L$ Tilia purchases charged as PayPal Cash Advance

[Charlotte Bartlett]

On 7/16/2020 at 8:52 AM, Melancholy said:

Investigating some service charges on my credit card, my bank informed me that Tilia purcchases of L$ were charged to PayPal as a cash advance. This doesn't seem correct. It's a purchase of virtual goods. Has anyone else run into this? Is this an issue of how Tilia codes the transaction? Or is it something in the PayPal black box? 

Coming back to the OP:

1. Back in approx April 2020 the banking industry did a few "changes" with how they treat Money Service Businesses (MSBs) like PayPal.  Basically it opened the door to allowing them to treat charges to your credit card from those MSB as a cash advance, basically so they can start charging you interest right off the bat on a credit card.    

2. PayPal was forced to comply with the industry change and they re-coded transaction types.  Some banks can even tag on a fee as well as calculation of earlier interest.

3. That being said, this only applies if the transaction shows as a transfer versus a purchase.  

4. The bad news is if you have a recurring payments approved within PayPal for Tilia/LL - it may treat it as a transfer not a purchase.  

 I think you will have to do two things: 

A - Contact PayPal to clarify if point 4 was how this specific transaction was coded for you so you know if you are dealing with a transfer versus purchase.  Then you probably need to contact Tilia to see how they are coding the debit they are making so see which one is thinking it's a transfer versus purchase.

B - Once you have that clarified if they treated as a purchase and NOT a transfer you can then contact your bank to dispute the fees.    I think sadly it's going to be a transfer based on the PayPal TOS (last change was June 2020) and with the industry change above., Your bank is one of the ones now charging the fees/interest.    I would remove that Credit Card from PayPal and link to a debit card or bank account to avoid more fees.   Bank of America are one of the banks charging as a fyi.    Note I would still dispute the fees/interest regardless as unless you re-read the PayPal TOS in great detail it would have been impossible for you to know this if a previously set up reoccurring payment.    I think Tilia personally should be doing a warning (like Venmo and PayPal do when using their apps) around the potential for fees and charges (if they don't already - I don't buy LDollars).  Tilia's TOS doesn't clarify how they are coding transactions, they need to expand on their TOS in fairness to make this clear to consumers.

As a follow up if you have the ability and don't carry a balance on that card I would immediately make a payment to clear it to zero to cut off further interest charges.
 

Edited July 17, 2020 by Charlotte Bartlett

[Della Starlight]

Just had this issue today...it began with a Linden Research charge on July 15. Prior to that, the Linden Research charges were listed in my Paypal as entertainment. Beginning on July 15, they started listing them as money transfers, and my credit card bank charged me a $10 cash advance fee for each transaction. Second Life customer service referred me to my bank, who referred me to Paypal.  Apparently no one can get this changed, so the work around is to have Paypal use my bank account for the Linden Research transactions. And no one will refund me the cash advance fees I was charged. (I'm from the US if that makes a difference)

The other work-around would be to use my credit card directly on the SL website.

This is really not fair!

Edited July 17, 2020 by DellaLaBella
add comment

[animats]

35 minutes ago, DellaLaBella said:

The other work-around would be to use my credit card directly on the SL website.

Will you be charged for a cash advance on that if you buy Lindens?

You can have different payment methods for buying Linden dollars and paying Second Life fees. Linden Lab distinguishes between those uses. So it looks like you may need to put in a credit card for paying Linden Lab fees, and a debit card for buying Linden dollars.

You can't just turn off "Buying L$ in Second Life Viewer" in that checkbox to prevent being hit with a "cash advance" fee if you buy L$ the easy way. You can try, and it looks like it works, but the next time you look at the checkbox, it's still checked. Unclear whether that's a bug or a dark pattern.

 

Edited July 17, 2020 by animats

[Charlotte Bartlett]

1 hour ago, animats said:

Will you be charged for a cash advance on that if you buy Lindens?

You can have different payment methods for buying Linden dollars and paying Second Life fees. Linden Lab distinguishes between those uses. So it looks like you may need to put in a credit card for paying Linden Lab fees, and a debit card for buying Linden dollars.

You can't just turn off "Buying L$ in Second Life Viewer" in that checkbox to prevent being hit with a "cash advance" fee if you buy L$ the easy way. You can try, and it looks like it works, but the next time you look at the checkbox, it's still checked. Unclear whether that's a bug or a dark pattern.

 

I suspect that Tilia powers that transaction (credit card versus PayPal too).  So the Credit Card company will levy the fees regardless (I wouldn't risk it but somebody could test it I guess!).  Would be good to know if the bank /credit card company directly recognizes Tilia as a MSB and can categorize the payment correctly as a purchase.

The 10 USD fee has been a common complaint @DellaLaBella - there is actually a New York Times piece on how Venmo users got hit with the same fees after things changed in April of this year.  Tilia has a responsibility to warn you of fees (imho) - not sure if their screen does.     You may be able to get your credit card company to refund you - furnish them a copy of the Tilia TOS (available on their website) and state you were making a purchase for game tokens to use (so not a cash instrument nor a transfer - it was a purchase).   The card company may relent and refund you on the first occasion.  Also pay that card off as the interest is always terrible on cash advances and credit card companies place any payment below the full statement amount to that "last".    They are very crafty....

This is also timed where Tilia started to power things... so your credit card company/PayPal see it as money from one MSB (them) to another MSB (Tilia) - I suspect that is why purchases are now looking more like "transfers" which attract the credit card cash advance red carpet treatment from banks.

 

Edited July 17, 2020 by Charlotte Bartlett

[animats]

45 minutes ago, Charlotte Bartlett said:

 So the Credit Card company will levy the fees regardless (I wouldn't risk it but somebody could test it I guess!).  Would be good to know if the bank /credit card company directly recognizes Tilia as a MSB and can categorize the payment correctly as a purchase.

Monthly billing for tier is not getting hit with cash advance charges. Users would be screaming if it was. Not sure about paying for "premium". Because that comes with a "stipend" in Linden dollars, it could be interpreted as a cash advance, but probably isn't.

But what I'm hearing is that if you buy Linden dollars with a credit card, you will be hit with cash advance fees. Correct?

[Charlotte Bartlett]

51 minutes ago, animats said:

Monthly billing for tier is not getting hit with cash advance charges. Users would be screaming if it was. Not sure about paying for "premium". Because that comes with a "stipend" in Linden dollars, it could be interpreted as a cash advance, but probably isn't.

But what I'm hearing is that if you buy Linden dollars with a credit card, you will be hit with cash advance fees. Correct?

Only if via PayPal - (as far as we know per posts here) .   Also it's only some banks "taking advantage" of the new classifications for payments so far, so it may be less widespread (to start with).   Personally if I am paying anything via Tilia using Credit Cards (even if PP not is in the middle) I would be checking the transactions very carefully.  

Banks I know who are charging - Bank of America

Banks so far that may not be charging (yet) - Citibank and Chase

The real question will be is how Tilia code those direct transactions as if transfer, the banks can charge.....

 

Edited July 17, 2020 by Charlotte Bartlett

[MoiraKathleen]

2 hours ago, Charlotte Bartlett said:

Only if via PayPal - (as far as we know per posts here) .   Also it's only some banks "taking advantage" of the new classifications for payments so far, so it may be less widespread (to start with).   Personally if I am paying anything via Tilia using Credit Cards (even if PP not is in the middle) I would be checking the transactions very carefully.  

Banks I know who are charging - Bank of America

Banks so far that may not be charging (yet) - Citibank and Chase

The real question will be is how Tilia code those direct transactions as if transfer, the banks can charge.....

I had a transaction mid-June that went against a Capital One CC, and I did not receive a cash advance fee nor was charged any interest at the cash advance rate.  It was a partial amount for land tier, but the PayPal category was "Money Transfer"  the same category as on other transactions where I had purchased lindens (but those had been covered in full by my PayPal cash balance, so didn't involve a credit card).    So I don't know if I was just lucky, or if there was something else about the transaction that I can't see which influenced Capital One or perhaps Capital One is not (or has not yet) decided to take advantage of the new fee ability.

I think it is likely that the decision whether to charge a cash advance fee or not will be made by the bank who issued the credit card.

[Charlotte Bartlett]

48 minutes ago, Moira Timmerman said:

I had a transaction mid-June that went against a Capital One CC, and I did not receive a cash advance fee nor was charged any interest at the cash advance rate.  It was a partial amount for land tier, but the PayPal category was "Money Transfer"  the same category as on other transactions where I had purchased lindens (but those had been covered in full by my PayPal cash balance, so didn't involve a credit card).    So I don't know if I was just lucky, or if there was something else about the transaction that I can't see which influenced Capital One or perhaps Capital One is not (or has not yet) decided to take advantage of the new fee ability.

I think it is likely that the decision whether to charge a cash advance fee or not will be made by the bank who issued the credit card.

Agree as the banks will decide.  And most will move to charging...

[MoiraKathleen]

18 minutes ago, Charlotte Bartlett said:

Agree as the banks will decide.  And most will move to charging...

I agree most will probably move to charging...  and I'm sure that this is not the only thread we will see about it in the forums, if it becomes more widespread. 

[animats]

45 minutes ago, Moira Timmerman said:

I think it is likely that the decision whether to charge a cash advance fee or not will be made by the bank who issued the credit card.

Probably. But I suspect this is going to settle out as "charge cash advance for anything that looks like a medium of exchange".

(The backstory here is that the cryptocurrency people have been pushing the limits of what you can do in this area, and now the banks and regulators are pushing back. Until recently, private money-like things were mostly convenience features for selling something else. Like Itunes credits, which are mostly converted into music downloads. Then came Bitcoin. Enough people bought Bitcoin with credit cards, lost money, and couldn't cover their losses, that banks cracked down on that. Also see utility token vs investment token, the Howey test, and the SEC crackdown on initial coin offerings. Also see Decentraland, a virtual world where few people go in world but many speculate on the cryptocurrency and land.)

So, don't buy Linden dollars with a credit card for now.

[Charlotte Bartlett]

1 hour ago, animats said:

Probably. But I suspect this is going to settle out as "charge cash advance for anything that looks like a medium of exchange".

(The backstory here is that the cryptocurrency people have been pushing the limits of what you can do in this area, and now the banks and regulators are pushing back. Until recently, private money-like things were mostly convenience features for selling something else. Like Itunes credits, which are mostly converted into music downloads. Then came Bitcoin. Enough people bought Bitcoin with credit cards, lost money, and couldn't cover their losses, that banks cracked down on that. Also see utility token vs investment token, the Howey test, and the SEC crackdown on initial coin offerings. Also see Decentraland, a virtual world where few people go in world but many speculate on the cryptocurrency and land.)

So, don't buy Linden dollars with a credit card for now.

If only we could buy with Bitcoin 👋

[Della Starlight]

In my case it was Paypal who changed the Linden Research transactions from "entertainment" to "money transfer", which enabled my credit card bank to hit me with the $10 cash advance charge for each transaction. It had nothing to do with Tilia, and that name does not appear in the transaction. After speaking with Paypal customer service, I have changed my Linden Research transactions through Paypal to be paid with a bank debit card...which they said should get rid of the "cash advance" fee. I have also opened an SL ticket about this issue...we'll see what happens going forward.

[Della Starlight]

On 7/17/2020 at 4:45 PM, Charlotte Bartlett said:

You may be able to get your credit card company to refund you - furnish them a copy of the Tilia TOS (available on their website) and state you were making a purchase for game tokens to use (so not a cash instrument nor a transfer - it was a purchase).   The card company may relent and refund you on the first occasion.  Also pay that card off as the interest is always terrible on cash advances and credit card companies place any payment below the full statement amount to that "last".    They are very crafty....

Sadly, the credit card company would not refund the fees. They did warn me, however, that interest on cash advance transactions is charged from day one...live and learn as they say...hopefully my work-around will work!

[Charlotte Bartlett]

1 hour ago, DellaLaBella said:

Sadly, the credit card company would not refund the fees. They did warn me, however, that interest on cash advance transactions is charged from day one...live and learn as they say...hopefully my work-around will work!

Oh that sucks, sorry to hear that.   At least we know now that MSB to MSB will be a cash advance for credit cards.  

[Annie Nova]

On 7/17/2020 at 4:32 PM, animats said:

Monthly billing for tier is not getting hit with cash advance charges. Users would be screaming if it was. Not sure about paying for "premium". Because that comes with a "stipend" in Linden dollars, it could be interpreted as a cash advance, but probably isn't.

But what I'm hearing is that if you buy Linden dollars with a credit card, you will be hit with cash advance fees. Correct?

I buy lindens monthly with a CC and I've never been charged a 10.00 fee for using it. And if I were were charged, that would be the end of my SL days because I do not have a bank card. 

Edited July 20, 2020 by Annie Nova
fixed a word and to add something

[LittleMe Jewell]

25 minutes ago, Annie Nova said:

I buy lindens monthly with a CC and I've never been charged a 10.00 fee for using it. And if I were were charged, that would be the end of my SL days because I do not have a bank card. 

Is your CC the registered payment method here or is it used via PayPal?

[Charlotte Bartlett]

Just now, LittleMe Jewell said:

Is your CC the registered payment method here or is it used via PayPal?

Also which bank... ❤️

[animats]

2 hours ago, Charlotte Bartlett said:

Also which bank... ❤️

Also, which country...

[Annie Nova]

3 hours ago, LittleMe Jewell said:

Is your CC the registered payment method here or is it used via PayPal?

It's registered payment here, so I guess that doesn't count with the paypal site. 

[Della Starlight]

I have had a response back from the ticket I submitted to SL...they suggest I try removing Paypal and then adding it back as my payment method! I will make no further comment here.

[Charlotte Bartlett]

Not sure how that would help at all....somebody somewhere in that supply chain is classifying transactions from Tilia - > PayPal - > Credit Card as a Cash Advance.  Resetting PayPal does nothing at all.   I suspect it's PayPal based on the information Tilia is providing and perhaps how PayPal is classifying Tilia as a MSB (like those Venmo examples in the New York Time's piece).

Here is an example of a bank credit card agreement... I checked mine 

"A cash advance
is a charge to get cash or cash equivalents,
including travelers cheques, gift cheques, foreign currency, money orders, casino gaming chips, race track wagers or similar offline and online betting transactions. "

Linden Dollars are not any of those, unless banks are now actually saying Casino Gaming Chips are Linden Dollars (if so, that's a whole different ballgame - no pun intended).  Linden Dollars have never been a cash equivalent...

[Lindal Kidd]

That said "including", which means "this may not be a complete list of all 'cash equivalents'".  The CC company may reason that $L are used to buy stuff, so they're a "cash equivalent".  Especially since you CAN use actual money to buy Marketplace stuff, too.

[Charlotte Bartlett]

6 minutes ago, Lindal Kidd said:

That said "including", which means "this may not be a complete list of all 'cash equivalents'".  The CC company may reason that $L are used to buy stuff, so they're a "cash equivalent".  Especially since you CAN use actual money to buy Marketplace stuff, too.

That's not how Credit Card Company Cash Advances categorize purchases on a service.   It's not about reason, but categorization.   What is more interesting here is how PayPal are treating Tilia now it's becoming fully fledged and how more importunely once a standard is set how regulators may view it (Finra etc)....   Including you are right, but Credit Card companies do not recognize (yet) Linden Dollars as a cash instrument.    But they are surely recognizing Tilia as a MSB....

Edited July 21, 2020 by Charlotte Bartlett

[animats]

3 hours ago, DellaLaBella said:

I have had a response back from the ticket I submitted to SL...they suggest I try removing Paypal and then adding it back as my payment method! I will make no further comment here.

"Try turning it off and turning it back on again."

[Lindal Kidd]

That's what the Resident Geek tells me whenever I tell him I have a problem!