PayPal Leaves Small Business Out $500 And A Snake

Shawn runs a small reptile business, selling habitats, supplies, and animals. A customer’s purchase of a $500 snake went smoothly, with payment via PayPal and a critter off to a happy new home. Then the buyer reported the transaction to PayPal as fraudulent. They ruled in the buyer’s favor after an “investigation” that didn’t include talking to Shawn, and took back the $500. Voil√† – free snake.

His friend, a Consumerist reader, wrote to us on his behalf.

He has been using Paypal for years as his business account with no problems. A month or two ago he had a buyer purchase a $500 snake from him and everything went smoothly. The buyer then claimed it was a fraudulent charge and the money was immediately removed from Shawn’s account. When Shawn contacted Paypal, they gave him the $500 back while they investigated the matter. A few days later they took the money away again and closed the case. Now he is without his snake and without the $500.

What can he do? Paypal is not really helping much at all.

Not helping much at all is PayPal’s standard way of dealing with disputes. The contact information in this classic post may still be good, and lead to someone who can help. If the buyer is local, small claims court would be a useful and inexpensive route to try to get that money back.


Edit Your Comment

  1. YouDidWhatNow? says:

    …another classic example of the inherent evil of eBay/PayPal. It’s mind-boggling that they don’t win the tourney every year.

    There is no organization in this country more richly deserving of a regulatory beat-down than these criminals.

    • AlteredBeast (blaming the OP one article at a time.) says:

      I used to sell many items on ebay, and have family memebers who are power sellers, but I’ve long since moved on. It’s good for buying odds and ends (like a replacement part for something that is normally sold seperately). Generally, I buy off of Amazon/Newegg.

    • El_Fez says:

      On the other hand, go on a spending spree on Ebay, pay by paypay, dispute the charges and whamo! Free stuff! Easy peasy!

      • YouDidWhatNow? says:

        That’s just it exactly. As a buyer, go nuts. eBay/PayPal will support, endorse, and enable your thievery…with a smile.

        As a seller…you are so powerless that you can’t even give a fraudulent buyer negative feedback. Let alone ever hope of getting a positive outcome when someone is scamming you.

    • Jawaka says:

      Nobody wants to consider the possibility that it was a fraudulent transaction. There was just another post today about Mastercard accounts being compromised. Perhaps the purchaser used paid with a stolen card number. Wouldn’t the same thing have happened if the transaction was made in a retail store with a stolen credit card?

      • YouDidWhatNow? says:

        eBay/PayPal’s record is long and deep. They are utter scum. Evil in the purest form I hope I ever come into contact with.

      • pamelad says:

        If you’re an eBay seller: When accepting PayPal, state prominently in your listing that you will ship ONLY to a confirmed address (which matches up the buyer’s account with the shipping address). If the buyer is not confirmed, be suspicious of fraud and don’t ship the item. Also, it’s important to request delivery confirmation at time of shipping in case of possible dispute.

    • airren says:

      I agree. It’s a travesty of a mockery of a sham these folks keep losing the golden poo. I seriously want to organize a group of ones they’ve done wrong to march up to the management and punch them all in the face.

      And I’m saying this as someone who never did anything wrong, played by their rules, called them to make sure I was in guidelines and still got funked by them.

  2. Torgonius wants an edit button says:

    I say send PayPal a box of snakes as a thank you.

    Deliver them after hours, showing exemplary customer service

    Open the box so that they can breathe and roam free.

    • longfeltwant says:

      I say file two lawsuits. Two different parties illegally took your money. Make sure to include attorney fees.

  3. Blueskylaw says:

    “Not helping much at all is PayPal’s standard way of dealing with disputes”

  4. Coffee says:

    I loathe PayPal, and for that reason, I will not use it…I don’t care if something costs 5% more on Amazon than it does on Ebay…I will not support the company. Stories like this just reinforce my opinion of them: that they’re an irresponsible, borderline criminal organization that somehow skirts banking laws and treats customers and vendors both like shit.

    Do not attend concerts at Ticketmaster venues. Do not use PayPal. How else will they ever learn that people won’t stand for their shenanigans?

    • CubeRat says:

      Paypal skirts banking laws because they are not considered a bank. There are a lot of financial services out there that are not really regulated. Add to paypal the non-bank issuers of debit cards, payday loan operators, mobile payment services, any p2p services….etc.

      I don’t trust any of them, and refuse to use any of them.

    • VintageLydia says:

      When people wonder why I haven’t been to a “real” concert in over a decade, my answer is always Ticketmaster.

    • Mrs. w/1 child says:

      Exactly. Ebay is not an option and I will pay an ATM fee to withdraw money before I will pay with paypal at a art fair. So far at least etsy still allows other payment methods. We will see how long that lasts.

      Ticketmaster – don’t even get me started!

  5. thomwithanh says:

    I don’t deal with PayPal anymore for this exact reason

  6. AustinTXProgrammer says:

    Isn’t he out $500 or a snake? And would imply he should have both.

    • tenorcnj says:

      No.. AND implies that he has neither… or if you say it the positive way, he should have either a snake OR $500.

      • Lyn Torden says:

        But there is no reason he should end up with BOTH. Either he should get the snake back, or get the $500. The problem is the buyer has BOTH.

        PayPal doesn’t just host scammers, it IS a scam. Friends don’t let friends use PayPal.

    • cybrczch says:

      Seller had a snake, customer had $500.
      Seller sends snake to customer, customer sends $500 to seller via PayPal
      Customer complains to PayPal. PayPal removes $500 from seller’s account.
      Seller contacts PayPal. PayPal returns $500 to seller’s account pending investigation.
      PayPal investigates, finds for customer, returns $500 from seller to customer.
      Now customer has $500 and (according to seller) a snake. Seller had nada.

  7. comma.ellipsis says:

    This is like if a clothing store owner got mad at its landlord every time someone shoplifted, complained to the landlord, and then threw a tantrum when the landlord was sympathetic, but unable to do anything about it.

    Not to get too philosophical, but whether the actual transaction was fraudulent, or someone did this to him on purpose (also a kind of fraud, I suppose), all businesses face these risks. This situation really sucks for this individual, it really does. That’s why small businesses are such an endangered species but the real tragedy is how self-centered our society is that we are capable of performing such damaging acts to other people without regard for the consequences.

    • VintageLydia says:

      How is PayPal withholding money from the OP’s friend for fraudulent reasons at all like the situation you described? Unless you consider the Consumerist the landlord in which case, you’re at the wrong site, buddy. Until less than a year ago, this site was almost all posts like these.

    • doctor_cos wants you to remain calm says:

      No, it’s nothing like a clothing store and a landlord as you describe. Unless the people paid for the clothes, then complained about not getting them and the landlord took the money from the clothing store and gave back to the customer.

      • comma.ellipsis says:

        Well I didn’t think I’d have to explain how this is an analogy but what I am trying to get across is that all businesses face risks. The risks are different depending on if you’re an online merchant versus a brick-and-mortar retailer but in any case, the merchant is responsible for protecting themselves against risks like these.

        A scammer is responsible for this person’s loss but I can see how it seems easy to blame PayPal’s system.

        • jabberwockgee says:

          You don’t have to explain that it is an analogy.

          But your analogy is wrong.

        • StarKillerX says:

          Not only was your analogy wrong but if the facts are as the OP states that PayPal is wrong as it’s their system that allow the fraund to take place.

          • Jawaka says:

            If the buyer purchased the item with a stolen card which wasn’t reported until after the transaction occurred then what should PayPal have done to prevent it in the first place?

        • HogwartsProfessor says:

          It’s easy to blame them because they listened to the scammer’s story but then did not verify it with the seller. They never do. That is how the scam works.

          They need to be regulated or they need to close. Also, I think it would have been smart for the seller to get that money out of the account rather than leaving it in there. I NEVER left any pay in my account for my freelance job. It came out as fast as I could get to it.

  8. BennieHannah says:

    Can he file a police report for theft? They might not be able to actually DO anything, but having the report might help him if he goes to court or proceeds with the Paypal dispute.

    • BennieHannah says:

      Also, do some research with the purchaser’s jurisdiction and/or housing situation regarding exotic pets. If the buyer lives within a community or apartment or complex that disallows pets or certain types of pets, a call to either animal control or the rental management company might be in order.

      Watch Craigslist in the buyer’s area as well. You might luck upon an ad where the buyer is selling the snake he supposedly doesn’t have.

    • xanadustc says:

      Actually, if this happens, the best thing is to contact the FBI since they actually take internet crime and fraud seriously. I would like to see every person that has been defrauded by PayPal indict them in the crime, too. That might force a beat-down.

    • ThinkingBrian says:

      Actually I like that, file a police report against both the seller and PayPal, but also file a complaint with against PayPal. But I don’t know how the OP’s friend would deal with the seller because he’s at fault here too…

      I do think this business owner might want to get rid of PayPal and just go to accepting credit cards instead. I know it might cost more, but at least you loss PayPal and maybe deal with a bank and credit card company instead.

  9. nbs2 says:

    What classic post?

    Also, we shouldn’t be too concerned – it could be worse. He might have had to deal with WalMart.

    • taaurrus says:

      That was exactly my first thought after reading this so I scrolled thru the comments to see if anyone else was confused about it too but, apparently, it’s only you and me who are wondering “what classic post”? I think the author forgot to insert a link right about there.

  10. Marlin says:

    Small claims suit against paypal. Prove the item was sent and the money was “taken”.

    let paypal then have to go after the person that got said snake.

    • Jawaka says:

      What if PayPal weren’t involved and a person purchased the snake in an actual pet store with a stolen credit card. Once the person who legitimately owned the card reported the fraudulent purchases and the credit card verified it the store owner would still have lost the funds.

      • VintageLydia says:

        The credit card company would have taken the hit, not the seller.

        • ahecht says:

          No, the seller takes the hit when a stolen credit card is used. In fact, not only do they not get the money from the sale, they also get hit with a fine and face potentially higher rates in the future. That’s why the credit cards don’t have more security features — it’s not in the bank’s or CC company’s interests.

  11. Wdeal says:

    I generally agree that PayPal is heavy handed, though I am suspect when a story lacks specifics.

    Did the seller follow all PayPal guidelines (for example, with an eBay sale over $250, PayPal requires a signature at time of delivery)? I follow these guideline to the letter and (so far) haven’t had an issue. I do however wince at the additional costs I incur to comply (the fees for declared value, signature confirms and surcharges for delivery to residential addresses often exceed the base rate for sending the package !). However, just shipping the item isn’t enough to protect the seller.

    There’s little doubt the recipient scammed the seller; I’d just like more information before I declare PayPal negligent here.

    • VintageLydia says:

      The fact they didn’t even talk to the seller, and that not talking to the seller is seemingly SOP for these “investigations”, convinces me to agree that PayPal was negligent in this case.

      • lauy says:

        Typically their contact is via email, but the seller can always call them with questions. That’s what I have done.

      • Jawaka says:

        The seller has nothing to do with whether the purchase was paid for with a fraudulent card or not.

        • kobresia says:

          Precisely. This doesn’t sound like it was a “counterfeit” or “item not received” or “item significantly not as described” case, it was “paid for with a stolen credit card number”.

          Sounds like the seller quite possibly failed to follow the guidelines in the so-called Seller Protection Policy and shipped to an unconfirmed address. Folks doing so might as well just give their stuff away. If the buyer provided an unconfirmed address to ship to, Paypal needs nothing further from the seller if the cardholder’s bank claims fraud because the ship-to address has to match the billing address, period.

  12. Jane_Gage says:

    Get a merchant account instead.

  13. speaky2k says:

    I just recently bought tickets to an event and they wanted me to use Pay Pal to pay. I tried not using them, but it wouldn’t go through since I had a Pay Pal account. When I did use my Pay Pal account they wanted me to accept a new terms & conditions notice, which I declined, so that closed my Pay Pal account until I accept it. After that I was able to pay using a credit card, just not the one that was associated with my now closed Pay Pal account.
    In other words… Pay Pal Sucks!

  14. chizu says:

    I wonder how Paypal’s investigation actually works. It’s like they don’t actually read/pay attention to what goes on. Well, I should say, they completely ignore you.

    I received a “gift” payment for a few hundreds a while ago. (Someone was paying me back.) They held onto that money and sent an email to both the sender and receiver about it. We emailed back about how this money was NOT part of a sale, it wasn’t a business transaction, and it didn’t involve any “goods”. Paypal refunded the sender after dragging this out for about a month. It was a waste of time and beyond infuriating because the money gets locked up and even if the sender were to go to the bank, he’s out that amount of money to give to me. (We also can’t cancel the transaction.)

    God. How did Walmart beat Paypal?

    • almightytora says:

      That happened to a friend of mine as well. It was the first time ever in the years she has been using Paypal that she got an “audit transaction” e-mail from them.

      Pretty much she had to wait a couple days until the sender didn’t answer the e-mail from Paypal, the money got refunded to the sender, then the sender sent it back again immediately with no problems.

      It’s a stupid audit system Paypal uses.

  15. BangBangAnnie says:

    Did they make the buyer destroy the snake and submit proof like they did the violin?

  16. dourdan says:

    paypal will ALWAYS find for the buyer.

    i know it’s 20/20 hind sight, but if you sell something over 100 dollars GET A CHECK.

    as an ebay seller, all of my items go for 10-20 dollars, so if a buyer says “hey, your item arrived broken” i will not even argue. here is your money back. because if i try to fight i will loose.

    • GoldVRod says:

      “paypal will ALWAYS find for the buyer. “

      No they won’t.

      • Lyn Torden says:

        Agreed. PayPal finds for whoever showed up on a coin toss with no relationship whatsoever to any factual realities.

    • lauy says:

      Speaking from experience, they will NOT always find for the buyer. I had to file a chargeback once on a counterfeit bag after filing a dispute with them and they found in the seller favor.

  17. SmokeyBacon says:

    Paypal is evil yes, but how do we know it wasn’t a fraudulent transaction? Is the OP sure that the person they sent the snake to is the owner of the credit card used? I have had fraudlent charges on my account happen through paypal for items that I didn’t purchase, so this could be the case. I don’t think that paypal does much of anything to confirm that the person making a purchase is the person who belongs to the account. It sucks as the supplier when that happens but the supplier got scammed as much as the account owner in some cases (I was going to put buyer, but really they are not the buyer, they are the account holder and the fraudster is the buyer).

    • taaurrus says:

      That is what I was wondering myself. What if the person who bought the snake used someone else’s credit card and that is why Paypal refunded the money. My issue here though is this: shouldn’t it come out of PAYPAL’S pocket – not the seller’s?? If a bank card was used fraudulently then doesn’t the bank cover all fraudulent charges? They don’t make the card holder or the store where the card was fraudulently used pay these charges – the bank covers them. So why is the SELLER the one who is out the $500?

      • StarKillerX says:

        Yeah, if there was CC fraud involved then the fault for the illegal transaction as they are the one who performed it, not the seller.

        That’s supposedly one of the benifits of using Paypal is that the seller is protected from CC fraud by removing themselves from the CC transaction.

        • James says:

          Assuming they followed all the seller protection policies. If it really was a stolen CC, they likely didn’t ship it to a confirmed address.

      • SmokeyBacon says:

        Well, other than the fact that I never did say that the seller should have to be the one to loose money on this, you make a valid point. I didn’t mean to imply that the seller should have to pay, I just was pointing out that maybe it wasn’t the account owner that was scamming the seller, it could have been a third party. Paypal should be held responsible but since they are not considered a banking institution (even though they act as one) they never are. I hate paypal with a passion and honestly I don’t understand how people still use them – with as many problems as they have for sellers and buyers it just does not make sense to me. And as has been shown in story after story, it is never Paypal that had to pay for the screw ups, it is the seller or the account holder.

      • Jawaka says:

        It doesn’t come out of credit card companies pockets when someone purchases something from a store with a stolen card.

  18. maxamus2 says:

    More details would be nice.

  19. lauy says:

    A couple questions not answered above and needed before we bag on PayPal as per usual…
    1. Was this a chargeback or PayPal complaint/dispute? Chargebacks are decided by the cardholder’s bank, not PayPal. PayPal decisions the complaints and disputes.
    2. Did he have the shipment signed for? PayPal’s Seller Protection requires delivery tracking with a signature on tangible goods over $250 to the confirmed address for the buyer.

  20. Aliciaz777 says:

    This is exactly why I do not and never will use eBay and PayPal. There’s far to many ways for shady people to take advantage of eBay’s and PayPal’s rules to get free stuff. All they have to do is take a few minutes to file a claim and within a week they get their money back and get whatever they bought for free.

    It’s really crappy we live in a society like that, but nothing is going to change.

  21. HannahK says:

    I have always wondered, does PayPal really handle this that differently from other credit card processors, or do we just hear about it more often because small merchants like the OP don’t understand “the cost of doing business” as well as larger merchants?

    If he had a small business with whatever credit card machine it commonly used at most retail stores, and someone reported a purchase as fraud to their credit card company, what would have happened then? Do the credit card companies eat that cost, or do they take the money back from the store? I always assumed that store is out that money, and they have to chalk it up to the small percentage of stock that inevitable gets stolen.

  22. skloon says:

    i’ve had it with these melon farming snakes in my melon farming mail

  23. tooluser says:

    You should always carry a small flagon of whiskey with you, in case of snakebite. Furthermore, always carry a small snake.

    — W.C. Fields

  24. Collaborator says:

    Take Paypal to small claims court, it’s the only way they ever listen. Oh, and also, don’t use Paypal for any reason whatsoever. You have very little recourse, they’ve never once paid any attention to my side of things (the seller), instead, they immediately agree with the first person to file a compaint, regardless of reason. Why people use Paypal anymore for anything when there’s tens of thousands of cases of Paypal screwing people over I’ll never understand.

  25. KyBash says:

    I’m disappointed PayPal hasn’t busted under the RICO statutes — they consistently aid and abet fraud.

  26. Jawaka says:

    Isn’t it possible that it was a fraudulent purchase? I mean, we just had another post today about Mastercard accounts being compromised. Perhaps the purchaser used paid with a stolen card number.

  27. Jawaka says:

    Nobody wants to consider the possibility that it was a fraudulent transaction. There was just another post today about Mastercard accounts being compromised. Perhaps the purchaser used paid with a stolen card number. Wouldn’t the same thing have happened if the transaction was made in a retail store with a stolen credit card?

  28. Snakeophelia says:

    Hey, I’m someone who’s actually purchased (two) snakes online! So you’d think I’d have something useful to add to this conversation. However, I never paid via PayPal. because this was back in the day before everyone was using PayPal for such things. I’m pretty sure I mailed the breeders a check on both occasions.

    I’m surprised the seller does not have more proof that the snake was delivered safe and sound, or (if he does) that PayPal won’t accept it Both my snakes came via Delta Air Cargo and I not only had to only sign for them, but also open the crates at Delta to verify the snakes were alive. There was all sorts of paperwork on these transactions.

  29. BBBB says:

    A merchant needs to view paypal the same as a check or credit card – they are all subject to buyer scams or having been stolen. Yes, paypal didn’t investigate properly. But banks and credit card companies are often just as arbitrary – this is nothing new for experienced merchants.

    Years ago my friends with retail stores complained about bounced/fraudulent checks and unjustified credit card chargebacks – same story…new exchange process, [but more common because more people feel they can get away with it on Paypal and with social engineering it is easier to steal a Paypal account.]

  30. PhilipCohen says:

    And, just for a laugh, some serious analyses of PayPal’s “The New Way To Pay In-Store”, PayPal Here, PayPal Digital Wallet, PayPal Debit MasterCard, PayPal Local and Watch With eBay …

    eBay / PayPal / Donahoe: Dead Men Walking

  31. mcgyver210 says:

    The seller could file a criminal interstate theft fraud complaint with that much money involved. Also in these very one-sided cases with Paypal acting as a processor he may be able to file legal action against PayPal.

  32. Levk says:

    Works the same way with Credit Card Chargebacks, they do not talk to the biz and they can file an appeal but really they are not gonna do a thing, best thing would be to sue or so

    • mcgyver210 says:

      I am a merchant & I can tell you from experience a business can win a charge-back dispute against a consumer. Also consumers need to understand if you win a charge-back it doesn’t mean you can’t be pursued for theft of services or merchandise by fraud. Credit card companies are becoming less 100% pro consumers now with all the fraud etc involving charge-back disputes.

      Your credit card company isn’t obligated to help you commit fraud.

      Unfortunately now-days the consumer isn’t always right.

  33. Mudilo says:

    i got a snake he can have