PayPal - Friend or foe?

[UKRay]

I'm having a bit of a struggle this week. Essentially I'm struggling to stop myself getting in my car and driving 200 miles to choke the living sh*t out of a guy who has virtually shut my online business down by making a spiteful (and wholly unjustified) complaint to PayPal.

Essentially I sold the creep an amplifier and a few bits of musical tat including a foot pedal/switch thingie on eBay. He complained about the delivery costs so I offered to deliver- free of charge - next time I went to his area. I handed the amp and stuff over and he grumbled about the way I had described one of the foot pedals and said he had expected an effects pedal not a switch pedal. I told him that if he wasn't happy I'd gladly take the stuff away again but no, he wanted the amplifier and agreed to accept the delivery. He took the amp out of my car and carried it to his own vehicle - this man wasn't under any pressure to accept the deal.

I got back home two days later to find an email that said he had changed his mind about the deal and if I didn't give him a £25 refund because of the 'poor description' he would make a complaint to PayPal. This was far too close to extortion to please me, so I told him to do as he pleased but the deal had been agreed and it stood.

Next thing I know he actually made the complaint and PayPal have frozen all the funds in my account. £250 quid's worth. I was furious and fired off a spate of complaints to PayPal including a complaint about the jerk who caused all the problems.

I tried to resolve matters by offering him his money back as long as the goods were returned to me but he said he wanted to keep the amplifier... but he still wanted a £25 refund. At this point the jerk has my amplifier and PayPal has all the money - two weeks later nothing has changed.

This is what PayPal wrote back today (yup, almost two weeks after the event they finally wrote me an email):

Dear Ray,

Thank you for contacting us in relation to the status of your Buyer Complaint case ***********.

First let me begin by apologising for any inadequacy or inconsistency of service you feel you have received to date.

I realise that you are not satisfied with the way this dispute has been handled and I can confirm that our policy to hold funds that are disputed.

Please note that this policy was approved by you at the time when you opened your PayPal account and it is a standard measure in the buyer complaint resolution process.

The money will be released into the buyer's account once we can verify that the item in question was returned back to you.

I understand your frustration regarding this matter and regret any inconvenience it might have caused you.

Sincerely,

Marek

Protection Services Department

PayPal, an eBay Company

That would have been bad enough if I hadn't already had an email from the pompous little jerk a few days ago as follows:

From: Nicholas Forty

Sent: 25 May 2009 20:17

Subject: Apologies

Dear Ray,

Although aggrieved by the absence of the effects pedal, on reflection I've

come to realise that our meeting was the time to protest. Things may have

been rushed but you had acknowledged your error and did give me an

opportunity to object ('If you're not happy...'). Unfortunately I was too

weak to assert myself...

I apologise for not having come to this conclusion sooner (the irritation

had got the better of me) and will cancel the PayPal claim.

Yours sincerely,

Nicholas Forty

,

That was four days ago and the claim is still in place... I am furious, frustrated and fit to cause all kinds of mayhem.

How would you have dealt with this guy and how would you deal with PayPal given that I need PayPal to run my online business.

Ray

Edited May 28, 2009 by Johanna
removed email addy

[King's X]

That sucks, but they get you on the small print. I feel for you brother.

[rdb]

Long distance transactions stink! There's too much room for error, but a lot of us still do it.

I can't offer anything but commiseration...(sp?)

I was talking today, to someone who will not ship to some countries because of credit card deals gone bad. That being said, Paypal has been a convenience to me, but not a necessity. Same with ebay. I've learned to keep just a small amount in paypal for this very reason.

You gave this guy every chance to back out, instead he acted the spoiled little kid, apparently.

Hopefully he sees the error of his way, and this gets resolved...but in the meantime, maybe you can get a new account under some other name or email, and just rewrite the webpages to change it. I know I have several paypal accounts (because I kept forgetting the password...lol). I'm lucky enough to have several bank accounts (peanuts in them) to use for this very occasion. Flow like water, Ray, Flow like water! Don't let the b@#$&ds get you down.

I also have a merchant account that allows me to take ccards over the phone. As long as I get visa/mc verification everything rolls along smooth.

Paypal and ebay have grown to the point where they are huge businesses, and many people are unsatisfied with them now. They have all the business, and treat their customers like dirt. There are a few other companies that do the same online thing, the trouble is everyone is already on paypal...catch22.

[yehagirl]

When I started my business I was going to use paypal - until I read the whole contract. They basically said that they owned my web site if I used pay pal. You might try using Mals http://www.mals-e.com/ for your credit card processing. It is pretty simple to use and they have a forum to help if you get stuck!

Edited May 28, 2009 by yehagirl

[Johanna]

In the US you can tie a checking account into your payPal account. If any money accumulates in my PayPal account, I "withdraw" it to my checking account. If I want to buy something with PayPal and the money isn't there, they debit that same checking account. Was he able to freeze the whole account because that was the total of the original transaction? If he was only disputing $25 then only that much of the account should have been on hold, not the whole balance.

Johanna

[electrathon]

Just so you know, you as the seller will always be ruled against. Take it in the shorts and move on. You need paypal, suck it up. Look at it like your store was just shoplifted.

[UKRay]

In the US you can tie a checking account into your payPal account. If any money accumulates in my PayPal account, I "withdrw" it to my checking account. If I want to buy something with PayPal and the money isn't there, they debit that same checking account. Was he able to freeze the whole account because that was the total of the original transaction? If he was only disputing $25 then only that much of the account should have been on hold, not the whole balance.

Johanna

That was exactly what I did, Johanna. I withdrew almost all the 'cash' in the PayPal account as soon as it was paid in, but PayPal simply put a minus sign on the balance for the whole £250 transaction which means anything that came in (up to £250) was annexed and I couldn't pay anything out - unbelievable. Okay, there is a credit balance in there now but I had some small bills to pay last week. I really hate feeling so completely powerless!

PayPal even demanded that I paid money in to the account to cover the outstanding balance... I declined!

[Bree]

Let's talk about the consumer end. Paypal is all about EBay and if you use Paypal as a consumer for purchases outside of EBay you're probably nuts. Use a credit card.

I bought a GPS from an outfit named eSC Stores. I was in a hurry and didn't do my homework. I used Paypal thinking that they would protect me. BIG MISTAKE!!

ESC Stores turns out to be a bunch of thieves. They took the money and that's about the last I heard from them. No replies to communication... no goods shipped. I file a Paypal claim and they don't reply to Paypal. Paypal rules in my favor but they say that they can't recover any money from eSC Stores so I won't be getting any money.

Bottom line... I am out $424.22. Thanks thieves at eSC Stores. Thanks Paypal.

Take my advice use your Visa card and forget Paypal. You may get protection for EBay purchases but nothing else.

[JohnBarton]

Paypal is both a friend and a foe. I have been very lucky to have had no major problems with PayPal and they have been extremely friendly to me whenever I have had issues that needed to be resolved. Luckily I have also not had anyone file a claim like this.

Lately though I have become very concerned about Paypal's dispute policies.

I had another friend in England have $20,000 frozen for months because of "suspected fraudulent activity".

Paypal operates in a gray area - they are not a bank and so aren't subject to the law the way banks are - not that banks are any better to deal with. But essentially they own ALL records of transactions that you do on their system and that's why I am not keen to place too much of my business health on my ability to transact through Paypal.

This really sucks that it had to happen to you. I suggest investigating alternative means of electronic payment such as Google Checkout, Neteller, WesternUnion, MoneyGram, etc.... or even merchant accounts. When I had my merchant account I had probably five claims in ten years and on all of them I was able to keep the money because I had gotten ALL the information needed to verify identity.

Another thing that I have done in the past regarding paypal is to have multiple accounts set up. You will need a few bank accounts and a few email addresses but this has been something I have done in the past to make sure I always had a "working" paypal account.

I also do NOT tie my paypal account to my real email address. I use a catch-all box on my domain that allows me to make up email addresses on the fly. The catch-all box accepts all emails that are addressed to @jbideas.com and are not already assigned an email box. Thus I can make up a new email and get a new paypal account instantly if need be. Of course this doesn't mean that you can get around the other things PP wants to "verify" the account. I do that by having several bank accounts and using the "virtual credit card" feature that my bank offers. This assigns a valid credit card number that I can use for online purchases. So I tie that to the new PP account and they are none the wiser because their computer can't distinguish between a credit card number assigned to a real card and a virtual one.

Of course none of this actually helps you to get your money from this jerkoff. On that score I'd start out by explaining to Paypal that you are going to start a class action to protest the way they handle claims. I don't know what to tell you. Maybe file a complaint with the police in this man's town? This is one of the crappy downsides to the internet. Even crappier since this time you personally met the guy and offered to rescind the deal.

I wish I had a better answer for you. Hope it works out soon!

[UKRay]

Interesting story, Bree - but I use my PayPal account to pay small overseas bills because it is so much cheaper and easier than using a bank. THis is the first time I have had any problems with PayPal and, trust me, I'll be much more careful in the future . The thing to recognise is that making any kind of payment to a private individual in the US, or even in mainland Europe, is a nightmare if you live in the UK because of the astronomical charges the banks impose for international transactions. I have bought great stuff from several forum members without a glitch using PayPal and been paid for all kinds of leathergoods. The essence is being able to trust the folk you are doing business with.

It is also very easy and much cheaper to deal with trusted businesses in other countries. Just picking up the essential bits and pieces for my new sewing machine was made easy because the vendor was happy to take PayPal (thanks Ryan!) so I simply spent my dollar balance and didn't incur any exchange fees.

The problem comes when you get a piece of poop like the guy who tried to rip me off - you simply can't legislate for weirdos, mad people and sad little men like him.

The financial aspect isn't a bother so I'll get over this quite quickly, but it has definitely left a bad taste.

Thanks for your support folks - I'll stop moaning now and get back on my horse... my stitching horse!

Let's talk about the consumer end. Paypal is all about EBay and if you use Paypal as a consumer for purchases outside of EBay you're probably nuts. Use a credit card.

Take my advice use your Visa card and forget Paypal. You may get protection for EBay purchases but nothing else.

Edited May 28, 2009 by UKRay

[Shorts]

Ray, sorry about the troubles with that guy. A frozen account is my largest concern using Paypal. Actually I have several issues with Paypal but I'm not quite sure what to use instead in order to maintain immediate online/electronic payment methods. I suppose investigation is in order to determine costs for alternate methods.

I hope this all goes away soon and you can get back to leather.

[UKRay]

Ray, sorry about the troubles with that guy. A frozen account is my largest concern using Paypal. Actually I have several issues with Paypal but I'm not quite sure what to use instead in order to maintain immediate online/electronic payment methods. I suppose investigation is in order to determine costs for alternate methods.

I hope this all goes away soon and you can get back to leather.

Monica, to be honest, now the dust has settled on another day, I'm not too worried about PayPal as although they adopt a severe attitude to complaints, this is the first problem/complaint I've ever had in all the years I have been dealing with them. I'm not expecting another anytime soon so it is probably best to put this down to experience and try to make sure it doesn't happen again.

PayPal has just emailed again and said that if the guy doesn't prove to them he has returned my stuff by June 2 they will unfreeze my money and all will be as it was.

Karma will hopefully catch up with the and all will be well with the world; so I'm going to go and pound some more leather...

Ray

[MADMAX22]

In the US you can tie a checking account into your payPal account. If any money accumulates in my PayPal account, I "withdraw" it to my checking account. If I want to buy something with PayPal and the money isn't there, they debit that same checking account. Was he able to freeze the whole account because that was the total of the original transaction? If he was only disputing $25 then only that much of the account should have been on hold, not the whole balance.

Johanna

From what I understand that is allmost worse, if you have a bank account tied to your paypal account then they can freeze all money's tied to that paypal account which includes your bank account. I have read countless tales of poeple who had there checking and savings frozen because of a paypal dispute and the bank couldnt do a thing about it since you basically signed a contract with paypal.

Thats the main reason that any bank account that I tie to paypal will be solely for that reason and no other. And I wont base a business or much else on it.

[JohnBarton]

From what I understand that is allmost worse, if you have a bank account tied to your paypal account then they can freeze all money's tied to that paypal account which includes your bank account. I have read countless tales of poeple who had there checking and savings frozen because of a paypal dispute and the bank couldnt do a thing about it since you basically signed a contract with paypal.

Thats the main reason that any bank account that I tie to paypal will be solely for that reason and no other. And I wont base a business or much else on it.

For those that don't know this is called an ACH or Automated Clearing House transaction. It is the way that "electronic checks" are done and businesses like PayPal and subscription houses started using ACH to do automatic deductions.

The largest danger here and it's a BIG BIG BIG one is that ACH requests can ONLY Be canceled from the merchant NOT by the account owner. So most banks will refer you back to the merchant when you dispute an automatic deduction.

I used to have a bunch of these out there when I thought it would make my life easier. But they don't and they can wreak havoc on your bank account if they deduct the wrong amount or you get to low in your account around the time a deduction comes along.

I used to have a seperate paypal account for accepting money that was not tied to any real world bank account. Then when I got money into it I would transfer that money to a second paypal account that was tied to an account. I NEVER left money in the first account and NEVER used it to buy anything. If it went belly up due to some transaction like what happened to Ray then I would have shut it down and opened another one. I ran a couple hundred Ebay auctions through that account.

I have to say again that I have haven't had any trouble with PayPal BUT it pays to be cautious especially in light of new policies on the part of Ebay and PayPal. I never do business these days on Ebay and I almost always get paid through PayPal by people that I deal with extensively on their order before they pay me. I do use the same account now to also pay for things and it's tied to my account so there is the danger that it could be screwed with by PayPal but I have my fingers crossed.

Twice in the past month PayPal has held up a transaction. Once it was on a payment I made, and PayPal actually called me to verify that I had made the transaction and it was legit. The other time was a few days ago when I received a deposit on a case. They put a reveiw hold on it and it was cleared the next day.

On that one I was a little pissed off that they have taken an extra $9 without any indication as to why? I assume it was something to do with the exchange rate from my buyer's currency into USD but it would be nice of them to indicate that somehow.

While we are on the subject of PayPal let me share this scam with you so that none of you fall into this trap.

Beware of people who offer to pay you in two installments. The scam goes like this, they offer to pay you in two installments from different accounts. The first payment is a small amount and it list the item you are selling. The second payment is for the balance.

As soon as you ship the item the scammer will dispute the second charge claiming that they didn't have anything to do with the purchase. PayPal will freeze the money and then eventually return it to the second account's balance UNLESS you jump through hoops proving how it all went down - and even then they may rule that it's not the "account holder's" fault and not give you the money.

So if anyone offers this then decline because it's probably 99.99% a scam.

It happend to several folks on the billiard forum who were cheated out of their cues. Most were able to get their cues back but not without a lot of help from the forum members acting locally where the scammer lives.

[UKRay]

That sounds like very good advice, John.

I'm going that route first thing on Monday morning! A brand new bank account with no money in it that is just used as a clearing account would work for me. I'm also going to open another PayPal account to make sure I can keep trading even when they are playing silly beggers. Thanks my friend.

Ray