@dwolla: a bunch of clowns not to be trusted April 18, 2013
So, I tried Dwolla
I actually tried it a year+ ago to send money to a friend. It's fast, inexpensive, and seemingly easy.
I'm working on a project and it seemed like a hassle to have the folks paying me send a check that I would then have to deposit in my bank account. The whole mailing, receiving, going to the bank and depositing process takes about 10 days and consumes non-trivial amounts of time.
Doing things electronically seemed like the right answer… using ACH as a mechanism for moving money around at $0.25 per transaction on its face seems too good to be true.
Turns out it is.
So, I signed up for a Dwolla business account.
I asked my business partner to send me money via Dwolla which they did. They moved 5-figures of money via Dwolla to me.
Dwolla needs to verify that the business is who it says it is so I don't just take account numbers off someone else's checks, open a Dwolla account, and move money out of the third party's account. I get that.
I provided Dwolla with the PDF of the EIN information that I received from the IRS. They didn't like it.
So, I called the IRS and asked for a letter certifying that in fact my business had the specific EIN. The IRS faxed me a signed letter and I delivered that letter to Dwolla. That wasn't good enough.
So, I provided Dwolla with a PDF of the California Secretary of State's business database showing my business is currently licensed and that it has been an ongoing entity since 2004. I also provided a bank statement with the correct and corresponding account numbers to Dwolla.
The only thing that's remotely out of line is that the addresses are different. There's the original business mailing address, my address at my ex-wife's house (the one that the IRS has because I haven't filed 2012 taxes yet), and the new address (which corresponds to my current home address.)
At around 11am today, I got a call from Dwolla to verify the information. I provided my date of birth, cities I've lived in, etc. to validate that I am who I am.
My account was "enabled."
Less than an hour later, my account was suspended for "suspicious activity."
I called Dwolla and they claimed that they were unable to verify my account. This is total bullshit as they could look on the California Secretary of State's web site and validate the company. They can call the IRS and validate that the EIN validation letter dated April 16, 2013 is in fact authentic. They can call my bank because they have my bank statement. There's a ton of ways they can verify that my business is who I say it is. Why they don't is beyond me.
Currently, there's 10s of thousands of dollars that have been removed from my business partner's account, that are sitting in Dwolla's accounts, that Dwolla claims they will "return in due course."
These guys are clowns.
If they have a particular set of documentation they need, they should be explicit about it. When I open a bank account, the bank tells me the documentation they need. I bring it, they open the account.
Dwolla just says they need EIN Verification, which I provided. If they needed something more specifically, they should be open about it.
But at the end of the day, these guys have ACH ability into my bank accounts.
They can reach in, take money, and then decide to sit on the money because they don't like something.
Yeah, yeah, I understand the whole fraud aspect. But at this point, they seem like the guys that are engaging in fraud because they are sitting on my money and they have not provided any visibility into how to have a valid business account or how to account non-trivial funds that they've already taken from other people's accounts.
My advice is to stay away from Dwolla. The concept is great. But the execution is not. They are probably trying to do to much on too thin a margin. I'd gladly pay $50 or $100 for business verification. I'd gladly pay $5 per transaction for moving big chunks of money between businesses. What I will not gladly do is let a bunch of folks who I have no idea who they are other than a web site ever again reach into my bank account.
While there are no really good alternatives to moving money domestically except via check, I'm going to wait until there are companies that maybe charge a little more but are actually reputable and have a visible process before I have someone else hold tens of thousands of dollars of my money.