Square Goes Public And Fields A Flood Of Customer Complaints

K2ConceptsK2Concepts Posts: 14,073Administrator El Jefe
Original Article Here!



You've probably seen Square's white plastic reader — it's a small square that plugs in to a smart phone or tablet. Customers swipe their card and the money is put into the merchant's Square account. It's really easy for small and new businesses to get an account.

Take Michael Barzman. After years of working as an auctioneer for other people he went out on his own. He started using Square but after a few transactions received an email that read, "Hello Michael. We are sorry to inform you that we are deactivating your account. Our account services team has reviewed your account and found a pattern of transactions associated with high risk activity."

Barzman didn't understand why Square froze his account. Square was also holding more than $10,000 of his money and wouldn't release it for 90 days.

"I thought that was such an exorbitant amount of time and it freaked me out being a new business," says Barzman. "My initial thought was, 'I'm done, this is going to be the end of me.'"

Even worse, Barzman says once your account is deactivated you can't get anyone on the phone from Square. Fortunately, Barzman had a business partner who helped him out financially.

Low Fees Attract Merchants

Search for "Square account deactivation" online and stories just like Barzman's pop up. Take Gary Gaskill, who recently started a business selling packaging equipment — boxes, tape dispensers and stuff like that. He'd heard about Square.

"Their prices were right," says Gaskill. "And, you know, it looked like a good deal and so I bought into it."

But after he did a few transactions Gaskill received the same email that Barzman got. His account was closed.

"They refused to tell you why they closed the account," says Gaskill. "It was like, why would you do this and not be able to tell somebody? It's my account. Why can't you tell me why you closed my account? And you're holding my money!"

Security experts say a 90-day hold on a potentially fraudulent account is within the norm. And Square has a right to be jumpy, says Marc Abbey, a managing partner at First Annapolis Consulting, which advises banks, payment networks and retailers. Abbey says Square takes risks on pop ups and food trucks — business that never would have been authorized to take credit cards.

"And all of those characteristics lead to a higher level of risk for a company like Square," says Abbey.

Square: Must Protect Us and Our Customers

In a statement, Square says it's trying to balance the needs of sellers with the necessity of protecting itself against fraud. If the credit card charges turn out to be fraudulent, Square is on the hook. It says the number of dissatisfied customers is small. Because the company just went public their ability to speak further is limited by law.

Amad Ebrahimi runs a website called Merchant Maverick, which reviews mobile payment companies. He's had hundreds of complaints about Square on his site. He doesn't see a good reason for the lack of communication.

"There should be some investment in a risk department that focuses exclusively on phone communication and getting these issues resolved as quickly as possible," he says.

And Ebrahimi points out that Square is no longer alone in mobile payments. There's PayPal, traditional banks and smaller competitors like Flint — which Ebrahimi favors because it has good customer support.

Auctioneer Michael Barzman says word is getting out that Square isn't always user friendly.

"You could not force me to use Square again!" says Barzman.

Square does have phone help for active accounts — but it hasn't solved the problem of customers who have their accounts terminated — they're left out in the cold with no one to talk to.

Comments

  • NotSoFastNotSoFast Posts: 3,468Member, Moderator El Moderator
    My fiancee uses Square in her snowball stand. For years people would stop and try to pay with a debit card, since so few carry around cash daily now. So far she hasn't had any problems. They only charge a couple percent of each sale and she marks up her sales (usually each snowball is $1.00-3.50) by one dollar as a service charge per transaction. So she profits from using it.
  • K2ConceptsK2Concepts Posts: 14,073Administrator El Jefe
    Yea I personally do not know of anyone who has had any problems with Square...BUT if it ever does happen? You can't say you were not warned...
  • NotSoFastNotSoFast Posts: 3,468Member, Moderator El Moderator

    Yea I personally do not know of anyone who has had any problems with Square...BUT if it ever does happen? You can't say you were not warned...

    True. Christy uses it maybe a couple of times a week at most, so even if they do freeze her account, it's only a couple dozen dollars worth in her case.
  • PTC_HydroGraphXPTC_HydroGraphX Posts: 1,109Member ✭✭✭✭
    I've been told that there is also an DOHS directive too that they have to consider when medium sized cash transactions take place. Even with that they should still be accountable to their customers and be able to provide them with customer service and reasoning for the holds.
  • willie14228willie14228 Posts: 235Member ✭✭✭
    @K2Concepts , Today was the first day that I ever had an issue with pay-pal logged in and my account was froze I sell Big Bore air rifles and other hunting gear on my last web update I had included black powder muzzle loader and they locked my account because of it. What pisses me off is all this time nothing was said but right after someone makes a $300 purchase (not a muzzle loader) they lock my account.
    But like you said I called today they told me why they had an issue I removed the items in question and my account is supposed to be unlocked by Monday.
  • K2ConceptsK2Concepts Posts: 14,073Administrator El Jefe
    It happens...we have had our account locked up or our card denied because we deal with over seas accounts...can't blame paypal because they are only looking out for their customers security...

    We actually had a fraud ATM withdrawal...not sure how they did it but they had my card number and PIN...got away $500...jerks...Paypal refunded me and a week later I noticed the transaction was doubled...so while the perps only got away with $500 (which was credited back to my account) there was also a software update and Paypal actually dinged my account again for another $500...which they reversed right on the spot when I told them...

    So again all in all? I have no regrets over using Paypal...
  • MidOhioHydrographicsMidOhioHydrographics Posts: 10,167Member, Moderator, Business Ninja El Moderator
    Except there zero tolerance policy on anything related to firearms... :perturbed:
  • Fejery4491Fejery4491 Posts: 154Member ✭✭✭
    The entire state of California practically has a zero tolerance policy on anything related to firearms, so it probably doesn't affect Jim much.
  • willie14228willie14228 Posts: 235Member ✭✭✭
    Nah,... now if they banned Corana THAT would be an issue  :|
  • WileECoyoteWileECoyote Posts: 7,225Member, Moderator, Business Ninja El Moderator
    That's ok... When the sh!t hits the fan, we TOTALLY got your back California... you just sit here and think about tending the rabbits...




  • willie14228willie14228 Posts: 235Member ✭✭✭
    Just as promised account is clear again, I do like the fact that If you stay strictly with paypal and not an outside C.C processor you will never get a chargeback due to a stolen card My store fields a lot of scammers from other countries trying to buy and ship to cut out addresses. After doing some research with Pay Pal I discovered that as long as the purchases was made through an paypal account if the buyer files a stolen card or account claim Paypal fields the responsibility as part of the sellers protection clause. (As long as the products being sold are within paypals allowed products)
  • willie14228willie14228 Posts: 235Member ✭✭✭
    P.S for those that do have a business account with PayPal get the prepaid business MasterCard, Instant access to your accounts money without have to wait the two or three days to transfer funds and 1% cashback
    Another fast access to your money is to use the PayPal invoicing the processing rules are different than Check Out buttons and when a client pays the bill the money is available right away instead of the usual holding periods not to mention the ability to track your sales and products in the system
  • smike61smike61 Posts: 15Member
    I had square for years at the shop and it was ridiculous how much money they would hold for a potential chargeback that never happened. I went to paypal here for business and never had any issues. I fact the people I sold the studio to still use them
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