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Bloggerwave Cleared by PayPal- Is PayPal protecting their Customers to a Fault?

May 27th, 2007 by admin

Earlier today I contacted PayPal.  I was hoping to get an update on the Bloggerwave situation as Bloggerwave had indicated to me that they’d cleared up their account with PayPal.  If you’ve been following the recent articles on this blog you will of noted that early in the week last week PayPal had indicated that Bloggerwave’s accounts had made payments to bloggers with either a bank account or credit card account it was inappropriately accessed.  PayPal specifically indicated that fraud was involved on the account coming from the pain inside.

Subsequent to that revelation by PayPal I have since heard that approximately 8 to nine other bloggers have had payments from Bloggerwave reversed.

Those problems now seem to be over.  After receiving several updates from Bloggerwave on the situation, I finally had the opportunity to speak with a representative from PayPal’s resolution department today.  They indicated first that Bloggerwave account was now in good standing and free to pay bloggers or anyone for that matter.  Second, PayPal also indicated that Bloggerwaves account had probably been flagged initially when someone logged into the account from a location different from the normal location that the accounts had previously been accessed.

This last piece of news does seem to make sense of the entire situation.  PayPal has a number of security flags that will flag or freeze an account when PayPal suspects fraud.  For example if you have a PayPal debit card and you use that debit card out of state or after traveling several hundred miles, PayPal may flag your account if they did not recognize the transaction location as it location that you normally do business.  Basically they are flagging the accounting case someone has stolen your debit card and started to go traveling with that on a spending spree.  They have a similar test that determines where a person blogs and online for their PayPal account.  So if you establish a PayPal account and Amsterdam and take an overnight trip to Paris and access the account in Paris, PayPal may flag the accounts and make an attempt to contact you to verify that you authorize the transaction in Paris or the login in Paris in this case.

If they are unable to contact you, or if you are unable to respond to verify the transaction, PayPal may freeze your account or reverse the transactions that can her after the window representing the items of the been flagged as suspect transactions.

In other words, PayPal is indicating that someone logged in to the Bloggerwave accounts in an atypical location and that put the account on flag.  The payments that were made to bloggers after that point at which study account was flagged were also flagged.  If PayPal follow their normal procedures they would have attempted to contact the account holder by telephone and this is typically done with some form of automated telephone service.  If the response was an adequate or if the response was not provided PayPal within freeze the accounts and/or reverse those flag transactions, which is what PayPal indicated happen in this case.

What does all this mean?

1. it is clear that PayPal flagged, possibly froze and definitely reversed several transactions.
2. It is unclear why PayPal’s representatives in the resolution department initially indicated that the bank or credit card account funding the PayPal account for Bloggerwave had not authorized the transactions.
3. It is unclear how fast Bloggerwave responded to the initial flags on their account from PayPal which must’ve occurred in early May shortly after their payment transactions on the eighth of May.
4. However it is very clear that Bloggerwave was able to straighten out their account with PayPal this last week and the account was put back in good standing on May 24 approximately.
5. Bloggerwave did repay the bloggers that had their transactions or their payments that is reversed.  My own payment was provided again by Bloggerwave and PayPal verified that they would not reverse this latest payment from Bloggerwave.
6. PayPal does not provide any protection to people that sell services and receive payment via PayPal.  This is very important for bloggers to understand so that they can fully appreciate the risks that they take when they perform work for people accept payment via PayPal.
7. Bloggerwave is a relatively young company, approximately 2 months old and it would appear that they’ve experienced a nasty growing pain at the hands of PayPal.
8. Anyone working with PayPal needs to ensure that they are very accessible to respond to PayPal inquiries relating to fraud if they hope to keep their PayPal account running smoothly.  I know from experience with my debit card from PayPal that they routinely flag transactions whenever I travel more than a couple hundred miles away from my home using my card.  I was unaware until today that they make similar flags for people that login from different locations on a computer checking their PayPal account.

Bloggerwave Status - Cleared and Trust Restored at a higher Level

Based on the update from PayPal and the confirmation from PayPal that Bloggerwaves mitigations to me this week were correct, I would say that my faith in blogger wave is a brand-new company has been restored to a higher level than it was prior to this situation. 

First, blogger wave met my first test as a blogger and they paid me.  When PayPal reversed this initially it was in question, but now that his been rectified and the trust that they deserve for completing the payment has been restored in my eyes.

Second, throughout the situation once blogger wave got involved and they were very active and proactive in dealing with the issue.  Given the circumstances I could not take blogger wave at their word that they were not to blame, however I was able to verify that they were not to blame through third-party, PayPal.  In my eyes this raises my trust level for blogger wave, as they continue to communicate in an upfront and honest manner through the situation.  I couldn’t confirm this until today, but now that I have been able to confirm its I am happy to know that they were honest in their communications and that means a lot to me.  They could have easily performed a corporate song and dance about the problem and confuse the situation even more than it was initially.  In retrospect they were upfront, honest and even transparent about their actions to rectify the problem and that means a lot.

Third, Bloggerwave is still a fairly new company, and they have gone through a bit of a trial by fire and pass the test.  Hopefully they of emerge from this unfortunate incident is a stronger and smarter company and hopefully they will emerge and grow as a very good partner for bloggers.  History can never be an indicator for the future, however it does play a factor for people and organizations that must build relationships based on trust.  I believe that Bloggerwave learned a very important lesson this month about establishing, maintaining and even reestablishing trust.  I hope that they will be able to channel this lesson and the energy from their effort into something positive and successful.