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Tue Jan 20 2009 14:21:08

PayPal Regulatory and Licensing Compliance

By: Ina Steiner

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The issue of which regulations apply to PayPal came up in a recent AuctionBytes article. PayPal spokesperson Michael Oldenburg outlined for AuctionBytes today the rules and regulations to which PayPal is subject and adheres:

PayPal is licensed as a money transmitter on a state by state basis. Currently PayPal has 43 state licenses (not all states require a license). Although PayPal is not a bank (we don't offer loans or take deposits), PayPal is still subject to and adheres to all of the rules and regulations governing the financial industry including:
  • the Bank Secrecy Act and the USA Patriot Act anti-money laundering requirements
  • Regulation E consumer protections
  • Office of Foreign Asset Control
  • the Fair Credit Reporting Act
  • Gramm-Leach-Biley privacy requirements
  • Credit Card Association Guidelines
Also, although the Know Your Customer requirements for money transmitters are different than banks, we do have the same requirement as banks to maintain an effective Anti Money Laundering program. Some merchant processors do escape these regulations, but not PayPal. Compliance with these regulations is a top priority for PayPal and eBay and is handled by a large, dedicated team within the company.




Comments (13) | Permalink

Readers Comments

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: ss

Tue Jan 20 15:37:07 2009

The next thing will be at the taxpayers expense. Can you say TARP

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

This user has validated their user name. by: Ed Gadfly

Tue Jan 20 18:43:41 2009

The statement would be more believable if it came from someone other than a PayPal spokesman.

Do 43 states go along with the PayPal 21 day hold policy?

Do 43 states go along with the tying arrangement eBay and PayPal share for non-Power Sellers?

Do 43 states go along with eBay/PayPal's refusal to accept US legal tender, i.e. cash or US Postal Money Orders?

Really... which 43 states Mr. Oldenburg?

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

This user has validated their user name. by: Bob

Wed Jan 21 09:02:18 2009

He's right, Paypal is tough on money laundering, that's why I use another provider for that.

But Paypal is fine for buying my sex slaves, paying for child labor, the purchase of recreational drugs and pharmaceuticals from Spain, accepting payment on fraudulent eBay auctions...

If only you could launder money and buy porn with Paypal - then it would be the perfect service.

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: Patricia

Wed Jan 21 12:12:48 2009

Did you happen to ask him why the 180 day holds in some instances and was that legal?  Did you also happen to ask him paypal only acts this way (21 day holds) for Ebay transactions.  They are far more customer oriented on other types of transactions!

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

This user has validated their user name. by: Bob

Wed Jan 21 15:51:24 2009

Those regulations for money transmitters are meant to be for companies that transmit money across the US and International for their customers. Kind of what Western Union or Brinks does. Paypal acts in a different way, I believe, with their business practices.

It takes quite a long time already until some lawmakers look into that matter. I guess we all have to wait until that happens to see what's legal and what's not. Until then, Paypal makes the rules in a grey zone and that's very unfortunate.

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

This user has validated their user name. by: Bob

Wed Jan 21 16:01:51 2009

Paypal wrote: PayPal is not a bank (we don't offer loans or take deposits).

Haha, is that a joke ?
1. I can withdraw money from my bank account and put it in my paypal account and leave it there. That is a deposit, period !
2. Paypal offers loans on many items. You have probably seen the offer don't pay for 30 days or whatever. That is a loan, period !

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: On Lies and Secrets

Wed Jan 21 18:42:01 2009

@ Bob

LOL!!! I agree with your posts - paypal is working in infinite shades of gray with respect to the activities that are conducted with the service.

I am a fairly honest person in real life, but if I was actually criminally minded, I would use paypal services as if they were going out of style. I think there needs to be more government regulation (at state and federal levels) for paypal's financial services.  I think paypal consumers need protection from questionable practices and I think there needs to be oversight from potential abuses of the service that you (Bob) have so cleverly described in your post.

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

This user has validated their user name. by: Bob

Wed Jan 21 21:16:11 2009

Thanks OnLiesnSecrets..

What makes me real upset is that they are so arrogant and ignorant to think that people believe that junk they write in their statements.
...
PayPal is not a bank (we don't offer loans or take deposits).
...
Oh Jeeeesus, I would fire that guy right away. No Deposits !? So what does everyone do then, when they transfer money from their bank account to paypal ?

Well, if Paypal does not take deposits, I should request my money back from the last couple years. And so should you !

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: Evo-Woman

Wed Jan 21 23:37:19 2009

Paypal continues to act as they see fit by playing fast and loose with our money.  Unreasonable holds, large fees and unauthorized withdrawals.  I hope they get caught stealing from us.  I usually zap my account the second the funds hit.  I am not lining their pockets any more than I already heve!

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: Chris Goddard

Thu Jan 22 03:41:30 2009

Agree entirely with most of the above, reason being I am in Europe and so do not have first hand experience of some of the above (Thank the LORD!) But the feeling is exactly the same here! PP is FINE when it works!! However unfortunately this is LESS than 50% of the time! And the staff?? PLEEZE! Do not get me started!! As my Granny used to say is ''You pay peanuts you get monkeys!!'' Just check out OUR community boards sometime!
Happy days eh??

Chris

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: nuff said

Thu Jan 22 06:32:45 2009

Credit Card Association Guidelines

I would be looking at these guidelines folks. PP holding your money? Call V/M chat with them over all your complaints. Even the mighty PP has to adhere to visa and mastercard guidelines.

Everyone complains about PP and their tactics, does anyone ever complain to the card associations that make it possible for them to accept credit cards? That would be my first stop!

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

This user has validated their user name. by: Bob

Fri Jan 30 08:09:50 2009

In a recent blog by Ina (Jan.18th, 2009, http://www.auctionbytes.com/cab/abu/y209/m01/abu0231/s02 ), Paypal admits that they accept and take deposits into customers Paypal accounts:

... we will ask for the seller to deposit a reserve in their account," Monroe said in the blog interview ...

I guess it depends who you ask or what day of the week it is and the Paypal guys will give you whatever information they like.

If Paypal would be a bank, we buyers and sellers would be finally protected. So hopefully this will happen soon.

PayPal Regulatory and Licensing Compliance   PayPal Regulatory and Licensing Compliance

by: reblceo

Fri Jul 10 11:31:10 2009

Let's not miss the real message here:  We have till 2011 to find a new payment processor based out of some remote data center located deep in the amazon jungle



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