PayPal
 

What's wrong with PayPal?

Hi. Bored. Posting.


I recently asked that same question, on a thread similar to this. Know what I found out? With Paypal, even AFTER your transaction has cleared, and the money is in your REGULAR BANK ACCOUNT, the buyer can STILL do a chargeback, and screw you! Unbelievable.

Here's my question from that other post, and the response:

Q: "once in your bank account, it's untouchable, no?"

A: --The answer is no. Paypal will hold the seller responsible if there is a charge-back and the buyer can show a valid reason, such as item not being delivered, etc.

The problem is, the seller can still get ripped-off because sometimes the buyer will say things about the item that are not true and do a charge-back and the seller will have a lot of problems getting it solved with PayPal if at all.

This is why a number of sellers refuse to use PayPal.

Also, the seller must have a feed-back score of 50 or better to actually qualify for PayPal protection. Less than that then the seller could be out of luck.--


Doesn't that make you just wanna cancel your Paypal account right now?

Indeed. lol. Thanks for the info.

<<<-- Originally posted by Josh Bass : With Paypal, even AFTER your transaction has cleared, and the money is in your REGULAR BANK ACCOUNT, the buyer can STILL do a chargeback, and screw you! Unbelievable. -->>>

Josh,

Simply not correct.

I didn't really sign up to be a defender of PayPal, but I have to jump in here. I'm sorry to say most of what you are saying about PayPal simply isn't correct. What is the source of your information?

It's really not fair, and in fact does us all a big dis-service to keep repeating these mis-statements about PayPal. PayPal is one of the easiest and cheapest ways to pay and receive money safely on the Internet. Without it, it becomes very difficult to conduct online transactions unless the seller has a merchant account (accepts major credit cards). Most sellers on eBay and other auction sites and online classified forums (like DVInfo.net) do NOT have a merchant account.

So I would ask everyone, before you repeat hearsay or a rumor, check your facts with an authoritative source.

And a word of caution. Many of the sellers who DON'T use PayPal and claim it's due to bad PayPal policies, also want you to pay using money order or Western Union. Guess what? If you sent them your money in either of those ways, you have NO recourse if the seller doesn't ship. These sellers are highly suspicious IMO.

The reason I know your statements about PayPal are incorrect is that recently I have been looking to buying and selling some expensive items, and the question of PayPal and chargebacks came up. Or rather, it was grossly misrepresented. So I'm concerned about safety and getting my money. :-) So I did some extensive research.

The proper sources are:

1. The PayPal User AGreement
2. The PayPal Buyers Complaint Policy
3. The PayPal Sellers Protection Policy

Here's my summary of the above. You can read the detailed legal docs for yourself. But let me be clear. I AM NOT A LAWYER AND THIS IS NOT A LEGAL OPINION. This information is for non-legal, informal discussions only, and is not to be relied upon for any business, financial, or legal purpose.

If the Buyer files a complaint with his/her credit card company, or with PayPal, stating that he did NOT receive the goods, then the Seller will be asked for proof of delivery. If the seller provides proof of delivery, then nothing happens.

If the Seller cannot provide proof of delivery, PayPal will attempt to recover the funds from the Seller's PayPal account. If there are no funds in the account, PayPal can NOT debit your bank account. The worst they can do is suspend your account and/or seize any funds that come into your PayPal account in the future.

The key here is that just because a Buyer makes a complaint doesn't mean that the Seller is automatically charged for the funds. As with any good business practice, the seller should always require and maintain proof of delivery.

If the buyer's complaint is that the goods received were not as described, PayPal takes no actions to recover the funds.

On top of all that, PayPal has a Sellers Protection Policy. If you follow the proper steps when you sell the item, PayPal will not hold you responsible for a chargeback.

The bottom line is that if you, as a seller, have done nothing wrong, then you will not lose the money paid by the buyer.


On the other hand, as a buyer, you should be fully protected by your credit card company. But the terms of each company can be different, so you may want to call your company and ask for the specific details and steps to recover your money.

My credit card company is great. If I file a complaint with them that I did not receive the goods, they immediately give me a temporary credit until the dispute is resolved. They then ask PayPal and the seller to provide proof of delivery. If none is provided, then my credit becomes permanent, regardless of what PayPal does or doesn't do. Furthermore, there are no adverse actions taken by PayPal against me for filing a valid chargeback. YMMV.

Jim, you might want to spend some time at this site, PayPal Sucks.

I used to feel like you, and found myself defending PayPal. However, I have met too many individuals lately with "horror stories" about PayPal for them all to be false. I've not personally had problems with PayPal, but I do believe they are a company with serious problems. People use PayPal because they are convenient, not because they are a great company to do business with.

Didn't Ebay buy Paypal? I'm pretty sure that Ebay would be better at managing the Paypal problems. Does anyone know the update on that?

Murph

JUST THE FACTS, MAM
 

Jeff,

First, let me state that I do not care for PayPal's attitude nor their policies. In fact, if there were any alternatives, I would certainly give them serious consideration.

But the problem is there is no real alternative if you want to buy from small sellers. If you know of one, please let me know.

Now, this site, www.PayPalSucks, is another good example of misquoting PayPal policies. On the home page it states that the terms of service means that you waive your rights to a credit card chargeback. And then they provide a link to "credit card waiver page". Here they are supposed to be quoting PayPal:

quoting PayPalSucks:
Here's the actual policy from PayPal:
This is quite different. The operative word is "misuse". I suspect the credit card companies will cancel you card if you continually file bogus complaints.

Perhaps it has changed since the law suit was filed.

IAC, I specifically asked my credit card company if I was protected against failure to deliver from sellers on eBay who used PayPal. The answer was an unqualified yes.

If you look at their "Alternatives" page -- I don't seen any viable alternatives to PayPal.
Again, if you do, please let me know.

Here's my problem. If a seller doesn't offer PayPal, and doesn't accept credit cards, the only viable option for anything over $100 is escrow.com. And that costs extra money, and it takes a long time for the seller to get their money. So most sellers aren't willing to use escrow.

What I don't understand is why some of the major banks and/or credit card companies don't open up a competitive service to PayPal. Could be a banking regulation thing.

In the meantime, I suggest that people only report on the facts. If they personally have had a bad experience with PayPal, then let us know. But like all rumors, they shouldn't be repeated unless you have the facts.

Oh, here's an idea to protect your bank account against improper actions by PayPal. I have implemented this idea.

Open a separate account with your bank (usually no charge) that you associate with PayPal. Keep zero, or very small ($5.00) funds in it. IF you sell something via paypal, withdraw the funds immediately. THem transfer the funds from your 2nd bank account to your regular bank account.

This way, any "errors" by PayPal will only result in a returned check. And if you tell your bank that you did not authorize the check, then no overdraft fee.

Somebody should probably move all these PayPal posts to a new thread called PayPal Issues or something.

This would not be viable in Florida. I can't find a single bank that has free checking (or savings) without a minimum balance or direct deposit.

PayPal's policies have changes several times recently with the purchase by ebay and the recent litigation.

Check out the BAnk of America Advantage Account. For $20/month gives you up to 3 checking accounts, and 2 savings accounts, no fees on anything (like MOs, cashiers checks, travelers ck, stop payments, etc.), free checks, free online, free online bill pay, etc. I have been extremely happy with BoA.

Oh, they also have more FREE ATMs than anybody. The online banking is great, you see all debit card charges within minutes of the charge. Customer service people are very friendly and helpful.

And with the $20/mon there no min bal required. But if you do have combined balance over a certain amt, there's no monthly fee.

Well, I apologize if I gave out incorrect info. Here's the thread:

http://www.dvinfo.net/conf/showthrea...l&pagenumber=3

My question and the response to it are on the third page of the thread. Now, let's all play nice. This isn't DV.com .

Hey Josh,

I see where you got your info. The problem is that the info Danny Fye posted is incorrect. And who knows where he got his info. And so it goes on and on, people repeating incorrect statements.

I believe that the proper response when you "hear" something like this is to check out the claim with the source. That's what I did when I first heard stuff like this. I read the PayPal policy docs, talked to PayPal, and talked to my credit card company.

The current PayPal policy documents simply don't support these statements. Now I suppose that PayPal can violate their own policies in which case they would be subject to another class-action suit.

As a seller, the best thing one can do is to get your own merchant account. But if you are only selling a few things here and there, it's not worth it.

The real problem with PayPal is that there is no real competition for the service they provide. If there were, a lot of the arrogant, one-sided policies that PayPal has would get changed to keep/attract peoples business.

If you want to buy something online from a seller who doesn't have a merchant account and you don't want to use PayPal/MO/Western Union/Escrow, then how do you pay for it?

use COD (cash on delivery) so the risk is not on your side.

Well, my bad for the bad info. I shall be more careful in the future, and preface such statements with "hey, this guy said. . ."

On the free checking... If you qualify for a credit union, do it. Mine is $5 for a savings acct. Free share draft, free second savings acct.

http://www.creditunion.coop/how_to_join.html

Edit - The $5 is the minimum balance. There is no fee.

Hey guys, I split this thead on Paypal from the How I Lost My DVX100 thread. Fire at will!

Which one's Will? :-))

Thanks Dylan. Hopefully a lot of folks will find this discussion helpful.

You know, I hate to bring it up, but PayPal is kindof like politicians -- it's the least of the available evils.

It happened to me...
 

Two years ago I had a payment for $300 USD taken out of my account over 50 days after an auction had been completed. When asked how on earth I was supposed to trust Paypal when they are reversing transactions which are over a month old, I was told that the funds used for the transaction were obtained illegaly.

Of course, how the hell was I supposed to know 50 days after an auction closed that the funds were obtained illegally? Couldn't they have told me this earlier then 48 days after I shipped the item?

Their customer service was horrible. I was told if I read their user agreement they have the right to reverse a transaction at any time for any reason, as well as freeze my account at any time for any reason.

I was also told by Paypal this is only in the non-american user agreements, and that if I was an American they would have not reversed the transaction.

I don't know if either of these facts still hold true, but that experience made the decision for me.

Obviously, I no longer accept payments through paypal anymore.

Paypal through your bank account is a long way from safe. Paypal through your credit card is much better. It offers you one more buffer before getting screwed.

Damn. I really am going to cancel it.

Re: It happened to me...
 

<<<-- Originally posted by Ari Shomair : Two years ago I had a payment for $300 USD taken out of my account over 50 days after an auction had been completed. When asked how on earth I was supposed to trust Paypal when they are reversing transactions which are over a month old, I was told that the funds used for the transaction were obtained illegaly.
-->>>

Ari,

Sorry to hear about that. I'm sure that was a real bummer. :-(

A few questions if you don't mind.

Did PayPal take the funds out of your PayPal account, or out of your bank account?

What did they mean by "obtained illegally"? Who obtained the funds illegallly, and from where?

Did they have the Seller Protection Policy at that time, and if so, did you follow it?

Did you ever talk to an attorney? [I know an attorney would probably cost more than the amt in dispute :-(( ]

Did they give you an opportunity to rebut the claim?

<<<-- Originally posted by Dylan Couper : Paypal through your bank account is a long way from safe. -->>>

Hey Dylan,

Could you please explain what you mean by this?

Paypal I believe can withdraw funds not just from your Paypal account, but right from your bank account if you have one connected to it.

I have a Paypal account that is not connected to my bank account, it is only connected to my credit card. If I want to pay for something, it has to come out of my credit card. If someone pays me for something, I can put it back on my credit card, or keep the balance in my Paypal account.

I forget that people keep a balance in their Paypal accounts. I never do. As soon as that money is mine, I want it out of their hands and back into mine. That should be one of the rules of a seller, never keep a balance in your Paypal account.

Dylan,

<<<-- Originally posted by Dylan Couper : Paypal I believe can withdraw funds not just from your Paypal account, but right from your bank account if you have one connected to it. -->>>

Not according to the Payments (Sending, Receiving, and Withdrawals) Policy, Section I.2., Electronic Transfers:
Now, since PayPal has the technical means to make a ACH debit to your checking account, it could always happen in error. That's why I do two things:

1. LIke you, I withdraw my funds from PayPal immediately.
2. I have a separate checking account that is associated with PayPal. This account is always kept at a balance of $5.00 or less.

Therefore my exposure to PayPal adverse actions is very, very limited, at the most only 1-2 days.

Again, if someone can give me a better alternative to PayPal, I'm all ears. :-)

Jim, your quote is in reference to payments, not deposits.

Jeff,

That is correct. I'm not sure I understand your point. Deposits?

If you are the seller and the buyer uses PayPal, the funds are deposited and in the sellers account. The section you reference covers withdrawls of funds from the buyers account, not how deposits are handled into the sellers accounts.

Jeff,

<<<-- Originally posted by Jeff Donald : The section you reference covers withdrawls of funds from the buyers account, not how deposits are handled into the sellers accounts. -->>>

Perhaps so, but still PayPal has made the statement "PayPal will never make transfers from your bank account without your authorization." I am not a lawyer, but it could be argued that since that statement was a very broad statement ("PayPal will never ...") that it would apply in general.

In any case, no where does the PayPal member give PayPal explicit permission to debit his bank account without specific approval. Here's the Section II.2. on Receiving Payments:

Again, nowhere here does it state that you are authorizing PayPal to debit your checking account. The only item of concern is the last phrase "...if there are not sufficient funds in your PayPal balance, PayPal reserves the right to collect your debt to PayPal by any other legal means."

But I don't see that as different any other debt you owe. Just because you owe someone or some company money does not give that company the right to just debit any bank account your have. In fact, it first requires a legal judgement against you, and even then a private company may not attach your bank account without some very specific legal processes. In the end it requires a court order to do this.

For starters, the amount may be in dispute, and you are entitled to your day in court before any funds change hands.

Conclusion: PayPal can not debit your bank account without your specific permission on a case by case basis.

Once again, I AM NOT A LAWYER, AND THIS IS NOT A LEGAL OPINION.

Jim, I'm 90% certain of one case of fraud where Paypal withdrew a payment from the sellers bank account to return the money to the buyer. The seller had defrauded the buyer, police were involved, but Paypal only recovered a fraction of the initial payment. It's an extreme case, granted.

Your making plenty of assumptions Jim. It's actually pretty easy for a bank to find out about other accounts you may have and put a hold on the accounts, pending court action. Is a bank likely to do this for a $10 item, probably not. However, for a $5,000 camera or an auto, you can bet they will.

Jeff,

<<<-- Originally posted by Jeff Donald : It's actually pretty easy for a bank to find out about other accounts you may have and put a hold on the accounts, pending court action. -->>>

What is the basis for your assertions?

Actually, a Bank will NOT put a hold on anything without a court order.

So, If PayPal gets a chargeback, and claims I owe them money, my bank will not do anything until PayPal sues me, is awarded a legal judgement, and obtains a court order for the bank to seize the funds. Even if PayPal wins a judgement it is not automatic that they will get a court order to sieze the funds because certain kinds of funds and assests are protected. In a worst-case scenario the debtor must be allowed to recover by filing bankruptcy. It's a long and hard process to actually get your hands on the money someone owes you.

Banks do not get involved in settling debt disputes. They only respond to court orders. Think about it. Otherwise, I could just claim that you owe me $10,000.00 and send a claim to your Bank that would at least tie up your funds. It just doesn't work that way.

But when you propagate false statements about anyone or any company without a solid basis to do so, you are making at least borderline slander. How would you like it if someone was making false claims about you?

All I ask is if you're going to post something very negative about PayPal, then back it up with facts, not opinions and hearsay.

By no means is PayPal perfect. If I had any other options, they would be well considered. Without PayPal, or some similar service, the online auctions and sales by small sellers would just about dry up. Because the only other option is sending a stranger cash, which is many, many times more risky than PayPal. That would end up hurting us all because we would not have a safe way to buy/sell cool equipment from one another. :-)

Look, I'm not going to continue the debate about PayPal. Just read the actual PayPal policy documents, and talk to your lawyer if you have any questions.

Let's get back to more interesting, more positive things: DV

No one answered the question about Ebay owning Paypal now?? That makes a difference if it's true. Anyone know anything about it?

Murph

Yes Paypal is an eBay company.

About Us

--------------------------------------------------------------------------------

Founded in 1998, PayPal, an eBay Company, enables any individual or business with an email address to securely, easily and quickly send and receive payments online. PayPal's service builds on the existing financial infrastructure of bank accounts and credit cards and utilizes the world's most advanced proprietary fraud prevention systems to create a safe, global, real-time payment solution.

Re: Re: It happened to me...
 

>Did PayPal take the funds out of your PayPal account, or out >of your bank account?

Out of my Paypal account (I never gave them my bank account info)

>What did they mean by "obtained illegally"? Who obtained >the funds illegallly, and from where?
The purchaser of my goods. They wouldn't expand on the explanation, but my assumption is a stolen credit card (It was an overseas purchaser)

>Did they have the Seller Protection Policy at that time, and if >so, did you follow it?
At the time I wasn't eligable, as I was Canadian and it didn't apply to me.

>Did you ever talk to an attorney? [I know an attorney would >probably cost more than the amt in dispute :-(( ]
No, I never did for the reason you outlined.

>Did they give you an opportunity to rebut the claim?
No, there was no opportunity as I had no control over the source of the buyer's funds.

It was a fairly long time ago that this occured, it just left me with a very poor taste in my mouth. I now also no longer ship overseas as a precaution.

From the Real World
 

Wow. Obviously no one in this thread has ever had a real merchant account. To give you some perspective on these issues, PayPal and all other credit card processors must abide by the contractual obligations set by the credit card companies, which include the potential for chargebacks. It is a major aggravation for honest business owners, but a reality that is part of protecting all of us card holders from unscrupulous businesses.

Businesses that accept credit cards are contractually obligated to maintain a balance to cover potential chargebacks, which can be a hefty amount for even a small business.

We had one business that charged back a substantial amount not once, but three times. They admitted their fault and apologized every time, but I began to think it was a subterfuge to stay in the black at the end of the month. The last time, we had them write a check rather than having the processor reverse the chargeback.

Accepting credit cards comes with a price.

Part of the "confusion" is that sellers, buyers and merchants are contractually governed by different agreements. The fact that PayPal is not a "real" bank also means they are governed (or not) by a different set of laws.

So, John, what are you saying? Paypal bad or good? Chargebacks can happen even when money is in your bank account (as in, no longer in the Paypal account) or not?

Josh, I'm not saying PayPal is "good" or "bad." I'm just telling you that the potential for chargebacks is a part of the real-world risk of accepting credit cards. The PayPal agreement (which of course you agreed to when you signed up) reads:

When you receive funds through PayPal, if the sender's transaction is reversed for any reason and you do not qualify for the Seller Protection Policy for that transaction, you will owe PayPal for the amount of the reversed transaction plus, for chargebacks, a $10.00 USD chargeback fee. You agree to reimburse PayPal from either your PayPal account or by other means

I don't know if PayPal can pull the $$ out of your bank account for a chargeback, depends on the category of their agreement with the bank. Probably they can. With a real merchant account, the gateway company can suck the money out and you only have 24 hours to dispute it with the bank, after that you have to go to court if you can't come to an agreement.

Still sounds suckalicious to me. Maybe I'll keep the account and use it only when I'm a buyer, and accept personal checks only or some such.