Dwolla email - "We need to verify your identity!"

[Stephen Gornick]

Just got this message, supposedly from Dwolla:

From: Dwolla <no-reply@dwolla.com>
To: [me <myemail@mydomain.com>]
Subject: We need to verify your identity!
Date: Mon, 28 May 2012 11:37:00 -0500 (CDT)

Please report any errors in this e-mail immediately.

To better protect you, we need to verify your identity!

Please log into your Dwolla account to complete any additional verification.

Dear [my name],

This e-mail is being generated for Dwolla account ID # [my 10-digit dwolla address].

Additional account verification is required for [my 10-digit dwolla address]. Please log into your Dwolla account to complete any additional verification. Please note any pending transactions may be delayed until your account is verified!

Report an error in this e- mail.

Contact Dwolla support with Questions.

At first I thought it was a phishing attempt as the links are not to Dwolla.com but to SendGrid.net.  But those redirect to Dwolla before prompting for username and password so it is probably legit.

Just to be careful, I then manually typed in the URL https://www.Dwolla.com and logged in but didn't see any alert on my account.  On the left hand side I did see the link "Verify account info" and clicked on it.

It shows:

To finish verification, we need to have a photo ID on file.
Please upload a valid photo ID, such as a U.S. driver's license or passport, to verify your identity.

My "Account settings" shows my account as a "commercial" account so I am curious if:
A.) Because of my transaction volume (or other reason, random selection even), I'm now being asked to verify my account?
or
B.) All commercial accounts are being asked to verify?
or
C.) All Dwolla customers are being asked to verify?

Would others mind confirming if they too have received this e-mail and/or are are now required to verify with photo ID? (and if so, is this for  personal accounts as well)

I generally carry a $0 balance and now I don't know if I will be sending in a photo id at this point.   With there being no fee to deposit cash (at Chase, into BitFloor account) and ACH withdrawals now possible (e.g., BitFloor) or coming soon (BitInstant - http://bitcointalk.org/index.php?topic=82328.msg925722#msg925722 ), I see fewer and fewer reasons to use Dwolla.

[barbarousrelic]

I have not gotten it. I would not give any information from links from an email, just go to their website directly and see if they ask you for information there.

[rjk]

Yes I got it, and I am pissed. Probably triggered by an amount over $1k, or some stupid shit like that. I've had my account for a while, and have deposited and withdrawn several times.

[repentance]

There've been multiple threads lately about Dwolla's new verification requirements regarding all things related to Bitcoin.  Their ToS explicitly state that if you fail to verify in line with Veridian's requirements they can

You understand and agree that the decision by Dwolla to take certain actions, including placing holds on or limiting access to Your User Account as detailed below, may be based on confidential criteria that are essential to risk management or security concerns. You understand and agree that neither Dwolla nor Veridian are under any obligation to disclose the details of its risk management or its security procedures to You.
You understand and agree that Dwolla is authorized, pursuant to general parameters of conduct established by Veridian, to take the following actions due User misconduct or Security Concerns as detailed in this section:
● Place a Hold on Your User Account for Up to 90 days:
● Temporarily or Permanently Suspend or otherwise Limit Your Access to Your User Account:
● Contact Users who have purchased goods or services from You, contact Your bank or credit card issuer, and/or warn other Users, law enforcement, or impacted third parties of Your actions; or
● Take legal action against you
If Dwolla, acting in accordance with the general parameters of conduct established by Veridian, takes an action against Your User Account, including: placing a hold on, suspending or otherwise limiting Your access to, or terminating Your User Account, We will provide You with notice that such action has been taken against Your User Account. Dwolla may also provide the opportunity to request restoration of access if it is deemed appropriate by Dwolla acting in accordance with the general parameters of conduct established by Veridian.
User Misconduct or Security Concerns that may result in any of the above listed actions, as applicable, include:
● Your Non-compliance with the User Conduct Requirements detailed in this Agreement, including attempting to use the Dwolla system for illegal purposes or attempting to falsify your identity or provide false information;
● Inability of Dwolla to acquire sufficient information to verify your identity;
● A determination by Dwolla, pursuant to general parameters of conduct established by Veridian, that a Hold on Your User Account is reasonably needed to protect against the risk of liability;
● A determination by Dwolla, pursuant to general parameters of conduct established by Veridian, that there may be a high level of risk associated with You, other Dwolla users involved in the payments You receive, Your User Account, or any or all of Your transactions.

User Conduct
You understand and agree that you will not engage in the following activities:
● Use the Dwolla System without written consent to operate or engage in any business regulated by FinCen, including the money service business;
● Act as a marketplace and/or exchange for virtual currency products without prior written consent;
● Use the Dwolla System in association with or for payment of illegal goods or service, including, but not limited to, illegal substances, illegal online gambling/ wagering, pyramid schemes, or any type of money laundering;
● Attempt to falsify Your identity, such as by providing false account information or false documents; or
● Defraud Dwolla, Veridian, or other Dwolla Users in any way.
You understand and agree:
● You will provide information requested to determine your identity, including but not limited to the following: a valid U.S. address, phone number, Financial Institution account information, photo identification, and/or tax identification or social security number.
● You authorize Dwolla, directly or through Veridian or third parties, to make inquiries it considers necessary to validate Your identity, such as requesting additional information to validate Your Financial Institution account ownership, identity, and transaction authorization. This information is requested to protect Dwolla Users.

Their actions aren't really unexpected.  It's been fairly typical that when the exchanges find new payment processors/"banking partners" those businesses start enforcing AML/KYC requirements fairly strictly once any significant amount of Bitcoin-related business starts passing through their customer accounts.

[Trader Steve]

And this is precisely why bitcoin was invented. 

[repentance]

And this is precisely why bitcoin was invented. 

Ironically, a lot people seem to dislike buying and selling on a peer to peer basis and think adding additional layers to the process is a desirable thing.

[tvbcof]

And this is precisely why bitcoin was invented. 

Ironically, a lot people seem to dislike buying and selling on a peer to peer basis and think adding additional layers to the process is a desirable thing.

I do.  To me, giving anyone else control of my BTC is giving them the ability to take it and give me nothing in return...and to get away with it, unlike with most other instruments.  This conception of the Bitcoin solution probably has something to do with why I've never been ripped off, or at least not ripped off for more than I expected...Bitcoinica got like $9.00 from me for example, but I anticipated it happening eventually.

Having at least the ability to destroy the BTC if I feel that the recieving party did not live up to their end of the agreement would go a long way toward my considering it a usable solution for a lot of things.  Somehow that idea seems wildly unpopular with sellers...

Not content to simply whine about things, however, I posted an idea in the 'market' section the other day to have a trust web which probably has a realistic potential to allow a cash-like cryptocurrency solution to be used with some modicum of reliability.  And requires zero involvement form our various judicial systems to boot.

[Garr255]

I'm going to send them my ID tonight... hopefully they don't kill my account.

[Stephen Gornick]

So the common denominator for those receiving this e-mail are that they've dealing with anything but trivial amounts (e.g., $100-ish range and under) and have transacted with either bitcoin exchanges or with other bitcoiners.

Doing both will almost guarantee that you get this letter, though it may not happen until after your transaction has already occurred.  You will not be able to withdraw the next time though without verifying first.

[rjk]

So the common denominator for those receiving this e-mail are that they've dealing with anything but trivial amounts (e.g., $100-ish range and under) and have transacted with either bitcoin exchanges or with other bitcoiners.

Doing both will almost guarantee that you get this letter, though it may not happen until after your transaction has already occurred.  You will not be able to withdraw the next time though without verifying first.

I have auto withdrawal enabled, so any deposit into my Dwolla account will be pushed directly to my bank. I logged in and checked, and there is no indication that the withdrawal is suspended, or that it will be late, so I am going to delay sending anything until after the estimated time of arrival shown in the withdrawal details. Will let everyone know how it goes.

[Garr255]

That's what I'm doing also.

[cytokine]

Boycott services that require identity verification!

Seriously.

Well, to the extent that it is practical.

[Garr255]

Boycott services that require identity verification!

Seriously.

Well, to the extent that it is practical.

What service to you recommend for this purpose?

[repentance]

Boycott services that require identity verification!

Seriously.

Well, to the extent that it is practical.

Many people don't consider bypassing regulated entities practical though.  They don't want to hunt around for someone trustworthy to trade with OTC - they want the convenience of being able to have funds go to and from an exchange or merchant either directly from their bank account or through a payment processor.  They also want to buy and sell with a minimum of delay.  Alternative money transmission methods aren't necessarily unregulated, either.  Here in Australia, even hawala dealers are required to comply with KYC/AML/CTF requirements and report suspicious matters to AUSTRAC.

AML/CFT compliance is a huge administrative burden for financial services providers.  Given that they don't have the option of not complying, many financial service providers would be perfectly happy for high risk customers to take their business elsewhere (just like they're happy for people who are bad credit risks to take their business elsewhere).

[tvbcof]

Boycott services that require identity verification!

Seriously.

Well, to the extent that it is practical.

Many people don't consider bypassing regulated entities practical though.  They don't want to hunt around for someone trustworthy to trade with OTC - they want the convenience of being able to have funds go to and from an exchange or merchant either directly from their bank account or through a payment processor.  They also want to buy and sell with a minimum of delay.  Alternative money transmission methods aren't necessarily unregulated, either.  Here in Australia, even hawala dealers are required to comply with KYC/AML/CTF requirements and report suspicious matters to AUSTRAC.

AML/CFT compliance is a huge administrative burden for financial services providers.  Given that they don't have the option of not complying, many financial service providers would be perfectly happy for high risk customers to take their business elsewhere (just like they're happy for people who are bad credit risks to take their business elsewhere).

This^  Just like ISP's may at most cry crocodile tears when their high-use customers threaten to walk.  They just move on to the competition and cost them money.

Off-hand the only thing I could think of as a way to get revenge would be to swamp them with sock-puppet type accounts which won't gain anything and cost them in processing.  Might be illegal and one would get in trouble over it though.  Not sure.  Don't care that much either since I never was, and never had any interest in being, a Dwolla customer.  I'd love to see them suffer, however, simply on the basis of what they did to Tradehill.

[repentance]

This^  Just like ISP's may at most cry crocodile tears when their high-use customers threaten to walk.  They just move on to the competition and cost them money.

Off-hand the only thing I could think of as a way to get revenge would be to swamp them with sock-puppet type accounts which won't gain anything and cost them in processing.  Might be illegal and one would get in trouble over it though.  Not sure.  Don't care that much either since I never was, and never had any interest in being, a Dwolla customer.  I'd love to see them suffer, however, simply on the basis of what they did to Tradehill.

For the most part, I don't believe these services start out with bad intentions.  I think that in many cases they're just extremely naive about commercial realities and promise what they later find they can't deliver.  Ultimately, a time comes when surviving as a business means having to do the very things their customers wanted to avoid.  This often happens before the company has made sufficient profits to have more options - PayPal only survived when it was under attack from regulators worldwide (and it's still very limited in the services it can provide in some places) because e-Bay's involvement meant it was literally able to become a bank in its own right.  Dwolla does not have a backer the size of e-Bay which could help it become a bank in an offshore financial centre.

I also think that BTC exchanges and payment processors alike seriously underestimate the sheer amount of fraudulent transactions they'll be exposed to on a daily basis, and the amount of money laundering attempts they'll encounter.

[rjk]

So the common denominator for those receiving this e-mail are that they've dealing with anything but trivial amounts (e.g., $100-ish range and under) and have transacted with either bitcoin exchanges or with other bitcoiners.

Doing both will almost guarantee that you get this letter, though it may not happen until after your transaction has already occurred.  You will not be able to withdraw the next time though without verifying first.

I have auto withdrawal enabled, so any deposit into my Dwolla account will be pushed directly to my bank. I logged in and checked, and there is no indication that the withdrawal is suspended, or that it will be late, so I am going to delay sending anything until after the estimated time of arrival shown in the withdrawal details. Will let everyone know how it goes.

Winning! The deposit just showed up in my bank account. Hopefully now I can leave Dwolla and never look back.

EDIT: However, I can't withdraw or send the remaining balance of $100.

[Garr255]

I'm glad to hear the transfer made it!

I do need to send someone $180 (my remaining bal) soon, so I hope there won't be a huge delay after I send in my info.

[repentance]

I have auto withdrawal enabled, so any deposit into my Dwolla account will be pushed directly to my bank. I logged in and checked, and there is no indication that the withdrawal is suspended, or that it will be late, so I am going to delay sending anything until after the estimated time of arrival shown in the withdrawal details. Will let everyone know how it goes.

Winning! The deposit just showed up in my bank account. Hopefully now I can leave Dwolla and never look back.

EDIT: However, I can't withdraw or send the remaining balance of $100.

I didn't really pick up on it before, but do you mean that when funds hit your Dwolla account they automatically get transferred to your bank account without any further action on your part?  If that's the case, it could explain your account being flagged for enhanced verification.  It's a common technique for layering transactions in money laundering (such accounts are called "walking accounts").

[Garr255]

I have auto withdrawal enabled, so any deposit into my Dwolla account will be pushed directly to my bank. I logged in and checked, and there is no indication that the withdrawal is suspended, or that it will be late, so I am going to delay sending anything until after the estimated time of arrival shown in the withdrawal details. Will let everyone know how it goes.

Winning! The deposit just showed up in my bank account. Hopefully now I can leave Dwolla and never look back.

EDIT: However, I can't withdraw or send the remaining balance of $100.

I didn't really pick up on it before, but do you mean that when funds hit your Dwolla account they automatically get transferred to your bank account without any further action on your part?  If that's the case, it could explain your account being flagged for enhanced verification.  It's a common technique for layering transactions in money laundering (such accounts are called "walking accounts").

Although that is probably a good way to scramble money, Dwolla uses a transfer threshold.