Linden Lab is slowly skimming USD off the top of your cash outs.

[Levidian]

I have done a few cash outs in second life, large and small and I feel that Linden Lab is unfairly skimming off the top, but only on paypal transactions. I have not done a wire transfer, but I think they are cheating ONLY on Paypal transfers.

Allow me to explain the two ways of doing this, and why I feel they are cheating you.

Scenario: Let's assume you want to cash out $5,000.

How it is currently done (Incorrect way): $5000 * 0.05 = $250 (This is the fee taken out of the $5,000 cash out).  $5000 - 250 = $4750 (This is what you get in your paypal.)

How it should be done (Correct way): $5000 * 0.05 = $250 (This is the fee). $5000 + 250.00 = $5250 (This is what you need in your process credit to get $5,000)

Linden Lab is charging you a 5% fee on cash out fee portion of the cash out. Since you only get $4750, if you add a 5% fee on that, you come up with $237.50 fee, not $250.00. Charging you $250 for receipt of $4,750 is a 5.26% fee, not 5%.

Wire transfers are governed differently, and I would bet dollars to doughnuts that they do it my correct way as shown above.  For example, if you wanted to request a wire of $40000, the fee would be $2,000 (plus $100 for the wire transfer itself, but we won't include that here) and they would expect you to have $42,000 in your credit account to process it. In the end, you lose $42,000 in your credit account, get $40,000 in your bank account.  However, if it were done through paypal, you would get $38,000 cash, but your fee for getting $38,000 cash should be $1900 and not $2000.

Thoughts? Does anyone do wire transfers and can confirm my last paragraph?

Edit: Let me add some additional clarification below because this sounds confusing to some. The process is that you are requesting a certain amount of money to be sent to you when you cash out. The conversation should work like this:

You: Hi there, I want to withdrawal $5,000. Bank: Ok no problem, it's a 5% fee to make a withdrawl, so in order to get your $5,000, you must pay a $250 fee. You: hands over $250 fee. Bank: hands over $5,000 cash.

The conversation should NOT work like this:

You: Hi there, I want to withdrawal $5,000. Bank: Ok no problem, it's a 5% fee to make a withdrawl, so you're only going to get $4,750 of the $5,000 you requested. Bank hands over $4,750 cash.

Edited November 28, 2019 by Levidian

[Adam Spark]

They charge 5% of what you are cashing out (the USD amount at the end of L$ conversion) and make no bones about it. It works the same as commission fee on the MP. You sell something on MP for 100L, 5% comes out (soon to be 10). 5% of 100L = 5L.

$237.50 is not 5% of what you are cashing out if you are cashing out $5000 USD. 5% of 5000 is 250, so that is what comes out.

https://secondlife.com/corporate/pricing.php

5000 minus 250, not minus 237.50, is 4750

Edited November 28, 2019 by Adam Spark

[Levidian]

23 minutes ago, Adam Spark said:

They charge 5% of what you are cashing out (the USD amount at the end of L$ conversion) and make no bones about it. It works the same as commission fee on the MP. You sell something on MP for 100L, 5% comes out (soon to be 10). 5% of 100L = 5L.

I understand what they are getting at (and you), but even the link you provided says "processing USD credits".  The credit is the amount you get in the end. Your money is what's processed.  The other part is the fee. The credit should not include the fee.  The fee should be added to the amount you get. It's a very easy mistake to make.

It's further confused by the MP commissions, because in this case, 5% of the sales price is 5% of sales. That's more clear cut.  Just like the 3.5% of L$ to USD charge on the lindex. Simple and clear cut.  But 5% for processing credits is not clear cut, because in my example, that $250 they are taking out of a $5,000 cash out is not a credit that's processed.  It's a fee.  The $4750 is what is processed, and what is cashed out, not $5000.

Edited November 28, 2019 by Levidian

[Adam Spark]

3 minutes ago, Levidian said:

I understand what they are getting at (and you), but even the link you provided says "processing USD credits".  The credit is the amount you get in the end.

Yes and getting to that end is the processing part. The part being processed into USD credit is the $5000 USD worth of lindens. The fee for that processing is 5% of the value.

[Garnet Psaltery]

Linden Lab is a business, and therefore needs to make money in various ways.  They tell you what the cost will be.  This is not cheating.

Edited November 28, 2019 by Garnet Psaltery

[Levidian]

2 minutes ago, Adam Spark said:

Yes and getting to that end is the processing part. The part being processed into USD credit is the $5000 USD worth of lindens. The fee for that processing is 5% of the value.

That's just not accurate. The part being processed into USD credit is done when you sell L$, not when you cash out to paypal.  When you cash out to paypal, the conversion from lindens is already done.  That's an entirely different fee (3.5% fee from the lindex)

 

Edited November 28, 2019 by Levidian

[Levidian]

2 minutes ago, Garnet Psaltery said:

Linden Lab is a business, and therefore needs to make money in various ways.  They tell you what the cost will be.  This is not cheating.

Charging you 5.26% fee for something that is listed as 5% is cheating.

[Adam Spark]

Just now, Levidian said:

Charging you 5.26% fee for something that is listed as 5% is cheating.

You said in your original post you are getting 4,750 USD to process 5,000 USD.

5,000 minus 4,750 = 250, or 5% of 5,000

[Levidian]

29 minutes ago, Adam Spark said:

You said in your original post you are getting 4,750 USD to process 5,000 USD.

5,000 minus 4,750 = 250, or 5% of 5,000

If you buy something from the store for $100 that is taxed at a 10% rate, do you pay $10 or $11?  Linden says it's an $11 tax, and you seem to agree with this.

I also said, in my original post, that is how it was done now, and that it's an incorrect way.

What is being processed is $4,750, not $5,000.  The $250 in this case is not being processed.  It's just being removed from teh credit account, like paying land tier.  4750 * 0.05 = $237.50, the proper 5% processing fee for processing $4,750 to paypal.

Edited November 28, 2019 by Levidian

[Adam Spark]

Just now, Levidian said:

If you buy something from the store for $100 that is taxed at a 10% rate, is that a $10 tax or an $11 tax?  Linden says it's an $11 tax.

I also said, in my original post, that is how it was done now, and that it's an incorrect way.

Is it possible that the rest of the money charged is actually a paypal transaction fee? They have processing fees of their own. So actually, you should be losing more than 5% without any cheating

[Levidian]

10 minutes ago, Adam Spark said:

Is it possible that the rest of the money charged is actually a paypal transaction fee? They have processing fees of their own. So actually, you should be losing more than 5% without any cheating

As far as I can tell, they have no processing fees out of the USD Credit account because the money in the USD credit account is already USD. In fact, even if you're banned from second life and have USD in the credit account they are obligated to give you this USD back one way or another (see tilia terms of service section 3.3.5).  There's nothing to process. Paying for land, premium, or any other myriad of charges and fees in second life are not subject to this 5.26% fee when they pull from your USD credit balance. It's only when cashing out to paypal. For them to take out a 5.26% fee from a cash out is no different than pulling a monthly land tier from your account.

I'm sure paypal has some fees, but they are not even anywhere near the realm of 5%, and secondly what linden pays paypal, even if its based on the amount sent, would only apply to what they actually send to you, not what they keep.

Edited November 28, 2019 by Levidian

[Selene Gregoire]

1 hour ago, Levidian said:

I understand what they are getting at (and you), but even the link you provided says "processing USD credits".  The credit is the amount you get in the end. Your money is what's processed.  The other part is the fee. The credit should not include the fee.  The fee should be added to the amount you get. It's a very easy mistake to make.

That isn't how it works. 

As a for instance, when you return an item to a store in RL and that store has a return fee policy (aka restock fee), the fee is deducted from the amount you paid for the item, not added to it. You do not get full price for the item. That's how it works when you cash out or, more accurately, withdraw cash from SL after converting it to USD. You get less because you are paying the fee out of the amount withdrawn, not on top off.

LL is not a bank. Don't expect them to act like one, unless you want them to have to abide by the US federal banking regulations, which would not be a good thing for any of us. 

Edited November 28, 2019 by Selene Gregoire

[Mollymews]

Levidian, best to look up accounting terms like nett and gross. Linden deduct 5% of the gross. Not 5% of the nett which is what you are thinking

if Linden were to charge 5% of the nett then the fee would be an addition to the amount withdrawn not a deduction

5000 + 250 = 5250.  250 for Linden and 5000 for you

or 4750 + 237.50.  As you say

Linden are not ripping anyone off by saying 5%.  We just have to use the appropriate accounting reference

[Erwin Solo]

For me, the key takeaway is that it is senseless to give or collect charitable contributions in L$. Just make your donations directly in your RL currency. 

Edited November 29, 2019 by Erwin Solo

[SpiritSparrow Skydancer]

wow I wish I could cash out 5000.00

[Lindal Kidd]

Like most here, I disagree that the 5% cashout fee is being incorrectly computed.  But disregarding that issue, the OP neglected to mention the larger issue:  The whole game of buying, selling, and cashing out $L is rigged by LL to their benefit, from start to finish.  Most of us are aware of that, and participate anyway...because as the man said, it's the only game in town.

There's a fee to purchase $L, $1.49 USD.  There's a spread between the buying and selling rates for $L of about 10L.  There's a 3% fee for selling $L.  And there's a 5% fee for cashing out from your $USD Balance to PayPal.  Taking it all into account, LL takes about a 10% tax on a complete round trip of money from RL to SL and back out again.

[bigmoe Whitfield]

I own my own real life business, I have fee's for processing credit cards, checks,  bank transfers, even wire transfers,  where am I paying the fee's from.  you can guess it,  my customers off set the fee's for the most part as I add them into my products and I raise my prices at times when my fee's raise.  LL is just doing the same on their end,  they are a business after all and have to be able to cover their own end first, if they did not, do you know how long this place would stay existing.   yeah.

[Levidian]

Thank you all for explaining it.  We'll agree to disagree and thank you for the responses. I'm going to consult with my accountant on this issue, because I still fail to understand it.  Obviously, if everyone seemingly has the same explanation my line of thinking is incorrect, so I want to really understand this and maybe he can get me a better explanation. I am also going to use a wire transfer for my next cash out and see what happens, but I would bet its as I say it should be and NOT the way everyone thinks it should be.  I'm putting that out of my backside, but I would bet I'm correct, and if I'm correct then either the wire transfers are wrong, or the paypal method is wrong (I'll post my findings when I get there).

As for the above, I understand that this is a gross of fees, I just view whats bring processed and such what is subject to the fee in the first place to be the varying definition.  Thanks again for the chatter.

Edited November 29, 2019 by Levidian

[bigmoe Whitfield]

4 minutes ago, Levidian said:

Thank you all for explaining it.  We'll agree to disagree and thank you for the responses. I'm going to consult with my accountant on this issue, because I still fail to understand it.  Obviously, if everyone seemingly has the same explanation my line of thinking is incorrect, so I want to really understand this and maybe he can get me a better explanation. I am also going to use a wire transfer for my next cash out and see what happens, but I would bet its as I say it should be and NOT the way everyone thinks it should be.  I'm putting that out of my backside, but I would bet I'm correct, and if I'm correct then either the wire transfers are wrong, or the paypal method is wrong (I'll post my findings when I get there).

As for the above, I understand that this is a gross of fees, I just view whats bring processed and such what is subject to the fee in the first place to be the varying definition.  Thanks again for the chatter.

wire transfer is for over 10,000 usd only now too.  otherwise they do not do them.

[Selene Gregoire]

5 minutes ago, Levidian said:

Thank you all for explaining it.  We'll agree to disagree and thank you for the responses. I'm going to consult with my accountant on this issue, because I still fail to understand it.  Obviously, if everyone seemingly has the same explanation my line of thinking is incorrect, so I want to really understand this and maybe he can get me a better explanation. I am also going to use a wire transfer for my next cash out and see what happens, but I would bet its as I say it should be and NOT the way everyone thinks it should be.  I'm putting that out of my backside, but I would bet I'm correct, and if I'm correct then either the wire transfers are wrong, or the paypal method is wrong (I'll post my findings when I get there).

As for the above, I understand that this is a gross of fees, I just view whats bring processed and such what is subject to the fee in the first place to be the varying definition.  Thanks again for the chatter.

No one said that is the way it should be. It's just the way it is. And as for accounting, that is my profession. It's not something easily understood by those who have not had the years of college classes and/or the hands on experience in learning. What you have been told is the way the accounting is done. If you want to know why it is done this way, be prepared to spend many hours with your accountant as they walk you through the whole process of how to keep books the legal way.

[Levidian]

5 minutes ago, Selene Gregoire said:

No one said that is the way it should be. It's just the way it is. And as for accounting, that is my profession. It's not something easily understood by those who have not had the years of college classes and/or the hands on experience in learning. What you have been told is the way the accounting is done. If you want to know why it is done this way, be prepared to spend many hours with your accountant as they walk you through the whole process of how to keep books the legal way.

Then if that's the way it is, we would expect wire transfers and credits to paypal to be in the exact same manner, yes?  eg, a $20,000 wire transfer would result in you receiving $19,000 to your bank account, right?

Edit: Clarification - Requesting a $20,000 cash out via Wire transfer would result in Linden taking $1,000 of fees and sending an actual wire for $19,000.

Edited November 29, 2019 by Levidian
clarification

[Selene Gregoire]

14 minutes ago, Levidian said:

Then if that's the way it is, we would expect wire transfers and credits to paypal to be in the exact same manner, yes?  eg, a $20,000 wire transfer would result in you receiving $19,000 to your bank account, right?

 

Gah. Sorry. Posted by accident without saying anything.

Thing is LL is not a bank and they don't do business like banks do. That's where you're getting your wires crossed. It is typical of all for profit businesses to deduct fees from the amount, not add the fee in on top.  If they did that you would have to add more USD to your SL account to cover the fees. It's just the better way from a business and accounting POV to deduct the fees rather than calculate then add the fee on top. That's as simple an explanation I can give you on a forum.

Edited November 29, 2019 by Selene Gregoire

[Erwin Solo]

22 minutes ago, Levidian said:

Edit: Clarification - Requesting a $20,000 cash out via Wire transfer would result in Linden taking $1,000 of fees and sending an actual wire for $19,000.

No. 5% fee is capped at US$500.

https://secondlife.com/corporate/pricing.php

[Mollymews]

48 minutes ago, Levidian said:

Thank you all for explaining it.  We'll agree to disagree and thank you for the responses. I'm going to consult with my accountant on this issue, because I still fail to understand it.  Obviously, if everyone seemingly has the same explanation my line of thinking is incorrect, so I want to really understand this and maybe he can get me a better explanation

Levidian, as a business person you are not alone in this.  Richard Branson is a pretty successful business person and apparently finds board meetings quite fascinating when receiving financial reports.  He sometimes has no idea what the accountants are going on about, yet it doesn't stop him from doing business successfully

as he says the important thing is to have good accountants / financial officers who know their stuff. And you are going to do what Richard Branson does. Take advice from your accountant. So all good

a news article about Richard Branson's struggles with this is here:  https://www.cnbc.com/2018/10/18/richard-branson-told-this-lie-at-work-until-his-50s--heres-why.html

Edited November 29, 2019 by Mollymews
soemtimes

[Alwin Alcott]

1 hour ago, bigmoe Whitfield said:

wire transfer is for over 10,000 usd only now too.  otherwise they do not do them.

as far i know wire transfer is not possible
 

Can Tilia credit U.S. dollars directly to my bank account?

Tilia cannot process credit directly to bank accounts at this time, but can credit your U.S. Dollar balance to a PayPal or Skrill account.