WARNING: The following stunt may cause a croaker... forumites advice is required!!

[comicwiz]

I just recieved an email from email address service@paypal.com. It is a chargeback inquiry for a purchase which was made using a fraudulant credit card. I'm posting this information for two reasons. The first is to gain some insight on this type of activity, and have some forum members advise me on what I should do about this. And the second is to let consumers outside of Canada and the U.S. in on the kind of holes in PayPal's protection program... because I for one was not completely aware of their stipulations.

 

The email starts with:

 

Dear Joseph Fiore,

 

We have just been informed that you have received funds from an

account with reports of fraudulent credit card use.

 

Details of the transaction and this case are as follows:

 

Buyer's Name: [name witheld]

Buyer's Email:

Transaction Date: Apr 11, 2003

Transaction Amount: -$45.00

 

HOW IS IT POSSIBLE THAT TWO WHOLE MONTHS PASSED BEFORE PAYPAL FIGURED OUT THIS USERS CARD WAS FRAUDULANT?

 

There are some specific details in the email which are outlining the fact that I may be getting screwed, and my account history shows a -43.39 withdrawn from my PayPal account. What should I do? Is there anyone who has had a similar situation? I know $45 is not a lot of money, but I'm seriously concerned with the fact that PayPal has the ability to issue a chargeback on a transaction dating as far back as April 11th. Its also worth noting that I may not be eligable for their payment protection. Their payment protection states:

 

PayPal indemnifies sellers from chargeback liability resulting from

a buyer's fraudulent use of a stolen credit card and/or false claims

of non-shipment of goods for payments received through PayPal of up

to $5,000 per year when the following conditions are met:

 

And then they list 7 conditions:

 

1. The seller has a U.S. Verified Business or U.S. Verified Premier

Account, or a Canadian Verified Business or Canadian Verified Premier

Account. Note: While non-U.S. sellers outside of Canada may be

Verified, they do not qualify for and are not protected by the Seller

Protection Policy and therefore may be responsible for any reversals

made due to fraudulent funds. (I THINK I'M OK HERE)

 

2. The seller ships to the buyer's Confirmed Address. (HERE TOO)

 

3. The seller can provide reasonable proof-of-shipment which can be

tracked online. This documentation must show that you shipped to the

Confirmed Address. (Most U.S. carrier companies, including the U.S.

Postal Service, offer this service.) For transactions $250 or more

in value, the seller also needs to provide an online proof-of-receipt

in the form of a signature from the recipient. Because comparable

proof-of-shipment is not currently available for electronically-

delivered items, we are currently unable to offer Seller Protection

for digital goods and other electronically-delivered items.

(NOT SURE ABOUT THIS AS IT WAS SENT REGULAR AIR MAIL)

4. The seller accepted a single payment from only one PayPal account for

the purchase. (Multiple payments from different accounts for a single

item are a fraud indicator. Sellers should not accept such payments.) (GOOD HERE)

 

5. The seller ships to a domestic (U.S.) buyer at a U.S. address. (GOOD HERE)

 

6. The seller cooperates in resolving disputes by responding in the

following time periods: When a complaint occurs, the seller must

provide complete information within 7 days of a request from PayPal.

However, if PayPal is required by the credit card association to

respond immediately to resolve a reversal, sellers must provide the

information within 3 days. PayPal will indicate the response time

required in the e-mail message sent to the seller. (DEFINE COOPERATION )

 

7. The seller ships within 7 days of receiving payment. (GOOD HERE)

 

Under the guidelines of our Seller Protection Policy, we reserve the

right to place a hold on the transaction in question while we investigate

this case.

 

NOT GOOD. Especially because my PayPal account is linked to a bank account...

 

Any advice would be greatly appreciated. Thanks

[murph0]

Not that it helps now, but after I get any payment through paypal. I IMMEDIATELY have them either wire it to my bank account or issue a money order. Once it's out of there, they're SoL. I don't link my bank account but if I did and they tried to take money out of it, they'd certainly be getting a nice letter from a lawyer. There only other option would be to charge the C.C. against our knowledge and/or wishes which would result in another loving letter from an attorney as well as filing a grievance with your C.C. company over the payment and I'm 99 percent certain you'd win. (unless you have terrible history with them )

Long story short, leaving money in paypal accounts is probably not a good idea b/c their reputation is shotty at best.

 

Brian

[ArAich]

The way I see it Joe..is that this should be no differant than a business that accepts a "bad" credit card...if the business accepted the credit card as payment then that business has to try and get it's money back by going after the person who committed the fraud or write it off as a loss....

 

Paypal accepted the card therefore it is their problem as to how they get the funds back....not yours...

 

You fulfilled your obligation and you should not (and probably can't) get penalized for it through a bullshizit charge back....call Paypal and give 'em heII....

[lighthouse]

If you go to http://www.paypalwarning.com you'll see stories far worse than yours...

 

Joseph, the way PayPal's user agreement is set up, they can take money away from you at virtually any time, for any reason, and have no obligation to give it back. If your account is linked to a credit card and they attempt to reverse a previous transaction, they have the right to charge your card to get the money. If your account is linked to a bank account, they can draft money straight out of your bank account... any time... for any reason...

 

I use PayPal... I do so because it results in more bids for my auctions... But after they shafted me out of $465 two years ago, I will never again leave money in the bank account that PayPal has access to.

 

My best friend from college saw them draft $270 from his bank account, and they held his money for four months while they completed their investigation. They eventually gave him the money back, but because they don't have to notify you when they take your money, he bounced four checks including his car payment when the money disappeared. He figures it took him 10 hours on the phone to make sure his credit rating didn't get messed up as a result. When PayPal finished the investigation, he opened a new checking account just for them, and doesn't leave more than $20 in it...

 

Use PayPal... It's good for sales... And good for your bottom line... But be very, very careful about what accounts they have access to. And NEVER give them your primary checking account that you use for your household expenses...

[comicwiz]

Hey Brian

 

I'm normally good about getting my funds outta there, but I was away, and had some payments come in from recent auctions over the last few days. It was a timing thing really that sealed this story as a classic lose-lose situation... I'm going through their "Transaction Dispute" as I write, but after looking at the language on their site, I'm certain that I've got NO LUCK IN HELL claiming my money back...

[comicwiz]

Hey Rick

 

My thinking as well, but its the darned stipulations... now they are asking for a tracking number. I'm dead in the water! I know I've heard this over, and over, and over again on these boards, but some buyers would rather forgoe a transaction completely than to pay extra for registerred or traceable mail service. I keep seeing the initials R.S. everywhere on the PayPal claim for I'm filling out.... do you think this means ROYALLY SCREWED!!

[ArAich]

now they are asking for a tracking number.

 

I think that's a biggie.....

 

If I were in your predicament...and I may be one day...I would give them a call and talk to a representative....sometimes one on one conversation works out better than the online hoopla...

[comicwiz]

Hey lighthouse.

 

Sorry to hear about your loss. Makes mine pail in comparison. I agree; the advantages to accepting PayPal are fantastic, especially when looking at the way it bolsters more bidding for ebay auctions. I'm currently working on an online catalogue for a web project, and PayPal's shopping cart toolkit is incredible. I've even had ebay bidders tell me they wouldn't have bothered bidding if I didn't offer PayPal. But I do believe PayPal needs to assume some responsibility in this matter, based on the period of time between the transaction date (2 months), and that the buyer has a confirmed address. Why should it matter whether I can provide a tracking number??? They have a confirmed address, and an ISP to contact as his email address is not a hotmail or free web-mail account.

 

Here's the kicker -- they've given me 72 hours to complete the claim, otherwise I automatically assume the risk. I can't even begin to imagine how enraged I would have been if this happend during my holiday last week. I'm calling their security department on this... at least to give me and extension.

[lighthouse]

There is absolutely no point in calling them...

 

All they will do is quote you chapter and verse from the user agreement, and since you can't prove delivery, it's "thank you and drive through"...

 

Chalk up the $45 as a life lesson, and adjust your future PayPal dealings accordingly. On some items, it's worth the risk to lose money occasionally to fraud. But on bigger items, always protect yourself (or stick to buyers you know)...

[ArAich]

I think I'm having a croaker.....

[Room 237]

Happened to me too, took 3 months for the credit card company to tell me, and I lost 2,200 GBP, (US$1 = GBP 1).. there was noting I can do about it, they debit your account, the money is gone...

[comicwiz]

I think I'm having a croaker.....

 

. Thanks Rick. A least I got a laugh out of the incident.

 

Thanks guys for the advice. I'm pretty much screwed over for the money. I got off the phone with their CSR and in a nutshell, I'm not protected under their payment protection. I'm disappointed with the outcome, but like lighthouse says, I'm starting to look at this as a costly learning experience.

[comicwiz]

Happened to me too, took 3 months for the credit card company to tell me, and I lost 2,200 GBP, (US$1 = GBP 1).. there was noting I can do about it, they debit your account, the money is gone...

 

If you go to http://www.paypalwarning.com you'll see stories far worse than yours...

 

Wow, I feel like I just won a million bucks after reading the stories on this site and hearing about fortysevenuk's loss. Sorry to hear about your loss man.

[yertle]

If it is any consolation others are learning form your experience as well. Me being one of them. I've yanked my checking account from being associated with my paypal account and will be setting up an account strictly for paypal.

[lighthouse]

If it is any consolation others are learning form your experience as well. Me being one of them. I've yanked my checking account from being associated with my paypal account and will be setting up an account strictly for paypal.

 

And let me reiterate here... I am not suggesting you anyone should stop using PayPal... or implying that something like this will happen to anyone in particular. My reply wasn't about trying to start a panic.

 

I have been burned by PayPal's system and the people who abuse it. I continue to use PayPal. I think, overall, I have made far more money by accepting PayPal than I would have by not accepting it. But I have adjusted my risk tolerance when it comes to their system. And when people ask me for advice I suggest they do the same.

 

'House

[jonnydouble]

I have been burned by PayPal's system and the people who abuse it. I continue to use PayPal. I think, overall, I have made far more money by accepting PayPal than I would have by not accepting it. But I have adjusted my risk tolerance when it comes to their system. And when people ask me for advice I suggest they do the same.

 

'House

LH....What if you have a checking acount that you just keep say $50.00 bucks in....but also have a credit card linked as an alternate source....can they bypass the checking account and take the money back on your charge card??

 

 

Jonny D.

[fantastic_four]

So if you clear out your bank account, do they just charge your credit card? If so, how can you fully protect yourself? Anybody got a CC with a credit limit of $5 I can have?

[Joanna]

If possible, get a debit/charge card for the secondary account. Then use it as your CC. It's a way around the system since Paypal thinks it has 2 sources when it really only has one.

[jonnydouble]

If possible, get a debit/charge card for the secondary account. Then use it as your CC. It's a way around the system since Paypal thinks it has 2 sources when it really only has one.

 

But you probably couldn't use the debit card to purchase with paypal....I use my credit card to purchase books too.....unless you open two paypal accounts....one with a small checking account just for selling.......and another with a credit card for buying....

 

J.D.

[murph0]

What I did,

Created a savings account, opened it. Added it on paypal, and then closed it after it was confirmed. Next if you have a high limit and are in good standings with youre credit card company, you can ask that they call you to confirm all purchases placed on your C.C. So if Paypal tries to screw me, I'll know and not confirm the purchase and file a grievance.

 

Brian