Why Is PayPal Harassing OpenCamp? [Updated]

You’ll pardon me, for a moment, while I go on a personal rant about PayPal. I’ve had so many issues with the company in the past that now I can’t even open an account with it. Mind you, these issues spawn from what it called “suspicious activity”, because apparently opening an eBay account and accepting a couple thousand dollar payment for an auction is suspicious.

Funny, I thought that’s why PayPal existed, but I digress.

In fairness, PayPal does do some great things.  The PayPal X project is an amazing opportunity, and I highly applaud the company for it.  However, it’s difficult to see the good when we are staring at situations like this head on.

This time PayPal is focusing its sights on the OpenCamp conference. If you’re not familiar, OpenCamp is a conference that’s coming to Texas in August. It’s focused on bloggers, podcasters and social media enthusiasts and aims to be a meeting of the minds to help people “swap stories and build long lasting relationships”.

A tweet from @CaliLewis, host of GeekBeat.tv and one of the organizers behind OpenCamp, drew my attention to some issues that the organizers were having with PayPal.  The story, as told by John P. (another event organizer), sounds all too familiar to me.  Here are the highlights:

OpenCamp has a registration system through EventBrite, and is accepting payments for registration through PayPal.  For the past “several weeks”, calls have been coming in asking for the same information over and again.  What is OpenCamp, how many people will attend and why is it being held.  Granted, this might be somewhat important information for PayPal to know, in the beginning, in order to minimize risk.  However, John states that the calls have happened more than a few times, with each caller being a different person.  On top of that, no contact information has ever been afforded to John, and the callers only introduce themselves by a first name.

Apparently, the call this morning has pushed the situation over the edge.  According to the post, PayPal has now frozen the funds for OpenCamp, even though the event’s organizers had provided PayPal with huge amounts of information regarding the event, including personal credit checks for some of the organizers.

To add insult to injury, after PayPal froze the account, it then demanded contracts for every “vendor, speaker or anything else” related to the event.

Why is all of this happening?  According to John:

This morning I got a call from “Kathleen” (yet another unknown anonymous employee) in the “Risk Department”, explaining to me that they view events as being “extremely risky”. She told me that they would “rather close an account than have to eat a couple hundred dollars in disputed charges”. She went on to tell me that PayPal “doesn’t make much money off events”, and the bottom line was that they just don’t care about them.

I spoke with @CaliLewis, and here’s what she had to say about the immediate future of OpenCamp:

Q.  Hi Cali, Brad from TNW again. So what happens if PayPal won’t unfreeze the funds in a timely manner? Can OpenCamp still happen?

A.  “At the moment, they’re allowing us to take payments in, but not use any of the money to pay for our vendors. OpenCamp WILL still happen, but they are making it extremely difficult on us, and we should be focusing our efforts on making OpenCamp the best conference the attendees have ever been to, not convincing PayPal we’re legit.”

Q.  Was there any definitive start to this? Did some action cause an initial inquiry from PayPal?

A.  “It began with what seemed like a fairly innocent call from them a few weeks ago. Seemed like they were just inquiring about this fairly new account given all the registrations. John P. talked to them, and they researched all his other accounts. They saw there was a long term relationship, and they said everything was fine. They went away. Then, a couple weeks later, we get another call from a different random person at PayPal essentially asking the exact same things, but this time telling us they need John P.’s drivers license, social security number, and they were going to run a credit check.”

Mind you, this is not nearly the first in a line of horror stories about PayPal.  For a company that wants to be so deeply ingrained into the different forms of Internet payments, you’d think it would be a bit more savvy in picking its battles.  The organizers behind OpenCamp aren’t exactly unknown faces in the blogging world.  While PayPal might not be directly involved in blogging, it would still behoove the the company to be familiar with its clients.

So what’s next?  Apparently the answer is now to sit and wait.  Here’s hoping that someone at PayPal will notice the story and be able to do something about it.  Risk management is an essential part of any business, but doing so at the detriment of its customers is simply unacceptable.

Writer’s note: In answer to a suggestion from a comment, I’ll note that I have indeed contacted PayPal to give the company a chance to perhaps explain.  Thus far, the company has not responded, and I don’t honestly expect it to.  On top of the matter of how PayPal operates (going on past experiences), the issue deals with accounts to which I am not related.  If the company did comment, in almost any form, it would be a serious breach of privacy.

Update: Over the past couple of days, I’ve been hearing from Anuj Nayar at PayPal, asking me to follow up on the story.  Nayar assured me that the OpenCamp issues had been resolved.  Until today, I did not have any proof of this.  However, John P. from OpenCamp has now posted an update to the site that details the matter.

I have to say that I find it humorous that PayPal is never in any sort of hurry to fix user issues, but the company certainly has been in a rush to have me update this article.