PayPal's compliance department is sending warning e-mails
It's no secret that I'm a huge fan of PayPal My Cash cards as a tool for manufacturing spend in two of my favorite bonus categories: drug stores and gas stations. Unlike some more aggressive users, I've never withdrawn My Cash funds directly to a bank account, preferring to use the money to fund Bluebird, buy money orders, and make bill payments.
On October 9, the first report I'm aware of appeared, describing a warning e-mail sent from PayPal's compliance department about withdrawing My Cash funds directly to a bank account. On October 17 a reader forwarded me the e-mail he received, and on the 18th I received an identical e-mail for each of my PayPal accounts.
In other words, this is not a warning e-mail narrowly targeted at those who deposit and immediately withdraw PayPal My Cash funds. Rather, the compliance department seems to have adopted a relatively broad filter to identify users who may or may not have have exhibited the behavior described in the compliance e-mail.
Does this require action?
The compliance e-mail concludes with the following:
"If you think we've made an error, here's how to contact us.
- Log in to your PayPal account.
- Click Contact Us at the bottom of the page.
- Click Send us under Email Us.
- Follow the instructions to complete the steps.
We value your business and appreciate your attention to this matter."
This raises the question of whether those of us who have used My Cash funds immaculately should e-mail PayPal and protest our innocence, in the hopes of receiving another month, year, or decade of impunity.
That's a judgment that is going to depend on the individual. Personally, I've already maxed out my PayPal My Cash loads for the calendar month, so any changes in monitoring and compliance won't affect me until next month in any case. Consequently, I'm going to sit tight and wait for more datapoints to come in, as they inevitably will.
It seems likely to me at this point that many who received the warning e-mail, myself included, don't in fact have anything to worry about since we've used the cards more or less as intended. If, on the other hand, in the coming weeks we start to see people report accounts closures, I'll know I need to consider scaling down my My Cash usage.
No, PayPal still can't be "trusted"
I've ranted before that "trust" is the wrong framework to think about your relationship with your bank, your loyalty program, or your landlord. Save "trust" for your partner, your friends, and your kids (well, maybe not your teenagers).
When I write about PayPal, I always include the caveat that while they have been very, very good to me, many folks have well-founded grievances against their arbitrary account closures and long hold times for the withdrawal of frozen funds.
That warning still applies.
But since it's one of the easiest ways to manufacture bonused spend on cards like the US Bank Flexperks Travel Rewards and American Express Hilton HHonors Surpass cards, it's remained a tool in my arsenal, and I hope it continues to for a long time to come.