There’s been a lot of talk lately about how Paypal is “out to get” internet marketers. Several people have had their accounts frozen or even closed in some cases. And getting a straight answer from Paypal is usually an exercise in futility.
The latest kerfuffle to come up is with a marketer named Anthony Aires, who from everything I’ve seen is a perfectly honest and ethical marketer. He had his accounts shut down, with no specific reason being given by Paypal, just that his account presented a higher risk than they were comfortable with.
He recorded a phone call with Paypal and posted it here if you want to hear it:
Does this mean Paypal “hates” internet marketing?
I don’t think so.
First of all, I doubt Paypal’s definition of “internet marketing” is anything like yours and mine. We think of ourselves as “internet marketers” within this community but the fact is anyone selling anything online is an internet marketer.
Jeff Bezos (CEO of Amazon) is an internet marketer, as is the person selling a couple of items on eBay.
If Paypal hates internet marketing, they might as well shut their doors and call it a day.
A better question might be does Paypal hate the “make money online” industry?
Most of the stories about Paypal account closures that we hear are marketers selling to other marketers in the “internet marketing” niche. Often through the WSO section on the Warrior Forum.
I have no idea what the decision makers at Paypal actually think about this industry, but I can certainly see why they would consider it higher risk than many others.
Look at the WSO forum from an outsider’s perspective…
It’s a bunch of marketers selling stuff to other marketers, showing them how to make money on the internet. Yes, there’s other stuff there too but that’s the vast majority of what’s being sold.
When those marketers sell something, they get money in their Paypal account which they often turn around and spend with other marketers selling very similar products. Maybe to check out the competition, or maybe to learn something.
Either way, I can see where it would look fishy to anyone who isn’t familiar with the market. It’s a bunch of people selling similar things back and forth, often with very similar topics and even similar content.
And because there tend to be hot topics for WSOs, such as offline marketing at the moment, a lot of those things being sold would look really similar to an outsider.
Now add the most common payment system, WSO Pro and it looks even worse. Their affiliate program uses the alternating payment setup so some sales go to the vendor and some to the affiliate. Or all to the affiliate in the case of 100% commissions.
Now the person being paid isn’t the same person delivering the product and providing support. It’s not hard to see why that would raise some flags with Paypal.
And on top of it all, these things are all being sold through the same website (the Warrior Forum) by a bunch of different vendors. Some have contact information, support information and so on in their listings but the majority don’t.
If you ran Paypal and were liable for the payments that passed through your business, would you be comfortable with all this?
When it comes right down to it, you should never rely on a single third party for any part of your business. Whether it’s relying on Google for traffic or Paypal for payment processing, if you don’t have an alternative in place you’re just one decision away from being out of business.
There are some things you can do to reduce your chances of getting your Paypal account frozen or shut down, however. A lot of it is being as transparent as possible:
- Include contact and support information on your sales pages
- Don’t force people to sign up for your email list before they get delivery of what they paid for
- Avoid “hidden” continuity products
There are two products I’ve read that have some practical information about staying in Paypal’s good books:
They’re both good products and cover different aspects of managing your Paypal account. If you were to pick only one, I’d recommend Payment Shield Pro first but reading both is ultimately going to help you protect your account the best.
Hi John and thanks for your article, who enlightened my mind about one of the biggest problems for WSO sellers. Also I had some problems with it in last times, also for the people who buy the product, read it all, use it and after the 30 days of guarantee have passed, asks a refund through Paypal, who freezes that money.
You don’t have other choose than give the payment back.
Also this one is a problem who makes Paypal think about WSO as something suspicious. I use to include Contact and Support information on selling thread, but this is not useful, because people prefer to avoid direct contact and like to ask refunds straight from Paypal saying one of the few:
1) Product not received
2) Product received but different from what expected
3) Product is fluffy
And having no shipping proof, because product is digital and I have just the invoice of sale, there’s nothing to do.
After the Big P see that a user wants a refund, he freeze my money, and if I want to get my account active, I need to send that money back.
I think the key of all will be the creation of a payment system JUST for Warriors, or for internet marketers in general.
We can’t continue to use a system with the terror that one day we will be cutted off.
Thanks so much for your contents,
Alessandro Z.
Hi John,
I wrote a similar (but slightly differently focussed) article on my own site yesterday, so I’ve had a chance to think about this too.
You make some good points about the nature of the IM beast (and WSO selling in particular) but I’m still not sure that Paypal’s rection in this, and other, cases is entirely proportionate.
Risk is something we all weigh up in many situations and we sometimes choose to go ahead in riskier situations after we’ve made the necessary plans to handle the downsides. This is particularly true for most of the (real) financial world, where higher interest rates and other means are used to cope…..Greece, France, Italy etc. spring to mind
So, for Paypal to turn round in the middle of an ongoing customer relationship and declare unilaterally that this is now such a high-risk seems a little extreme. I wonder what Paypal’s founder would have to say if his backers for such “risky” projects as the Tesla sports car and his latest space venture were to pull out with no notice, just as he was about to start building them.
My own take on this is much the same as yours, that we need to protect ourselves as much as possible, but I don’t think that diminishes the fact that some of the big names in the internet world such as Google and Paypal have some of the very worst support systems on the planet. It is fine for them to demand that you need a contact address on your own page, but have you ever tried to get them to deal with you personally from their own support numbers?
I believe strongly that any company that suggests you as a customer are in some way “privileged” to deal with them is a company that is due for a rude awakening for such hubris!
Martin
I think you’re right that most of the “real” financial world treats risk differently than Paypal. Frankly, I think part of the reason they do things the way they do is to try and avoid getting dragged into that “real” world. If they were to get classified more officially in the financial realm, they’d find themselves subject to a whole bunch of new rules and regulations.
And I couldn’t agree more about the double standards that we see from Google, Paypal and various others. A large part of all their businesses is built on the exact things they penalize other marketers for – scraping content, not being easily accessible, hard-to-understand privacy policies, etc.