Paypal Hates You

Both people were happy to talk to me for as long as I wanted, but neither person was able to do anything at all. The system is clearly designed this way… to insulate the people who make decisions from the actual customers.

– Marketing maven Seth Godin on his experience dealing with Paypal customer service after they seized his money and treated him like a criminal. He eventually got his money back, but he will forever have an exasperated taste in his mouth. Consumers hate on Paypal all the time but in some ways you can kind of understand where they’re coming from, people are trying to scam them all the time. One of the other online payment alternatives, “e-gold,” is frequently used by credit card thieves to exchange funds. They probably have very friendly customer service.

Thanks for calling, please go away [Seth Godin’s Blog]

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  1. hobear23 says:

    I hate Paypal. I used it for 4 years on ebay, no probs. never sold anything, just bought stuff. My paypal was linked to my personal checking account, with a credit card as a backing fund. When I usually buy things on paypal for ebay, it comes across on my online checking account statement as PPAL INSTANT XFER. Last month I had two different amounts one for 40 dollars and one for 70 dollars, that came across as PPAL EFT DEBIT WITHDRAWEL, which my personal bank says are coming from a Paypal Debit Card Withdrawel. I do not have a Paypal Debit Card. I call Paypal 3 differant times. I spoke with 3 reps, none of whom could tell me where these debits were coming from, as neither Paypal or Ebay had any record of 40 or 70 dollar transactions with me. Yet, there they were, debited from my personal checking account. My own bank, First Indiana gave me back my money and told me to close my checking account, and change my credit card number, because someone at Paypal was defrauding me. I’m not sure what I can do in this situation. I can sue because i got my money back? But I feel that I have been victimized by Paypal. They advertise that they are so secure and so safe. Even sites that complain about them usually talk about them defrauding sellers, not buyers. I know this Christmas sucks because I have to find auctions that take money orders and don’t freak out when I want to send them one, think I AM a scammer.

  2. homerjay says:

    Two important rules when using paypal- only link it to your credit card, and when you have money in there, get it the hell out of there as soon as possible.

  3. mconfoy says:

    Given the amount of transactions on Paypal, I would be willing to bet their problem rate is pretty low.

  4. RonDiaz says:

    I was a happy PayPal user from 99ish through 2003 when somehow I was frauded and $700 was taken from my linked checking account. I was lucky enough to have not had $700 then and the credit union refunded the multiple overdraft fees and set me up with a new account. I also had to report Discover (linked CC) that my card had been compromised. It was impossible then to get PayPal to help me in any way. I swore off PayPal then until late last year when I finally had to reopen an account to get webhosting from the company I wanted to use.

    It sucks, it is impossible to use eBay without PayPal, and PayPal advertises it is safer than anything out there but the reality is it is dangerous as hell. They have no regulations governing them, they just do their own thing. I only have a Credit Card linked now and I will never link a bank account to “get verified”. I hope that the CC company will protect me if I get scammed by PayPal again but who knows for sure.

    I would LOVE to see a competitor to Paypal. LOVE. Paypal is dangerous, but it is near impossible to not use them.

  5. mopar_man says:

    I use PayPal as little as possible. I try and find items that I can pay by money order. If it’s a very rare item that doesn’t show up often and they only accept PayPal, that’s the only time I use it. I’ve heard way too many horror stories. I know a friend of a friend who shafted eBayers out of $1100+ and PayPal did nothing for the victims.

  6. Parting says:

    Just a trick for everyone :

    1. Open a checking account
    2. Link it to PayPal
    3. Get ”verified” by PayPal
    4. Add a credit card to your PayPal
    4. CLOSE the checking account
    5. Just use credit card, if any problems arise = chargeback

    I learned the hard way all of this =P

  7. Parting says:

    @chouchou: PayPal cannot create a ”overdraft” to nonexistent account. So it cannot steal from you.

  8. darkclawsofchaos says:

    @homerjay: exactly
    @chouchou: why all the trouble? Tt’s not like they force you to use use your bank account.

  9. SteveBMD says:

    @mopar_man: “I’ve heard way too many horror stories. I know a friend of a friend who shafted eBayers out of $1100+ and PayPal did nothing for the victims.”

    Mopar_man, maybe it’s time to reconsider your “friends.” Also, how do you know that Paypal did “nothing” for the victims? Any insurance payment or reimbursement should ideally have been between the victim and Paypal, and you and your “friend of a friend” shouldn’t have anything to do with it.

  10. Parting says:

    @darkclawsofchaos: Most of sellers on eBay request ”verified” account, one that is linked to a physical bank account. As a seller, it gives you more assurance that the buyer is not a fraud. However, PayPal does not protect it’s customers like a credit card. Even if PayPal ”approves” your reimbursement request, it does not mean that they will give you your money back.

    So if money is taken from your bank account, you’re pretty much screwed and you’ll never see this money again. I’ve lost 80$ like this. It could have been much worse. Plus, if PayPal makes a mistake and tries to retrieve payment from your bank, instead of your credit card (as you can request), you can get charged overdraft fees. And PayPal will never pay them, even if it’s their mistake.

  11. Parting says:

    @SteveBMD: Actually PayPal does nothing. There is NO equivalent to a chargeback. So if it’s fraud, the customer still loses everything, an gets no money back.

  12. Parting says:

    @SteveBMD: Also, it’s easier to defraud ”sellers” on eBay. For example, tell PayPal that you ”never received” merchandise, PayPal does not give sh@t if the seller has a proof of delivery. It just reimburses the buyer.

    So if the seller deals with a dishonest person, he can lose a lot of money.

  13. goller321 says:

    @chouchou: Yup. I set up a secondary checking account to use with Papal to insulate my main checking account. I only kept about $25 in it to keep the balance above getting a service charge. Paypal decided to use this account, instead of my credit card, which I had designated my payment choice- resulting in overdrafts from my bank. They did this twice. Now I only sign it up when I sell something and get my money out. As soon as the money’s in my bank, I take it out of the Paypal account.

    What’s worse is they don’t fall under any specific regulatory system. They aren’t considered a “bank.” So they can pretty much do what they want.

  14. Parting says:

    I heard about this website, I’m not sure if everything they say is truth… [www.paypalsucks.com]

  15. locode21 says:

    GOLLER321 said:

    “Paypal decided to use this account, instead of my credit card, which I had designated my payment choice- resulting in overdrafts from my bank”

    No, Paypal doesn’t decide that for you. You just have to be careful when making payments to make sure you’re using the source you want to use, not the default, which will generally be a bank account. You need to double check it every single time you use it. Just because you set it as credit card once doesn’t mean it’ll stay that way.

    Most people who have problems with Paypal have them because they don’t know what they’re doing, or because they fell for a spoof of some sort.

    I’ll take the convenience of Paypal any day over the time and hassle of money orders, or the flat out BS that is e-gold or Western Union.

    I sell a lot on eBay, have almost 8000 feedback, and only accept Paypal. I can count the problems I’ve had with Paypal on one hand, with 2-3 fingers left over.

    Paypal is a lot safer and smarter to use than any other online payment service.

    gbayemporium

  16. Parting says:

    @locode21: Sorry, but PayPal screws up. The situation GOLLER123 mentioned happens a lot and on a regular basis.

    Believe me, when I didn’t have enough money in my bank account (it’s secondary and it was linked to PayPal) to pay for my purchase, I checked and re-checked so the payment would be put on my credit cards. And PayPal still charged my Bank account first.

    You are a very lucky person, if you never had any problems with PayPal.

    However, it doesn’t automatically dismiss many valid complaints regarding PayPal customer service and practices.

    PayPal is a ”necessary evil” and it’s going to be considered as an ”evil” as long as they don’t clean up their act; and become more customer friendly (and ”fraudsters” unfriendly).

  17. mopar_man says:

    @SteveBMD:

    Notice how I said a friend of a friend? There’s a reason the scammer isn’t my friend. Perhaps the people that got scammed got their money back but according to the eBay feedback, they didn’t. If you look at the site CHOUCHOU posted and do some Google searches, you’ll see it’s not uncommon for PayPal to screw over the victims.

  18. bucky_katt says:

    Someone recently used my Paypal account to transfer $500 from my linked checking account to my Paypal account. Paypal sent me an e-mail notice of the withdrawal, which tipped me off that something was going on. When I contacted Paypal, they were nice enough, but they claimed they couldn’t do anything about it when I called since the transaction hadn’t been completed–there’s something like a 3-5 day lag between the withdrawal from your checking account and the money being credited to your Paypal account, probably so they can take advantage of the “float”. You’d think they would be able to flag transactions in their system before they go through. Anyway, since the transaction hadn’t cleared–the “float” ended up saving my ass in this case–I was able to contact my bank and stop the transfer. So I guess, in the end, the system kind of worked . . . in a completely half-assed manner that relied on me doing all of the work, but hey, at least they let me know someone was trying to steal my money.

  19. alexanderpink says:

    I will step in and say I like paypal a lot, and for multiple reasons. You can enroll in their money market sweep account and earn about 5% on your money. Not as high as ING usually is, but not bad. In addition, you can get the paypal debit card and it pays 1% cashback on all purchases. The cash back is awarded immediately after the transaction clears, not at the end of the month and not in the form of reward points some CC’s offer, so this also increases your return. I think paypal is as safe as any other online account, the largest problems seem to be from people who fail to ship to a confirmed address with proof of delivery to be seller protected, or they fall for a spoof account, or a phising site. If you set up your account securely, watch your ebaying practices, and pay attention to your money there is nothing inherent in paypal that will cause you problems.

  20. rolla says:

    whoa, after reading the comments, i’m gonna delete my checking acct info from paypal now.

  21. iamme99 says:

    Actually, I find Seth Godin’s complaint about Paypal customer service funny in that it comes from someone who doesn’t enable reader comments on his own blog. Meaning he doesn’t want to deal with his own customers or hear what they have to say about his articles.

    btw: I’ve never had a problem with Paypal but I’d be surprised if such a large organization didn’t have problems. Doesn’t sound like they do a good job though when they do need to be contacted, which is the true test of a company.

  22. DallasDMD says:

    @alexanderpink: Paypal is not FDIC insured or subject to regulations as a bank. My money will not sit in a Paypal account.

  23. alexanderpink says:

    @DallasDMD fare enough point. I agree they are a bank, and should be FDIC insured as well as subject to regulations. I was only pointing out some benefits to using them as such… any large organization has problems, so to hear complaints is not surprising. Many ebayers need to rely on paypal to keep them in business, and you rarely hear good services that paypal has provided, so I wanted to mention a couple.

  24. rikkus256 says:

    PayPal is fraud and here is my horror story. I have been using PayPal since 99. Last year when I saw PayPal has a new micropayment fee system (5% + $0.05, designed for payments of $0.99 or less), I sent an email to PayPal, stating I am an existing user, and asked how do I enroll in that new fee system. CSR replied with a link and told me to open a new account through that special link. I did exactly what was instructed in the email and started receiving payment with my new account. 10 days later, my new account was frozen by PayPal with over $500 in there. Then PayPal requested me to send in numerous documents to verified my identity, just like how they treat every legit, successful sellers like criminals. I sent in all the requested info then got an email saying my Social Security number “is in file” with another account therefore I need to supply an alternate SSN. I replied saying no Americans has more than one SSN, then they replied saying under PayPal policy I CANNOT have more than 1 business accounts. Now I am really pissed and replied saying I will take legal action if they don’t give me back my $500 they illegally held from me. Then guess what, within 24 hours my original account got frozen too! with over $1000 in there! The reason being it “links to a suspended account”. I bet PayPal was trying to give me some “lessons”.

    I contacted my lawyer, he sent a legal letter directly PayPal headquarter, within 24 hours, both of my accounts were activated again. I withdraw the money then closed both accounts. Not a single apologize from PayPal.

    More PayPal horror stories here: [paypalsucks.com]

  25. FLConsumer says:

    Does anyone know WHY PayPal doesn’t fall under banking regulations? They appear to be offering checking accounts, as they have a debit card and allow money transfers in & out of their service.

  26. forgottenpassword says:

    Yeah, I have heard quite a few horror stories about paypal freezing accounts & not allowing its customers have access to their money.

    Including one theory that paypal was purposely doing this on accounts with LARGE amounts in them so they could earn more interest on the funds they have frozen for long periods of time.

  27. SOhp101 says:

    I found the easiest way is to just use your credit card for every purchase. The only annoying thing about this is that you have to manually tell it to use your credit card instead of your bank account.

  28. Major-General says:

    If I remember correctly, and I could be wrong, certain financial services companies like Paypal and the ecount Visa cards have in their conditions that “money” in an individual account does not actually belong to the depositer until it is dispersed.

    It has been a while since I read the terms, but this is what I remember.

  29. Snarkysnake says:

    All of you people defending Paypal have evidently never been put through their bullshit while trying to get a problem resolved. Thats fine by me, because the rest of us that have will laugh our asses off when you do . (And you will)

    Now. Paypal is a nightmare version of what doing business has become in America.Read their terms of service. They are not designed to provide you with any effective means to appeal their decisions when they screw up (which is often) . Their one way contract is practically a license for them to freeze your account and make you sue them to get it back. This introduces moral hazard in their dealings with customers. Their reps know that your options are almost non existent and that they don’t have to make you happy,so they won’t play nice unless the mood hits them. Lots of us former users have learned this lesson the hard way.As for it being impossible to use Ebay without having a PP account…Uh, no.Lots of folks (like me) buy and sell without PP every day. If the seller accepts nothing but PP,they are just leaving business on the table-sucks to be them. (LOTS of PP only auctions end without a bid).As far as the FDIC/NO FDIC thing goes,you would NEVER put your money in a non-FDIC bank,but literally millions of people have millions in PP “play money’ sitting around with no specific guarantee.Talk about ripe for a scandal…

  30. Sidecutter says:

    I’ve used PayPal for years as a major part of running my own website. I honestly have had very minimal issues, only one customer “chargeback”, etc. While I havn’t had any real problems with them myself, I have certainly heard plenty of horror stories and do keep a tight watch on what’s happening with that account. I suppose the company is a very good textbook case of YMMV.

  31. bohemian says:

    Paypal stinks for ebay sellers. They are unresponsive and frequently leave sellers out both money and the goods they were selling.

    We also had the fun and games of Paypal randomly raiding out checking account and getting the bank account disconnected was a bunch of work. They are just not worth the risk and headache.

    Ebay will continue to lose it’s reputation and pool of sellers because they refuse to allow things like Google Checkout.

  32. privatejoker75 says:

    I need to use paypal for part of my business since 99% of my customers use it. I despise paypal for numerous reasons.

    For example, two weeks ago my account was suspended for no reason other than “we think someone may have stolen your password”. They came up with this marvelous theory after i logged in to my account from work apparently. The fun didn’t end there. I had to change my password, and confirm my phone number. Since my phone number changed I had to get a postcard mailed to me that took 10 days to arrive. Needless to say I was furious.

    I understand “protecting the consumer”, but they go overboard.

  33. privatejoker75 says:

    I forgot to add the fact that my account was frozen for 10 days with almost $500 in it. I always withdrawl money as soon as i receive it. In this case the account was frozen overnight and i didn’t have a chance to withdrawl.

  34. MeOhMy says:

    We used to call them “TheftPal.” Do they still automatically side with the buyer anytime they make a claim that that an item purchased never arrived or was not as described?

    I’ve got one b/c you pretty much have to have one for the occasional Ebay transaction, but I do not like them a whole lot. They seem to treat their own customers in much the same way the RIAA and MPAA treat their own customers.

  35. @darkclawsofchaos: Actually, the only two ways to get verified by PayPal is to use a bank account or accept their Credit Card. I refuse to do both. I think I might crack open a checking account and tie PayPal to that, then immediately close the checking account. This is because I absolutely refuse to let PayPal touch my checking account. I’ve had enough mystery charges end up on the prepaid Visa Gift Cards I choose to use with them for transactions. This is why I cannot shop on eBay because I refuse to verify my PayPal account and let them even have 0.1 seconds time to levy my Checking or Savings account as they see fit.

  36. I got to deal with PayPal’s dispute resolution after a seller never delivered the goods. Here’s how it went: I went through their dispute processed, filled out detailed information, etc., etc., etc. PayPal contacted the seller, then got back to me with, “Well, the seller says he shipped it to you, so there’s nothing we can do.”

    And, indeed, there was not a damned thing I could do about it, short of a lawsuit, so I just reported all involved to the relevant BBBs and wrote it off as a lesson learned.

    It was only $55, but never again.

  37. rioja951 - Why, oh why must I be assigned to the vehicle maintenance when my specialty is demolitions? says:

    @alexanderpink: For the most part, it sound OK, UNTIL you check were they are based in SINGAPORE, thus they do not need to be FDIC insured.

    It is clearly displayed at the bottom of the page in that little light blue over white contrast killer, ultra small print.

  38. rioja951 - Why, oh why must I be assigned to the vehicle maintenance when my specialty is demolitions? says:

    @rioja951: At least thats what i think. (IANAL)

  39. consumerd says:

    I decided I am going to sell my stuff I want on overstock.com.

    They even allow Google checkout!

  40. LAGirl says:

    @darkclawsofchaos: no, they don’t force you to use your checking account. but if you have it linked, they can pull funds whenever they want, for any amount, if they decide there is a problem. happens all the time. they also ‘freeze’ accounts, so that you can’t access any funds in your Paypal account.

    you can read all about the horror stories on [www.paypalsucks.com]

    for example, did you know this:

    “According to PayPal accepting their ToS (Terms of Service) in effect means you waive your rights to credit card consumer protection laws if you want to use their service, and that you may not issue a chargeback for unauthorized use of your credit card and PayPal account, or if you do, then they have the right to limit your account.”

    and by ‘limit your account’, they mean ‘close your account and take your money’!

  41. elislider says:

    at age 18 i was defrauded out of $5000 on ebay/paypal. needless to say paypal was of absolutely 0 help trying to resolve this for me. they locked my account, and had no department that would answer my questions or provide me any service at all. conveniently their dispute center and account review departments do not have phones apparently because they will NOT talk to a customer. you are required to send them an email only to recieve a canned message that in no way helps you. after being sent to collections, i eventually settled with the collections agency for $3000 and had to take out a loan to pay for it.

    on a different scale but almost as frustrating: just recently their site had a bug where it was crashing when i was buying stuff using paypal (repeated it on multiple computers) and for whatever reason after the 5th time that the site crashed for me, i was locked out of my account. i had to verify my phone number (i only have a cell phone and they dont allow cell phones a verifiable), my address (ok no problem), and to change my password. well i didnt want to change my password, but i did and then afterwards just changed it right back to what it was. however, when i called to get the phone number fixed, i wanted to know what had caused my account to be flagged, since that would obviously help protect me as a user so that i can prevent my account from being frauded in the future. however, their “policies” do not allow them to tell me what caused my account to be flagged. they would only say “potential suspicious activity” which doesnt mean a damn thing. like the original article here says, they are completely willing to talk to you and they are generally very friendly, but its like talking to a friendly computer with a script: they offer no support whatsoever. i talked to two levels of supervisors up from the original csr and they just blatantly repeated what the others said, telling me it was impossible to tell me what caused it even tho they were clearly looking at it on their screen at that moment.

    i effing hate paypal but unforunately its sometimes the only way to use ebay and i use ebay a lot…

  42. girly says:

    I just got phished for paypal today..sent the email to their spoof address.

    I don’t even use paypal.

  43. elroyerni says:

    Google checkout is the competition for paypal. I’ve had horrible experiences with paypal and their customer service teams. What good is it to even have a CSR when they CAN’T DO ANYTHING? They were nice people sure, but they couldn’t help me whatsoever. Anyone else have this experience?

  44. dextrone says:

    E gold is horrible, if you get money stolen they’ll just say, we can’t do anything. (happened to me)

  45. swan20 says:

    Paypal protection might sound good, but read the find print…like for instant, their seller protection sucks big time. Did you know that you need to fullfill 9 rules/things before you can qualify?? yes, not 4, 9. On top of it, There places in the worlds is under this, USA, Canada, and UK i think. anywhere else??? good luck. There customer service is horrible, yes, they sounds nice but “I am so sorry you lost your money, have a wonderful day” does not help one bit!!

  46. ritakitty says:

    Thanks for the info. I will not verify my account with paypal. I have a suggestion though. Sue paypal. Get a lawyer that is willing to help and sue them. They obviously have horrible customer service and they aren’t willing to talk about the problem that you have. If they don’t talk, they are trying to protect their asses from what you discovered. All they care about is money and the will find ways of doing it. On their website to call customer service, you get a residential or a cell phone number. I called it once and this person didn’t work for paypal. They have never heard of 1-800 numbers. So take my advice. After I get want I want from ebay, I will close my account with paypal. This was good information.