What everyone should know about PayPal! Nothing bu
Current mood: aggravated
Views: 173 Comments: 8
It all began from a charge back.
Sold an amp for $1100 and (and few other things) that totaled over $1200. All was good and a month went by. Then.....
Suprise!
My account was frozen! -negative- PayPal account. I was hurried to change all my "Buy It Now" online auctions to Money Order or Bank Wire Tranfers only. (so PayPal couldn't screw me out of any more money)
Then BANG!!!!
Faster than I could change my "Buy It Now" online auctions... a 5150 sold for $810 and FBV shortboard sold for $230.
BOOM! The buyers paid via PayPal immedaitly after auctions closed.
Shazzam, PayPal consumed this money and put it directly towards the negative from the charge back.
Well, screw that!! If I don't have payment in my posession, I reserve the right to ship products!
I email the buyers to explain to them of the situation and refunded their money.... then BANG! PayPal took the funds from my Checking account (putting that account in the negative!)
Whoa! So I called my bank and said "Shut'err down, NOW!!!)
Thankfully my bank shut it down. Though I was already in the negative, they saved me from more trama! I filed a claim with my bank to notify them of PayPal's scam! 48-72 hrs later, my money was back and the buyers of the 5150 and FBV shortboard are refunded without delay.
Just to be extra safe, I had those buyers call their credit card to notify them of PayPal's scam as well (Just in case PayPal tried pulling those funds back). As my bank account took the funds back from PayPal and said "no-no", you must'nt touch.
Needless to say paypal DID try to recoup that money back from those buyers credit cards... Thankfully, their credit card company said "NO!" payPal couldn't touch it. Sheww!
Now PayPal charged me back for refunding the buyers of the 5150 and FBV shortboard. + still in the negative from that gear that I sold over a month ago for $1200. = over $2200 in the negative.
Now here's another kicker. I had purchased a Mark IV back in August. That seller kept his funds in his PayPal account (for whatever reason) and PayPal swiped his funds away from him!!! REPEAT: He sold me an MKIV, that deal was done A LONG TIME AGO! And PayPal swiped his money!?!?!
I don't even know if they went back further to seller previous to that August purchase, but I'm sure I'll find out soon!
PayPal has the key to everyones money and will take YOUR hard earn cash without notice!
I've been using PayPal for years and have never had a problem. Many companies use PayPal day in day out without a problem. Something strange is going on in your case, I'm led to believe.
So someone charged back on a sale you made, and that put you in the negative? It's not a "scam", it's how the system works.
They asked you if you agree to their service terms when you signed up, and you agreed. And in the service terms they mention that in case of a chargeback, you agree to let them balance it out from your available funding sources. Which just happens to be your checking account and your credit card, in the absence of a positive paypal balance.
The morale is, read the fine print before you sign. Paypal is an amazing system, for both buyers and sellers, but you have to understand your risks and liabilities.
pifty- PayPal's user agreement is above the law. How can they get away with beating the system? The have found a loop hole:
Let's begin by first stating that PayPal is not a bank and does not provide its merchants with a Real Merchant Account. PayPal provides its merchants with a PayPal account.
There is a Very Big Difference.
With a Real Merchant Account, your funds are deposited into your personal or business bank account, which you control and which is also protected by Federal Banking Regulations.
With PayPal, your money is deposited into a PayPal Account, which PayPal Fully Controls.
Since PayPal is NOT a bank, they do not need to follow federal banking regulations. These regulations are in place to help the "Average Joe" avoid issues like having their bank account frozen for 6 months with no explanation...(Imagine if your bank was permitted to do that!)
Because PayPal is not regulated in the same way as a Real Merchant Account, Paypal accounts are frozen for almost anything and without warning. The account can usually receive money while it is frozen, but it certainly cannot withdrawal money. Once an account is frozen, the funds are often held by PayPal for months on end with Absolutely No Recourse for the merchant.
Merchants finding themselves on the wrong end of a frozen Paypal account will still have to find some way to pay their obligations and fill orders for the weeks and months while the account is restricted. A domino effect occurs when a merchant's account is frozen, leaving them with No Means To Fill Orders. Those orders are then disputed by customers, creating more chargebacks and the illusion of fraudulent activity on the part of the merchant. "Welcome to the PayPal Nightmare."
I guess my question is, how can paypal get away with not abiding by federal banking regulations? The same regulations that are in place to help protect the "Average Joe".
If it walks like a duck, quacks like a duck, looks like a duck, it must be a....
I'm by no means trying to defend Paypal. Like you said, they're not above the law, they're just not operating within the laws you expect.
They can do it, for as long as they can get away with it. I understand why they're rather non-lenient in the enforcement of their accounts. PayPal account holders undergo practically no checks of identity or financial integrity and no business plan reviews for the initiation of their account (much unlike the case of an acquisition of proper merchant account), and - don't quote me on that - with the amount of real fraudulent, illegal activity (resulting from the aforementioned lax security) which takes place in the Paypal system, I'm sure that a few innocent people get caught in the security crossfire. A few of those emotional stories float up on the internet, and here's your nightmare.
Having said that, I'm sure that they will be forced to incorporate as a bank (and thus follow all appropriate regulations) in the remote future. I think they're already doing it in the EU. Not sure how that'll affect the majority of their clients who are really only with Paypal for the ability to quickly and conveniently pay for small purchases on the web though. As for sellers, if you're a high volume merchant, then it makes more sense to get a merchant account for your business anyways. Depending on the product, you're likely to get a better rate.
Regardless, sorry you got burned man. I'd be pissed off too.
| My Profile
What everyone should know about PayPal! Nothing bu blog
