Consumer Complaints: PayPal Buyer Protection not all it's cracked up to be?
Filed under: Consumer Complaints
Have you ever purchased something on eBay, paid with PayPal, and felt good because you're got their "buyer protection" guarantee? Unfortunately, buyers aren't as protected as they might think they are. Sure, PayPal agrees to help resolve disputes between you and the seller, but that doesn't mean that you're going to win your dispute, even when all the evidence is in your favor.Witness this story from a WalletPop reader who was scammed by an eBay seller, and then felt victimized a second time by the lack of results from PayPal:
My consumer scam involves PAYPAL which is a ruthless, money grubbing Ebay company. They get to operate like a bank, allow consumers to think they ARE a bank, pretend to offer "Paypal Protection," when it is all a scam to get and keep consumers' money as long as they can.
Let me start out by saying that I am a small time Ebay Powerseller, with 100% positive feedback. I have been selling small vintage and antique auction items fairly regularly since 2005. I have used Paypal to receive and send payments early on so had always been a great customer and independent agent for Ebay and of Paypal.
All that changed in September 2007 when I purchased, on eBay, 100 bottles of "authentic" Chanel perfume for $1880. As soon as the shipment arrived, I had suspicions that they were fake, and ran to the nearest Macy's Chanel counter. My suspicions were confirmed. I then contacted the seller, who advertised on eBay that this was the real thing, who wanted to know absolutely nothing.
I then complained to eBay who immediately sent me to Paypal where I filed a fraudulent merchandise claim. Little did I know that Paypal would sit on this as long as they could, in the meantime telling me that they "take the claim of fraudulence merchandise very seriously." Sure they do!
Anyway, I was required to supply all the documentation I had, which I did, and a report from an independent verifier who examined the perfume and determined it was fake. I sent everything to Paypal posthaste because all I wanted was this large sum of money back and I would have been glad to ship the bad merchandise back to the unscrupulous seller. I contacted Chanel who said that the seller was not even authorized to sell their brand. I was also told that I could contact law enforcement but that they would just confiscate the merchandise and begin an investigation that may lead to criminal charges against the seller but would not compensate me for my loss.
Every time I called Paypal to find out where the case was, I received generic phrases from customer service reps who refused to ever connect me with a supervisor. In the mean time, I was in contact with the seller who told me that Paypal had frozen her account which she said has several thousand dollars in it, and now she could not pay her bills nor return my money. Of course she blamed me for all of this and verbally threatened me.
I just wanted to be done with the whole thing and was sure once Paypal stopped resting on their laurels, they would just refund my money from her account.
Guess what? Exactly two days before they were to close the case, approximately 6 weeks after the start of it, they sent me a generic email stating that they needed further documentation of inauthenticity.
I immediately called them and said I needed more time than two days as I had to ship more perfume to another independent verifier, have them examine it, and write a report. I had previously tried the department stores, such as Macy's, who confirmed the inauthenticity but were not allowed by their management to put it in writing, since it had nothing to do with Macy's and they did not want to be involved. I had also tried to get Chanel to do the same but they were not at all interested and just advised me to buy only from a reputable Chanel dealer from now on.
Anyway, Paypal refused to give me any more time. I tried my best but I could not get another verification in that short a time frame and I think they knew it.
Why they waited until then to let me know this, they only know, especially when they had 6 weeks of doing nothing and keeping my money, and hers, tied up.
I told them I would not be able to get another report within two days. They told me that the case would be closed and DECIDED IN THE SELLER'S FAVOR!
I couldn't believe it. I would be out $1880 and stuck with fake perfume! I was desperate. What I did was contact the seller, who did not know about Paypal wanting more documentation, and told her I would drop the claim and all charges if she would agree to take the perfume back and refund my money. She wanted her account unfrozen and was seemingly happy to agree.
As soon as I dropped the claim, Paypal sent me an email saying that the case was closed because I "resolved the claim with the seller to both our satisfactions." What bs!
Since the seller's account was now unfrozen, I expected a refund and attempted to arrange it and shipment back. The seller then informed me that Paypal informed her that her account would be frozen for 6 months due to suspicious activity. Of course I tried to verify this through Paypal who would tell me nothing.
[snip]
This all occurred because I did not pay with a credit card but used my Paypal account. I had transferred money from my bank account to my Paypal account to complete the purchase. I was told that if I had paid with a credit card, they would have gotten after Paypal to decide the case in my favor and credit my account. Since I did not use a credit card, Paypal basically had their way with me and used this to their advantage to keep and float money.
[snip]
I've been involved in a dispute with an eBay seller before, and can attest to the fact that the PayPal complaint process is not friendly to the person who has been scammed. Be very careful when using PayPal. They want you to believe they are on the side of the scammed consumer, but stories like this from buyers suggest they aren't quite so customer-friendly.
You may not have all the rights you think you have if you're using a PayPal balance to pay for a purchase. Let's hope that eBay doesn't go "PayPal only" as has been suggested in the media. This would likely give scammers even more opportunities, while eBay continues to collect more and more fees from those who do business with them.
Have you been cheated, scammed, or otherwise disappointed by a company? WalletPop wants your real life consumer complaints and scam stories Email us with your story...
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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Reader Comments (Page 1 of 1)
6-05-2008 @ 6:54PM
Will B. said...
With PayPal now introducing their "generate a secure card number" tool, it's going to get worse. For those that don't know, you can use PayPal to generate a disposable credit card number (tied to your PayPal account) to prevent merchants from recharging you, or whatever.
The problem is...you can't use your credit card to pay PayPal...you have to do bank draft. I was excited when I saw the service, but when I realized I wouldn't have the protection from my "real" bank...I quickly decided not to use it.
You hardly ever hear anything good about PayPal. I mean...I use it...often enough. But I wouldn't want to get serious about using it for business.
- Will B.
San Francisco, CA
Reply
6-06-2008 @ 8:09AM
bob weir said...
i had a similar experience some time ago with ebay and with pay pal. i ordered and paid for a dvd with pay pal. the seller did not deliver and would not respond to my emails. many emails went back and forth between me, the bank, and ebay/paypal. when all was done and said, they all washed their hands of the matter and said too much time had elapsed since i first lodged my complaint and so now the case would be processed no further. THE OUTCOME: the seller got my $30, i got nothing, and ebay/paypal ignored a case in which the buyer (me) was legitimately wronged. $30 is no big deal but the outcome is WRONG!
Reply
6-06-2008 @ 11:14PM
Denny said...
I use to think it was a great service but PayPal is experience some real problems lately...
Here is another PayPal Scam alert... full story here -
http://blog.trustedid.com/?p=506
snippet below:
Botnet Herder Guilty in PayPal Scam
According to eWeek, a 26-year-old security consultant has admitted to installing code to assemble botnet armies of up to 250,000 infected computers that were used to steal user PayPal names, passwords and other personal and financial information.
Reply
7-01-2008 @ 11:36AM
Ryan said...
Take it from someone who's account was frozen by PayPal 4 Times this year alone (all for suspicious activity?). Each time my account would hold over $200 in it I would be frozen. The first time I got the generic excuse of "parting of ways" even though I had done NOTHING wrong nor had I EVER had a complaint against the account. I called there corp number and ran through every extension in their system leaving a total of 120 voicemails. Well my account was good within 12 hours (go figure). Then about a month later I got slack and left over $200 in the account again......booom......account limited. Had to leave the normal 120 voicemail messages and the account was returned to normal without any interaction. A month later.....same story....same outcome. PayPal is terrible and once a major news network is pushed to run this story they will destroy themselves from the inside out along with taking ebay with them ;). Push your local news to run this story!
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7-06-2008 @ 4:35PM
John Whitaker said...
While investigating a product (Driver Detective, a PayPal seller) I was told the product was $9.90 and given the option to pay with PayPal. After clicking on PayPal, there was no "review" of the financial details for me to "confirm"... BAM... I got "Thank you for your order..." and saw $39.90 deducted from my account.
Trying to complain to PayPal about this practice sent me around in one circle after another... never allowing me to describe and register my complaint.
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4-07-2009 @ 7:40PM
herby said...
If you look for drivers on the net, you may be redirected to a link called "driver detective". Be careful here. Their 100% satisfaction guarantee does not include a refund of any type. Once they have your money, it is theirs. Their ad keeps directing you foreward until you are "registered" which means you accepted to pay and you are then "locked in". Also, if you read the offer, it reads "as if" you are paying $9.95 for the program. Trust me,it is written brilliantly, it's over $50 Canadian though. I got taken. I was comfy with 100% satisfaction guaranteed expecting a bow out any time if I was unhappy with my purchase. I thought I would check it out but got duped and I feel sooo small for letting this happen.Don't get me wrong, the program is excellent. I am just trying to share this knowledge with everyone I can so the legal confusion they present is clearer to those of us who "can read" but don't take the time to investigate the whole picture! Here in Canada and I am sure most of our neighboring states, 100% satisfaction means 100% satisfaction!!
7-24-2008 @ 3:58PM
Michael said...
I just initiated a complaint against a seller who took my money, but didn't send my item. I'll keep the forum posted on how PayPal performs. So far I haven't been happy. They've given the seller WAY too long to respond. This seller has bad feedback comments for this type of violation, so apparently neither PayPal nor Ebay has been successful in getting this seller to act legally. Initiating a complaint should extend the amount of time to give feedback on a seller--I had to leave damning feedback as the time was drawing near to close the window of feedback opportunity. This may make the seller less likely to make good on the sale. If PayPal isn't effective at resolving this, I'm going to spread the word, and put the bug into the ear of some attorney friends who handle class action lawsuits. I've paid PayPal a ton of fees for transactions, and they should be able to get my money back. The crooked seller is "celeb_frontcovers" in Ebay UK, so beware of them. Gillian Bartholomew is the seller's name, if it is correct.
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10-02-2008 @ 11:10PM
TC said...
I am glad I am not the only person who has been screwed over by paypal.
My paypal was linked to my bank account but I decided to add my credit card on and make it the primary purchaser. I purchased some headlights for $144 from ebay. I even got a confirmation from paypal at the very end of transaction with ***last four digits of my citi visa card. Looked at my citi account a few days later and did not see it in my recent transactions. I thought maybe the seller did not take the payment yet. About four days later I notice a $35 overdraft fee on my bank account.
I made several phone calls to paypal. The first rep I talked to was probably the most helpful. I explained the problem and told her I wanted $35 refunded for paypals mistake. She told me my money could be refunded with a document (such as a statement) of the overdraft. I lost the fax number so I tried to call again. The next rep told me that I had my bank as my primary source and I told her I had confirmation I did not. She gave me some generic bs about looking into it. Another rep told me it was the banks job to refund me. THe next rep just hung up on me after explaining the problem. On 6-13-08 I called paypal and immediately asked to speak to a superviser. This woman was a complete condescending you-know-what. She told me that my bank account was the primary account when I made the paypal purchase. No matter how many times I retaliated with "that's not what the confirmation said" she counter attacked. My attempt to get $35 overdraft fee that was clearly paypals fault was retaliated with "We WILL NOT refund overdraft fees." In a strong and condescending demeanor. There was no, "unfortunately, we are unable to refund". Nope, just a blatant refusal. By this time I am to tears I tell her "So you refuse to refund this money even though it is your fault?" Her response: "we will not refund your overdraft". My boyfriend took the phone and said "I hope you sleep well tonight." The woman probably has no soul. Paypal knows they can get away with this crap because they are a monopoly in a sense. If you want something off ebay there aren't very many options but paypal and umm paypal.
Reply
12-10-2008 @ 11:59AM
Rob Gray said...
R.G.
CEO, BBFG, LLC
McDonough, GA 30252
email:info@xxxxxxxxx.com
12-10-2008
To: Office of the Attorney General State of California
Re: Paypal account "xxxxxxxx@xxxxxxx.com"
cc: Federal Trade Commission, Office of the Attorney general state of Nebraska, Complaint Assistance Unit of the Division of Consumer Services of the Department of Consumer Affairs, Better Business Bureau, American Express, Chase, FBI Fraud Unit, Paypal
Dear Madam/Sirs,
We are submitting this complaint to compel you to renew your investigation of Paypal for ongoing fraudulent activity and to seek regulation of this financial entity to the accountability and rule of United States law.
Our story is a shocking symptom of the problem at hand. Paypal is withholding $33,306.86 that was successfully reversed to our Paypal account on November 7, 2008 without claims or disputes by any other party. Paypal initially declined to approve the transaction that became reversed, and no money changed hands between buyer and seller. The buyer made alternative payment arrangements with the seller because Paypal also failed to deliver the payment venue with the ease its advertising promises. Although no claim or dispute by the seller has been placed on the amount in over 30 days, Paypal continues to hold our $33,306.86 without offering any reason or date of resolution after repeated phone calls.
This presents numerous problems for which we think Paypal should be investigated and regulated. This pattern of milling and holding legitimate charges from honest customers on a large scale, in an imperious manner, is self-evident to anyone who investigates the volume of Paypal complaints. Whether this pattern is suggestive of secondary gain or whether its just bad business service is the real concern at hand for the US government. If the former is true and Paypal wishes to fund their own investment strategies with customer money, then customers at least need a Prospectus for full disclosure prior to that money being used elsewhere as "capital" to Paypal. If the latter is true then customers will still need some sort of consumer protection from mayhem the likes which we are experiencing. Paypal must not be allowed to continue to advertise "ease of use" while ensnaring customers in charge back schemes and debacles for which there is no accountability to a third party. As such Paypal is a threat to many businesses who find their cash flow suddenly impeded by questionable Paypal decisions for which their is no governing authority to mediate. In many cases businesses are financially damaged by such undesired mismanagement.
To this date, we still have not received our own money returned to us. Nor was a purchase completed. And, our credit lines continue to be inaccessible while Paypal holds the funds.
We will readily submit any necessary evidential documentation at your request.
Sincerely,
R.G.
Reply
1-25-2009 @ 3:41PM
Corinne G. said...
I have been always watched Paypal and read horror stories about them. My mom started her own Ebay business about 2 years ago and she never really had a problem with Paypal, then I finally decided to begin my own business. Mind you, I have had an account with Ebay for about 2-3 years.
When I first started my business, the money was really tight and with what I sold in the beginning (computer parts), I needed the money from the customer to have enough to ship the parts. Well, Paypal had gotten a new policy at the beginning of 2008 to "protect the buyer" by holding the seller's money until the buyer left a good feedback, until 3 days after delivery confirmation, or until 21-23 days had surpassed and no complaints were received from the buyer. Paypal stated that people who had an account with them or Ebay for less than 3 months would have their monies with-held.
Like I said, I had an account with both Paypal and Ebay for 2-3 years and I always paid for my things on time and I had sold textbooks in the past, so nothing was wrong, or so I thought. Paypal held and froze the money I received from the customer and I had no way of paying for the shipping! I ended borrowing money from my mother (which I hate borrowing) because paypal would not let go of the money. Then the customer did not leave feedback for 2 and a half weeks after I shipped the product and paypal would like look at the delivery confirmation number when they realized I did not ship through them. It's all bs. I have the money know and was able to repay my mother, but come on, the policy makes no sense when the seller may need the money for shipping...that is one of the reasons we charge it!
I stayed with paypal and have been looking into getting a merchant account to accept credit cards, but I'm going to let my business pick up a little more. Now I'm having more issues with Paypal. In the past 2 weeks, I have received 2 $35 overdraft fees from my bank account. The first one, I paid it and let it go because I figured I made some mistake in my money calculations. I am always depositing money in my bank account from customers through paypal and I check my account every day to make sure things are going smoothly (I have watched my mother go through hell with money before, so I'm a little paranoid). Well, I checked my bank account earlier this money and saw the numbers in the red and I almost died.
On Monday of last week, I withdrew $30 from paypal to my bank. I had yet to see it deposited, but I was sure it would be in by Friday since Paypal does say it should be in the bank within 3-4 days. Thursday morning, I pay $54 for products from a vendor through paypal. It usually takes 3-4 for paypal to pull money from my bank account. I need the previous depositted $30 to help pay for the products and I thought all was good. Well paypal was quick to put the $54 from my bank account because it showed this morning in my bank account, BUT I still have yet to see the $30. Where is my money now that I have pay yet ANOTHER draft fee??
I am definitely looking into getting a merchant account and I have applied for a credit card so that none of this will happen to me again.
Reply
2-05-2009 @ 11:56PM
JKK said...
Yes, PayPal holds your money for 3-4 days before depositing into your bank account, using the "float" to finance their own business. This is the same technique as your bank uses, but in reverse, if you use Bill Pay...immediately withdrawing the funds from your a/c while delaying the merchant's receipt by 3-5 days. That why most banks offer the bill pay service free of charge. What does PayPal give us in return for the float on our $??
I noticed another thing today while mailing two packages at a postal shop today. While I had included shipping insurance on one of the packages through the PayPal postal feature (computer generated shipping label & packing slip done at home) for a $2.15 insurance charge, I forgot to add insurance on the second package when I processed the PayPal postage.
Low and behold, the postage shop only charged me $1.70 for the same amount of insurance! Thus, along with all the other fees that PayPal charges, they get a 26% mark-up on insurance!
Needless to say, I will avoid using PayPal's postage service for future shipments, unless I can get the USPS to pick up at my home. And I will avoid using PayPal in general whenever possible, since they don't treat their customers fairly.
According to EBay's recently released 4th quarter financial statements, their Payments division is responsible for nearly 33% of the company's net revenues and growing much faster than their auctions division. (Of course their auctions division is in a shambles due to EBay's predatory auction practices they have instituted the last several months.)
Not surprising given their resourcefulness in creating new revenue opportunities (eg Pay Me Later) and their hidden mark-ups like shipping insurance.
Reply
2-16-2009 @ 5:39PM
Russ said...
I have been a serious Ebay seller for 8 years. I have had a number of issues with both Ebay and Paypal (It was a sad day when Ebay bought Paypal - before that day Paypal was a reasonable organization).
I will not go into details. All I can tell you is that I gave up long ago, in expecting either Paypal or Ebay to make an intelligent decision based on facts supplied to them.
I honestly believe that they simply roll a pair of dice in making a decision.
They use no common sense, and many times dont adhere to their own policies.
The care nothing about the seller; I am totally disgusted with them, and I personally would be ashamed to be employed by them. They have no honor, and are cowards as they hide behind whatever wall shields them from any reasonable debate.
Reply
3-04-2009 @ 12:53PM
Mike C said...
WOW $1800. Why not check with channel BEFORE buying product?
Reply
4-23-2009 @ 2:19PM
Willem said...
I have had just the same experience with Paypal Buyer Protection :
Waiting for weeks to help me further, then telling me i need to provide additional information within three days (on a friday, you know weekend and all)
I tell you that the additional information i needed to send was the tracking number, which i gave on filing the claim, but now it had to be by fax within three days !!!
What if i were on vacation ? What if i were without a fax?
Why only three days when they've had more than three weeks to tell me this? (I had to file a complaint on the Paypal website, in order for them to get the case moving again)
Paypal buyer protection is a scam by the biggest online payment processing service.
DON'T USE PAYPAL BUYER PROTECTION !!!! DON'T USE PAYPAL EVER!!!
Reply
9-19-2009 @ 10:43AM
Joe said...
Unwinding Ebay and Paypal:
Ebay programmatically suspends ebay user accounts and freezes paypal funds while researching "suspected" issues. Paypal (ebay owns 100% of Paypal) funds are frozen for around 21 days with Paypal and Ebay earning interest.
Ebay offers no telephone support and appears to offer limited explanations of "suspected" issues.
Ebay business processes and lack of customer support have impacted many customers. A successful class action lawsuit was filed against Paypal (Ebay) in 2003 for frozen funds. A similar class action lawsuit is likely in 2009.
Recommendation: Abandon Ebay and Paypal
Reply
12-25-2009 @ 4:28PM
Lyn G. said...
Currently i have an issue with the ebay seller from UK.
I bought an italian leather handbag for 21.99 GBP,but my
biggest fault was that,i immeadiately paid the seller,but i did
not read the policy on S&H option.This seller charged me the
amount of 7.00 GBP,but for some reason,she shipped the item
through overland surface mail,wherein she can actually ship
this item through Royal airmail for the same price.The seller
was ripping off the customer from the US and other countries,
because,some seller can increase their profit from the cost of
shipping and handling.
Now,after 14 days was past,i emailed the seller back and check
the status of my item,because 14 days already past and i said
Why,the other items that i bought from HK,India and other parts
of UK already arrived,before 14 days,but the item that i bought
from this UK seller has told me,that it will take between 56 days
or more for the item to arrive here in the States,due to customs
inspection and this is what she claimed.but i did buy her BS,
instead i filed a dispute and told the paypal to investigate the
status of the item that i did not receive,The Paypal emailed me
explain that i need to contact the seller,but i don't want to
listen to her BS anymore and that is why i told the paypal,that
i need a refund for the item i didn't receive.
My Advice to the buyers:
If,you think that the item did not arrive after 14 days,go ahead
open a dispute,if the seller still don't respond to your complain,
inform the paypal agent and show all the proof,that you never
receive the item,and if the item will take more than 30 days,
they will review the case and then file to a claim,the paypal will
give you 20 days for the filed claim,and if they found that the
seller has no solid proof of shipping the item to your address,
then the paypal will reversed the money back to the buyer from
seller's account,the paypal will continue to watch the activity
or the shipping status,and then the case will reach the
conclusion between the seller and the buyer.
Lessoned i learned:
Don't buy item from UK,that offer shipment through surface.
The cost of S&H worth 7.00 is enough to ship through Royal
airmail.Surface mail sounds cheap,but no guarantee that the
item will arrive on the time you were expected.
Reply
12-28-2009 @ 5:39PM
martin werner said...
The seller says UPS picked up my order. UPS says that they were paid for the item but it was never presented for delivery.
Paypal says that the seller needs to prove delivery but is not responsible for its arrival.
The dispute has started. The claim has been started.
Pay pal is a defendant in a class action suit .
The FBI has a internet fraud report web site.
Reply
12-28-2009 @ 5:54PM
martin werner said...
Paypal says the seller is responsible for making delivery but is not responsible for its arrival to buyer. (What mischief lies here.)
UPS includeds $200 automatically but it is for the seller to make a claim. ( I don't think they would have a could claim if UPS says they never got it.)
What if the ebay buyer asked for additional coverage?
Reply