Recently PayPal decided that my products for Filipino martial arts training are illicit. Or not. Only PayPal can determine what their policy means, and they aren't explaining.
My first inkling thatPayPal had an issue with the kind of training products I've sold through my website for years came recently in an email at 1am. It kindly noted that my account was being "limited" for violation of the "accepted use policies" (AUP) regarding firearms, blades and batons.
"Limitation" is Paypal's euphemism for freezing an account. I could not conduct any transactions whatsoever, including withdrawing funds that I had allowed to accumulate there. Since my business selling sticks involves buying industrial supplies to make sticks, freezing my account in effect meant I could not pay for supplies ordered until this was resolved.
Paypal's process is simple. You are directed to a webpage that basically says you have to comply with all their policies, and there is a box to click to say you are now in compliance. There is no room to discuss or dispute their opinion. It's their way or the highway.
Since the section of their "accepted use policy" is so vague and all-encompassing, it effectively meant that everything I sell, from Escrima sticks to pocket knives and tabaks, are illicit if they say so.
In order to comply with their definitions and restrictions, I was instructed to remove all references to Paypal from my website. I then posted a notice there for customers that I was no longer able to take payments through this service.
This satisfied Paypal and they unfroze (er, "unlimited") my account, saying I was now in compliance and free to use Paypal. In other words, I could use them if I didn't use them, but if I use them, then I cannot use them. Go figure.
At that point I wrote to them, pointing out that 1) I do not, and never have, sold firearms or firearms related materials; 2) I do not, and never have, sold switchblade knives; and 3) that Escrima sticks are sold commonly on the internet including through Paypal and Ebay.
This led to an interesting correspondence. I got one email stating that "Escrima sticks are exempt" followed by several others saying I was clearly in violation of their policies, specifically: "Your website has throwing knives, batons and switchblade knives available for sale. It is against PayPal's Acceptable Use Policy to accept payments for such items via the PayPal payment platform."
Now my website clearly and explicitly says "Escrima sticks" and points out that these are for "training purposes only" in the Filipino martial arts. Nowhere on my website does it say "baton", and my sticks do not meet the specifications for police or security batons, at least according to California codes. When I wrote to point this out, I got back emails directing me, once again, to the "accepted use policy" on firearms, switchblades and batons (the AUP says vendors must meet laws "everywhere").
At this point they also began mentioning that I sell switchblades (I emphatically do not!) and throwing knives (I advertise some but have never sold any), and throwing knives are not even mentioned in their AUP! If they had an issue with any particular product listed on my site, they could have just contacted me to inform me of this. Instead it's a heavy-handed approach of economic sanctions and control.
When I pointed out that Ebay allows sale of Escrima sticks and throwing knives, the reply was that Ebay has its own rules, and (once again) I'm selling batons! I then wrote to say that whether or not Ebay has its own policy, vendors were using Paypal "buy now" buttons and other Paypal tools to sell these goods. I included links to pages showing 38 auctions for Escrima sticks and 143 auctions for throwing knives, all using Paypal. The response to that was if I had a complaint against another vendor, I should forward their website link to Paypal. In other words, they weren't going to investigate themselves, in effect making me responsible for them to enforce their own policies.
I'm not their employee, nor am I interested in doing their work for them or causing problems for other sellers. My final point to them was that their policy is completely arbitrary and discriminatory. It is also clear, from the tone of various emails received over a day or so, that I was dealing with multiple people at Paypal. However, they never identify themselves so there is no accountability or any means of following up with someone already familiar with my case or complaint, or to ask for a supervisory opinion. If you look at their website, there is no phone number to call. Paypal is as anonymous as they come.
The best part is, by defining themselves as a "transaction facilitator" they avoid banking regulations, even though they take credit cards and pay interest on balances. Somehow they have positioned themselves outside laws of fiduciary responsibility. I've heard horror stories of Paypal freezing accounts for months with no recourse; I was lucky to get my money out as quickly as I did. Do I trust them to do business at this point? No, and until they can give me assurances that I am cleared to do business, I will not use them again.
Now how much of this ties into Homeland Security, and how much is it about the stranglehold of insurance company liability policies on activities in this country? The national anthem says we are the "land of the free and home of the brave" but we are increasingly swaddled in regulations that restrict our actions "for our own good."
A recent article on Wired.com talks of the police raid and legal tribulations of a couple running a respected online chemistry supply company, one which actually has Homeland Security as a client! Common supplies that can be gleaned from other products are now forbidden under the pretext of clamping down on illegal fireworks and methamphetamine manufacturing, and the article points out how insurance and legal constraints are barring students in schools from conducting the kind of experiments that were commonplace in high schools two decades ago.
Another article in the SF Chronicle described how a high school physics teacher in Mill Valley is in trouble for a demonstration he's done, with administration approval, for the past 15 years, because it "could traumatize the children". According to the article in Wired, the U.S. has slipped in the last 30 years worldwide in number of engineering and science degrees issued from #3 to #17 currently. We're intentionally dumbing down our educational system in the name of safety and security.
Now in my opinion all this is a smokescreen. Insurance liability and security concerns are excuses. PayPal can banish a small business like mine from using their services (and I'm not alone) but the fact that they allow free access to Ebay vendors tells me that, as usual, money is the bottom line. Sellers on Ebay give a cut to the site to list there, and Paypal takes a percentage of any transaction that goes through them. In other words, it's a double-dip. It seems probable to me that this is a way to limit outside vendors like myself, driving more business through their process to maximize profit. It's the American Way.
Am I cynical? Sure. I can find a work-around by getting a credit card account, but that is much more expensive. For business on the tiny scale I operate, it's probably worth the risk, but a handicap nonetheless. In the end, I simply feel like another piece of entrepreneurial roadkill on the highway of corporate greed.