Are Payoneer De-Banking and Appropriating Funds to Reduce Humanitarian Aid for Gaza?

Novara Media reported in January of this year that “Palestinians Are Having Their Bank Accounts Frozen. Their Banks Won’t Explain Why.” They went on to state in respect of Payoneer (Nasdaq: PAYO) that “such actions expose an international system of financial regulation that has collectively punished Palestinian people for years – and is now going into overdrive.“

The punishment overdrive suggested in the above media report is alarming and may provide an explanation for account de-banking and frozen funds in the context of a recent litigation instruction received by Lexlaw Solicitors & Barristers, a law firm in London. Lexlaw’s Financial Services Litigation team have been retained by a social media advertising agency that made the (now potentially fatal) decision in 2020 of selecting and using Payoneer Payment Services (UK) Limited (controlled by Payoneer Global Inc) as its online payment platform. Payoneer promised that it would make bank transfers easy but that promise seems to have morphed into making transfers impossible with many hundreds of thousand of dollars arbitrarily, or perhaps politically or ideologically frozen for months without a termination explanation.

Our client digital marketing agency is not a bad actor; all it does is place online adverts on major social media platforms for and on behalf of well-renowned, well-established and well-regulated charities to help them raise tens of millions in charity funds. This account activity was considered acceptable and unproblematic for Payoneer for years until recently – perhaps the change is because some of the funds raised may go toward humanitarian aid into Gaza? Our client certainly believes that is the case.

Payoneer’s Limited UK “Regulation”

What our client, an otherwise successful digital business advertising agency, did not know when it selected the payment platform is how limited the rules protecting UK customers actually are. Payoneer, is not in fact regulated like a mainstream bank operating in the UK, but instead has light-touch FCA authorisation as an Authorised Electronic Money Institution.

This means the FCA has given permission for Payoneer to issue electronic money (e-money) and provide payment services but that permission is restricted and there is no statutory compensation scheme available if Payoneer does anything wrong or goes out of business.

FCA ALERTS ABOUT PAYONEER:

“Some activities by this firm may not be protected
This firm is shown on the Register because it is now, or was previously, approved by the FCA (or relevant regulatory body). As a result, you may be able to complain about this firm to the Financial Ombudsman Service. If this firm goes out of business owing you money you will not be able to claim compensationfrom the Financial Services Compensation Scheme (FSCS). “

“Restrictions / suspensions
This firm has requirements or restrictions placed on the financial services activities that it can operate. Requirements or restrictions can include suspensions.”

UK Financial conduct Authority Register – Payoneer Payment Services (UK) Limited

Is Payoneer a UK or American Company?

Our client also thought, due to representations made by Payoneer, that Payoneer was an American entity operating in the UK not realising that Payoneer was in fact founded in 2005 in Israel by Yuval Tal and Yaniv Chechik. Payoneer has most of its workforce based in Israel at its corporate offices at Ha-Yetsira St 13, Petah Tikva, near Tel Aviv just 40 miles from Gaza. Payoneer is cited online to have Israeli government and IDF connections at the highest levels via it’s founders and owners.

“Leaked US Treasury documents reveal that [Payoneer] the soon-to-go-public company, where the new prime minister [Naftali Bennett] was an early investor, did business with bottom feeders of the internet”

“Behind Bennett’s Payoneer payday, a firm that profited off smut and alleged cons“
– The Times of Israel, 27 June 2021

“Police in Dubai say that Payoneer Inc. distributed some of the prepaid cash cards that have been traced to suspects sought in the [alleged Israeli intelligence service Mossad] killing of Mahmoud al-Mabhouh. The case has attracted heightened international attention since the U.K. last month accused Israel of forging British passports used by the alleged assassins.”

“Hamas Killing Shines Light on Payoneer, Prepaid Cards” – Wall Street Journal, 7 April 2010

The UK Registered office is 37 Broadhurst Gardens, South Hampstead, London NW6 3QT. There seems to be little if any visible sign of Payoneer at this suburban North London address. This is in fact the trading address of Gan Yeldim, a pre-school nursery and Shir Hayim, a Reform Synagogue.

Payoneer unilaterally froze (without providing any lawful reason) the funds of our client marketing agency – which places online adverts on behalf UK charities helping them to raise tens of millions in charitable funds. At the present time some proportion of the funds raised could well go to support Humanitarian Aid Relief efforts in Gaza. In the absence of any valid lawful explanation at the relevant time from Payoneer for its conduct, our client believes this de-banking and appropriation of funds is a possible explanation for Payoneer’s conduct. Our client simply cannot understand Payoneer’s conduct and believes that Payoneer is acting improperly and prejudicially against it perhaps for politically motivated or ideological reasons.

Payoneer’s Account Freeze – causing £multimillion loss to charities

Online financial product comparison site, Nerdwallet’s latest review of Payoneer states that “Customers report account freezes and terminations, resulting in the loss of funds.” Payoneer’s account freeze and termination all happened without notice to their micro enterprise customer – arguably in breach of Payoneer’s own terms to give two months notice.

“Customers report account freezes and terminations, resulting in the loss of funds.”

Nerdwallet: Payoneer Review 2024

On 7 February 2024, shortly before Ramadan 2024 (the period in which Muslims donate most of their obligated and voluntary charity), Payoneer froze our client’s account and locked them out of their funds having asked them for the details of their fundraising and charity work.

On 26 February Payoneer informed our client that it had taken a decision to terminate its account services without providing any justification nor cause and failing to this day, to allow any release of funds in apparent breach of its own terms and conditions to give notice and return funds (which terms it went on to swiftly change after Lexlaw recently pointed out their own breach).

Months later, our client’s complaints were meaninglessly responded to and instructions to return funds were not complied with seeming to prove the accuracy of Nerdwallet’s negative comments about Payoneer quoted above.

Payoneer’s Appropriation of Customer Funds

Ramadan is a Muslim holy month in which there is a strong focus on helping others and hence this is when Muslims give the vast majority of their charitable donations for the year.

Payoneer de-banked our client and blocked access and thereby appropriated hundreds of thousands of dollars in advertising funds that were paid over by leading well-established and world-renowned registered charities. These funds were set to be used to raise tens of million of dollars in charitable funds.

This de-banking and account freeze was, perhaps as believed by our client, timed by Payoneer to coincide with the month of Ramadan 2024 (which began on Monday 11th March 2024).

Given the lack of explanation for termination at the relevant time, our client suspects that Payoneer’s account freeze may be politically motivated to reduce humanitarian aid to Palestinian refugees via millions of dollars in charitable donations. Is Payoneer using its payment platform to engage in de-banking and appropriation of clients funds to limit charitable aid to Palestinian refugees? This is the question that our client asks itself.

Despite repeated customer requests over several months, Payoneer has refused to return the funds held in the account. Payoneer never provided any justification when terminating access to the accounts and withholding the money.

Months on, Payoneer still refuses to return funds thereby forcing our client to take legal action, the determination of which will be in the public domain.

Payoneer: Fit and proper for UK Authorisation?

Payoneer’s actions against a loyal customer that it had banked since 2020 and that had always acted compliantly are perverse and defy logic such that a question of prejudice is legitimately raised.

Payoneer have provided no contemporaneous termination justification for their prejudicial conduct which our client suspects may be driven by political or ideological bias prompting our client to question Payoneer’s suitability for regulatory approval by the FCA.

PAYONEER – CALL FOR WHISTLEBLOWER INFORMATION

Have you worked for Payoneer and have information about their practices and procedures that may be unlawful, amount to a miscarriage of justice, or covering up wrongdoing? Or do you know of other victims of de-banking and account freezes of this nature? You may be protected by law for making such whistleblowing disclosures and we welcome hearing from you.

Further, a fit and proper person when faced with correspondence highlighting breaches of its own terms and conditions would wish to correct its conduct not double down by quickly changing its terms and conditions to seek to permit its past breaches of its own terms and conditions in future. Customers and regulators across the globe should be made aware of this pattern of conduct.

Payoneer’s Evolving Terms and Conditions

After we wrote to Payoneer they slyly changed their terms (see below), giving them more power over client funds. Micro Enterprise accounts can now be terminated anytime without notice, and clients may not get their full balance back. This raises concerns about transparency and fair treatment for customers.

It is unequivocally stated in Payoneer’s terms and conditions that funds held by the platform belong to the account holder. Furthermore it is, or rather was, stated both that a Micro Enterprise will be given two months notice or termination (which did not happen in the case of our Micro Enterprise client) and that upon termination Payoneer will transfer any available Payoneer Balance provided that: (i) you have not acted fraudulently or with gross negligence or in such a way as to give rise to reasonable suspicion of fraud or gross negligence; and (ii) we are not required to withhold your funds by law or regulation, or at the request of the police, a court or any regulatory authority.

In the circumstances, Payoneer had and has no right to withhold our client’s funds but, Svetlana Vrubel, a Business Operations Leader at Payoneer in Israel informed our client on 17 March 2024 that:

“Payoneer has the right, to suspend access to funds in line with clause 24 of our terms and conditions. We are not able to make these funds available to you at this date. You will receive notification from us in the event that this changes.”

Svetlana Vrubel, Business Operations Leader at Payoneer in Israel

The above reference to clause 24 of the terms and conditions appears to be erroneous, since the Payoneer terms and conditions deal with termination and suspension of an account in clause 25. Or perhaps it was a template based on a previous version of Payoneer’s terms and conditions – contractual agreements that seem to change with alarming speed.

Remarkably after receiving our letter notifying Payoneer of its own breach of its own contractual terms and conditions, and citing those terms in our correspondence, it silently and quickly changed those terms and conditions:

• Firstly, Payoneer removed the requirement of giving two months notice to Micro Enterprises. This means Payoneer may terminate or suspend any of it’s present customer’s accounts at any time without notice.
• Secondly, it changed the terms to allow it to terminate unilaterally for any unlimited reason rather than the previous list of reasons.
• Thirdly, Payoneer rowed back from promising to transfer any available Payoneer Balance (we will transfer any available Payoneer Balance to you) except where there was fraud or a requirement to withhold funds by law or regulation or police or court or regulatory request. Now Payoneer simply says that at the time of a termination notice or at any time thereafter we may give you instructions on how to withdraw remaining funds.

It is clear that Nerdwallet’s review of Payoneer “Customers report account freezes and terminations, resulting in the loss of funds.“ is becoming more and more accurate. Now, account freezes and terminations can now happen at any time without any notice and can last for any period of time and you may (or may not) get instructed on getting your funds back.

You can consider the changes in detail below with now missing terms highlighted in red and new terms in turquoise. These terms and conditions seem completely unfair to all Payoneer customers. Perhaps Payoneer customers such as our client would not even realise these amendments have even taken place?

Payoneer’s Scramble to Change its Terms

[MARCH 2024]

25. TERMINATION AND SUSPENSION
25.1 We may terminate or suspend your engagement with us under these Terms and Conditions and your use of the Payoneer Services hereunder at any time on immediate notice or in the case of a Micro Enterprise, by giving not less than two months’ notice. You may terminate your use of the Payoneer Services with us at any time in accordance with the Closing Your Payoneer Account provisions above. We may terminate or suspend your use of the Payoneer Services with immediate effect, including access to funds, if or upon, as applicable: (a) your violation of these Terms and Conditions, (b) your provision of any false, incomplete, inaccurate, fraudulent or misleading information, (c) you are engaged in fraudulent, money laundering, terrorism financing or illegal activity or we reasonably suspect the same, (d) we reasonably believe that your Payoneer Account has been compromised or for other security reasons, (e) we are required to do so under any applicable law or regulation, or at the direction of any regulatory, law enforcement or other competent authority, or (f) continuing to provide the Payoneer Services would be in breach of our obligations under applicable law or regulation. We shall notify you either prior to the suspension or termination or, if prior notification is not possible under the circumstances, promptly after the suspension or termination, unless we are prohibited by law to notify you.

25.2 Upon termination, following receipt of all necessary information from you and all transactions and applicable and/or outstanding fees and charges have been processed and deducted, we will transfer any available Payoneer Balance to you provided that: (i) you have not acted fraudulently or with gross negligence or in such a way as to give rise to reasonable suspicion of fraud or gross negligence; and (ii) we are not required to withhold your funds by law or regulation, or at the request of the police, a court or any regulatory authority.

Payoneer Terms and Conditions – March 2024

—

[APRIL 2024]

25. TERMINATION AND SUSPENSION
25.1 We may terminate or suspend your use of the Payoneer Services at any time. You may terminate your use of the Payoneer Services with us at any time in accordance with the Closing Your Payoneer Account provisions above. Grounds for termination or suspension, including access to funds, include but are not limited to, (a) your violation of these Terms and Conditions, (b) your provision of any false, incomplete, inaccurate, or misleading information, (c) you are engaged in fraudulent, money laundering, terrorism financing or illegal activity or we reasonably suspect the same, (d) we reasonably believe that your Payoneer Account has been compromised or for other security reasons, or (f) if we are required to do so under any applicable law or regulation, or at the direction of any regulatory, law enforcement or other competent authority. We shall notify you either prior to the suspension or termination or, if prior notification is not possible under the circumstances, promptly after the suspension or termination, unless we are prohibited by law to notify you.

25.2 Together with a termination notice or at any time thereafter we may give you instructions on how to withdraw remaining funds.

25.3 Termination of your use of the Payoneer Services will not affect our right to make deductions for any outstanding or unpaid fees.

Payoneer Terms and Conditions – April 2024

This highlights Payoneer’s recent changes to their terms and conditions, specifically regarding account termination and fund access for Micro Enterprises. Here are the key points:

• Previously, Payoneer guaranteed a two-month notice period for Micro Enterprise account termination. This clause has been removed, allowing Payoneer to terminate accounts at any time without notice.
• Previously, Payoneer promised to transfer any remaining balance upon termination unless fraud or legal restrictions applied. Now, they only say they may provide instructions on how to withdraw funds at some point after termination.
• Previously, termination reasons were limited. Now, Payoneer can terminate for any reason.
• These changes were made after our client’s account was frozen, raising concerns about retrospective changes.
• Payoneer’s terms and conditions seem to be changing frequently and unfavourably for customers.

Overall, the new terms and conditions give Payoneer significantly more power over client accounts and funds, raising concerns about transparency and fair treatment for Micro Enterprises.

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