.

This is why banking is so profitable despite the seemingly low rates. It's also what creates the problems of 'runs on banks', but with the FDIC in place, the banks may lend as recklessly as possible, and if they fail (a handful a week are, currently) the losses are socialized among the taxpayers. Private profits, socialized losses. You'd think bankers were running the government.

Re:Paypal is not a bank (3, Insightful)

smallfries (601545) | more than 4 years ago | (#31054478)

No you are completely and utterly wrong. There is a very authoritative document from the Fed that explains how banks expand the money supply, but a simple starting point for you would be the wiki page on Fractional Reserve Banking [wikipedia.org] .

Re:Paypal is not a bank (1)

Snover (469130) | more than 4 years ago | (#31054416)

Banks, in the US at least, haven’t created money since 1935. That job goes to the Federal Reserve. If you’re referring to creating money through investments, well, PayPal has a money market too.

Re:Paypal is not a bank (1)

Colin Smith (2679) | more than 4 years ago | (#31054456)

Nope. You are wrong. Banks create money every day. That's what makes a bank a bank, and different from all other financial organisations, like say paypal.
 

Re:Banking Reform (2, Interesting)

GoodNicksAreTaken (1140859) | more than 4 years ago | (#31054642)

Wal-mart would fight this type of regulation to the death as they want all the profitability of offering banking services without all of the regulation and they have the deep pockets to prevent the type of regulation that both Paypal and Wal-mart ought to fall under.

Who will be manning the call centers... (4, Funny)

Anonymous Coward | more than 4 years ago | (#31054008)

Who will be manning the call centers to handle the complaints?

Re:Who will be manning the call centers... (2, Interesting)

mysidia (191772) | more than 4 years ago | (#31054046)

Hehehe....

Nice.

However, PayPal doesn't have any call centers.

They're paypal. The only way you can contact them is by e-mail (which they ignore), or through forms on their site (which you might get a response to in 3-6 months, if you are lucky) -- as for getting your hard-earned money back from your account they randomly chose to freeze, expect it to take 12 - 18 months, again if you are lucky.

If you are unlucky, 36 to 48 months, or (possibly) never. Your luck depends little more than who you wind up talking to, how you talk to them, what sort of move they are in. And the result of a few rolls of a D20 die.

Re:Who will be manning the call centers... (0)

Anonymous Coward | more than 4 years ago | (#31054124)

That's not true, I know there is one in Omaha, NE. I know people who work there.

Re:Who will be manning the call centers... (0)

Anonymous Coward | more than 4 years ago | (#31054274)

I am wondering, is it possible to you sue PayPal in small claims court?

Due to RBI regulations (5, Informative)

kai_hiwatari (1642285) | more than 4 years ago | (#31054020)

This is due to some change in the regulations by the Reserve Bank of India (RBI) regarding offshore money transfers. I read somewhere that RBI is demanding some documents form PayPal to make them eligible to transfer money to and from Indian Banks. Apparently PayPal hasn't been able to furnish those documents.

Re:Due to RBI regulations (0)

Anonymous Coward | more than 4 years ago | (#31054118)

At first I thought you said Reverse Bank of India, which would have explained the reversing of funds from the summary..

Re:Due to RBI regulations (4, Informative)

iammani (1392285) | more than 4 years ago | (#31054130)

Of course. Paypal has to be registered with the RBI to make forex (foreign exchange) transfers. Every time someone converts rupees in dollars or vice-versa, the source and destination of transfer and reason have to made available to the RBI.

Apart from these, Paypal would also be subjected to regulations governing these transactions.

The problem is Paypal doesnt want to be regulated as bank but wants to be able to perform what banks do. And this does not go well with the RBI.

Re:Due to RBI regulations (1)

djrok212 (801670) | more than 4 years ago | (#31054406)

Banks don't create money? Let's see... They take in $1,000 in deposits and provides loan for $10,000 dollars worth of goods, based on only having to have a 10% reserve rate, seems they've created $9,000 in money to me. This is actually how our economy works, like a big pyramid scheme.

Re:Due to RBI regulations (1)

gbjbaanb (229885) | more than 4 years ago | (#31054434)

No, this is how our economy tried to work, until someone realised the excessive leverage couldn't go on forever and we had a banking crisis - that you and I had to bail out. The $10,000 you mention isn't actually 'created' money, just temporary credit which has to be paid back eventually, or more likely nowadays, foreclosed on.

Re:Due to RBI regulations (1)

lennier (44736) | more than 4 years ago | (#31054666)

Except now that the crisis is 'over' we're back to fractional-reserve business as usual. Whee!

Re:Due to RBI regulations (1)

LukeCrawford (918758) | more than 4 years ago | (#31054370)

seems like paypal would be better off saying so up front; My first reaction was that it was likely more of paypals seemingly racist 'fraud prevention'

Happened to me .. (0)

Anonymous Coward | more than 4 years ago | (#31054026)

A few years back PayPal had closed my account without warning. It locked about $400 in it. It took about a week for them to finally tell me what was up, and they told me I'd have to wait up to 180 days to receive these funds. It took way longer, but I finally got my check. I'm never going to use PayPal again.

Re:Happened to me .. (1)

ZosX (517789) | more than 4 years ago | (#31054314)

That is six months or longer!! Paypal should be illegal because of crap like this.

Let me be the first to say (0)

Anonymous Coward | more than 4 years ago | (#31054040)

I am truely heartbroken!

My theory (5, Funny)

wealthychef (584778) | more than 4 years ago | (#31054080)

I think PayPal is run by cowboys.

Re:My theory (1)

Runaway1956 (1322357) | more than 4 years ago | (#31054422)

This is the post I was looking for, LOL

Indians never win against the cowboys - this is old news. Now, someone comes along and tells us how ignorant we are for mistaking Indians for Native Americans. *shrugs*

Yet another reason (3, Insightful)

Dracos (107777) | more than 4 years ago | (#31054182)

Why PayPal needs to be regulated as a bank, and why I refuse to use it.

Money laundering and terrorism (3, Interesting)

140Mandak262Jamuna (970587) | more than 4 years ago | (#31054228)

Where would you hide a tree? In a forest of course. Every time there is a new technology is found, the terrorists and criminals use it first and the law enforcement is way behind and always plays catch up. The Mumbai attackers were using prepaid satellite phones and VOIP routed through New Jersy to get constant feed back while they were on their rampage inside the Taj hotel. Wait for a day or two, and you will see that angle will be mentioned. Whether sincerely or as a diversionary tactic by Paypal or by RBI I don't know. But it is a well known fact the terrorists use havala trading systems very effectively and Paypal would not be a big step for them.

Paypal Sucks (3, Informative)

Anonymous Coward | more than 4 years ago | (#31054238)

http://www.paypalsucks.com/

I got burned by these bozos once. Make sure you read the terms and conditions carefully. They refund only under very tight circumstances. If there was an alternative, i'd use them instead.
I had no problems on about 50 transactions ... I got bitten for several hundred dollars once...

Seriously, PayPal sucks...

Wouldn't it be deliciously ironic... (1)

epp_b (944299) | more than 4 years ago | (#31054286)

...if this were all down to poor programming done by Indian outsourcers?

Does this make PayPal (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31054322)

an Indian giver?

As bad as PayPal is... (0)

Anonymous Coward | more than 4 years ago | (#31054368)

In this case they're doing the right thing. Almost all of the Indians using PayPal are scammers.

Currency controls (-1)

MillionthMonkey (240664) | more than 4 years ago | (#31054584)

India should just implement currency controls similar to the ones implemented by China. Really, China has a billion people too, and it's been working really well for them.

The lower the price for the yuan (a.k.a the renminbi) in dollars, the more dollars China earns from exports, and the fewer dollars it spends on imports. By not allowing its currency to rise, China generates a dollar surplus, and hence must buy up the excess dollars by purchasing Treasuries and maintaining large dollar reserves. A similar policy for India would need to go further, so that one rupee is equivalent to -1 dollars.

The Paypal thing makes it easy to do this. Here's what India has to do:
  • From its headquarters in Mumbai, the Reserve Bank of India purchases Indian treasuries on the open market, using a Paypal account.
  • When the bill arrives, the central bank simply ignores the positive account balance, leaving Paypal holding the bag with a large reserve of dollars.
  • Meanwhile the bank prints a new type of security, which holds them accountable for 10,000 dollars each, backed by the full faith and credit of Paypal.
  • The bank puts these up for sale for rupees, accepting all methods of payment other than Paypal.
  • When everyone realizes they've been suckered into buying dollars with rupees, the dollar will acquire a negative exchange rate in terms of the rupee, as everyone beats on Paypal's doors to pay them back. But Paypal, holding dollars, is not in a position to do so. This is equivalent to the rupee falling down to a value of minus one dollars.

American Indians? (1)

go_jesse (243193) | more than 4 years ago | (#31054674)

Wow, I read this and thought "American Indians" the whole time I was reading it. Only from within the comments did I realize my mistake...

Nothing New (0)

AmigaMMC (1103025) | more than 4 years ago | (#31054714)

Paypal (an eBay company) has been doing this for a long time. There have been a lawsuit in California which Paypal has settled (meaning all the money went to lawyers and now Paypal can do the same thing again as, once settled, you cannot sue the company for the same reason). Many people in the US have had accounts with $20,000 or more locked for no specific reasons, for months or years, while the company collects interests on that. This is the kind of behavior that needs to be outlawed in the U.S. (all other developed countries do not allow this). Paypal is NOT a bank and therefore are not subject to banking regulations (which in the U.S. are lax anyway).
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