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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."

42 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 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.

    3. 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.

    4. 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.

    5. 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.
    6. 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
  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.

  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 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?
  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.

  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
  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. 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

  11. 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.
  12. 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 ----
  13. 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.

  14. 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.

  15. 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.

  16. 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 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

  17. 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.

  18. 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.

  19. 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.

  20. 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.

  21. 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.

  22. 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.

  23. 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.

  24. 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.