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The PayPal Phenomenon
An Anonymous Coward writes: "Pretty interesting and thorough history of PayPal." Not really the usual fare on Slashdot, but this is a very readable account of one of the few dot-com successes. I find PayPal pretty annoying today - a lot of the anti-fraud, privacy-invasive measures which this article applauds make Paypal much less enticing to me than it used to be. And they've been accused of squatting on people's funds at the slightest excuse. But maybe that's the way to success: start off with a very appealing product, then slowly tighten the screws.
Here's a nice outline of why PayPal's implementation is NOT very conducive to regular transactions.
http://www.gamers-union.com/paypal.html
Also interesting to note, a few days after this page went up, PayPal yanked service on the W3 storefront they'd been providing for this individual.
And now he will no longer accept PayPal transactions.
Unfortunate, but very necessary to protect himself and his customers.
Chas - The one, the only.
THANK GOD!!!
I personally have had nothing but good experiences with Paypal, but I was shocked to learn that there was a dark side to it that many, many people have been burned by. It seems the fact that I've had no problems with Paypal is the exception rather than the rule -- many people haven't been so fortunate.
Some of the problems can just be attributed to "shit happens," but in many cases, Paypal is guilty of out-and-out theft: when they receive a complaint about a single transaction, they often freeze the accounts of everyone involved, and then do everything possible to make themselves inaccessible by phone or e-mail so that the accounts can never be unfrozen. They've just walked away with someone's money. Good job.
Anyway, here are some useful links that have many, many testimonials of bad experiences:
Paypal Warning
Testimonials from above site.
PaypalSucks.com
Based on the testimonials I've read, here are a few ways I can think of to make the Paypal experience as safe as possible.
1. NEVER leave money sitting in your Paypal account. Withdraw it IMMEDIATELY. They will freeze it, or steal it, if they get an excuse to do so -- any excuse will do. Don't be tempted by their "Paypal Money Market Fund". That 1.2% APR isn't going to make you rich. You'd be better transfering your money to your bank where it can't be stolen. They can't steal what isn't there.
2. Try to avoid setting up a bank account on Paypal or giving them your checking account number for any reason. They do everything in their power to convince/force you to set up a bank account, which should give you cause for suspicion. If you give them your checking account number, they can (and will) withdraw the money from your bank account at any time without permissions.
3. If you must set up a bank account with Paypal, contact your bank and tell them NOT to allow Electronic Funds Transfers from Paypal without your approval. Unlike with a credit card, there's no way to dispute EFT charges. Get this in writing from your bank.
4. Check your credit card statement carefully each month, and chargeback any mysterious charges immediately -- but not if you have money sitting in your Paypal account or they have your bank account number, because they will take your money away from you if you do a chargeback. Get your money safe first, then call the credit card company to do a chargeback.
5. Try to avoid using a debit card -- you have no fraud protection, and if the debit card draws from the same account as the bank account you have set up in Paypal, you might run into some problems because of the way Paypal does things. If you have $600 in your bank account, and you try to make a $500 Paypal payment from your bank account, it'll bounce! Why? Since bank transfers take 3 days, Paypal wants to avoid finding out 3 days later that there's no money in the account, so they use your credit/debit card to "secure" the transaction by "locking" $500 on the card and then releasing it after the bank transfer clears. So now, when you've tried to pay $500 from your bank account, Paypal has locked $500 of the $600 in the account, leaving only $100 in the account which will make the $500 bank transfer bounce. The bank will charge you a bounced transfer fee, Paypal will charge you a fee, and you'll be unhappy with the whole situation. Sometimes even when the transaction DOES complete, they still don't release the "hold" on the card for days, weeks, months, or ever.
6. Do not use Paypal for large transactions. Use some sort of escrow service. With the incredible fees Paypal is charging now, it wouldn't be much more expensive.
7. As an alternative to Paypal, consider using E-Gold instead. Instead of dealing in a national currency like Dollars or Pounds, it uses actual physical gold as currency: you actually own a stake in the vault of gold that the company owns, and you can send/receive electronic gold from others as payment. It's very expensive to get involved, though: getting money into an E-Gold account requires you to go through a currency exchange service (E-Gold does not offer this service directly) which generally charge a 15% conversion fee, and 1% of your balance is deducted per year.
The cool thing about E-Gold, though, is that if you buy 5 ounces of gold, you'll always have that 5 ounces of gold in your account no matter what happens to the value of gold or to your national currency. If you spend (for example) $200 on 2 ounces of gold, but six months later the price of gold has risen from $100/ounce to $300/ounce, you'll still have that 2 ounces of gold -- but it'll now be worth $600. Pretty nice, eh? A lot nicer than Paypal's 1.2% APR mutal fund.
Anyway, use Paypal if you have to, but be safe. Minimize the opportunities for them to steal your money. Don't use them as a bank. They're not a bank; they're not regulated as a bank, but they want you to use them as a bank so that they'll have more chances to take your money.
Play it safe, and you should be okay.
It's nice to hear you had a good experience with PayPal. I've only rarely used it, but I was recently pointed to Paypal Warning.
The page lists all sorts of articles with negative comments about Paypal. Apparently it has gotten a 3 out of 7 on Reseller Ratings (where everything is scored by customers). They also have a Paypal Wall of Shame with "unedited horror stories".
The thing that grabbed my attention the most, however, was the following on the front page:
WARNING:
Your Paypal account can be frozen at any time, without advance notice leaving you without your money for weeks (if not forever), and there isn't much you can do about it.
Any thoughts, folks?
XML is like violence. If it doesn't solve the problem, use more.
on the phone to paypal? that phone number is a closely guarded secret and noone at paypay will give it out.
you cant call them or email a live person. you only get their automated responses..
Sorry, but any bank that ignores all it's customers is a scam, and Paypal is a scam, plain and simple... If they want to prove to me they aren't then have a live human respond to my email instead of the canned computer responses.
I reccomend to everyone I know to avoid paypal like the pleague and expect to get money stolen from them by paypal with no way of ever getting it back.
Paypal can fix that, Hire people to answer email and publish a phone number.hn
Do not look at laser with remaining good eye.