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PayPal Shuns Debt Collectors, Until Needed    
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By : Stephanie Eidelman, Inside ARM (Kaulkin Media)

I had an interesting experience yesterday. We are in the process of re-designing insideARM.com (for a November launch, coming soon!). One of the hundreds of associated tasks is to set up an account with an online service that accepts payments over the Web, so people can buy reports, sign up for webinars, etc. in our Bookstore. Our web development firm likes to use the PayPal merchant system for all of their clients. So we applied for a "PayPal Pro" account as part of the set up.

We were denied the account.

Why? Not because of poor business credit or a negative history. It was simply because we are associated with the debt collection industry. Seriously.

I spoke to seven different people and explained over and over how our business operates and why we needed the merchant account (“For the last time, consumers will not be making debt payments on our site.”) I was finally told that our services fit into the prohibited activities listed in their acceptable use policy. Here it is:

Prohibited Activities

You may not use the PayPal service for activities that:

  • violate any law, statute, ordinance or regulation
  • relate to sales of (a) narcotics, steroids, certain controlled substances or other products that present a risk to consumer safety, (b) drug paraphernalia, (c) items that encourage, promote, facilitate or instruct others to engage in illegal activity, (d) items that promote hate, violence, racial intolerance, or the financial exploitation of a crime, (e) items that are considered obscene, (f) items that infringe or violate any copyright, trademark, right of publicity or privacy or any other proprietary right under the laws of any jurisdiction, (g) certain sexually oriented materials or services, or (h) ammunition, firearms, or certain firearm parts or accessories, or (i) ,certain weapons or knives regulated under applicable law
  • relate to transactions that (a) show the personal information of third parties in violation of applicable law, (b) support pyramid or ponzi schemes, matrix programs, other “get rich quick” schemes or certain multi-level marketing programs, (c) are associated with purchases of real property, annuities or lottery contracts, lay-away systems, off-shore banking or transactions to finance or refinance debts funded by a credit card, (d) are for the sale of certain items before the seller has control or possession of the item, (e) are by payment processors to collect payments on behalf of merchants, (f), are associated with the following Money Service Business activities: the sale of traveler’s checks or money orders, currency exchanges or check cashing, or (g) provide certain credit repair or debt settlement services
  • involve the sales of products or services identified by government agencies to have a high likelihood of being fraudulent violate applicable laws or industry regulations regarding the sale of (a) tobacco products, or (b) prescription drugs and devices
  • involve gambling, gaming and/or any other activity with an entry fee and a prize, including, but not limited to casino games, sports betting, horse or greyhound racing, lottery tickets, other ventures that facilitate gambling, games of skill (whether or not it is legally defined as a lottery) and sweepstakes unless the operator has obtained prior approval from PayPal and the operator and customers are located exclusively in jurisdictions where such activities are permitted by law.

Wow. I can't find any services in the above description that we offer, even indirectly. Most of you know that insideARM.com and Kaulkin Ginsberg, don’t collect debt. In fact, we don’t even have interest in any companies that do. We provide news, information, research and business consulting services to the ARM industry. That’s enough for PayPal, it would seem.

I guess PayPal feels this entire industry isn't worthy of their services. I did ask one guy how PayPal handles their own accounts receivable. He didn’t know, of course. I suppose they would never try to collect or hire an agency to do so for them...that would be unseemly.

But then I did a quick Google search on PayPal and debt collectors. Turns out, PayPal is an enthusiastic user of debt collection services. And they don’t mess around: apparently, they use some of the largest and best-known ARM firms in the world. Since PayPal accounts are most likely high-volume, low balance, and because people using PayPal are already heavy Internet users, there is a massive amount of complaining about their debt collection procedures.

Ironically, we can help organizations like that. We just held a Webinar on Headline Risk. In it, we discussed how to combat the negative image of the ARM industry in the media. And later this month, we’ll be conducting another Webinar on the Social Media Swarm, including how to use social media for business development and how to fight a negative social media profile.

Not that any of that matters to PayPal.

Stephanie Eidelman is the President and Publisher of Kaulkin Media and insideARM.com. She can be reached by email.

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