What the hell good is Paypal?

[Tdarcos]

A customer of mine had to set up a commercial account last month - hosting with SSL - and used Hostgator. He recommended I get one of their commission accounts, because by me recommending him, I got a $50 commission.

So now Paypal confirms hostgator sent me $50. But I can't use that to pay for something on Steam (HL2 deathmatch, $4.95) even though Steam accepts Paypal, it only allows me to use a credit card, I can't use the funds on Paypal to pay something that accepts Paypal.

I also have $7.45 on a Paypal Gift card, and can't use that either.

[Ice Cream Jonsey]

That reminds me. I enjoyed your videos. Are you doing more of them? Do you think this would be a good candidate?

[pinback]

A customer of mine

Do what now??

[Tdarcos]

A customer of mine

Do what now??

I'm designing a website for him. He's offering a web-based service and I'm constructing it.

[Tdarcos]

I can't use the funds on Paypal to pay something that accepts Paypal.

I also have $7.45 on a Paypal Gift card, and can't use that either.

For some reason Paypal has basically locked my account because it can't post the small deposits to my credit union account - I don't have a regular checking account right now and can't set one up, long story I might tell later - so as a result even though I was able to spend some $16 of the $25 Paypal gift card, I can't spend from it now. Paypal says until I'm verified my spending limit is 0, which makes no sense since it already allowed the gift card to be used it should allow it now.

How you get verified is via 2 small transfers of a few cents into your "bank" account, and you report those on Paypal's website. The only way you could know them is if you have access to either the telephone banking or on-line banking website for that account (or can obtain and could wait up to maybe a month for the statement to come back in the mail!) The transfers will not complete, apparently they don't go through.

Paypal does recognize the routing number as Prince George's Community Federal Credit Union and so it should work. As I used the same information about a year ago to set up direct deposit for my Social Security Disability check, and I receive several hundred dollars each month (most of which I end up withdrawing to issue a check to my landlord), I know it works.

So I don't know what the problem is.

[Flack]

Did you call your bank? Did they see the deposits come through?

PayPal is so crappy, but generally speaking it works. It reminds me of those motor scooters they were renting when we went on vacation to Cozumel. I was like, "UGH those are so STUPID who would ever RIDE one of those!" Then I found out that the only alternative was to not go anywhere ... at that point it didn't seem so bad.

[Finsternis]

I avoid PayPal like the plague. I will never set up an account there. the only time I use it is when there is NO other option, and the transaction is a simple credit card charge, where they bill my card for something and I don't have to set up an account, have a balance, or give them any info beyond the usual.

It's a horrible deal n the face of it. They're not a bank. The rules are this: you give them money, and they let you use it if they feel like it. If they decided you don't get to use it, they keep it. There is no legal appeal. the only complaint process ends in arbitration which they completely control. You could put $100,000 in there and they could keep it if they felt like it and you have no legal recourse. Uh-uh. Sorry, Paypal.

There are a huge number of horror stories of exactly that happening to people. Check out paypalsucks.com or any of the other anti-paypal sites.

Never, ever carry a balance at paypal.

[Tdarcos]

I found what the problem is with Paypal.

Under my old e-mail address, postmaster@paul.washington.dc.us (Yes, I am one of the very, very tiny number of people who actually use the e-mail address Postmaster) I had purchased a videotape back in 1996. Paypal advanced $16 and change, but apparently I had not given them corrected information and they tried to bill a checking account that I closed. So when my current account information, I guess, matched the one I owed them money on, they froze this one.

I recognized the name of the movie, while I don't remember buying it, it seems very likely that I did as a present for someone. So I authorized them to transfer the less than $17 to clear the overdraft. In a couple of days it should be clear.

[Tdarcos]

It's a horrible deal n the face of it. They're not a bank. The rules are this: you give them money, and they let you use it if they feel like it. If they decided you don't get to use it, they keep it. There is no legal appeal. the only complaint process ends in arbitration which they completely control. You could put $100,000 in there and they could keep it if they felt like it and you have no legal recourse. Uh-uh. Sorry, Paypal.

Never, ever carry a balance at paypal.

Why would anyone be stupid enough to keep $100,000 in Paypal unless they were running an illegal operation and needed to launder money? If you have that much money you can use a real checking account or credit cards.

If you don't want it in your own name you incorporate, either in your home state (usually less than $100) or you spend about $300 including fees and pay a company to act as agent for you, it can be local or any state in the country. Then you use a corporate checking account.

I have said it many times, Never operate a business larger than a lemonade stand under your own name, either use a corporation or a Limited Liability Company. I use corporations because the fees are substantially less and I'm not doing enough for the use of an LLC to work in my case. I have two corporations and an LLC, which I don't really use, but I just keep the LLC in case I need it, it only costs $10 a year.

Nevada is very good for that sort of thing. If you want to hide money from a soon-to-be-ex-spouse or creditors, using a Nevada corporation would be excellent. In the last 20 years in Nevada there have only been two cases where courts have allowed the corporate veil to be pierced and allowed the corporation's separate existence to be ignored. In both cases, the corporate officers committed fraud.

For doing lots of corporations, I'd pick Colorado. It's the least expensive state at $50, you can incorporate over the Internet in 10 minutes with nothing more than a Colorado address and a credit card, and if you don't operate in Colorado, you pay no income tax there and don't even have to file tax returns there. My Colorado corporation only files a federal return. Also the yearly renewal on the corporation and the LLC is only $10 each and a corporation or LLC can be its own agent, something neither Delaware nor Nevada allow.

Public corporations tend to use Delaware because of director protections but Nevada is picking up a lot of business because of the tax advantages and anonymity.

You might say, well, what happens if the corporation operates outside Nevada, how is that going to help? Well, if I set up an operation in Chicago, hire people from Wisconsin and they sue my company which is incorporated in Virginia, but operating with an authorization to operate in Illinois, in determining the rules, the Illinois court must follow Virginia's laws on corporate operations. So if one uses a Nevada corporation, it's home state's law applies no matter where in the US that it operates.

I'm a messy cheapskate and I'm not doing anything illegal. The corporation I happen to operate and am the only director is Viridian Development Corporation, a Virginia non-stock, for-profit corporation, authorized to do business in and located in Maryland. I paid a $100 one-time fee for that back in 2008. Since it's non-stock I don't pay the yearly $300 fee for filing an annual report in Maryland (report fee is $0), no annual fee, and the annual corporate renewal fee in Virginia is only $25.

But I found out the Western Union system works for a Paypal bank account - at least for deposits. I haven't gotten my MasterCard yet but they did show the two deposits. So I can transfer money to the Mastercard account from Paypal. Metabank will categorically deny any withdrawals, so that will work; they comply fully with Ferengi Rule of Acquisition #1: "Once you get the customer's money, you never give it back".

I'm not sure why my Credit Union could not handle the transfers; haven't had a chance to ask them.