I made $200K and PayPal locked my account
I'm the creator of turn.js (www.turnjs.com), a javascript library for books and magazines. I released a commercial version in July 2012 and six month later I made $200K. I don’t know how, but I made it.
PayPal has closed my account because I don’t have a social security number. It seems like I don’t qualify for one because I’m just “an international student” from Venezuela.
I have been working really hard to release a product for publishers that converts PDFs to HTML5 for books and magazine with the brand-new turn.js 5th release.
I don’t know what to do or where to go. I don't have more money.
Please help.
Any suggestion would be appreciated.
blasten@gmail.com
Emmanuel
297 comments
[ 3.3 ms ] story [ 309 ms ] threadAnother note - releasing the 4th release's source code under something like the Affero GPL (or a similar noncommercial license) could drive adoption of that version, since many people like to "try before they buy" - and would like to do so with the most feature-filled version.
I just wonder why don't you Emmanuel provide more information.
I suspect that a good lawyer will be able to recover most of it for him, especially since his presence in the US was not material to the earning of that income.
If the work that generated the income was done while he was physically in the US, then the immigration folks will definitely have an opinion on if it was legal under his visa terms. This may or may not have an impact on any potential legal remedies that are available wrt Paypal.
I heard of someone who was deported because he was painting fences for some disposable income. My guess is that the OP actually needs an immigration lawyer, not a civil claims lawyer (or whatever they are called).
It's a sticky situation, and likely depends on whether the money was being posted to a PayPal account with a US or Venezuelan address/bank account, and whether he actually performed any work on turn.js while in the US. My guess is that if PayPal are asking for the SSN, he tied it to the USA, which is going to be a problem.
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BUT, let's say OP gets a lawyer and starts exchanging nasty letters with Paypal. Any Paypal lawyer worth his salt is going to quickly say "Hmm, you're a student? Does your visa situation allow you to earn money in the US, or was this income generated illegally? Let's ask USCIS for their expert opinions. By the way, you do realize they can deport you, right? Are you SURE you want to continue down this road?"
But you're being nasty about Paypal, and I very much doubt the implication. I'll bet you 10:1 that Paypal would rather give him his money. But they also want to be in compliance with the law. They also want to spend the least they can on policy-vio detection and fraud detection ("least they can" means "a hell of a lot", say my professional connections; they're serious about fraud), and the least they can on customer service, and have minimal PR consequences.
It's not like they get to keep the money if they decide it's not legal to move it; they have to give it back, or pass it on. They'd rather pass it on and have more future business, from which they can take their cut. But they won't flagrantly break the law to do it, and they can't spend infinite resources making sure the right thing happens in every single case.
I'm working legally in the US (TN-1), but my wife is here without permission to work (TD-1) (and is not working). When I discussed her options with my immigration lawyer, like maybe should could remote-work for a company back home, my lawyer said (informally) that any work or any income, while in the US, was subject to immigration law. In fact, I was told US immigration's opinion is that when non-US citizens answer work email while on vacation in Hawai'i, it's technically illegal (although obviously everyone happily ignores that in practice).
What a surprise, countries are really no-fooling serious about protecting jobs for their own citizens.
So it's quite possible that in this case, Paypal had no legal alternative.
US Customs took his aside and was't going to let him pass (no surprise) but let him through but told him he could pass but he couldn't work in the US not even housework, not a joke.
> I suspect that a good lawyer will be able to recover most of it for him, especially since his presence in the US was not material to the earning of that income.
I'd be very surprised if this argument were accepted, given that presumably a lot of OP's income came from US sources (if OP was temporarily in the US, AND was being paid from non-US sources, AND the total sum was not as high as 200 grand, then arguably the case would be in a gray area [1]). Otherwise, it would be too easy to enter the US on a tourist visa and work from home, coding or teaching $foo via Skype, but good luck explaining that to the immigration authorities on entry.
However, it's not clear whether OP was actually in the US when they were selling the licenses.
[1] http://www.nationofimmigrators.com/employment-based-immigrat...
This coming Summer, apply for pre-completion OPT.
You are allowed to start a company (register a corporation), and work for it under OPT status. I have inquired about this on HN before: https://news.ycombinator.com/item?id=1523021 I also verified with the DSOs (Designated School Officials) at my university, who are authorized to give legal advice on this matter, and they said that it was indeed possible to be self-employed / do a startup while on OPT.
What you should do is:
1. Apply for pre-completion OPT right away. Once you get your EAD (it'll have a start date on it), register for a C-Corporation after the start date. (Unfortunately, non-citizens cannot start S-Corps, which are actually more suited to startups).
2. Then get a bank account on the company's name; link that account to your PayPal account, and cash the money to the company's bank account. You can then pay yourself a lump-some "salary" or cash it out via stock dividends.
3. Since your pre-completion OPT is authorized only for the summer, you'll have to stop "working for your company" at the end of the OPT period. So that this doesn't bite you again, in the meanwhile you should find a different solution to charging customers such as an international PayPal account or some other payment solution that is not based in the US.
4. Once you graduate, you'll be able to work for you company for atleast 12 months; and if you have a STEM degree (Comp Sci counts as one), you can work for it for an additional 17 months (adding up to a total of 29 months). After that there really aren't any other visas for startups / being self-employed, as the H1B requires that you own less than 50% of the company employing you (the real issue is that "you are not in control of your employment" and that you're fireable -- so even substantial ownership under 50% might be problematic -- but IANAL and I don't know about this. It might indeed be possible to do a startup on an H1B with 3 co-founders. Check with a lawyer.)
5. After the 29 months of post-completion OPT, if you are not particularly attached to the United States, there are many countries that welcome startups and self-employed freelancers and issue visas for such people. One such place is Dubai, a modern metropolitan city with people from various backgrounds. The DTMFZA (Dubai Technology and Media Free Zone Authority) issues Freelance permits (for $3k/year) that let you be self-employed in the country. One of the great things about Dubai (and the UAE in general) are the zero taxes. To top it all, Dubai happens to be a really great city. Other options, perhaps include Singapore and other cities/countries, but I don't know about the immigration/visa deal for freelancers in those countries.
Good luck! If you have any further questions, feel free to reply to this thread -- I'll be monitoring it.
Until then, hopefully you can trust PayPal to hold onto your funds (and not gobble it up for some stupid reason).
If by that you're referring to the rule that mandates you maintain minimal periods of unemployment; Yes.
Since you're running your own company, as long as you don't fire yourself you should fulfill this requirement.
The F-1 OPT status allows for upto 60 days of unemployment though. This means that means if you were to work a regular job, you still do have a little gaps of time in between switching jobs to search for a new job.
I love turnjs btw. Very slick tool.
1. Find a lawyer who can advise you, definitely based in the US, and almost certainly based on CA, the home state of PayPal. As you (potentially) have $200k in cash, you'll have no problem finding excellent representation. Hopefully you can get away with spending only a few thousand.
2. Select a different payment processor. You can do this immediately. Stripe has a good reputation, but there are others as well.
3. (Optionally) Post your progress. Especially if the lawyer can give you good advice that is applicable to others in your same situation, you are potentially saving other innovators many thousands of dollars not to mention headaches.
Good luck.
If you mean "worth more" - well, maybe, but at the same time, you can only make as much as the market will yield.
If you mean "worth less" - $200K over six months is OK, but not great if you realize that there will be likely six month period (one year periods?) where revenue will be very low.
It's very boom/bust, and the $200K made here needs to go a long, long way. All in all, you would probably (more than 50% of the time) make more money providing desktop support than trying to sell software (or games) as an independent entrepreneur.
Of course, some times, you hit it big, and it makes all the sweat and toil worthwhile.
I'd guess that PayPal wants an SSN so they can report your revenue to the IRS for taxes. If so, they might accept an EIN or TIN instead, which you can obtain as a business (which you probably want anyway if you plan on doing that much business).
Alternatively, if you are not actually in the U.S. (you didn't say explicitly), you may need the local equivalent instead, though good luck getting PayPal to accept anything that doesn't follow their script.
In any case, the instant you get access to your PayPal account again, get all the money out of it before they change their mind, which they frequently do, and switch over to the reputable payment provider you picked in step 1.
Finally, next time you start doing business with a service, even a popular one, search for negative experiences with that service and take them seriously. You now know not to use PayPal ever again, but that still leaves quite a few other services out there to get burned by.
OP, it takes a little while to get a TIN, but it's pretty straightforward to do so. You can get this as a foreigner, even if you're not in the US.
I recommend contacting the IRS to see how to do this. They have a competent international division. A phone call to paypal to see what they require probably couldn't hurt, but you can never be sure with them.
If you buy $1000 of toys and then sell them on eBay for $200 later, then you won't owe tax because you had a loss of $800. However, if you were audited, you might have to prove that the toys originally cost you $1000. If this is the only unusual item on your return, it's unlikely that an auditor will bother with it.
However, if you went to, e.g., China and bought $200 of toys and came back to the US and sold them for $1000, then you will have to pay tax on the $800 of profit.
If you are young and don't have a national insurance number yet, ask them to change your account holder to one of your parents and give them the NI.
I'd basically create a website reporting this issue to the general public and attach all emails and information you can get from them. Also, I'd change the payment method in your website to something else LIKE RIGHT NOW! You should never, ever trust Paypal! Like NEVER!
You should also report this to the media, they will love it! $200K is a lot hell of money!
Singapore is an incredibly good place to do business, I'm not shocked, especially since he wasn't a native born American.
Oh yeah, the real kicker is that you have to renounce citizenship, or you'll pay federal taxes even while living abroad. (True for dual citizens, too)
That was probably his real reason.
If this wasn't the umpteenth time I've heard this story, I wouldn't say this so pesteringly:
To everyone: Stop stop stop stop stop using PayPal. This happens over and over again. For once, thankfully, there are viable alternatives out there -- Stripe & WePay to name two (both of which I've had excellent experiences with).
Not saying they're panaceas or that there won't be security/freezing issues from the new guys, but PayPal has a documented, extensive, and repeated history of freezing accounts with large amounts of money in them over short(ish) periods of time.
https://stripe.com/us/help/faq#do-i-need-an-SSN
https://support.wepay.com/entries/313535-why-are-you-asking-...
You are not getting interest by letting that money sit with PayPal.
However, even if you don't do this, PayPal transactions are via ACH (actually, this isn't a PayPal-only thing - technically anyone with your ACH account info (the stuff at the bottom of your checks!!) can push/pull money into/from your account, it's the nature of the beast) and that has many failsafes and undos available, though it is a real PITA.
I do take my money out of PayPal as fast as I can.
Turn.js is awesome, I've been a fan of it for a while, and I hope and expect PayPal to resolve this.
But generalizing advice off this one data point is wrong. For the vast majority of people, PayPal is hands down the best choice.
People shouldn't expect that you can run a business as though it were a lemonade stand and funnel hundreds of thousands of dollars through any processor, including paypal, without anyone taking notice. That's not the way banks work, it's not the way the law works.
Get a business license, get your ducks in a row, make sure you read the terms of use, make sure you understand the legal implications of the business you are conducting, and then proceed accordingly. If you run into problems with a bank, a processor, or whomever then go consult someone who knows the law far better and can act on your behalf (e.g. a lawyer).
This is the exact same advice whether you use stripe or paypal or authorize.net or what-have-you.
If your business operations are indistinguishable from fraud or money laundering on the surface then you should not be surprised if your accounts get frozen and you should ask yourself how you need to go about making sure there is a perceivable difference.
Perhaps one could argue that the law or banking regulations or the corporate policies of the most popular services were different, but that's the world we live in. And it's not because they are trying to be assholes, it's because fraud and money laundering are commonplace, and if these companies don't try to keep it in check then they will get shut down by the government or the fees you pay to use the service will be much higher.
Actually, in large part, they are just being greedy assholes that are doing this because they can get away with it, and because it is profitable. They largely invented the freezing game, and they know how profitable it is.
Of course fraud and money laundering are issues, however that is far from the OP's use case. Before they freeze hundreds of thousands of dollars, you would think they would at least look at his site for a few minutes.
To be frank, you're talking out of your ass here. You have no idea of the problems that paypal is facing, and you are imaging that frozen funds are somehow identical to profit for paypal. That's not the case at all. In reality paypal has to deal with a veritable army of fraudsters and organized crime members on a daily basis. And they are hugely sophisticated, well funded, and impressively capable. Paypal's successes against such folks happen in the dark, because typically these guys aren't going to go blogging and tweeting up a storm about how paypal shut down their international money laundering operation. But it happens all the time. And that's why paypal is often so aggressive in these cases. Because they've seen the "clueless international student with a side-business and no paperwork but a really fancy website" gambit played out a thousand times already. How do you tell the difference?
Easy, when the legitimate operation goes and gets its legal issues sorted out, gets a business license, gets a tax ID, EID, inputs an SSN, etc. and sorts out any other legal or ToS violations they have then paypal won't have a cause for freezing the funds anymore.
Now, you might say that we should change the rules, and make it easier for anyone and everyone to toss around hundreds of thousands of dollars across international borders without any documentation or the involvement of any sort of registered business entity. I'm somewhat sympathetic to such notions, but such changes would entail a plethora of complex and thorny ramifications that I think most people who implicitly hold such ideals almost certainly haven't thought through.
There is one complaint against paypal that is sensible and backed up by evidence, and that is that they often have crappy customer service. That does indeed suck, and it aggravates these sorts of situations beyond a level that is reasonable, and, of course, generates a lot of antipathy toward paypal that isn't fully warranted.
If people want to switch to paypal alternatives, they are certainly able to try. Of course, one wonders why there are so few which have a global reach and the convenience of paypal. It couldn't be that the problem of peer-to-peer international payments is at its core fundamentally quite difficult and that only one company has done the immensely challenging work to actually make it possible, could it?
Surely not.
Paypal sux.
The problem is not that they freeze accounts, but there is no recourse to appeal. They require ID after freezing the account, but they should get this before setting up the account. If they are so upset about fraudsters, then I'd have thought they would attempt to ascertain the identity of their patrons before getting their knickers in a twist that their patrons aren't identified fully.
Imagine this situation without any financial institutions involved. Say that you are a visiting student from Venezuela without a work visa has earned $200k in cash in the US and then packed that money into a briefcase and went to head back to Venezuela. That money would be 20 banded stacks of $100 bills. Imagine what happens when you go to cross the US border and proceed to casually declare that you have $200k in cash you are taking with you. You have no work visa, you have no tax ID number, you have no business license. All you have is a website and a pile of cash. How do you think that will go? What do you think would happen if you took $200k in cash to Western Union and asked about wiring all of it to Venezuela?
Our country has decided to push a level of responsibility for tracking illegal financial transactions and for tax evasion onto financial institutions. And that's what paypal is doing here. They aren't doing it because it somehow makes them richer to have this money frozen for a while, that's at best a tiny effect. They are doing it because the alternative of ignoring fraud, tax dodging, and money laundering is that 1: chargeback rates go up, which will increase paypal's financial losses and could cause credit card processors to increase the rate they charge paypal for transactions, 2: governments confiscate the funds, 3: governments don't allow paypal to operate there.
The idea that there is some big mean paypal asshole twirling his mustache and waiting for an opportunity to screw over some hard working paypal user and steal their money is a very seductive one but it is massively wrong. The reality is that paypal has an enormously difficult job and sometimes good people get caught up in the complications.
The idea that someone can set up an international business and earn $200k in less than a year and somehow expect that operating without any documentation or having to go through any legal hoops is extraordinarily naive.
This is not a legal issue. The law is on PayPal's side because of their draconian legal agreements. The freezes are a customer service issue, at least from the customer perspective. They are a profit mechanism from PayPal's perspective, and they don't really care about the customer service aspect because they have managed to flourish despite a horrific reputation.
If I still used PayPal for my payment processing, I'd sleep like a baby: I'd wake up crying every two hours.
My business account just got similarly flagged and we provided all necessary documentation that proves we are a real business. They removed the flag in 24 hours.
I can't help you get back the money that PayPal has frozen, but I can help you keep selling it and ensure you keep what's yours.
Email me - tyler [at] simplegoods.co
I started turn.js as a weekend hack with html5. Then, I showed it on HN and asked for a Job. Later, I went to some tech company, I didn't get forward for whatever reasons. Turn.js was initially MIT licensed, and I had literally no money. However, some people were making 30k or more selling my javascript on some marketplaces, so I decided to stop and get back my credits. I created a commercial license, and everything started to change. I never enjoyed my money, I came to the U.S. because I needed a degree...
http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...
Do you not recall because you haven't read your own agreement, or because you haven't actually opened a merchant account with a bank before? You don't have to take my word. Type ["merchant account agreement" 180] into Google to see some 40,000 examples of bank contracts with that same hold period written into them.
And the OP case description is quite unclear, but the details sound like that it might be not "assets frozen while check if business is legit", but actually a threat of "charges filed against owner for circumventing anti-money laundering laws and assets confiscated".