Would You Buy Insurance To Protect From Paypal Account Freezes Or Bans?

by pheonix44

Posted: 13 years ago 24 replies

INTERNET MARKETING

I had an idea that I know I am going to be roasted for, but I was thinking about all the people who have been complaining about paypal lately. Many of them say they had money in their accounts when it was frozen and they might never be able to get it back.

What if someone offered insurance against this? The premium would be based on several factors according to risk of course. It something happened to your account several steps would be taken to verify it and then you would be reimbursed a certain amount of what was left in your paypal account.

The amount would depend on how much coverage you had. It could be 20% 40% 50% up to 80% of what was left in your paypal account. The only nub would be that once you used it once your policy would be terminated.

In the world of risk this sounds like something that could work. What would one need to make this happen? What if it were offered to internet marketers specifically?

Is it something that you would buy?

#account #bans #buy #freezes #insurance #paypal #protect

linkwhizz 13 years ago

I am currently setting this up. Our attorney is trying to recover our frozen funds which stands at over $25k, he has told us to take an insurance policy out to protect against this kind of thing in future.

If I had known that I would need one before I would definitely get one. My only concern would be the cost as if you sell products on the warrior forum it's not a matter of IF your account will be closed, it's WHEN.

paypal don't support our info product businesses any longer so it an insurance company are likely to see it as a huge risk if they actually research the situation.
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Underground SEO 13 years ago

I would say forget it. The insurance industry is heavily regulated in any western country so there's no way you could even dream of doing it yourself. Also, I don't think the demand is really there from the average Joe for an insurance company to start offering PayPal insurance as a financial product.
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David Keith 13 years ago

and i am not sure how you would charge for it anyway.

one of the biggest reasons accounts get banned is due to the spikes in money coming in.

so if i normally run $100 a day, and then i run a promotion and do $6,000 for 3 days straight. that will likely get my account banned.

but there you would have been charging insurance premiums for a $100 a day account.

seems way to complicated for me to figure out.
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HeySal 13 years ago

I would think that any insurance companies would want you to follow the same safeguards against being shut down as paypal requests itself, so it's kind of a "what's your point" situation.
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pheonix44 13 years ago

so if i normally run $100 a day, and then i run a promotion and do $6,000 for 3 days straight. that will likely get my account banned.

I you did 6.000$ a day for three days straight I could see how that would look suspicious.
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- Bill Farnham 13 years ago
  
  When you factor in the cost of the insurance as a percentage of the transaction you will most likely find that getting a regular merchant account and using PP only as a 'black swan' provider is a better solution.
  
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- David Keith 13 years ago
  
  Originally Posted by pheonix44
  
  I you did 6.000$ a day for three days straight I could see how that would look suspicious.
  
  similar stuff to those sort of number discrepancies is what leads to most bans. and many of those are legit IM businesses. with lists of people who can drive big numbers of sales for a few days and then very little normally.
  
  or think about a product launch. heck even a WSO with a couple of decent affiliates would do fairly big numbers for a few days and then fall off to nothing.
  
  so the 2 biggest reasons for bans are big jumps in activity and clearing the account out every couple of days
  
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  Donimo 13 years ago
  
  There's such a thing as insurance for your paypal account? Where did you hear this?
  
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pheonix44

13 years ago

similar stuff to those sort of number discrepancies is what leads to most bans. and many of those are legit IM businesses. with lists of people who can drive big numbers of sales for a few days and then very little normally.

or think about a product launch. heck even a WSO with a couple of decent affiliates would do fairly big numbers for a few days and then fall off to nothing.

so the 2 biggest reasons for bans are big jumps in activity and clearing the account out every couple of days

I don't think it is from the sudden influx of cash. You can be a powerseller on ebay and do huge numbers like what you mentioned. I think they fear you might potentially have alot of refunds or disputes.

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George Wright 13 years ago

More moons ago than I care to remember I came up with an idea for Pet health insurance.

People laughed, I never did anything about it.

Someone started it and now you can buy pet health/hospitalization Insurance.

Since money in a frozen PayPal account will eventually be given to you, maybe a Factoring Company would be interested in underwriting this.

A factoring company advances you money based on money you have coming to you sometime in the future.

George Wright
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JeanneLynn 13 years ago

I think it's a good idea. I've had a Paypal account for about 10 years and I haven't had a problem. However, the stories on the forums really freak me out. It seems like the loss of a Paypal account could really cripple a business. I think people would buy insurance to protect them against this scenario.
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Alexa Smith

Banned 13 years ago

Originally Posted by pheonix44

The amount would depend on how much coverage you had. It could be 20% 40% 50% up to 80% of what was left in your paypal account.

The amount left in the PayPal account wouldn't be the problem at all. That's money that's coming back to you anyway!

The problem, in these circumstances, would be the lost profit through being unable to trade. That's what people might want to insure against. But the downside there is worst for "unprepared people" who have no other payment processor in place. "Unprepared people" tend not to be the ones most interested in buying insurance.

Insurance is such a technically complicated, legalistic and hyper-regulated product that it's surely almost inconceivable that anyone short of a major, financially sophisticated, corporation could possibly set this up, Robin. You have to prove assets on deposit to meet foreseeable claims, and so on (everywhere, I think?) to be allowed to sell any sort of insurance?

Originally Posted by pheonix44

What would one need to make this happen?

Several million in liquid assets and a law-firm very familiar with the world of insurance and financial services, in the first instance, I think.

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Istvan Horvath

13 years ago

Originally Posted by Alexa Smith

Insurance is such a technically complicated, legalistic and hyper-regulated product that it's surely almost inconceivable that anyone short of a major, financially sophisticated, corporation could possibly set this up,

^^ THIS!
As a former insurance agent, licensed (=passed exams) on two continents, 3 countries, two provinces... believe me, the "hyper-regulated" is still an understatement

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Alexa Smith Banned 13 years ago

Originally Posted by Istvan Horvath

As a former insurance agent, licensed (=passed exams) on two continents, 3 countries, two provinces...

Oooh, isn't it interesting the stuff you sometimes learn - even about your friends - in these conversations?!
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- Istvan Horvath 13 years ago
  
  Originally Posted by Alexa Smith
  
  Oooh, isn't it interesting the stuff you sometimes learn - even about your friends - in these conversations?!
  
  Yeah... that always happened when moved to a new place (which is kind of a permanent motive of my life... 'leitmotif') and "until I figure out what to do with myself".
  
  Learning about the locals' financial habits, together with reading the classifieds in local papers give you tremendous insight about your new place
  
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pheonix44 13 years ago

Several million in liquid assets and a law-firm very familiar with the world of insurance and financial services, in the first instance, I think.

pop, pop, pop, pop, pop

That is the sound of my bubble being burst

It makes sense though.
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- Alexa Smith Banned 13 years ago
  
  Originally Posted by pheonix44
  
  That is the sound of my bubble being burst
  
  It makes sense though.
  
  Sorry, didn't mean it to come across this way.
  
  This is something I've been thinking about myself, recently. Not your insurance idea (that didn't occur to me), but just "What would I do if my PayPal account were suddenly frozen" because so many people's have been, recently. I have AlertPay and MoneyBookers as well ... but more to the point, if I were about to start selling a product which might produce sudden PayPal takings out of line with my normal volume (which is actually negligible because I get paid by ClickBank, mostly), I'd want something else ready first. And the people who might be interested in buying insurance, I think, would be those "be prepared" people ... :confused:
  
  But really ... it's the loss of potential profit that's the "scare" (and insurance is about "scares", in some sense, I think?) because the account funds are only "frozen", not "confiscated"?
  
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Power and Wealth

13 years ago

I think this is a great idea, but VERY COMPLICATED to implement effectively.

I would love to have this kind of insurance, but by the time you need it, your business is already over a barrel anyway.

It might be nice to get that last payoff, but it doesn't help your business much after that.

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Bill Farnham

13 years ago

Originally Posted by Xpert Marketer

I think this is a great idea, but VERY COMPLICATED to implement effectively.

I would love to have this kind of insurance, but by the time you need it, your business is already over a barrel anyway.

If you're talking about your business being interrupted, this type of insurance has been around for ages. Google "business interruption insurance coverage" and spend some time doing the research before you call your insurance agent.

~Bill

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Renavon 13 years ago

Seems like a good idea, would be quite complicated to set up. Although a lot of people have been saying the bad sides to this, but maybe you could offer insurance against potential loss of income aswell. Not sure how that would work but, might be worth looking into
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pheonix44

13 years ago

If you're talking about your business being interupted, this type of insurance has been around for ages. Google "business interruption insurance coverage" and spend some time doing the research before you call your insurance agent.

I am about to check this out right now.

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JustFelix 13 years ago

I want someone that is smart to run this idea, and not just any amature.
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pheonix44 13 years ago

I want someone that is smart to run this idea, and not just any amature.

Your tone sounds mean spirited. You don't have to be that smart to run an insurance company, and if you did you could hire people that were if you weren't.
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- Kay King 13 years ago
  
  An insurance angle (except for business interruption insurance which is availble) makes no sense to me. You insure against a "loss" - but you don't lose the money in Paypal. The money is frozen for six months but it is then released to you.
  
  If you receive an insurance payment for a loss and recover the property later, most insurance companies will be waiting with their hand out and want their money back. Regulations are stiff and convoluted, it's very expensive to start such a business and the underwriting would have to be tight.
  
  What would work is a 3rd party investment company - but I think Paypal would have to be part of the contract. That is how mortgage securities are sold and how settlement companies operate. If you win a big court award from an accident, it may be structured to be paid in installments over 5-20 years. An investor might offer to pay you 50% of the cash value (or less) and in exchange you would sign over your rights to the settlement. You get a lump sum of cash fast and the investor makes money over the long term.
  
  With Paypal there would have to be a way for the funds in the frozen account to be assigned to a third party. As far as I know, that isn't possible at this time. Maybe because no one thought of it.
  
  kay
  
  Edit: I think someone with a frozen account and a large sum of money in it would be a fool to sell to a third party if they know from paypal that the funds will be released in full in 6 months.
  
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Would You Buy Insurance To Protect From Paypal Account Freezes Or Bans?

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