By Kevin Yank

Web Service Horror Stories

By Kevin Yank

With most of us looking forward to a holiday break, you might be thinking about taking that idea you’ve been turning over in your head all year and making it your holiday project. The plethora of services out there means that you can focus on the exciting parts of your idea, and leave the boring details (like payment processing) to another person.

If you do, be careful which services you choose to rely on! As web developers become more dependent on third-party services like PayPal, Vimeo, and Apple’s App Store, we hear more horror stories of partnerships gone wrong. Just this week, two such situations crossed my desk.

First, Jacob Gorban of Apparent Software wrote about how PayPal actively sabotaged his business. In November, he teamed up with six other Mac software developers to launch MacGraPhoto, a two-week-long sale on a bundle of Mac graphics apps.

The sale was wildly successful, but the sudden activity on Gorban’s PayPal account triggered an anti-fraud lockdown. He was prevented from accepting payments, and eventually had his account funds frozen for six months, along with a lifetime ban from using PayPal. All this for no reason other than having launched a successful sale.

The PayPal support staff he dealt with in attempting to resolve the issue repeatedly lied to him, and wasted his time (as well as his partners’) by demanding paperwork that, once submitted, was never even looked at.

Following Gorban’s high-profile blog post on the matter, PayPal higher-ups finally contacted him to resolve the situation. But this came a month late, and as an exercise in PR damage control — rather than genuine customer support.

Lesson #1: Avoid relying on PayPal, or any other market-dominating player that provides no meaningful partner support. At the very least, be ready to switch to an alternative at a moment’s notice.

Next up, Paul Boag (of the successful Boagworld Podcast) wrote about Why You Will Regret Using Vimeo. As a paid-up Premium member of video-sharing site Vimeo, Boag was using the service to host videos for publication on the Boagworld web site. Then, out of the blue, Vimeo decided that several of his videos violated its terms of use; they advised him via email that he had 24 hours to move the videos elsewhere before they’d be deleted.

It turns out that what Vimeo took exception to was commercial content. In Boag’s case, this took the form of videos presenting advice on how to run a more successful business. On further investigation, Boag found that Vimeo is wildly inconsistent about enforcing its "no commercial content" rules, taking a hard line against subtle violations while turning a blind eye in high-profile cases.

In short, Vimeo’s terms of use boil down to one rule: if they don’t like your video (even if you posted it months ago), it will be deleted on 24 hours’ notice.

Lesson #2: Before investing in a third-party service, read its terms of use, and then do a little research on how it chooses to enforce those terms. Vagueness and unpredictability are not desirable qualities in a business partner.

And remember: sometimes if you want a job done right, you have to do it yourself. In the comments on Paul Boag’s story, SitePoint author Rachel Andrew chimes in with a great suggestion: host the videos on Amazon S3 and display them using an open source video player.

Sometimes — just sometimes — partners can be more trouble than they’re worth.


    I feel you on the paypal story. I use them for everything, and then they canceled my card on me. Their customer service is atrocious, and when they say they are “making a note on your account” that seems to mean that they are dozing off and talking in their sleep. Whether due to laziness or just a lack of a better option, I still use them, but will avoid dealing with their service department at almost all costs… literally.

  • gaurav_ch

    Good Gosh!!!! I was thinking of using paypal for my business. Thanks for pointing this out to me in time.

  • WebKarnage

    These are straight forward guys trying to do positive things on the web. How many people selling illegal stuff they have no copyright to sell on eBay are fine according to PayPal? Thousands. They certainly are dangerous people at times who deliver their services with astonishing arrogance. I wish it didn’t happen with nearly all web services that are financial, but I’ve heard similar stories about every similar service to PayPal. It’s how the financial world seems to operate full stop.

    with best regards,

  • Jay Tillery

    Yeah! I had the same issue with Vimeo and now use Brightcove, which is extremely expensive but my freedom to do as I please is an enormous plus. I’ve played around with LongTail too. As far as PayPal, I’ve never had a problem with them.

  • Ian

    PayPal are just dire and it’s shocking that they can continue to cause so many of their customers such problems. I too had problems with my PayPal business account although nothing as severe Gorban’s. PayPal froze my business account simply because I logged in with a different IP address (I was away in Asia at the time). The only way to unlock my account was to have a security code posted to me (taking up to 7-10 days to arrive!) or scan and send them bank statements (impossible when I was on the other side of the world in Asia!). Their customer support is totally useless and most of the replies are just pre-written templates from their so called support team. I now use Moneybookers instead.

  • arts-multimedia

    I think you do Vimeo injustice. There are always two sides to a story. The fact that Boag used Vimeo to offer services to a client in itself proves clearly that there is a commercial aspect to this. If I offer video services, I hire a paid video service and so should he. Vimeo is very clear on this in their policies and you cannot expect them to check every video although they monitor content much better then YouTube. Vimeo is not a paid service, although for a small fee, it offers you the option to upload more then 1 HD video a week, create channels and so on. Here is an excellent article why Vimeo is such a good service for non-commercial work:

    As for PayPal, many online payment services will lock the account when suddenly a lot of cash comes in. The reason is that they are afraid of having give loads of refunds. After all, they do not know what you exactly are selling and it has happened before that a banking companies ends up paying the bills while the provider disappears with the money. It helps to talk with such a service upfront about what you plan to do, that certainly will prevent a horror story like this. PS: PayPal is not as cheap at most of think. There are better options out there.

  • p2409

    I refuse to use Paypal for any of my web clients. As far as I’m concerned it’s expensive, and has a scammy, low-rent, third-world feel to it. If you’re serious about your online business, you’ll pay for your own SSL certificate and on-host processing with your bank.



    I have one big question; that in present times; whenever you make an online payment from your visa or master credit card; you need to pass through a 3D-secure authentication page as per rules of RBI.

    But while I add any card; through paypal it doesn’t require that authentication IS RBI sleeping ? or there are special privileges for paypal.


  • What alternative is there other than an expensive Merchant Account?

  • pug2112

    I know of a case where an art auction was held to raise money for an orphanage – however, paypal withheld the funds for 6 months as the sale was quite successful.

  • arts-multimedia

    If you’re serious about your online business, you’ll pay for your own SSL certificate and on-host processing with your bank.

    Other bank companies do exactly the same thing as Paypal, they will block your account as well if suddenly your sales sky rocket. As said earlier, you can prevent this sort of situation by warning the banking service upfront.
    That said, Paypal does indeed have a cheap feel to it, and it is in fact more expensive then many other banking services, but if you only have a couple of products, Paypal is an easy going short term option. Once your sales are high enough to compensate for the monthly fees of banking services, you can step it up.

    WordPay is a reliable banking service and combined with you can set up a serious shopping site. If you do not want to be responsible for security on your own server, you can even rent a shopping cart service like
    This sort of service can give you peace of mind because if a hacker steals the information on your site, you’re in trouble.

  • Sjefke Zondervrees

    Although I “know” of Paypal stories like this (and had the pleasure of dealing with their virtually useless cutomer services on several occasions – fortunately not to the extend of Gorban’s), it would have been useful to provide some alternatives (tricky, I suppose – but you do so for Vimeo)?

    Google Checkout doesn’t seem to be an option: – perhaps worth some investigation from your side – providing a review? This is popular/valuable content in the making…

  • Eric

    They froze my account after I sold an item on eBay for ~$350. I have 100% positive feedback on eBay and have had my PayPal account open since 2001. After 3 weeks they decided to let me have my money. I read about some real horror stories how they withdrew money from a linked bank account without reason, which scared me into de-linking my bank account and all associated credit cards. I’ll still use it occasionally to buy cheap items off ebay but I won’t rely on it as I have in the past.
    Here’s a list of alternative merchant account vendors, but keep in mind I can’t vouch for any of them- they’re just available, you need to do your own research:
    RegNow (owned by Digital River)
    eSellerate (Digital River)
    ShareIt (Digital River)
    RegSoft (Digital River)
    Reg.Net (Digital River)
    Emetrix (Digital River)

  • arts-multimedia and Worldpay are two great services for a merchant account and you need them both + a bridge between the two but the name escapes me now. They charge a monthly fee (about $25) on top of a percentage (2%-3%). Then you also need a secure shopping cart as well. can take care of that (again a monthly fee of about $19)so that you do not need to worry about hackers breaking into your own secure server. Having peace of mind is worth $19 a month, I would think. Of course, you need to have enough sales to cover that.

    Hope this is helpful to somebody?

  • Perhaps if one expects to have large amounts of money flowing in or out it is safer to use a proper merchant account.

  • arts-multimedia

    Perhaps if one expects to have large amounts of money flowing in or out it is safer to use a proper merchant account.

    Even good merchant banks freeze your money if you suddenly get an influx of money that is uncharacteristic for your business. Like I said earlier, talking with your merchant bank before a big campaign is a good idea but I agree that talking with PayPal is practically impossible.
    Worldpay, combined with are very reliable, but you do have a monthly cost.
    If you do not sell for more then a few hundred dollars a month, don’t bother opening a merchant account. In that case, PayPal is the cheapest way out. I don’t see any other option unless you go with Regsoft, but they ask a whopping 6% commission.

    Hope this is useful to somebody?

  • Yes- that is useful- thanks.

  • There’s also stories about PayPal that involve someone who receives a payment from a client for services rendered and then the client disputes the payment with PayPal which leads to PayPal often returning the money to the client and locking the supplier’s account.

    It seems that in cases like these, regardless of how legitimate the claim of the client is, that PayPal always acts in their favour at the expense of the account holder receiving the money which means that honest suppliers can lose out when dealing with unscrupulous clients.

  • gisnap

    It seems that in cases like these, regardless of how legitimate the claim of the client is, that PayPal always acts in their favour at the expense of the account holder receiving the money which means that honest suppliers can lose out when dealing with unscrupulous clients.
    The place where fun never ends.

  • Good .. I’m going to make a mistake and use PayPal, but after this talk, I think I fell on my decision

  • Eric_HE

    I had the same issue,,,but i think paypal is also good

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