There is BitPay and there is BTCPay with zero fees. Why would someone use BitPay over BTCPay?
BitPay allows a merchant to accept bitcoin on their website, but receive fiat to their bank account. BTCPay, by virtue of being self hosted and non-custodial, does not. BTCPay users (at the moment) have to manually set up automatic fiat conversion using an exchange or other third party.
Has anyone come across reports of this happening in the US -- or for that matter, anywhere outside of Europe or European IP ranges?
There is this user -
https://bitcointalk.org/index.php?topic=5310416.msg56133269#msg56133269 - who says he was hit with KYC demands despite being outside the EU, although he does say he uses different IPs so perhaps he used a European VPN server or Tor exit node.
Buying a pizza and giving a very large tip via bitcoin might be a way to launder money, which is what KYC is supposed to prevent track.
The same could be said of paying in cash, and even more so by paying in cash in a restaurant or picking up food in person without giving out a name or address as you would with home delivery. And yet, no one trys to make you KYC for this.