Spencer Fry

This is somewhat of a continuation of my last post about PayPal (What is PayPal Thinking?), but branches out more generally. As far as I know, none of the original PayPal founders are still with the company: many have gone on to start new and exciting startups. Max Levchin, the most well known of the founders, is mainly credited for coming up with the idea of easily being able to pass money over the Internet. On the one hand he wanted it to be a painless process, but on the other hand he wanted it to be safe and devoid of scammers. Max is generally credited with solving PayPal’s early fraud problems through advanced mathematics.

However, I can imagine that Max certainly did not envision his fraud detection hindering legitimate users. Max goes on to say as much in the book Founders at Work by Jessica Livingston. Well, just last night I went to open up a new PayPal account after being instructed to delete mine by a PayPal Representative to free up my Social Security # for my business account. The process began OK until I got to the “Add Bank Account to Verify” process. I got an error message: “Your bank account has previously been linked with another account. You must add a new one.” or something to that affect.

Now, this is clearly some sort of security measure. “OK,” I said to myself, “I’ll just contact PayPal over the phone and explain the situation. They’ll surely understand that it was they who told me to close my personal account in the first place and they’ll override this.” It turned out that not only would they not override it (~90 minutes later), but that their system was hard-coded to not even allow them be able to override it if they wanted to. What a crock. I know that if Max and the other founders of PayPal were still with PayPal and if the company still had any resemblance to its founders’ vision than this would never have happened. It’s just another example of where a startup outperforms a big company: customer service and their users’ interests in mind. So now I’m left to either never use a personal account with PayPal again or to get a new bank account. (A great post was made on a very similar subject earlier today by Fred Wilson.)

I opened up a new business account with PayPal for nterface a few weeks ago. To verify the account, PayPal asked me to input my Social Security # (SSN) instead of my Tax ID # (TIN). I thought this was really strange, because it was a business account and not a personal account. Therefore, why should I have to enter my SSN? I shrugged it off and proceeded to input my SSN. An error occurred that my SSN was already tied to another account. Of course, I have a personal account that I’ve been using for 6 years with PayPal.

“Sorry, there’s nothing we can do for you,” said the PayPal representative that I talked to on the phone. “Let me get this straight,” I said. “There’s no way to verify my business account, because my SSN is already tied up with my personal account? Are you kidding me? I can’t use my TIN?” “No,” the lady said. Her supervisor wasn’t any help either. I then asked them if I could downgrade my personal account to the level that doesn’t require a SSN. “Yes, that would work,” the supervisor said. But, no, that didn’t work. PayPal’s downgrade system was broken. This was two weeks ago and they said it shouldn’t take more than a few days to fix the system and that they’d process my downgrade request at that time without a problem.

Fast forward two weeks to Sunday. Figuring that I’d have no problem with adding my SSN to my business account two weeks later, I logged in and proceed to enter my details. I get the saying that my SSN is already associated with an account, again. Ugh. I call up PayPal and ask them what the problem is. “Our downgrade system isn’t working right now, sir.” Out of luck again, I try to figure out a workaround to be able to verify our business account. PayPal tells me there isn’t one.

Finally it dawns on me that I can close out my personal account to free up my SSN to be able to verify my business account. This works. Now everything is dandy except for the fact that I’ve lost 6 years of history with PayPal on my personal account and had to go through all of this hassle. This raises two questions: (1) Why does PayPal not allow me to verify my business account with my TIN? and (2) Why does it take a large organization like PayPal over two weeks to fix their downgrade system?