The trouble started a couple of weeks ago, when Dalson Foods received an unexpected email from PayPal expressing concern that the company was selling Sun Valley dates. The dates are supplied to Dalson from Sun Valley, a subsidiary of New Zealand-owned Icelandic Holdings. The dates themselves are of Iranian origin.
“[PayPal] said under US law it is prohibited to sell anything of Iranian descent.”
The United States has has an embargo on trade with Iran since 1995. The political relationship between Iran and the US has been rocky since the early 2000s, and talk of war between the two countries over Iran’s nuclear programme is still current.
Buckley says PayPal spoke of protecting users with its policy. It asked for documentation around the origins of the dates, but did not elaborate on what kind of information was required when asked. PayPal’s communication was not clear, says Buckley, who describes the emails as form letter style “standard responses.”
“Basically, they said, ‘Look, it’s prohibited… you need to provide documentation that proves its origins.”
Sun Valley told Buckley that they didn’t carry the kind of documentation PayPal seemed to be asking for, he says. After hearing this, PayPal put a limitation on Dalson Foods’ account which means customers can no longer shop with their credit cards on the site.
“Problem was, we weren't aware it wasn't working at all, not until I tried it myself as PayPal tells you your account is limited but doesn't go into detail about how limited you really are on functionality,” Buckley says.
Buckley has received no further communications from PayPal after requesting they remove the credit card block. His perspective is that since Dalson operates in New Zealand, the US laws invoked by PayPal should not apply.
“You can’t do that to a company, you have to operate within the laws of the country you’re operating in.”
Dalson is in the process of shifting its credit card business to another facility, but this will take time. Buckley wants to warn other retailers about what PayPal has cost them.
“They won’t remove [the block], they won’t respond, I don’t know what to do.”
PayPal has been contacted for comment.
In 2010, PayPal independently moved to cut off a donations account associated with political blog WikiLeaks after learning it was breaking the law.
PayPal explained the decision on its blog: “PayPal has permanently restricted the account used by WikiLeaks due to a violation of the PayPal Acceptable Use Policy, which states that our payment service cannot be used for any activities that encourage, promote, facilitate or instruct others to engage in illegal activity. We’ve notified the account holder of this action.”
American Chamber of Commerce in New Zealand representative Mike Hearn says issues like those Dalson Foods experienced are to be expected.
“If [Buckley] is using PayPal, all I can suggest he does is change to a New Zealand provider.”
Hearn pointed out that while the Iranian dates were not entering the US, customer payments relating to them which were handled by PayPal would have done. Therefore, he felt it was fair for PayPal to apply US law in this case.