Beware Paypal!

Am I wrong about this? I believe that PayPal has not dealt fairly or correctly with me. I have a personal PayPal account.

I recently ordered a movie through eBay (The Incredibles – great film by the way) and did not receive it. So I followed up with the seller and received an automated response from them. I then contacted PayPal to retrieve my money. Here is a summary of my contact with them and their response.

Reason for Dispute:
Buyer’s Comments:
Seller tells me that both PayPal and eBay have questioned their legitimacy as a seller and have frozen their assets to allow purchasers to recoup their money. I include an excerpt from his response here:
To all of my Ebay Customers: As of March 29th PayPal and Ebay have forced me out of business. They saw my successful DVD auctions with 200 sales in 3 days as “suspicious” activity, at which point PayPal froze my access to all of the money you have paid me for your DVDs and other products. Even after 2 days on the phone confirming every piece of information that Paypal asked for… including proof of enough product for all customers that have ordered… Paypal still froze my accounts. They have informed me that they will hold all monies for 180 days (6 months) for you to ask for refunds. Of course, this whole time they will be earning interest on your money. I am seeking legal action against Paypal and Ebay for their actions these past few days and for forcing me out of business even after proving that I am a legitimate dealer and answering every question they have asked. In the mean time, feel free to ask for your money back from PayPal, as they are the ones with your money, not me. I am sorry that you have been caught up in this. I have done my best to protect your interests in this sitution, but you can’t fight big business sometimes. Thanks, J.M.

Date of Complaint:
Apr. 14, 2005
Case Closed
Status Details:
We have completed our investigation of this case. We attempted to process a refund from the seller’s account to your account. Unfortunately, the seller’s account does not contain the funds necessary to cover this refund. We were able to recover $0.00 USD. We have taken action against the seller and are working to recover the remainder of your refund. We will contact you when we have more information. No further action is required of you at this time.

The amount of money in question is only $10. But I’m rather disappointed to find that I have no protection and no recourse under Paypal’s system. Prior to this I was comfortable and confident that Paypal’s service offered some degree of protection. Below is their buyer protection statement available here (you may need to log into Paypal to see this online).

As I read it PayPal is underwriting the purchasing risk to the tune of up to US$1000. But that is not what they are telling me.

At PayPal, your security is our top priority. PayPal Buyer Protection is offered as a way to make our online trading community even safer and more secure.

With PayPal Buyer Protection, qualified purchases are eligible for up to $1,000.00 USD coverage at no additional cost. Additional coverage may apply for purchases made with PayPal Buyer Credit.
When a buyer files a claim through PayPal Buyer Protection, PayPal works with both the buyer and the seller to gather the details of the transaction. We investigate the facts of the case and make every effort to come to a fair conclusion.


* Items Covered by PayPal Buyer Protection
* PayPal Buyer Protection Rules


* PayPal Buyer Protection Eligibility
* eBay Listing Requirements
* Tips on Protecting Yourself from Buyer Claims


PayPal helps you buy with confidence on eBay. Before filing a claim, we encourage you to work with your seller since most issues can be resolved through direct communication. If you find it necessary to file a claim, your transaction may be covered by either PayPal Buyer Protection or the Buyer Complaint Process.

Transactions Covered by PayPal Buyer Protection

If you paid for an item and never received it or received an item that was significantly not as described, your transaction must meet each of the following requirements to be eligible for PayPal Buyer Protection:

* The PayPal Buyer Protection icon must be displayed in the Seller Information box on eBay
* Your purchase must be a physical item — services and intangible items are not covered
* You must use PayPal to pay for the item and must use the seller’s email address associated with the listing. To make sure of this, use the grey Pay Now button you’ll see when the listing closes on eBay.

PayPal Buyer Protection Rules

* You may only file one claim per PayPal payment
* Claims must be filed within 45 days of the PayPal payment
* You may not file a claim if you are simply disappointed with the item you have received. Items must be significantly not as described or never received.
* You are limited to three PayPal Buyer Protection refunds per calendar year.
o Refunds issued on PayPal Buyer Credit transactions may apply towards this limit. Learn more by reviewing the PayPal Buyer Credit Policy.
* You must be willing to provide information during the investigation process. If we are unable to obtain the necessary information, your case may be cancelled without a refund.

For specific terms and conditions please review the PayPal Buyer Protection Policy in our User Agreement.

Here is the listing on eBay (it should be available for a little while yet). To my mind it meets the requirements outlined above.

Given the amount of money involved I don’t know how far I’ll pursue this – I suspect the PayPal folks rather count on this – but I am certain that I will not be using PayPal for transactions in the future.

I am posting this as a warning to anybody who would think to trust PayPal for any substantial transactions in the future. And if you are interested in the opinions of other disgruntled folks, check out the website. for more stories and problems. They seem like they are a little over the top but they do represent the dark side of what had at one time promised to be a safe way to purchase on eBay.

Oh, and of course you may wish to be cautious of the seller too ( I don’t know who is really at fault here but I do believe you will wish to be cautious dealing with all parties involved.

2 thoughts on “Beware Paypal!”

  1. Just thought I would let you know I bought 10 soccer jerseys from a seller on ebay in Australia, I received 9 of 10. I contacted Pay Pal, they credited my card for the transaction and contacted the seller. It took two weeks but he finally wrote, he was on vacaation. Said he must have left one out, sent it to me and I had Paypal then pay him. Worked out great for me. I use Paypal at least 10 times a week and never had a problem. Sorry to hear you had and hope things go better next time.


  2. Scott:
    Enjoyed your website. The way to avoid this scenario, as you probably determined, is to never use your bank account to pay with PayPal, only use your credit card (which of course PayPal makes difficult through the default selections). Here, you could simply charge-back through your card issuer against the PayPal charge for which you didn’t receive anything. It’s the same reason I would never use a debit card–you never want to grant anyone access to your bank account for any reason. You have much more protection through your credit card account.

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