Dwolla Begins PayPal-Style Account Suspensions

[ben-abuya]

It's getting harder and harder to use fiat money to buy bitcoins:

Dwolla has moved beyond closing the accounts of those it can prove are operating unlicensed exchanges and has begun closing the accounts of private individuals based on a mere affiliation.

It’s not just some random Bitcoiner they began with, either. On Wednesday, January 23rd Dwolla suspended the account of StompRomp founder Josh Harvey. Here are the circumstances...

http://codinginmysleep.com/dwolla-begins-suspensions/

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[kjlimo]

I'm confused what was the problem here...

Is there more between the lines, or are we not allowed to use Dwolla to pay people back? 

Or does it depend on what we're paying them back for?

[ben-abuya]

I'm confused what was the problem here...

Is there more between the lines, or are we not allowed to use Dwolla to pay people back? 

Or does it depend on what we're paying them back for?

I was told that it would be safest to use the account only for MtGox transfers and not send or receive money to or from anyone else, because they can't tell what those transfers are for. So, if you want to keep your account I'd restrict it to MtGox transfers only. Unfortunately, they didn't warn me that this was the policy ahead of time, so now I can't get my account back.

[kjlimo]

I'm confused what was the problem here...

Is there more between the lines, or are we not allowed to use Dwolla to pay people back? 

Or does it depend on what we're paying them back for?

I was told that it would be safest to use the account only for MtGox transfers and not send or receive money to or from anyone else, because they can't tell what those transfers are for. So, if you want to keep your account I'd restrict it to MtGox transfers only. Unfortunately, they didn't warn me that this was the policy ahead of time, so now I can't get my account back.

Interesting, are you Josh?

Are you able to start a new account, or is this some sort of Dwolla BAN for life?

[ben-abuya]

Interesting, are you Josh?

Are you able to start a new account, or is this some sort of Dwolla BAN for life?

Yes, I'm Josh. As of a few minutes ago, it appears that my account was unsuspended. I got an automatic email saying my account had been "verified." There was no other explanation.

[kjlimo]

Interesting, are you Josh?

Are you able to start a new account, or is this some sort of Dwolla BAN for life?

Yes, I'm Josh. As of a few minutes ago, it appears that my account was unsuspended. I got an automatic email saying my account had been "verified." There was no other explanation.

Gotcha - I had to wait for "verification" once which was sped up once I called and the "security dept???" looked at my stuff and said I was cool.

Sounds like the article may need a follow up/clarification.

[BCB]

This is a fraud issue.  Now an individual user issue.

It's just too easy for hackers and crackers to opening Dwolla accounts link it to a hacked bank account or open both with false credentials then exchange fiat for bitcoin and poof they are gone.

Large banks can write this stuff off cause they pass the costs it off to merchants and they generate a ton of revenue.

Dowlla as new business with ton's of venture capital has no sustainable revenue, so they have to cut these losses.


This happens regularly with
Paypal
Credit Cards

I'm seen it happen with
Bank Of America
ING Direct

And I'm sure others have seen this too.

Until individuals and business can generate bitcoin through work for goods and services and Bitcoin become the sole medium of echanges  the intersection between fiat and bitcoin will always be bitcoin's Achilles heel.

[ben-abuya]

Gotcha - I had to wait for "verification" once which was sped up once I called and the "security dept???" looked at my stuff and said I was cool.

Sounds like the article may need a follow up/clarification.

Just to clarify, my account *was* verified before this happened. This is probably the 3rd time within the week that I've gotten an email saying my account was verified.

This is a fraud issue.  Now an individual user issue.

I'm not sure what you mean by that, but if it's that easy for them to suspend accounts without warning, it's an issue with broad implications for all Bitcoin traders. People should be aware that their accounts can be suspended at any time. In the fast-paced world of BTC prices, this can lead to hundreds or thousands of dollars of damages.

[BCB]

My point is while this thread is Dwolla specifit

ANY fiat account that is use to buy, sell or trade bitcoin is subject to suspension and/or termination.

The good new is that they do have to give your your money back after a certain period. 

[kjlimo]

My point is while this thread is Dwolla specifit

ANY fiat account that is use to buy, sell or trade bitcoin is subject to suspension and/or termination.

The good new is that they do have to give your your money back after a certain period. 

ben-abuya - you might be new to the world of USD and banking, but it sounds like your article is just another "paypal froze my account cuz they felt like it.

While perhaps new/up & coming for Dwolla, I would have expected this all along b/c they are subject to rules of US fiat...

Nothing really new year, just watching the plan play out as it will.

[ben-abuya]

ben-abuya - you might be new to the world of USD and banking, but it sounds like your article is just another "paypal froze my account cuz they felt like it.

While perhaps new/up & coming for Dwolla, I would have expected this all along b/c they are subject to rules of US fiat...

Nothing really new year, just watching the plan play out as it will.

kjlimo, I didn't write the article. I'm also not new to USD or banking. I'm also not surprised this happened. However, it is newsworthy, in that I've seen few reports of this happening with Dwolla. For that reason, I believe this is of interest to other bitcoiners who are relying on Dwolla for trading bitcoins.

[kjlimo]

ben-abuya - you might be new to the world of USD and banking, but it sounds like your article is just another "paypal froze my account cuz they felt like it.

While perhaps new/up & coming for Dwolla, I would have expected this all along b/c they are subject to rules of US fiat...

Nothing really new year, just watching the plan play out as it will.

kjlimo, I didn't write the article. I'm also not new to USD or banking. I'm also not surprised this happened. However, it is newsworthy, in that I've seen few reports of this happening with Dwolla. For that reason, I believe this is of interest to other bitcoiners who are relying on Dwolla for trading bitcoins.

gotcha, but it sounds like there's no news...

You had your account verified and the transaction went thru...

did I miss something?

[ben-abuya]

gotcha, but it sounds like there's no news...

You had your account verified and the transaction went thru...

did I miss something?

Okay, let me fill in some details. Throughout the last week I had to send in the same photo of my ID twice, after already submitting it last September, as their system repeatedly verified and unverified my account. At the time, I thought it was just a software glitch. Then, after waiting about a week for my funds to clear, they suspended my account before even trying to contact me, and cancelled those transactions. On the phone, I was led to believe that they wouldn't reinstate my account unless I sent them my latest bank statement going back 30 days, which I am not willing to do. At this point, even if I had confidence that they won't suspend my account again (and I have no such confidence), it would take another week for those funds to clear. Instead, I've wired the funds directly to MtGox. Hope that clears it up.

[kjlimo]

gotcha, but it sounds like there's no news...

You had your account verified and the transaction went thru...

did I miss something?

Okay, let me fill in some details. Throughout the last week I had to send in the same photo of my ID twice, after already submitting it last September, as their system repeatedly verified and unverified my account. At the time, I thought it was just a software glitch. Then, after waiting about a week for my funds to clear, they suspended my account before even trying to contact me, and cancelled those transactions. On the phone, I was led to believe that they wouldn't reinstate my account unless I sent them my latest bank statement going back 30 days, which I am not willing to do. At this point, even if I had confidence that they won't suspend my account again (and I have no such confidence), it would take another week for those funds to clear. Instead, I've wired the funds directly to MtGox. Hope that clears it up.

Thanks ben-abuya for adding the details.  I agree that the resending of info seems unnecessary and silly/stupid.

However, I also expect that from Dwolla as this is just one more step towards them being Paypal.

I appreciate you taking the time to share you experience and voice concern. 

Mind me asking how much the wire transfer cost you?  I'm guessing for me the fact that wire transfers cost more than zero is still the reason I'm ok with dealing with Dwolla thru their idiocracy...

I expect that they are going to be dumb and potentially freeze my assets b/c they don't make any money from me.  However, I'm guessing the amount of transaction fees I've saved over the past 24 months well exceeds how much they may confiscate from me in the future since I don't transfer more than $1,500 at any one point in time and can wait 6 months to have it returned according to the process.

[ben-abuya]

Mind me asking how much the wire transfer cost you?  I'm guessing for me the fact that wire transfers cost more than zero is still the reason I'm ok with dealing with Dwolla thru their idiocracy...

It is pretty expensive. My bank charges a $45 flat fee, and I think MtGox charges about $10 on their end. However, I do know there are banks that will do it for $20. It's also less convenient than the Dwolla interface (come banks will still make you fax them a form), and it's hard to track where the funds are. It may even be slower, on average.

[BCB]

ben-abuya,

I think you will have better luck buying OTC.

[twolifeinexile]

Dwolla price is still competitive.

[danieldaniel]

ben-abuya,

I think you will have better luck buying OTC.

With OTC, there might not always be a guaranteed trade, however.

Also, some people feel more comfortable sending money to a "big" company, rather than "that guy over there".

[ben-abuya]

UPDATE: Just received this email from Dwolla. I don't have a recording of the phone call with their customer support but I do remember the agent saying that my account was suspended due to a violation of their TOS and that my transactions had all been cancelled. Still, it's nice that they apologized.

Dwolla Support
JAN 25, 2013  |  02:08PM CST
Dear Josh,

First, we are very sorry for what happened, we take full responsibility for any miscommunication.

Let us try to explain: your account was never suspended. You were placed in a "verification" state, which reflected the conversation you had with our fraud team, to provide a [bank] statement, due to the increased transaction volume. We noticed you've since cancelled these transactions and had previously submitted a photo ID, and we've moved you out of the verification state. This state may have appeared to be confusing, as it does in some ways limit your actions within the Dwolla system. This is something we need to improve our messaging on. However, at no time were you suspended from using the service.

We apologize for the inconvenience and confusion this may have caused. Let us be clear, that your account is fully verified, and may be used in accordance with our terms of service.

Best,
Dwolla

Sincerely,
Dwolla Support
www.dwolla.com
www.trydwolla.com (Send someone free money on us to get them started)

[kjlimo]

UPDATE: Just received this email from Dwolla. I don't have a recording of the phone call with their customer support but I do remember the agent saying that my account was suspended due to a violation of their TOS and that my transactions had all been cancelled. Still, it's nice that they apologized.

Dwolla Support
JAN 25, 2013  |  02:08PM CST
Dear Josh,

First, we are very sorry for what happened, we take full responsibility for any miscommunication.

Let us try to explain: your account was never suspended. You were placed in a "verification" state, which reflected the conversation you had with our fraud team, to provide a [bank] statement, due to the increased transaction volume. We noticed you've since cancelled these transactions and had previously submitted a photo ID, and we've moved you out of the verification state. This state may have appeared to be confusing, as it does in some ways limit your actions within the Dwolla system. This is something we need to improve our messaging on. However, at no time were you suspended from using the service.

We apologize for the inconvenience and confusion this may have caused. Let us be clear, that your account is fully verified, and may be used in accordance with our terms of service.

Best,
Dwolla

Sincerely,
Dwolla Support
www.dwolla.com
www.trydwolla.com (Send someone free money on us to get them started)

Thanks so much for sharing your experience!  The more we know, the better off we'll all be.

To summarize, is it fair to say Dwolla is still growing into a Paypal like scary beast, but may have some slightly cheaper/better processes in place?

Still need to be aware that they can hault your funds in an instant, but hopefully it all works out in the end?

Last question for ya: Has Dwolla won your business back, or will you be sticking to wire transfers from here on out for Mtgox?