Is PayPal really the safer way to pay? PayPal is able to freeze an account at any time they wish and leave customers unable to access their funds. PayPal leaves everyone vulnerable to internet fraud with phoney protection plans and will offer little or no help should customers seek advice. Learn what customers have really agreed to when they accept PayPal’s terms and conditions.
PayPal is the largest online payment service with over 150 million members. Advertising itself as a safer way to pay, many of us consider it a more attractive prospect than revealing our credit card or bank account details to independent sellers. But how safe is it to leave your money in the hands of a faceless corporation which has one of the worst customer service records of any payment service? Many websites are now devoted to exposing the many horror stories and bad experiences customers have suffered at the hands of PayPal and it defies logic that this company is allowed to continue in its shameful and unlawful practices.
Many are unaware of the 2002 class action lawsuit filed against PayPal by the California Superior Court. Two class representatives namely Roberta Toher and Jeffrey Resnick, filed separate claims against PayPal accusing the company of placing inappropriate restrictions on customer’s accounts and freezing those accounts for a total of 180 days without adequate reason. These claims were later consolidated into one. PayPal was also accused of many other examples of improper practice including failure to answer complaints, and providing misleading promises of customer protection. The case was eventually settled out of court with PayPal paying $9.25 million into a settlement fund for customers who had opened accounts between October 1st, 1999 and January 31st, 2004. Although this may sound like a large amount each person received only $50 – $100 and in many cases much less. As the case was settled out of court PayPal was not convicted of any wrongdoing and has since been allowed to continue in its shady practices.
Reported experiences with PayPal range from small instances of rude and unhelpful staff, to larger problems such as PayPal freezing their accounts and even withdrawing money straight from their personal bank accounts. There are numerous stories on the internet from customers who have been unable to access thousands of dollars in their accounts for up to 6 months. PayPal can freeze accounts if they suspect unlawful activity, all the while earning interest on the money trapped in that account. Reasons for suspicion include the transfer of large amounts, repeated transactions from the same buyer or even receipt of funds from a country PayPal considers ‘risky’. Many small businesses have filed for bankruptcy after PayPal withheld their funds and refused to lift restrictions, even after evidence was submitted to prove the validity of the transactions.
PayPal also offers a buyer and seller protection policy which assures the customer they are covered in the event of non-payment or non-receipt of goods. In reality PayPal’s protection scheme only covers tangible items so purchase of e-books or software is not covered by the policy. They also state in their terms of service that they will only refund buyers if they can recover the funds from the seller which is impossible if the funds have already been withdrawn. There is also a flawed return policy which leaves sellers open to scams. One of which consists of a buyer filing a complaint about an item and requesting a refund. They then ship the empty box back to the seller and provide a tracking number to PayPal to prove they have returned the item. PayPal will then withdraw the money from the sellers account, leaving the buyer with the item they have purchased and their refunded money. The seller is unable to do anything as PayPal consider the tracking number as proof of return and will not assist the seller any further. This is one of many scams which are common throughout EBay and other auction sites.
If a customer finds themself a victim of PayPal’s abysmal service they will quickly discover that the complaints system is virtually non-existent. PayPal’s contact number is difficult to find within the website and if it is located customers must be prepared to hold for an extremely long time before being able to speak with an actual person. Customers have reported instances where requested documentation has been lost on numerous occasions and even if all requirements are met PayPal still refuse to lift restrictions on their account. How is it possible for PayPal to continue this awful practice unchallenged? Before customers can open an account they have to agree to the terms and conditions PayPal impose on them. After opening an account they are now at the mercy of PayPal with no recourse should a problem arise further down the line. Before opening an account with PayPal customers need to be aware of the dangers they are exposing themselves to when dealing with a self-regulated corporation such as PayPal. If a dispute arises later on a small company really is no match for the mighty billion-dollar power of PayPal, and many business owners are now left with their companies in tatters after putting their money in PayPal’s hands.
To read the many horror stories of bad experiences with PayPal please visit the links below: