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PayPal Settles NY Probe, But Faces Others

Posted by timothy on from the probe-away-captain dept.

Coneasfast writes "PayPal, which is owned by eBay, has admitted misleading shoppers into believing it offered credit-card-style protection and has agreed to pay $150,000 to settle charges. There are many sites out there which are dedicated to the problems of paypal, including PayPalSucks and PaypalWarning." Reader ipandithurts links to this related Reuters story, pointing out that the New York investigation isn't the only PalPal probe: "PayPal's practice of suspending users accounts while investigating suspicious transactions continues to be review by the FTC. While the rate of fraudulent PayPal transactions is less than one-half of one percent, the volume of more than $12.2 billion last year keeps Paypal caught in the middle of many disputes."

69 of 218 comments (clear)

  1. I'm done by mod_critical · · Score: 5, Interesting

    People I know have told be about nightmares with PayPal, but until this post I didn't realize it was so prevalent. I just closed my account, I really dislike the idea that PayPal can simply choose at will to freeze assets in any associated account.

    1. Re:I'm done by Vancorps · · Score: 4, Interesting
      Its worth noting that they don't freeze just any account.

      I think at some point we all just need to re-evaluate what we consider a bank in the modern age. I continually fail to see how Paypal is not a bank and thus regulated by all of the same government policy.

      I've heard the arguments and they just don't make sense. On the Internet some things do need new definitions since they don't reflect world realities.
    2. Re:I'm done by Bob+C.+Cock · · Score: 2, Interesting

      I wouldn't close my paypal account just based on this. You have other payment options when buying stuff off ebay, you don't have to use paypal. If the seller only accepts paypal try to work out other payment terms or bid on the same item where the seller does accept other forms of payment. The article claims that less than .5% of all paypal transactions are fraud. That's pretty damn good considering how many transactions go through paypal in a day. If it weren't for paypal, I'd have to mail my rent checks to my landlord every month. (shudder)

    3. Re:I'm done by LostCluster · · Score: 4, Interesting

      Its worth noting that they don't freeze just any account.

      Of course, any fraudster is going to claim "I didn't do it!" and demand that PayPal send him his money immediately when he's found out and his account is frozen.

    4. Re:I'm done by Vancorps · · Score: 2, Insightful
      In many ways it makes sense to freeze accounts while an investigation is taking place. It ensures that there won't be any undue complications.

      In the case of a dispute then they need a way to prove one side acted in the wrong. The means the burden lies on the person making the complaint. If such evidence is brought forth then they should procede with a fraud investigation. But of course, Paypal isn't a bank so the rules are very different.

      That said Paypal should in no way have the ability to freeze your assets. They should only have the ability to freeze you from using paypal during the disputed time.
    5. Re:I'm done by Kris_J · · Score: 4, Informative

      I gave up on PayPal when they started charging an "International transaction fee" when someone outside the US was involved in a purely US$ transaction. There's no basis for that fee.

    6. Re:I'm done by alonsoac · · Score: 3, Informative

      My account is frozen because Paypal lacks the capability to accept credit cards from my country (I can buy at amazon or thinkgeek, just not paypal). I only learned about that problem after they had taken my initial deposit (they have no problem accepting bank wires from my country). So the money came in and it can't go out. For about a year now. Luckily it was a small amount.

    7. Re:I'm done by G3CK0 · · Score: 4, Interesting

      I am currently in a dispute with paypal. I sell classified automotive listing software http://mycars.jaredeckersley.com . I had a purchase made on 3/4/04 and sent the required login information for the download to the e-mail address of the purchasers paypal account. I did not get a response from the buyer. I did not think anything of it until the 3/7/04 when I got a notice from paypal of a reversal of payment request. The buyer sent a request for reversal of payment and at the same time, they logged into the secure download section and grabbed a copy of my software. PayPal has frozen my account until it sorts the matter out, but I am stuck in the middle. I do not qualify for seller insurance from PayPal because I sell a virtual product. On their seller protection page (https://www.paypal.com/sellerprotection), they list qualifications for protection ... but the main one that excludes virtual products is this:
      Ship tangible goods
      Since comparable widely-accepted proof-of-shipment methods are not currently available for intangible goods and services, the Seller Protection Policy does not cover digital goods and other electronically-delivered items.
      So what do I do now? The buyer never responded to my e-mail upon purchase, they did in fact download the software (server logs prove it) ... and I even have an e-mail with their admission that they downloaded the software to see what it was someone was buying on their account. Does it seem reasonable for PayPal to suspend my account? Does it seem reasonable for the buyer to have downloaded a copy of my software and claim that they just wanted to see what it was?

      --
      A clear conscience is usually the sign of a bad memory.
    8. Re:I'm done by andy+landy · · Score: 2, Insightful

      A friend of mine summed it up rather nicely, "If you buy things with PayPal, you're spending money, but if you receive anything into your PayPal account, it's nothing more than magic beans".

      Yeah, sure their practices are dubious at best, but you *did* agree to the license agreement (Let's not go there).

      Transfer your money out regularly, don't keep too much in the account at any time, and vet your buyers just as they'd vet you (That's what eBay feedback is for!)

      --
      perl -e 'print "Just another Perl newbie\n";'
    9. Re:I'm done by Lumpy · · Score: 2, Interesting

      as a seller I only accept paypal. Money orders and cashiers checks are EASILY counterfitted and I was passed one once.

      if you dont have paypal, you don't get to buy from me. they give me protections as a seller that nobody else can.

      I have never bheen screwed on paypal, but I know their rules (read them before signing up and read them 2 times a year) most people that are pissed at them didn't bother to read the rules or were stupid and tried to use paypal like a bank... they are NOT a bank.

      I attribute the small percentage of "pissed at paypal" the same as a seller with a feedback of > 5000 but with 50 negatives... it's what happens when you get big.

      --
      Do not look at laser with remaining good eye.
    10. Re:I'm done by CreatureComfort · · Score: 5, Informative


      The reason that so many seem to be confused about PayPal not being a bank is because so few people actually understand what a bank really is, or why they are regulated. Most people seem to believe that you give the bank your money, the bank puts it in a vault someplace, and when you want it back, they take it back out of the vault and give it to you. This is essentially what PayPal does, but it is not at all what a bank does. The reason that Paypal is not a bank, and not covered under current banking laws is two-fold.

      Current banking laws, the world over, are generally the result of banking and savings and loan crashes and failures. These resulted in many people losing all or part of the money they had invested in the bank. The way that a bank works is that you deposit your money into an account. The bank then loans your money to someone else. When that person repays thier loan, the bank takes a portion of the interest that person paid (her cost for getting the loan) and gives a portion to you as an interest payment on your account. [Non-interest bearing or monthly fee accounts being a way for you to let them use your money for free is an entirely different rant.] Now while they are loaning out your money, you may want to actually use it to buy something. So banks use a pot of un-loaned money to give you back what you deposited when you request it. It should be obvious that there are [primarily] two glaring problems with this set-up. First, if the bank makes a loan to someone who doesn't pay it back, and the person who's money they loaned out wants to withdraw it, the bank has to get that money from the pot of un-loaned money and pay it back later from the banks portion of the interest payments from other loans. If many, many people fail to pay back thier loans this creates a major squeeze on that pot of un-loaned money, and it could run out. The second problem occurs if the first has happened, or is even rumored to possibly be happening. Since the pot of un-loaned money must be significantly smaller than the total deposits for the bank to actually make a profit, and it is in the banks best interest to keep that amount as small as possible (in other words, as much money loaned out and earning interest as possible), situations have happened where people wanted thier money, and the bank didn't actually have that much on hand. This led to runs on banks, and bank failures, and lots of people losing money.

      Thus we have banking laws. Almost all banking regulations deal with how large the pot of un-loaned money has to be that a bank is required to keep, with how a bank decides who to loan money to, and how much risk they are allowed to take, or with reporting procedures to make sure that the banks are complying with the above criteria.

      Since PayPal never loans money, and all money that is listed in your account is actually on hand for them to pay you at any point, they fall outside almost all of the regulations that banks must follow.

      The other thing that people seem to beleive, which boggles my mind, is that banks have regulations against freezing your account if they think there is suspicious activity on the account. In fact, there are no laws or regulations that say they have to give your money back in a specific time period. If they think that there is suspicious or criminal activity they can, and in some cases are required by law to freeze your account and sometimes even confiscate your money. [Al-qaeda, terrorist fund-raising organizations, drug cartels, human trafficing, other fraud, etc.] If they decide to do this, you have no recourse other than to sue them. Exactly the same as PayPal. (This is particularly U.S. centric, since banking laws vary considerably around the world.)

      In fact, if PayPal were to be placed under banking laws, the only impact that would have on them is a tremendously higher burden of federal paperwork. As long as they do not make loans, almost none of the other regulations would af

      --
      "Unheard of means only it's undreamed of yet,
      Impossible means not yet done." ~~ Julia Ecklar
    11. Re:I'm done by jp10558 · · Score: 2, Insightful

      Honestly, I can't see how one would get screwed with a Money Order or Cashiers Check. Don't ship the product until the check clears the bank. Make it clear that there will be a 10-15 day wait period from your recipt of the check to ensure it clears. Money Orders should be instant I think, just take it to the post office or wherever and get $$. If it is refused, e-mail the buyer and indicate the problem and that you will need another pymt. Or cancel the sale because the pymt did not go through. Only thing you may be out is time.

      --
      Opera, Proxomitron-Grypen,GPG 0x0A1C6EE3
  2. PayPal... by SisyphusShrugged · · Score: 5, Insightful

    I really believe that the amount of effort necessary to provide PayPal with security is worth the effort. PayPal is such a useful utility, especially in conjunction with eBay.

    I can see, however, how they have been misleading, in all my uses of PayPal I assumed that there was credit-card style protection (as I was using a credit-card) and they should make it more evident at the very least that the actual protection is not on par with a normal credit card purchase over the internet.

    --
    Post apocalyptic gaming goodness
    1. Re:PayPal... by j0e_average · · Score: 5, Funny

      Useful, yes, but I get an email at least once a day advising me that my account may have been compromised. I have to verify/provide all manner of information, such as ATM PINS, CC Numbers, DDA/Routing numbers, etc... You'd think they'd keep better track of their info! ;)

    2. Re:PayPal... by TClevenger · · Score: 4, Informative
      Not only that, but there's usually no protection at all. In my case, they determined that the other party took my money and didn't deliver, but when they went to debit their account, it was empty. Still, the seller was later able to keep using PayPal to receive payments with no penalty--no "lien" was placed on the account to pay me back.

      PayPal reserves 60 days to "investigate" the dispute before ruling--just enough time for your credit card issuer's statute of limitations for claims to run out. Avoid PayPal if you can.

      (Avoid eBay seller 'zmish' as well.)

    3. Re:PayPal... by Dukael_Mikakis · · Score: 4, Insightful

      And I'm sure that they didn't do anything to give the feel of "credit-card style" protection. I used Paypal for my ebay transactions and without problem, but I thought that it was shady as hell the whole time.

      Of course Paypal succeeded because of its partnership with ebay, and thus allowed ebay to further exalt its convenience by such a simple utility.

      However, at heart, Paypal just seems to be the well-dressed, charming schiester that you think is completely trustworthy, but you realize the whole time is just a fraud. Expensive suit, nothing to back his promises.

    4. Re:PayPal... by Rebel_Princess · · Score: 2, Informative
      Not true and definately not informative - you have 30 days (no more) to file a complaint with Pay Pal. They then take 10 days to make a ruling:
      Limitations: You may only file one claim per PayPal payment

      Claims must be filed within 30 days of the PayPal payment

      Does not cover cases where you are disappointed with the item you have received

      You are limited to two PayPal Buyer Protection refunds per calendar year. If this limit is exceeded, there is no guarantee for full recovery. You will be awarded only what can be recovered from the seller. However, it is possible that the claim can be resolved through the Buyer Complaint Process.

      You must be willing to provide information during the investigation process. If we cannot obtain the necessary information the case may be cancelled without a refund.

      I use Ebay and Pay Pal a lot. The horror stories have worried me forever, but it really is god damn convenient. Then last month I got fucked by a seller ($345) who had said to allow 2-4 weeks for delivery - which in retrospect sounds like an attempt to get around the Pay Pal 30 day limitation. Luckily, he can't multiply and I filed on the 29th day after seeing he'd unregistered with Ebay and had like 20 negative feedbacks left the 2 days prior.
      Luckily Pay Pal found in my favor and actually refund my money... I consider myself lucky.

      This is a great reference site for Pay Pal, Ebay and transactions in general.

      Not saying Pay Pal is safe, it's dangerous as fuck, but wanted to correct the above "informative" posts timeline.

  3. Clearing up a troubled past... by LostCluster · · Score: 5, Insightful

    PayPal started as a very fast-and-loose operation in the early days of the Internet. Money transfer seems to be so simple an idea, but it's a highly regulated industry to prevent fraud and so that large transfers of money draw the attention of law enforcement just because that can help in the locating of drug dealers and terrorists... if somebody's moving thousands of dollars for no apparent reason, it at least deserves being looked into.

    When eBay got involved, they started cleaning up some of PayPal's worst policies, but there's still a few more that need tweaking, and eBay has inherited a lot of trouble from the laws PayPal broke in the late 90s. I'm glad they're starting to settle these things...

    1. Re:Clearing up a troubled past... by Vancorps · · Score: 3, Insightful
      I suppose the question is, will Ebay cleanup Paypal? They have made it a bit more mass user friendly but there is still a ways to go.

      I think there needs to be some regulating body. There is just too much money floating around blindly.

    2. Re:Clearing up a troubled past... by Dukael_Mikakis · · Score: 3, Interesting

      You're right, paypal is a very useful utility for sending money to and receiving money from parties that you might not entirely trust.

      Unless, of course, the untrusted utility is paypal itself, as appears to be the case.

    3. Re:Clearing up a troubled past... by BrookHarty · · Score: 3, Insightful

      if somebody's moving thousands of dollars for no apparent reason, it at least deserves being looked into.

      Why? If I wanted to sell a Computer system on Ebay, it could easily go for a few thousand. Note everyone is selling cookie jars.

      This is just as bad as the Police taking your money "Because it could be drug money" if you have over 10 thousand dollars. People still deal with cash and money transfers daily.

    4. Re:Clearing up a troubled past... by LostCluster · · Score: 2, Informative

      Truthfully, PayPal isn't that good at insulating you from people you don't trust. As demonstrated too many times, somebody can input into their PayPal account with a credit card, send the money to you, then initiate a chargeback to the credit card which strips the money out of your account.

    5. Re:Clearing up a troubled past... by Zak3056 · · Score: 3, Insightful

      if somebody's moving thousands of dollars for no apparent reason, it at least deserves being looked into.

      I disagree COMPLETELY. If your are not the subject of an investigation, or not sending/receiving money from someone who is, I think what you do with YOUR MONEY is no business of the government's.

      --
      What part of "shall not be infringed" is so hard to understand?
    6. Re:Clearing up a troubled past... by cyt0plas · · Score: 2, Insightful

      Actually, if you follow their Seller Protection Policy, they will eat the chargeback.

      NOTE (a little caveat): If it's over $250, don't use USPS. You need online signature tracking, which is a pain, but it _is_ documented in the policy. If you want someone to cover the chargebacks for you, you should at least read the policy.

      For merchants with a Merchant Account, guess what? When there is a chargeback, they take the money out too. Plus, you have to wait 2 weeks to a month to get it in the first place. People can do the same sort of crap you mentiion to almost any online merchant.

      --
      Contact Me (got tired of viruses emailing me).
  4. Oh no3z they friezed my account!!!11one by Brandon+One · · Score: 3, Interesting

    How about terrorists using PayPal to transfer money? The feds don't have the right to monitor those kinds of transactions as it is a private bussiness.

  5. Paypal is a great concept... by Anonymous Coward · · Score: 5, Informative

    Unfortunately, if anything goes wrong, you are automatically guilty until proven innocent.

    I have been using paypal for a number of years and only had one issue with them. A guy lost a part for a record player I sold him, then tried to demand his money back claiming I never sent the part with the item ( i did ). He simply reversed charges on his cc and paypal did the same to me, tanking my account to -$1200. I had over 100 transactions with paypal -- this guy?? 0! and I was the one who was guilty.

    1. Re:Paypal is a great concept... by Anonymous Coward · · Score: 2, Funny

      A $1200 record player part? Was this a magic record player?

  6. Fees by Fat+Jedi+Kid · · Score: 4, Funny

    I wonder what service they are going to use to pay the fine? I suggest: NoCheques!

  7. PayPalDamon by rsmith-mac · · Score: 4, Informative

    Just on a small side-note while we're on the subject of PayPal, PayPalDamon, the CSR hired to specifically work on online relations, has quit as of last week. For those who don't visit any of the forums where PPD visited, PPD was PayPal's public face for those forums, offering PPD as a first contact for forum-goers who encountered any sort of problem(ripoffs, technical issues, etc), and generally kept the geek user base in touch with what was going on at PayPal. At this point, there are no annouced plans to replace him, and he will be missed.

  8. forced upgrade by Roger+Keith+Barrett · · Score: 5, Interesting

    My big problem with paypal... forced upgrades.

    I have a big problem with the fact that after using paypal to pay some set dollar amount that the account is suspended until I give them a checking account number. I don't want to give them this information... I just want to use the service to pay for something. I don't want to use it for a checking account or anything like that. And you can't use a credit card for more than account... so basically if you don't want to send them information that credit card becomes useless. If I was a regular user with just one e-mail address, there would be no way around this at all, even with other credit cards.

    Their practices leave a hell of a lot be desired... give us your info or we'll make you jump through hoops or just not service you at all. Gee.. I wonder if they sell or use that info in questionable ways.. ya think?

    --

    Why don't you embrace your slashbotness instead of living in a dreamworld?
    1. Re:forced upgrade by way2trivial · · Score: 4, Informative
      give them a bank account that refuses to allow paypal withdrawals..

      Case in point- netbank, a real fdic insured bank- open an account with very little money, and list it with paypal.. they will make the required pair of deposits into netbank, and you can report the amounts-- netbank REFUSES to allow paypal to withdraw from their account holders.... voila- problem solved (works for me)
      I only put money into netbank with paypal

      --
      every day http://en.wikipedia.org/wiki/Special:Random
    2. Re:forced upgrade by jjo · · Score: 2, Interesting

      Really? I looked at their website, and it appears that they do allow ACH (automated clearinghouse) withdrawals. Do they refuse PayPal withdrawals for all their customers, or do you have to ask for PayPal protection specially?

    3. Re:forced upgrade by way2trivial · · Score: 2, Informative

      the former.... paypal tells you this when you go to add netbank as your bank

      --
      every day http://en.wikipedia.org/wiki/Special:Random
  9. Keep a low balance by poppageek · · Score: 3, Funny

    I use Paypal for the CDs I sell on eBay but I never let the balance get over $100 before I take it out. Well ok, I spend it.

  10. A company should be transparent by Angelonio · · Score: 2, Interesting

    both regarding to customer rights and to the company obligations.
    I think the Feds should be spending more time investigating Paypal's practices.

  11. Not necessarily good, but necessary? by sjb2016 · · Score: 5, Interesting

    I don't agree that PayPal should be freezing accounts so liberally, but they do need some better control and tracking. Last year about this time I had a transfer in my account from somebody I didn't know. The amount? $2,000. I could have withdrawn the money immediately and let PayPal figure it out. Instead, I e-mailed both the sender and PayPal. Neither e-mailed me back, but the money was gone in 5 or 6 days. I wasn't peeved with the mistake, they happen in real banks too, but I was peeved that I e-mailed PayPal about something that could have gotten ugly had I been cut from a lesser moral fabric, and they didn't even acknowledge they received the e-mail. Not even an auto response. I didn't even want a thank-you, just wanted to know it was being taken care of. But I digress

    1. Re:Not necessarily good, but necessary? by Jah-Wren+Ryel · · Score: 2, Insightful

      I didn't even want a thank-you, just wanted to know it was being taken care of.

      What do you expect? If two months down the line Paypal decides that they never fixed it on there own and that you must have withdrawn the money yourself so now you owe them the $2K, you have nothing to prove that they ever did anything about it. By not acknowledging you, they are keeping as many options open as possible.

      --
      When information is power, privacy is freedom.
  12. Sounds just about right by dartmouth05 · · Score: 4, Insightful

    Perhaps the most damning evidence against Paypal is that when I change the option from pay via bank account to pay via credit card, every time, I get a Yes/No screen that specifically says that paying by bank acount transfer is as secure and safe as paying via credit card. This is not true, and this language will almost certainly end up coming back to haunt PayPal.

    1. Re:Sounds just about right by skywire · · Score: 3, Insightful

      But it IS just as secure and safe (actually, more so) -- for PayPal. They have always portrayed getting "Verified" (opening up your checking account to them) as being for enhanced security, without bothering to mention that it is THEIR security that is enhanced, not yours. Similarly, my bank has recently sent out marketing materials to its credit card holders bragging about a new security "service" that they are going to generously make available to us "free of charge!" Of course, it is solely to their benefit, and our detriment.

      marketing n. the art of lying to customers

      --
      Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.
  13. NO, doesnt deserve looking into by nurb432 · · Score: 4, Insightful

    Just because i spent a lot of money in cash is not a good reason to violate my right to privacy.

    No I'm not blind to the fact its taking place, but that doesn't make it any less wrong.

    Private law abiding citizens should not be investigated on a whim by the 'authorities' .. Period.

    --
    ---- Booth was a patriot ----
  14. Credit Card companies and PayPal by powerpuffgirls · · Score: 4, Interesting

    Coming from another point of view - if you're a merchant accepting credit card, any complaints by customers will almost always result in immediate charge-back. This is actually very bad from businesses as it can take weeks to prove/disprove things.

    PayPal is under fire because it's so common nowadays that when you buy things online via some sort of money-service, you are entitled to such privilege, ie auto charge back should you complain about it.

    PayPal in this case is wrong for misleading customers, they should have come clean and stated clearly that they don't do charge back.

    Imagine if we didn't have this 'charge-back' facility in the world as we know it, and suddenly Visa charged back a merchant's account without stating it clearly in its T&C, I'm sure Visa will be in deep water too.

  15. how is 0.5% insignificant? by Anonymous Coward · · Score: 5, Insightful

    "While the rate of fraudulent PayPal transactions is less than one-half of one percent, the volume of more than $12.2 billion last year keeps Paypal caught in the middle of many disputes."

    If 1 out of every 200 transactions is fraudulent, I'd say that's a big problem, not a small problem, regardless of the total number of transactions.

  16. Paypal alternatives by leviramsey · · Score: 5, Informative

    Probably the best one I've encountered is Neteller. Especially if you're planning on using this to sell stuff, Neteller is much better than Paypal (weekly settlements of the amount in your account in excess of the pre-set "float" are done via check sent through FedEx, for instance).

    I'll be deploying Neteller soon for taking online payments.

  17. Paypal founder by Anonymous Coward · · Score: 2, Interesting

    Luke Nosek was my college roomate. Luckily he sold out before Ebay took over, and is winking over this thread while he drives around San Jose in his cute little Z3 wondering what to do next in life. Ya PayPal sucks, but for a marketing major at UIUC, he did pretty well.
    The idea originally started out as a way for roomates to "beam" money to each other using their PDA's, which at the time was early model Palm Pilots. It evolved into one of the largest online payment schemes available. Anything at this point is beyond the original goal of having a convienant way for friends to float money back and forth for bills.
    It sucks that Ebay charges you for selling something, and then a seperate charge for using the paypal service. Guess that .10 cents a picture wasn't paying enough.
    At least Paypal has given friends jobs... Richman has been bumped up through 5 levels over the past 2 years. Any day now I imagine he will be Chief strategic Officer.
    If you want to move up through the ranks fast, join the paypal team. Not sure how Ebay has effected the business structure though.
    At least a few people got very rich. Time for me to send out resumes now..

  18. Paypal and EBAY combined = scamalicious! by Classic+Novels · · Score: 4, Informative

    The dynamic duo of Paypal and EBay is probably the biggest source of continuous online scams around. EBay's policies for rectifying a fraudulent sale are absolutely ridiculous. We once put on a multiple item sale and a user whose account was hacked bid on all of them. We were out something like $150 on multiple transaction fees.

    Did EBay do anything when we reported it? NOPE!

    And Paypal payments are not protected despite any reassuring sounds they make. We used to sell on EBay but have stopped, in part because of the risk of getting scammed big-time and not being able to have anything done, either by Paypal or EBay.

    For those of you considering setting up shop online, DON'T EVEN CONSIDER Paypal. They don't have any security features like the physical 3 digit code on most credit cards nowadays, and their policy of freeze-account-first, ask questions later is a joke

    1. Re:Paypal and EBAY combined = scamalicious! by Roger+Keith+Barrett · · Score: 2, Insightful

      BUT... like it or not Ebay is a good way to get items that are hard to buy locally or through retailers, and being so large and well known does mean they have to behave to some extent (remember when they had the server problems a couple of years back???) The problem is that there are so many people on there that REQUIRE paypal. Something needs to be done about this. Should they require at least 2 method of payments for any auction? Then need to do something...

      --

      Why don't you embrace your slashbotness instead of living in a dreamworld?
    2. Re:Paypal and EBAY combined = scamalicious! by rickbender1940 · · Score: 5, Informative

      Tell me about it! A few days ago I bought about $100 worth of ink cartridges, in several lots of $20 (all from the same seller, the same night). But when they wouldn't ship the items OR issue me a refund, I went to launch a fraud complaint on EBay.

      Guess what? The minimum purchase for filing a fraud complaint is $25! So they didn't do anything at all! It shows that if you want to scam on EBay, just do it in chunks less than $25.

      EBay is a dishonest, crooked business

  19. The problem is fraud by Sycraft-fu · · Score: 4, Informative

    Criminals LOVE to rip people off electronically using credit cards since they believe, rightly so, that it isn't likely to get back to them. Happened to my parents, someone got a hold of their CC info somehow and bought $1000 worth of shit at Gamestop. The bank noticed this (Gamestop is a popular place for stolen CCs), noticed it was way outside of their normal spending, and instantly froze the card and called them.

    Now the problem is, if someone commits a fradulant transaction, the seller is basically SOL if they shipped the goods. The person who's card was stolen isn't liable as per CC law, so the chargeback goes to the seller. Not a huge problem if you are a large merchant, you send it over to accounts receavable, legal, and your loss prevention group. If they find the guy, you sue him for what you lost. A much bigger deal for joe average who does not have these resources.

    So, to try and protect sellers and convince them that PayPal is safe to use, they do things like this. Once PayPal has you bank info and has confirmed it, they can say with a much greater degree of confidence that you are who you claim to be. It's still not certian, of course, but much harder than just ripping off someone's CC#.

    Ya, it's a pain for those of us that obey the law, but it's a necessary evil of online transactions. I jump through a lot of hoops for my buyers, I'm verified with PayPal and eBay, and I'm indipendantly verified by Equifax. It was a pain, but it helps put people at ease that I'm not going to rip them off.

    1. Re:The problem is fraud by angle_slam · · Score: 3, Interesting
      "The bank noticed this (Gamestop is a popular place for stolen CCs), noticed it was way outside of their normal spending, and instantly froze the card and called them."

      There's a trade-off to be taken into consideration before credit card companies freeze your card. If you are legitimately using your credit card in an "abnormal" manner, you can be stuck with a frozen card. This has happened to me twice. The day after I received a new AMEX card, I went out of state on business travel. Naturally, AMEX thought it was suspicious that a card mailed to AZ on a Monday was being used in CA on a Thursday. It took me a long time to convince them that I was on the level.

      Later, after not using my AMEX card for months, I charged a lot of money in CA. Next thing you know, my card is being declined and I can't even fill up my gas tank anymore.

    2. Re:The problem is fraud by angle_slam · · Score: 2, Insightful

      In general, I agree with you and use cash for the majority of my purchases. However, both instances I talked about, I was on business travel. I don't like using "my" money for business travel, even though I get reimbursed. If I use a credit card instead, I never pay for it at all--by the time I get billed by the credit card company, I already have my reimbursement check and can pay for the charges.

  20. It's the law with credit cards by Sycraft-fu · · Score: 2, Interesting

    You can stop any charge by contacting the issuing bank. They then reverse the charges to the seller. Your recourse at this point is to sue him for the money. Since it's small dollar it'll be small claims and this not expensive to file. I'm not saying it's a good situation for you, but it is the law with credit cards, it is rather biased in favour of the consumer.

    By the way, you'll be glad it is if you are ever on the other end of the stick. I got my car fixed at a Pep Boys to the tune of $650. Drove it out, and found out that what they were supposed to fix was still broken, despite their claims it had been fixed. Wanted like $200 more. No, enough of that, you don't get to charge me $650 tell me it's done and then not have it done. I stopped the charge. The bank investigated, and decided I was in the right.

  21. Customer support by slackor · · Score: 3, Insightful

    Last year I had my account frozen because I did business with someone who did business with someone who used a stolen credit card. They freeze all accounts even remotely related to the one under investigation. Anyway it took about 3 months of faxes and phone calls to get MY money unfrozen. The worst part was trying to find a customer support phone number, they hid it behind a labyrinth of "help" pages. It seems to have improved now, only takes about 4 clicks to get to -- but that kind of information should be on the front page.

  22. Small amount, folks by The+Tyro · · Score: 2, Interesting

    I'd never use paypal to directly pay for any big-ticket items; that's why God made escrow services.

    Seriously, if it's over a hundred bucks or so (definitely if it's into the thousands), I'd seriously consider using an escrow service and paying the percentage... though dedicated fraudsters have gone so far as to set up fakes.

    I tend to treat paypal as a convenient money order service for small-ticket items... if I lose, no big deal.

    --
    Even if a man chops off your hand with a sword, you still have two nice, sharp bones to stick in his eyes.
  23. Depends by Sycraft-fu · · Score: 4, Insightful

    What percentage of total online credit card transactions are fradulant? If it's around .5%, then I'd say PayPal is fine, they are just like anyone else. If it's .001%, then yes, PayPal has a problem.

    Stastics are useful only in a greater context. My favourite example:

    Nearly ALL deaths due to cancer happen only in developed countries. Cancer-caused deaths in the third world are quite rare. So, clearly, there is something evil in the developed world that causes cancer, right?

    Wrong. The reason is, of course, people in the third world die of something else before cancer ever has a chance to kill them, malaria is a huge killed, for example. Well there are almost no malaria cases in the United States, since we can easily cure it. Given our ability to cure more basic killers, you get the more advanced and difficult stuff like cancer that eventually gets someone.

    So this percentage isn't really relivant unless you can cite the larger picture of online fraud. If 10% of online transactions are fradulant and only 0.5% of PayPal ones are, then PayPal is doing a bangup job.

  24. PayPal Problems by Hachima · · Score: 5, Informative

    I really dislike PayPal's policies. As a seller there is no protection against digital goods. I sold something for $250 to someone. Then several days later I get an e-mail from PayPal stateing it was a stolen account and they take the funds out of my account. As a seller I have no way of knowing the account is stolen or not. The owner of the account and PayPal should be held reliable for stolen accounts. Not me as the seller.

  25. Use paypal at your own risk by Anonymous Coward · · Score: 2, Informative

    My pay-pal account was frozen with NO warning. The reason? My bank can generate a new credit card number for each internet/phone transaction which limits the amount the card is good for. Buying something worth $40.00? Make the card worth $50 (include shipping/tax) and have it expire in one month. No fraud or worries.
    Paypal "limited" my account without warning because I was using too many credit card numbers. They never told me why, I had to call the Bozos twice to get the reason why. They would not "unlimit" the account until I sent them credit card and bank statements.
    Can there *please* be a Paypal alternative?

  26. My Paypal Experience by ThousandStars · · Score: 4, Insightful
    Until my second business experience with Paypal, I had no problem with them. I provide editing services, and one client decided to reverse his credit card charge to the tune of $600 after I transferred the money to my bank accounts.

    Paypal then showed my account was "negative," which I ignored until they forwarded my account to their nasty collection agency, NCO financial systems.

    On the advice of my lawyer, I paid the agency and sued Paypal in Small Claims Court. They claim I can't do that and arbitration is mandatory, but offered to split the difference and call it a day (in other words, it's worth filing a case if you've been screwed, since settling is easier than fighting). I might go that route, but one thing I know is that I'll never use Paypal again and I recommend that my friends also don't.

    Yes, I've filed a complaint with my state attorney general and the FTC. I hope if enough people do, Paypal will have to end some of their most egregious, consumer-unfriendly business practices.

  27. Small Claims Court? by FsG · · Score: 2, Informative
    Why is it that these people are spending their time writing horror stories, rather than taking steps to get their money back? If PayPal robbed you for something to the tune of $1000, I'd say it's more than worth the time to sue for it in small claims court; it's not that hard, either.

    Could someone explain to me why these people are whining online rather that suing?

    --
    I made a PHP/MySQL library that prevents SQL injection & makes coding easier!
  28. Re:Paypal alternatives - a list of several by Anonymous Coward · · Score: 2, Informative

    There is a universe of no-chargeback payment systems out there. Many of them also seem to have the property of being based around precious metals. The first online was e-gold in 1996. Others have arrived since then of somewhat similar flavour: e-bullion.com, pecunix.com, libertydollar.org, goldmoney.com.
    A good comparison chart is here.
    BTW, I see that magnatune.com supports one of these now, but ebay is still PayPal only - no surprise.

  29. A Software Developer's Perspective by Dan+East · · Score: 3, Informative

    I have used PayPal for 3 years now as my primary method of payment from purchasers of my software (DEXplor). In fact, it is my preferred method of payment. Why? For starters, my total fee per sale ($13.95 retail) is only 6% (3.5% + $0.35). That is cheaper than anything else available to me as a small-time independent developer. Online stores (Handango, PocketGear) charge a whopping 30%. Even eSellerate (which I also highly recommend) charges 10%.

    Next, I have a PayPal Visa card that I can use to directly access the money in my PayPal account immediately after a sale, without any additional fees (even if the account is overdrawn). I find that incredibly useful. It also tends to keep my PayPal balance low (most I've ever had in there at a time was still sub-$200). That is good, in that if PayPal freezes my account I have little to lose, but bad because it is too easy to access the funds. :)

    After thousands of sales I have only had one charge-back because the CC was reported stolen after the sale. My account was never closed or frozen. The money was just debited out of my account.

    I'm sure others have horror stories, however as a software developer I really have nothing to lose. After all, the software licenses I sell are virtual, and are of small dollar amounts. Heck, if someone really wanted to get a license illegally they could just hunt down the cracked version of my program and save themselves the larger repercussions of credit card fraud.

    So I guess what I'm trying to get at is PayPal may have its problems, specifically when dealing with actual merchandise of high dollar amounts, but for ISVs it is a very good method of processing payments. After reading this story I will just make sure I never keep large sums of money in my account (which, unfortunately, has never been a problem in the past). It would also be wise to set up a checking account specifically for use just with the PayPal account, to eliminate the risk of tying up any external funds because of PayPal issues.

    Dan East

    --
    Better known as 318230.
    1. Re:A Software Developer's Perspective by RonBurk · · Score: 3, Informative

      Or use SWREG for $1 + 4% and not have to worry about having your bank account frozen. Last I researched it, they seemed like about the cheapest reputable shareware cc proxy.

  30. I'd be suspicious... by Grimster · · Score: 2, Informative

    if there were few complaints, did I read that right, the volume of more than $12.2 billion last year, yowza, if they didn't have some people out there screaming bloody murder about something, I'd be suspicious.

    I've seen several "horror stories" with Paypal first hand. EVERY single time, every one, the person screaming was partly (if not nearly fully) at fault. They sent stuff to people who had shady looking order details, etc, or they ordered things "too cheap to be true".

    And before you mark me off as someone who doesn't know let me fill in a few blanks.

    I have used Paypal since hell I can't even remember, 1998? 99? 00 at the latest. My paypal rating is over 1100 and I recieve "in the neighborhood" of a dozen payments via paypal per day (yes day). I use my Paypal debit card constantly, for nearly everything "day to day" related, buying dinner, groceries, gas, movie tickets, you name it, anything that's not a business expense (use my business credit card for that so I have an unquestionable paper trail for my accountant).

    And let me tell you a story about Friday, I went out to eat, got done and went to pay, "do not honor" card denied (paypal debit card), called card services "oh we tried to call you today and verify some purchases but we got no answer" (well suspending my card is one way to get an answer). I verified some personal information, verfied a few purchases, and then handed the waiter my card back, and all was well. I wasn't mad, or pissed, I was damn glad that Paypal saw a big old $430 charge for something "kinda odd" for me to buy and took action to make sure I wasn't getting drained by some carder.

    I've had a couple chargebacks, they debited the amount from my balance, life went on, I've had a couple disputed charges, paypal asked me for info, I gave it, they asked the buyer for info, I assume they gave it, and in the end paypal either refunded them their money, or told them "tough noogies" and left the transaction as it was.

    I don't doubt Paypal has fucked up royally on a few occasions, but EVERY time I've seen a problem, either my own or someone I knew, Paypal handled it and typically quickly and without too much aggravation.

    You don't process BILLIONS a year and have millions of customers without pissing a few of them off.

    --
    --- www.f-theocean.com
  31. Re:Fuck Paypal by ayatollah+jones · · Score: 5, Interesting

    Be thankful you can still even access your account. A similar thing happened to me -- and I was a long-time Paypal user (since their X.com days) with hundereds of successful transactions.

    After waiting eight months they finally released the frozen funds, told me that my account was no longer "limited", and that I was once again free to use the system. Unfortunately, despite telling me otherwise, they forgot to actually take the limit off.

    At that point, I was so disgusted with their mistakes and the countless hoops they had made me needlessly jump through, I decided I just wanted to get rid of my personal information from their system. I just wanted to close my account, and move on.

    However, because they had forgotten to take the limit off, I couldn't even close my account.

    So I emailed their customer support. I forwarded them my previous correspondence, and their resposne stating that I was in the clear. I asked them to either take the limit off as they had originally stated (so I could close my account myself), or just close the account for me and remove my personal information from their system.

    PayPal's response?

    Thank you for contacting PayPal.

    We have terminated your further use of PayPal. This termination is per PayPal's User Agreement, Acceptable Use Policy.

    PayPal, in its sole discretion, reserves the right to terminate this Agreement, access to its website, or access to Service without notice for any reason and at any time."

    Your account will remain locked indefinitely, and we ask that you not attempt to open a duplicate account, as any additional accounts will be locked from use as well.

    We thank you for your business with PayPal.

    Sincerely,
    Josh
    PayPal Account Review Department
    PayPal, an eBay Company

    Gee, thanks PayPal! And sadly I'm by no means alone in this. So keep in mind, your personal information is by no means safe in the hands of PayPal.

  32. EUROPE = REGULATED, different ToS for EU members. by brain159 · · Score: 4, Interesting

    It's worth pointing out that European PayPal users (myself included) are now actually users/customers of PayPal (Europe) Ltd which has a physical presence over here (company offices in England as far as I can tell, possibly an extra customer service centre in Ireland).

    There is a specific heap of EU legislation relating to Electronic Cash Issuers (not banks, just e-money services such as PayPal) - PayPal have now created this EU company and obtained the relevant license in order to do what they do in compliance with the European rules.

    The revised ToS for affected users include:

    *) that PayPal can only lock the funds related to a specific disputed transaction - not your entire account balance
    *) a clear explanation of your financial position in relation to them (that your account balance represents an unsecured debt from them to you - if they tank, you might potentially be stuffed)
    *) Jurisdictional stuff setting the venue for any suing of them by "us" to be England, and pointing out our right to go to the UK's Financial Ombudsman Service or the Courts for relief in the event of a dispute with them - no attempts at all at a "you cannot sue us" clause.

    As a UK-based occasional PayPal user, I'm pretty pleased with this new arrangement. This move into the UK also means I could invoke the Data Protection Act to obtain any "hidden" information on my account in the event of a dispute.

    These changes haven't been hidden - all EU-based members have been emailed about this and the information is on the "updates" column on the left on your main account overview page.

  33. PayPal is indeed frustrating to deal with by Usagi_yo · · Score: 2, Interesting
    Even if you are the subject of fraud, they are difficult to deal with. As I found out when somebody used a valid CC, then reported it as a faudulent transaction on Ebay. So I lose $90, appeal it, find out that my sort of transaction is not covered in the sellers protection plan by Neither ebay or paypal.

    They won't tell me who it was, who charged back or any other information about the person other then it was a unautharized transaction.

    60 days later my account is unfrozen and I'm billed or the transaction fee, a chargeback fee and I'm out $90.

    My biggest gripe is, all that stuff they require you to send when under investigation, like utility bill, bank statement (I refused) etc ... they should require up front to open the account.

  34. Re:Be careful what Paypalsucks motives are by adzoox · · Score: 2, Interesting
    I would also be careful as to who "propogates and prods" for the "probes" to be done. Yahoo auctions have almost fade into non existence as eBay has grown bigger and bigger. I wouldn't be surprised at ALL if this was some type of Martha Stewart Example.

    Because a vocal group of people hate Paypal and because the competition despise it and it's parent company's success - they are common targets for criticism. When companies like Yahoo and with services like Yahoo PayDirect are NO BETTER and in fact offer less protection and ARE OFTEN THE CHOICE of scammers.

    Scammers will point to paypalsucks.com as reason why they don't accept paypal so as to give them some kind of "credibility'.

    Paypalwarning is different, but still bias towards negative Paypal transactions.

    Any poster to paypalsucks.com forums that praises paypal or argues points is banned or belittled.

    --
    Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
  35. It's the net standard by KalvinB · · Score: 2, Informative

    PayPal is pretty much the standard for handling on-line transactions. I've seen a few other sites for handling transactions but the sites look cheap and the finance charges aren't. Or they have this phoney Disney Dollars thing going. Give us real money and you get to call it "eGold" or some crap that like.

    PayPal also has the sense to offer Instant Payment Notifications and prewritten scripts all ready to go for site owners to plug in to recieve them in a variety of languages. I use PHP. Previously I just modified it to generate an e-mail to myself with the account info in an easy to cut and paste format for final manual processing. Now it also handles updating the htpasswd files which are in a subdirectory of the unadvertised IPN processing directory with a DENY ALL. And since the script calls home to PayPal to verify the payment good luck spoofing your way through.

    I don't know of any other on-line payment companies that offer the absurd level of ease of use, low fees and the great features like IPN that allow subcription sites like mine to offer instant access. And PayPal has the user base. Lots of people have PayPal accounts and it's no pain in the butt to establish one if you don't.

    I don't care to establish a dozen different on-line payment accounts and a dozen different scripts to instantly and securly process payments just to appease a minority of people who think PayPal is the spawn of Satan. NewEgg seriously screwed up with me and 4 months later finally refunded the entire cost of the server case ($145) after getting the BBB on their back which put them back in purgatory. Before that there was no way I was ever going to shop with them again and recommended against them quite a few times to friends. Every company has a fraction of customers that hate their guts. You can't seriously expect everyone is going to stop using their services just because the company screwed up with you.

    I've actually had a couple dollar bills snail mailed to me. One from France and one from New York. I post the address for that reason. When I sell a Content CD I usually get a check in the mail. If people can't stand PayPal there are quite a few ways to get money from person A to person B. I just use and recommend PayPal because it's the easiest and cheapest.

    Ben

    --
    Work Safe Porn
  36. Re:I'm not done by tomcrick · · Score: 2, Informative

    A few chargebacks maybe, but I got nailed by a fraudulent transaction on PayPal and they didn't seem to care at all. There argument is that they are a payment medium and as such they don't have responsiblity over what happens! Absolutely ridiculous - I think they should have similar regulation to a bank or a credit card service, as they certainly provide a similar service. My problem was to do with the fact that UK PayPal users had (have?) no real protection from fraud (especially from their absurb Seller Protection Program - it's anything but!).

    Please feel free to read what happened and also the email transcript between PayPal and myself - some interesting reading!

    Any advice gratefully received!

  37. Re: Net Bank...Hmph. by MikeVx · · Score: 2, Informative

    They also have little surprises in thier policies that get documented after you've been bitten by them. I lost a few hundred dollars to a then-undocumented policy against "third party" checks. A friend had sold some artwork he had crafted to a couple of organizations, but he has no bank account (at his level, bank fees represent a huge bite). A couple of deposits I sent in to my account never got processed or returned, it took several phone calls for them to find and return one of the checks, which was not submittible to another bank because of the endorsements restricting to one bank (a safety tactic, when dealing with sane banks). The organization for that check re-issued, but by then neither of us could remember the others and without the checks that were not found and returned. As this was not my friends fault I ate the difference. I closed my account with a very angry letter. My last statement arrived with the very first mention of third party check restrictions in a policy document that I had received. As you might guess, I don't regard them very highly. These days I make careful notes about where checks come from, despite never having had this sort of problem with any other bank or credit union.

    --
    Sigmentation fault - core dumped