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Online e-Commerce Issues w/ PayPal? 410

A concerned entrepreneur submitted this question for your consideration: "I run a very small online company and the main method we obtain payments for products is via PayPal. In this digital age having an easy way to accept payments for goods is critical to small business survival. Have you had problems with PayPal freezing your accounts, have you had any issues with PayPal harming any of your credit? Neither has happened to me but it it still is a concern. Recently, I was sent this site, became concerned and wanted to ask Slashdot readers for their input on security and any problems they may have had with this service." If you send your money to a website for safekeeping, you expect it to be safe, and a large part of this perception is based on dependable customer support. According the warning site, it sounds like PayPal might be a bit deficient on this end. Have any of you experienced similar problems?

"I don't necessarily trust the website I linked to, nor PayPal's statements. PayPal requires you to register your credit card AND your checking account and could conceivably and legally(?) remove any and all funds and stop you from withdrawing a dime from your PayPal account as well as your own checking account at their whim. What is a small business to do?"

Just an aside, if you are signing up for a personal account, you only need your credit card. It's merchants who want to use PayPal's premium features who have to specify banking information as well.

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Online e-Commerce Issues w/ PayPal?

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  • Mis-informed (?) (Score:2, Informative)

    by sid crimson ( 46823 )

    It's merchants who want to use PayPal's premium features who have to specify banking information as well.

    Is this a new policy? Paypal asked for my bank info when I signed up ~6 months ago... for their standard service (no premium features).

    • by zaren ( 204877 )
      I only have a standard service account with Paypal. I do any work with them by moving money into and out of a checking account at my bank set up just for Paypal transactions. Paypal (to the best of my knowledge) doesn't hold any of my money, my bank does that.

      This is, in fact, the only reason I use Paypal at all - I was in no way interested in putting my money in their system, because I'm not a die-hard auction / online shopping user, and didn't want money tied up where it wasn't quickly accessable.
    • Wrong. I have a standard account, and the first thing I bought was over $100, so they insisted on banking info.

      It's really moot, though.

      They keep changing their story, and their requirements so much, you can't keep up with them. Any money you have in your "account" isn't really yours at all, if they say so. I would be very scared to have more money in that account than I could afford to lose, which lately has been about $20.

      As a matter of trust, how can you trust an establishment that claims they can make all their money through interest on the float, and that they are quick and easy to use, then over a period of 18 months starts adding fees here and there, adding no value, and apparently doing something that gives fodder to those writing paypal horror stories? I can't claim that such stories are true, but where are the rebuttals? Where is the free/easy to use account I had a year ago? Something screwy is going on.
    • Re:Mis-informed (?) (Score:3, Informative)

      by Svet-Am ( 413146 )
      I registered with PayPal a long time ago (nearly a year before their merger with I had to give them banking info even way back then.

      In all that time, I never had a problem with them until recently. I tried to buy a cell phone on eBay and was duped by a nefarious seller. I called PayPal customer support and they told me to contact the "card-issuing bank" for any neccessary chargebacks. I did this and then PayPal treated the chargeback as a stop payment and charged me again for the same transaction.

      Highly irritated, I called PayPal back and raised holy hell about it. they told me that they dont do "chargebacks" on completed transactions (which raised the issue that we dont know if a transaction will be a success until after money is transfered and classified as complete by paypal, thus making it nearly impossible to fit into their strict requirement for a chargeback...)

      Anywho, they instructed me to file a fraud complaint, which I did. Then I found out during filing the complaint that per some eBay-PayPal agreement, I have to wait 30 days to file a complaint. So, that meant I had to sit idle for over a month without a cell phone and without my bargeld (german slang - "cash").

      Finally, nearly 45 days later, I managed to get PayPal to investigate (there was hardly any investigating at all, honestly) and they gave me my money back. But, all the while during their 10-day investigation, they put my account on hold, preventing me from buying sending or receiving money...

      Alas, though, we are in a crux. Due to this, I have come to detest PayPal. But, their security measure, however slim, are much better than BidPay or Billpoint. So, what are we to do when our only means of performing some function is also our worst? Sounds eerily similar to the whole Microsoft conundrum.
  • PayPal (Score:5, Informative)

    by PopeAlien ( 164869 ) on Monday December 10, 2001 @02:55PM (#2683182) Homepage Journal
    The only problem I've had with PayPal was a looong delay in processing a bunch of payments for a group buy of webplayers. A lot of people in the co-op were highly irritated with the delay. They wanted the main buyer that we were sending our money to to prove his identity.. If anything this reassured me. I've also used it without a hitch to buy a few things off ebay.

    I think the main thing to keep in mind is that PayPal is not a bank, and not FDIC insured.. I'd use it as a method to exchange money online, but not as a cash storage facility.
    • Re:PayPal (Score:5, Informative)

      by jesser ( 77961 ) on Monday December 10, 2001 @03:39PM (#2683441) Homepage Journal
      I think the main thing to keep in mind is that PayPal is not a bank, and not FDIC insured.

      FWIW, the new version of Yahoo! PayDirect [] is FDIC insured. Its fees [] are similar to the current PayPal fees []. I haven't used PayDirect since it switched banks several weeks ago, but I remember that it was possible to contact Yahoo about the service if you were willing to pay for a long-distance phone call. (PayDirect is also the only service that I was able to get a tip bookmarklet [] to work with, so I'm biased.)
    • Hehe, they sat on your money too, eh. That almost got very hairy, and I haven't used paypal since. I didn't appreciate them setting back our purchase by that long.
    • by Hooknbaby ( 535912 ) on Monday December 10, 2001 @10:18PM (#2685283)
      I had zero problem with PayPal for a year till two months ago my account got hacked. Someone stole $985 to pay for two eBay auctions. The shipping address was trackable but the local police said the place was a very bad area and they don't know whether they can find the person. FBI is too busy to handle this, although there are evidences showing that this hacker may have stole much more money from other people.

      The best part was, you feel pretty good with PayPal because of the third party insurance. But when you really need it, PayPal is not very helpful. I reported to PayPal right away and then realized that they don't even have a phone number regular users can call. It took them six days to reply my email asking for affidavit. I sent out my affidavit with police report right away via priority mail and it took them two weeks to reply me this time saying that they have never received it. Upon my request they finally gave me a fax number. About a week after I faxed everything to them, they reversed the two transactions, but then restored one, and then charged another $625 without any reason given. So my account actually got a even bigger negative number than before. I've sent tons of emails to them checking about this. And after 20 days silence, PayPal wrote me another email on Dec. 9, exactly two month since the hacking attack, claiming that they had never received my fax. Fortunately I did keep the receipt of the fax to prove that I have sent the fax and they had received it.

      Today I got a statement from my bank saying that because the recurring overdraft situation has not been resolved for too long, they have closed my checking account and filed a record for five years. Next they will pass my case to an agent to collect the money from me. PayPal has no comments at all so far.

      PayPal is a neat thing when there's nothing wrong. But once there's a problem (and the problem is likely to occur again since the hacker is still not tracked down yet), they just leave you aside. It reminds me a joke I've heard, something providing you a false feeling of security while you are actually being screwed. It refers to condom before... now I think it fits PayPal better.

      I am working on suing PayPal since I have to get my banking record straight up. If anyone has similar experience and want to work on it together, please contact me at (sorry to use such an address... I only use it for first contact because it has spam filter.)

      I have sufficient documents to prove the story. Including my certified affidavit, police report, bank statement, email history and transaction summary.

  • by Ieshan ( 409693 ) <> on Monday December 10, 2001 @02:55PM (#2683183) Homepage Journal
    I think a lot of internet junkies are still wary because they're decent business-people too, and this being the case, the reason people distrust online banks and payment services are their apparent lack of physical stuff.

    When you go into a regular bank, you look around and see they have pretty lightbulbs, nice counters, poorly decorated walls, and all sorts of plush chairs and things. They've even got those little pens. Other people are waiting inside. These things make you *want* to be there.

    A website might be real, real pretty, but that doesn't have any physical worth. When I step into a pretty bank, I know that my money is probably going to be secure because in the worst case senario, they've got physical stuff to back my loan with. While this doesn't have practical application in the real world, this is a large part of how our brain percieves things.

    Paypal is dubious because they've got nothing to look at. Sure, they've got a big customer base, but *where is* paypal, and who runs the thing? I think the digital world is still evolving in that we still can't estimate worth by a website. I hope we can in the future.
    • I think a lot of internet junkies are still wary because they're decent business-people too, and this being the case, the reason people distrust online banks and payment services are their apparent lack of physical stuff.

      Or maybe it's because internet service companies have tendency to go tits up without much warning. Regardless of how much physical "stuff" they've got lying around.

    • Paypal is at ** It -is- a physical place. It is called the Web Wide World.

      and Elon Musk [] owns Paypal.

      There you go; Now all your doubts about Paypal can henceforth be gone.

      Begone, Evil Thought, Begone!
    • Well, I tend not to put much credit into the "physical stuff" of a bank. If a bank goes under the value of their "physical stuff" will likely be very insignificant compared to the potential debt of the company. Remember the S&L scandals of the 80's? Personally I find the fact that a bank is federally insured much more reassuring than their "physical stuff". (Paypal is not a bank and not insured as one) Even FDIC has its limits, but it provides far more backing than the paltry physical assets of most banks.
      think about the assets of a small-mid sided bank office (wild guesses here, I'm not a banker):

      Commercial building maybe 500k, but is likely leased
      Computer equipment: 200k
      office furniture, pens, etc: 100k
      specialized facilities (safe deposit vault): 500k

      So their physical assets might be as much as 1.2 million, supporting moderate number of small business accounts (200 maybe) and a decent number of personal accounts (3000 maybe), again, more guesses. Assuming an average value of these accounts at $2000 each (guessing) that's 6.4 million. And that's just the deposit side of things, not the loan side. Even with the wild inaccuracies of my guesses, it's not hard to see that the physical assets are not likely to match up much against the value of the accounts.
      • Correct. What keeps US banks solvent is the capital requirements imposed by federal and state banking regulators. These requirements demand, among other things, that loans be accounted for in particular ways and that the bank invest its assets only in certain kinds of ways.

        Also, note that deposit accounts are not assets of a bank, but liabilities; loans are not liabilities, but assets. (That is, if you go down to the bank and deposit $100, the bank's assets don't change, because they record both $100 in additional cash and $100 in additional liability to a depositor. A bank can make money only by profitably investing deposited amounts.)

    • by coyote-san ( 38515 ) on Monday December 10, 2001 @03:29PM (#2683385)
      The problem isn't that Paypal is an online bank, it's that it's not a bank at all!

      Real banks have state charters and are closely supervised, have strict documentation and recording requirements, etc. I don't give a damn about the physical appearance of my bank, I do care about that little sign on the front door saying "FDIC insured." This doesn't mean that I'll never have problems, but it (and the state charter required for that insurance) does guarantee that they keep sufficient records for problems to be resolved, that money in accounts won't go *poof* if the bank goes under, etc.

      But Paypal is nothing. If it goes under, the money it holds just disappears. If it says it's never heard of me, I have no way of proving that I have an account with thousands of dollars. If they make a payment, they have no statutory requireemnt to document that it was authoritized or to refund my money.

      I'm not totally without rights, but instead of strong local oversight I have to deal with a civil suit in the Federal courts for a contract dispute. If I could prove that we had a contract (did you ever get a signed document from PayPal?). If I could afford the expense. If I could affort the long delays before the case is heard. And all of that assumes that they haven't changed their "terms of service" to require binding arbitration by an arbitrator of their choice.

      During the early days, this may have been justifiable. Not just because it costs money and time to do it right, but because the regulatory agencies wouldn't have known what to do with something like PayPal. I know, because I actually checked local laws and discovered requirements for things like a physical location open to the public, cash reserves, etc.

      But not now - even if PayPal is completely honorable (and I have no reason to believe otherwise), the lack of oversight limits how much confidence we can have in them. If they are acting like a bank and being perceived as a bank, it's long past time for them to BE a bank. Until then, they're no different than trusting "my buddy Bob" to deliver you the cash promised the next time he's in town.
    • A website might be real, real pretty, but that doesn't have any physical worth. When I step into a pretty bank, I know that my money is probably going to be secure because in the worst case senario, they've got physical stuff to back my loan with.

      I don't trust a bank because it's got a building. I trust a bank because it's FDIC insured.

      E*TRADE bank is basically just a pretty website, but I trust them WAY more than PayPal, because they are FDIC insured like any other bank.
  • by richardbowers ( 143034 ) on Monday December 10, 2001 @02:55PM (#2683184)
    I paid to a "verified" seller, and PayPal refused to make good when he stiffed me. They took two months to even investigate my claim, and when they did, they responded that the bank account they had verified no longer existed. (Gee, no kidding). Since then, they've continued to send me spam, but won't do anything about the money. I look at using PayPal as being a step better than sending cash through the mail, but definitely several steps below using an actual credit card or even a check (since you can place holds on checks, and they take time to clear). I don't plan on using them ever again, and I steer clear of businesses that use PayPal as their only method of credit card payment.
    • by 0xA ( 71424 ) on Monday December 10, 2001 @03:04PM (#2683251)
      This is the problem with PayPal.

      I know lots of people who have never had a problem with PayPal, everything runs smoothly. The people I've talked to that have had a problem all have had a complete nightmare with it. Every one of them.

      Now it is possible, prehaps likely that people that have a problem that is resolved quickly are less likely to complain about it. This could be why I've never heard good things about their customer service but I don't think it's the case. Banks have sets of rules and years of experience dealing with problem transactions. They aren't perfect (I have stories, that would make you ill) but because PayPal is a pretty new concept I think they still have a lot of kinks to work out.

      • by Anonymous Coward
        I don't see how the root poster had a "problem" with PayPal. He had a problem with a bad seller that used PayPal to screw him over.

        If he had just sent a money order, would it have been Western Union's fault the transaction went bad?

        The real "problem" here is that you are sending money to someone you don't know, and some people want to delude themselves into thinking PayPal or eBay is going cover their ass because they've got the big brandname.

        It doesn't work that way, and if you can't hack the risk, don't do it.

        I'm not saying that PayPal hasn't done some scummy things, just that there's a difference between the legitimate stuff and richardbowers-type "I got screwed and I learned my lesson" complaints.

    • Did you take your complaint to your credit card company??
      • by ahde ( 95143 ) on Monday December 10, 2001 @04:00PM (#2683556) Homepage
        I've had a problem with credit card fraud from a company called IOPAY.COM through my credit card with CHASE VISA and I've spent 4 months trying to resolve fraudulent recurring charges on my card. The first occurence was on September 28th and was blocked by CHASE VISA security division (probably incorrect cardholder information -- ie. not my name, address, etc.)

        Another charge was attempted by IOPAY.COM soon after and declined again for security reasons. On October 1, I received notice of the fraudulent charges and telephoned CHASE VISA and stated that IOPAY.COM did not have my authorization and please do not accept any other attempts by IOPAY.COM to use my card. I cancelled my card and had a new card number issued.

        Since then, there have been (I think) 4 attempted charges by IOPAY.COM, none of which is legitimate. I've never used my CHASE VISA card for online purchases. I've signed 3 statements to the fact that I did not authorize and do not authorize any charges by IOPAY.COM at any time, as well. I believe all charges have been made to the previously cancelled account and forwarded to the new one.

        All additional attempted charges have been honored by CHASE VISA against my explicit direction and the earlier assessment by their own internal fraud department. I have had to deal with each charge specifically and have been threatened in writing and over the phone by CHASE VISA employees that I can be held liable for the charges if their own internal decision is that the charges are valid. As I said, I have signed three statements that the charges are not valid and am awaiting the fourth in the mail.

        I finally cancelled my CHASE VISA card completely and hope this will resolve the issue.

        So, you see, it isn't only PayPal that has poor customer service.

        I believe that at least some credit card companies are in collusion with and silently accept knowingly fraudulent charges. They certainly stand to profit by it. Credit card companies make 2% or more per transaction, not to mention any interest accumulated on such charges.

        I believe CHASE VISA is a willing, if not active, participant in such fraud, allowing pornography or other online sites to make charges that are not valid; and by having lax security and inadequate authorization measures, they are stealing from their customers in the hope that at least a percentage of fraudulent charges (which they stand to profit by) will go uncontested, or will be unsuccessfully contested (according to their dispute resolution rules) by their customers.

        In my opinion, you're screwed either way. Our banking system needs stronger protection for customers.
    • by clifyt ( 11768 ) on Monday December 10, 2001 @03:20PM (#2683343)
      I agree, as opposed to cash in the cash in the mail (Money Orders / Whatever) it is a hell of a lot better.

      I use PP for a lot of transactions, and have also recently paid to get a merchant account with a 'real' bank. Its far more expensive, and the rules are far stricter...especially since we sell everything over the internet. If I get screwed by someone with the Merchant Account, I am out the merchandice, I get a return fee AND if the bank happens to approve too many fradulent cards, they charge us again.

      To me, that is far worse than PPs methods. Why the hell should I be charged by the bank for something they approved? I'm told I can pay for their verification system (at a cost of like $1 per transaction of something huge like that), but they still don't offer any insurance.

      No system is perfect, hell, a friend sold a few gran worth of equipment and decided to do things the most secure way he knew how -- COD through UPS. UPS took the obviously fraulent money order (looked like it was printed on a bad inkjet) and then proceeded to blame the seller...told him to talk to the postal authorities since it was a 'postal money order', who of course didn't have anything to do with it as they didn't print it out, and it wasn't one of their folks accepting it.

      So, to me, PP offers far greater security than merchant accounts. As a buyer, I get a little warry about folks using this, but as a seller, I'd rather take the few problems PP has over the other systems...

      • A bank story (Score:3, Interesting)

        by fm6 ( 162816 )
        I'm reminded of a couple of pieces I read on this issue. Sorry for not remembering names. Sequence of events goes like this:
        1. Man starts online bookstore, running it out of his home. Achieves modest success with a small but loyal customer base.
        2. Nationally syndicated columnist discovers online bookstore, interviews owner. Writes it up as example of ordinary guy doing on a small scale.
        3. Thousands of people read column, go to bookstore site, place orders.
        4. Man gives resulting credit card transactions to his bank.
        5. Bank says, "Whoa nellie! That's a lot of money! How do we know you can fulfill these orders? Your account is frozen!"
        6. Online bookstore suddenly has no income, folds.
        It's tempting to point fingers, especially at the bank. But that's shortsighted. Our monetary system has been around for so long, we forget how cumbersome and convoluted it is. Ultimately, every transaction carries a risk of fraud and loss. You shouldn't be suprised if anybody involved, merchant, buyer, bankers, whoever, does their best to avoid getting stuck.

        And all of them do get stuck occasionally, not just the little guy. Difference is the big guys can spread out the cost of fraud over more transactions.

    • Use a credit card (Score:4, Insightful)

      by macdaddy ( 38372 ) on Monday December 10, 2001 @06:01PM (#2684210) Homepage Journal
      The easy answer to that is to use a credit card via Paypal, not a bank account. They tried to screw me once like they did you. I paid the guy and never got the goods. After 2 weeks of no contact, I called them and asked to have the transfer nixed. They gave me the run around and kept transferring me to different people. I seriously think that they do what a cartoon I once saw did. In that cartoon was a helpdesk. One person had an irate customer on the phone demanding the supervisor of the tech they were talking to. The tech put them on hold and looked around at his colleagues in the cubical farm and asked who wanted to play super. Someone said I'll play super for you if you play super for my guy on line 6. I swear they did that to me. I know I got a couple of those people twice and they played super a couple of times too. After a couple of weeks of getting jacked with by them, I threatened to call my credit card company, contest the Paypal charge, and let my card carrier sort it out. The person playing super that time bucked up and sent me to a person whom I think really was a super, or the designated person to call when that happened. He told me in a really pissed voice that if I did that, they'd "turn the matter over to our legal department and sue my ass off". Yes, I can quote those exact words. I told him to [censored] and hung up. My next call was to my Visa card carrier. I told them what was going on and that I wanted to contest the charge in the amount of $ They happily responded. They contested the charge and credited my account. They said they would get back with me if they needed more information. A few months later I received an official letter from my card company saying that they had investigated, received little cooperation from the and that they were siding with me and the credit to my account. It worked like a charm. I absolutely do not use bank account transfers from them. I use my Visa Check Card that withdraws straight from my checking account. It affords me all the protection from Visa like contesting charges and fraud protection. However I should use a card with a limit so that if it's stolen, my real $$ funds aren't possibly in limbo while I wait on a credit. I hope this helps someoen.
  • Previous Articles (Score:2, Informative)

    by Anonymous Coward
    Also good for a read: 22 2&mode=thread 21 2&mode=thread
  • Simple solution (Score:2, Insightful)

    by Darth Yoshi ( 91228 )
    Open a bank and credit card account just for paypal transactions and keep your operating capital in your main business account.
    • Open a bank and credit card account just for paypal transactions and keep your operating capital in your main business account.
      Isn't it a bit redundant to open a bank account just so you can use it to open a PayPal account?

      I've used PayPal and worked as described. I was pleased and would use it more, but I'm at their introductory limit (I don't recall the amount -- $200?) and they won't let me continue without opening a regular PayPal account. OK, fair enough, but they won't let me do it with a simple credit card, it has to be my credit card *and* my checking account. My bank charges $5/month to set up an account for electronic payment, and I'm not about to do that just for PayPal. If I were interested in paying all my bills that way, maybe $5/month would be worth it, or maybe it would piss me off and I'd switch banks. But I'm not interested in electronic bill payment so I don't care if they charge $5 or $500/month.

      The $5 aside, why should I give PayPal an open pipeline into my checking account when I intend to pay with my credit card? If they want a backup, I'd be happy to give them two credit card numbers, but I refuse to give them access to my checking account. And I don't see why I should open a 2nd checking account just for them.

      • > My bank charges $5/month to set up an account for
        > electronic payment

        good heavens, is that BofA or Wells Fargo?

        There should not be a charge. You're at the wrong bank. I'm not even sure it's *possible* for a bank to not participate in ACH these days. If you have a checking account, and your checks have a routing number, that's all that's needed . . .


  • by under_score ( 65824 ) <> on Monday December 10, 2001 @02:57PM (#2683203) Homepage
    This is just another issue like immigration or "Homeland Security" which is a balancing act between trust and convenience. Whenever you are operating with a third party, you need to balance trust versus convenience. If you favor trust, you will take more time for your safety: background checks (of people or Paypal), getting legal advice, insurance, anonymity concerns, etc. If you favor convenience, you will worry about reducing processing time, reducing bad experiences, simplifying and generalizing requirements, etc. Occasionally, technology can help increase both trust and convenience. But ultimately, even then, you are balancing trust and convenience against the provider of the technology. For example, open source software can be more trusted than closed source, but only if you forego convenience by actually checking the source!
  • by Anonymous Coward on Monday December 10, 2001 @02:58PM (#2683209)
    I represent Fitsworth McGibbons, the legal firm who have been retained to manage legal affairs for Paypal, Incorporated. Negative comments without merit are actionable as slander, and we demand that you remove such objectionable material from your site immediately, or we will be forced to pursue legal action against you on behalf of our clients.

    Thank you for your attention with regards to this matter.

    P.S. IANAL.
    • The funniest thing is that this is absolutely correct - false negative statements *are* actionable.

      But in the US, the truth is an absolute defense against slander and truthful negative statements are fully protected. Odd how the lawyers who forget to mention this tend to represent the clients who have the most to fear from their truthful critics....

      In this case, I'm reminded of Oscar Wilde(?) suing someone for claiming he was a sodomite. So the other person proved it in court as a defense, and since that was a crime at the time Wilde was taken off to prison. Even if some people are exaggerating about their experiences with PayPal, who thinks PayPal would let the case reach court?
  • I also run a small online company [] that uses PayPal almost exclusively for its payment system. So far I've generally been happy. However, the one email I sent to customer service took a full month to get a response. Phone support was better, however the reps didn't seem like they were too knowledgeable. Needless to say, I'm a little bit wary of having so much money in my account, so I can only suggest sweeping the funds to a real bank account on a regular basis...
  • I use paypal to handle my banner ad payments. I average $200 a month. I've heard about problems with paypal freezing accounts, so I try to keep the amount stored at paypal to $50 or less. It's so easy to transfer money out to my real bank account that even if they freeze my account, I'm only out $50.

    You could even to a daily transfer if you recieve enough money to justify that.

  • when I was purchasing something, the froze the sellers account for reason they wouldn't dislcose.
    they also wouldn't give me MY money back.
    after about 45 days, during which the seller went through hell, they finally got it solved.
    but the fact that they wouldn't let me get MY money back, and just hung on to it really pissed me off. there where about 100 people buys an items for aboiut 50.00 per item, si it was a sizable amount of money they held.
  • Win-win (Score:3, Insightful)

    by dfeldman ( 541102 ) on Monday December 10, 2001 @02:59PM (#2683216) Homepage
    As a customer who was defrauded by a merchant who used Paypal, I believe that Paypal would make good business sense for you and be very bad for your customers. I bought a cordless phone from an ebay merchant who never delivered it, and paid with Paypal about 3 months ago. Paypal only recently *started* to investigate my claim, and I was forced to dispute the charge with my bank instead. Their number (650-251-1100, culled from whois) is not even on their site and the customer service reps are quite useless.

    If you ever "go bad" and decide to start screwing people, Paypal is your weapon of choice. If you are a scrupulous merchant, Paypal is probably the best way to go because there will be few complaints on either side of the transaction. As I am also an ebay power seller who uses Paypal, things have been just fine on that side of the table as well.

    Just my 2c.


  • I got a spam about this web site too. At first I assumed it was one of my users (I have a web site that solicits donations via PayPal) but it turns out that it was just a spam. I'm not sure I believe all the horror stories. I'm paid for hundreds of dollars of auction stuff using PayPal, and I've received over $300 in donations to my site using them (but I send nearly $200 of that to their September 11th fund).

    I am now using Amazon's Honor System and C2IT to get donations as well for people who don't trust PayPal, but frankly I don't see what the problem is.
  • I have used it several times, without problems to make payments.

    The Anti-PayPal website is spamming all the Usenet newsgroups. They had a commercial interest in seeing a paypal competitor called c2it which is CitiBank's micropayment initiative. But c2it asked them to pull the ad. c2it had a link on Friday but not today (Monday)
  • by brassman ( 112558 ) on Monday December 10, 2001 @03:01PM (#2683227) Homepage
    Considering that at least one of guys who's slamming PayPal is also spamming most of Usenet, I'd be tempted to give them the benefit of the doubt. He's at least one can short of a sixpack.

    • by ywwg ( 20925 )
      he claims he's not doing the spamming. uh huh.
      • >he claims he's not doing the spamming. uh huh.

        If you're talking about the owner of, I for one believe him. The site's been around awhile (I came across it it 3 or 4 months ago), so he doesn't need to spam to get visitors. The only thing spamming would gain him is bad blood and one hell of a bandwidth bill for this month. I say it's doubtful.

  • by DrEldarion ( 114072 ) <[moc.liamg] [ta] [0791uhcsm]> on Monday December 10, 2001 @03:02PM (#2683233)
    I have never myself had a problem with PayPal, but others have had some. Some good advice:

    1) Transfer all money out of your PayPal account IMMEDIATELY. This doesn't give them a chance to freeze it.

    2) Tell your bank to not allow PayPal to withdraw from your account without your authorization. I've heard of them dipping into the checking account if the funds aren't in the PayPal account.

    3) Having your customers pay with credit cards... that way if anything happens they can dispute the charges.

    Hopefully with these precautions you should be okay.

    -- Dr. Eldarion --
    • by Syberghost ( 10557 ) <syberghost&syberghost,com> on Monday December 10, 2001 @03:10PM (#2683285) Homepage
      Having your customers pay with credit cards... that way if anything happens they can dispute the charges.

      Most customers aren't very savvy. If you tell people "Don't use a check when you do business with me, use a credit card, because I use PayPal, and they might rip you off", they are going to hear "Don't... do business with me... because I... might rip you off."

      They don't wanna hear from "this other company is at fault", they're gonna wanna give you money and have you give them goods and/or services, period.
    • my bank said the only way to do this was to put a $.01 stop payment order in for PayPal. That's fine and dandy but it costs $15 (CDN) and expires every month... that just isn't reasonable - I haven't looked at what other banks would do given this request, but doubt that there would be any difference since they are all cut from the same cloth.

      I am looking at creating a new chequing account just for the swept funds which then I will transfer the whole balance to an account that PayPal doesn't have access to.
  • I'm sure there are hundreds of these. But this one came up in a newsgroup that I read often (

    A n auction for classic video games gone wrong []

    Then there is the followup:

    Victory []

    I haven't been burned, but I use PayPal as little as possible now. There has to be a better way.
  • Paypal's debit card (Score:3, Interesting)

    by strredwolf ( 532 ) on Monday December 10, 2001 @03:08PM (#2683274) Homepage Journal
    I've kinda sidestepped this issue with my own dealings with Paypal. What I did is:

    1. Signed up for a Yahoo! Mail account, and told Paypal to send policy updates and transaction details there. I think alot of these companies want to keep in contact with you so you don't get trapped when they have to change policy.

    2. Signed up, and received, the Paypal debit Mastercard. You get this by being a Premier or Business member. This debits straight from the Paypal account. I pay for art prints, supplies, and shipping through Kinkos, Mail Boxes Etc, and even the US Postal Service (yep, they take credit cards now).

    Their main aim is to keep cash in the account, so that they can make money off of it. They make no jokes about it either -- clues are there if you go to their money market fund and read through the prospectus.

    Also, Paypal *does* insure the accounts though The Traveler's Group (a well known, respected insurance company). They sidestep that issue.

    Of course you could use Spamazon (more trouble than it's worth) or Yahoo! PayDirect (less features, more secure, more time consuming). But Paypal's the best bet here.
  • Like PayPal says, they're not an escrow service or a bank. If you want to make secure transactions with someone you've never met, you'll need to hire a trusted intermediary.

    Would it be nice if Paypal was a little more customer-oriented? Yes, undoubtably. Unfortunately, their business model is all about minimizing costs, so they're really not in the customer-service business.

    Really, there's nothing new here. You need to read all the fine print before you sign up for something. A "free" service will always have a lower level of customer service than a service that charges for it.

    An interesting issue that's raised in some of the articles is how PayPal is ideal for money laundering. I never really thought about that, but it definitely looks like something that Ashcrft and Co. might decide to look into.


  • I've never had any problem with PayPal, but my use has been minimal. I think it is worth noting, though, that PayPal has got one of the more vigorous anti-fraud groups around. I think their fraud rate is around 1/2 of 1 percent, which is (IIRC) lower than many credit cards.

    Some of this information is from an MSNBC Article [] that showed up on SANS NewsBytes []. But I've also heard personal anecdotes from security professionals who'd rather have the Mafia after them than PayPal.

  • I've purchasd probably about $500 worth of stuff via paypal, in 7-10 seperate transactions and have not had a problem. I also use them for online membership renewals for a non-profit that I am President of. Granted, I do sweep the money to our bank as soon as it hits $50 - but I have not had any reason to be concerened. YMMV
  • by LetterJ ( 3524 ) <> on Monday December 10, 2001 @03:10PM (#2683288) Homepage
    One of the serious flaws in the Paypal setup is that once Paypal believes that a visitor is you (i.e. logged in) that credentialed visitor has complete access to any accounts that Paypal knows about.

    About a month ago, I logged into my email to find email "receipts" for nearly $12K in payments, all of which were made while I was sleeping during the night before. Someone had gotten into my account and transferred to several other people various sums of money ranging from $75 to $5000 per transaction. Most of them were against my credit card, but several were against my personal checking account (used mostly for hobby spending so it didn't have much in it) including the $5000 one. I called my bank to protect the checking account and they were very helpful. The credit card company's fraud detection department called me before I even had a chance to call them. Paypal's fraud detection??? Nothing. When I called them (and getting that phone number is no easy task), that sudden burst of activity hadn't even made anyone curious.

    My paypal account was put in restricted status and I detailed exactly which transactions were fraudulent. I moved the remaining checking funds out of the path of paypal and had the credit card number cancelled. You'd think that this would stop anything from going forward and efforts could be concentrated on reversing the transactions. Nope. The middle of the next week brought me a series of automated messages from Paypal indicating that my transactions to withdraw all that money from my checking account failed, but not to worry, they'd try again in 3 days. I called paypal and was told that those attempts were automatic and *nothing* could be done to stop them from completing their course.

    My bank has been great, letting those transactions bounce and not charging me a dime for stopped payments or overdrafts related to this. The credit card company is treating it like any other fraud, and while it may take a bit to work out, they're working with my refusal to pay for these transactions. As for Paypal? Their handling of this was totally unprofessional for anyone handling money.

    The icing on the cake was the emails I started getting once Paypal took the money back from the recipients. I was being accused of cheating them and being asked to resubmit the payments I owed. When I asked to what address they sent the merchandise (hoping to get the mailing address of the perpetrator), it was implied that it was for something related to warez in an IRC channel. At least one of the recipients still thinks I am just out to cheat him out of his money. So, whoever set this up screwed both sides over.
  • Or Ebay payments, or whatever they call it now? It takes credit cards and echecks and puts the money into your account in a few days. And your customers don't have to be billpoint members to use it. All you do is send them an invoice or they pay through the auction page.
  • I applied for a PayPal account at the suggestion of a friend long before I had any reason to use it. Luckily, I didn't store any money in the account, becaue when I came back several months later to make a purchase, I found that it had been frozen. The "customer support" responses asked me to fax them various forms of identification to make sure that it was, in fact, my bank account - I had registered my checking account as I did not yet have a credit card. This is understandable, in a way - I'm sure there are people who try to use PayPal to steal money from other people's accounts - so I paid a rather high price at my local copy shop to fax them what they needed.

    They did not unlock my account, however; their stated reason was that the address on my driver's license did not match that on my bank statement. When I explained that I was a college student, they simply repeated their first request, but now they wanted a credit card statement as well, despite the fact that I never entered (and did not own) a credit card. Without anything else to do, I simply removed all of my banking info from their records. I would have closed my account, but it's not possible to do that when you're suspended.

    I have a credit card now, so I could probably get it unlocked. I don't feel like spending the time and money to do that, though, and I don't have enough confidence in PayPal to trust them with my money, either. So I've made do with waiting for people to process personal checks, or paying the extra few dollars for money orders.
  • by gmhowell ( 26755 ) <> on Monday December 10, 2001 @03:15PM (#2683317) Homepage Journal
    I'm not sure how much it costs for online stuff, but for bricks and mortar stores, you can lease the equipment cheap, and the fees per transaction are not much. You are much better protected in this case.

    So double check your needs. Maybe you can rationalize accepting credit cards directly.
    • Have you ever tried to get CC processing without having a physical storefront? I have, and it's nearly impossible without handing over at least a grand and a 3 year commitment. Paypal is easy to set up and requires no sort of approval process or agreements. Plus, it integrates easily with your website.

      If anyone knows of a place that will give me a merchant account without taking a bundle of my money, let me know. I spent about 6 months trying to find one about 2 years ago, and then just scrapped the site because there was no way for me to accept online payments.
  • by Adam Wiggins ( 349 ) on Monday December 10, 2001 @03:18PM (#2683332) Homepage
    PayPal is great for person-to-person transactions, as well as small organizations requesting donations. But for a business of any size, it just doesn't cut it. You need real payment processing, and here's why:
    • Ease of use. Forcing people to sign up for a paypal account before they purchase from you is a sure way to loose sales.
    • Professionalism. When someone wants to sell me something via a PayPal payment, I get cold feet. It's not professional, and it makes me wonder about the trustworthiness of the business, especially if it's an item that costs more than $20 or so.
    • PayPal is vastly more expensive. Last time I checked, they skim something like 5% off your credit card transactions. A good e-commerce merchant account from a real bank should only charge you on the order of 2.5%.
    • Integration. I suppose this goes with the first point, but as a web designer it's an important one for me...I want to build payment handling into my PHP-generated web page, not send the user to an external site.

    The only downside to "real" processing is the barrier of entry. You've got to fill out a bit more paperwork, talk to at least one real human (the banker), and there are some startup fees associated with it. But once you are up and running it quickly will become more economical than paypal, because of the difference in transactions rate (5% vs. 2.5% as mentioned above), not to mention you won't loose sales to people that don't want to sign up with PayPal.

    And just as you thought I was posting to get, you guessed it, it's Shameless Plug(tm) time!

    The only Open Source payment processor in the business: TrustCommerce []

    Mention Slashdot when you sign up for a test account and you'll get a, well nothing, but at least we'll know you're cool. :)
    • On a security note, a few centralised systems like Paypal, if they agreed to inter-operate (and compete) would be much better for the general population. It would mean that you don't have to trust web developer 'x' to have designed a secure online payment processing system (I always imagine the idiot who made an SSL site then sends the CC details by E-mail to a hotmail account). You just have to trust one or two or maybe a handful of payment processing companies -- VISA and Mastercard should be offering this service _now_ to merchants.
      • Yes, security [] is an important issue I didn't even touch on, but which should be a top priority for anyone doing commerce over the open Internet.

        Personally, I don't trust large companies like Visa/MC to handle 100% of the security for a task like this. But then, as a former sysadmin and currently an engineer for a payment processor, I'm probably about as paranoid as they come...
    • Are there any Paypal-Like services that don't require the buyer to sign up for an account? Maybe with a few of the benefits of TrustCommerce, but without set-up costs?
      • No - and for good reason. (PayPal does the same trick with their "verified seller" stuff, though obviously it's not quite as rigorous.) Basically, accepting credit cards is a huge liability. Why? Because you can run large amounts on a bunch of credit cards, cash out the account, and then skip the country. People have defrauded cardholders (and ultimately, the acquiring bank, which is who ends up eating it) for millions this way. Banks (and anyone who is going to front the risk of your business running credit cards) need some assurance that you aren't going to defraud them.

        It's also good for the purchaser, because if a business is legitimate enough to get a merchant account, you can probably trust them, at least somewhat. There's always the chance of fraud, but a business that accepts credit cards has essentially been pre-screened by the bank for you.
    • When looking at auctions or sometimes when I just need to buy something online, I'll specifically look for companies that accept PayPal. I truly hate the idea of giving my personal and CC info to every single company on the net that has something I might want to buy. I would much rather give the info to 1 company and make payments through them, because it means no CC info ever has to go to the company or person I'm buying from. Many companies I have seen accept credit cards and what-not on their own, but also accept PayPal because they know there is enough people out there like me that will easily decide to shop somewhere else if I'm forced to give them my CC info.
  • by leshert ( 40509 ) on Monday December 10, 2001 @03:20PM (#2683342) Homepage
    I think that some of the ire toward PayPal is because you only hear about the bad things that happen. When a transaction goes well, no one stands up and screams.

    I've been using PayPal for a long time, and I've never had a problem with it. I wish I could say the same for some of the vendor sites out there (e.g., I'll never buy again from, but that's another story).

    In case anyone's wondering, this isn't astroturf support. I'm a real person [] who just happens to like PayPal.

  • I was looking through the Wall of Shame on the PayPalWarning site, and saw this. It was just too funny... So I'm going to post it here for everyone else's amusement. It's entirely possible this is a hoax, but still...

    I wonder... When did Linus Torvalds give up the rights to his OS?

    Consumer reporting scam: Larry Lawrence (12/6/01) PayPal continues to hold my $600. Illegally. Several months ago I was offering the general public a free copy of the popular OS called Linux 8.0. This is a freely distributable program under the general license agreement. The customer only had to pay for shipping. ($5.00 US dollars) I had hundreds of people that responded to the offer and I delivered the program as offered and according to the law. PayPal sent me an e-mail saying that they were going to suspend my account unless I could provide proof that I had permission to distribute this software. Well, I e-mailed them back several times and explained to them that I did programming on my own and would never consider distributing software that was against any law. PayPal said that I had to prove that I had permission from Microsoft to distribute the software. Microsoft has nothing to do with Linux. Linux has always been to my knowledge, a free OS. I am e-mailing you first before taking legal action as this is the professional way to do business. They have closed my account, which is fine accept that they hold my funds without paying me interest on the funds and refuse to return the funds.
    • (Oops - sorry about that empty post above. I'm used to using Netscape where hitting return in a text field sends you to the next field just like TAB, but I've switched to Konqueror where hitting return submits the form. I hit return after typing the subject thinking that would "TAB" me down to the text body but - oops.)

      Anyway - This story you quote, if true, indicates not only that PayPal is guilty of the annoyingly common MS-is-god-above-all attitude, but also the poster is doing somethng a bit strange too. Notice he didn't call it Linux 2.4.x, or something like that. He called it Linux 8.0 - which indicates to me that he's reselling a full DISTRIBUTION, perhaps Mandrake or SuSE - and THAT could include add-ons that are not free, and THAT would still make what he's doing illegal.

  • by Elwood P Dowd ( 16933 ) <> on Monday December 10, 2001 @03:24PM (#2683360) Journal
    Paypal only makes sense if you're pretty low volume. If you're making any real money with your business it's always safer to sign up with visa/amex/whoever and accept credit card payments. It's not much more expensive than paypal and it's a lot safer for both customers and merchants.
  • by jsimon12 ( 207119 ) <[tzzhc4] [at] []> on Monday December 10, 2001 @03:24PM (#2683361) Homepage
    I have had them freeze my account and hold payments (supposedly randomly), but I have had them do it more then a few times. I am by no means someone I would consider suspcious, I occsionally sell extra things I have on eBay and use PayPal for payments, also occsionally buy things and use PayPal to pay.

    But on 3 separtate occasions I have had payments held, and also on one occasion I have had my account frozen. And yes it did take me FOREVER to get a hold of anyone on the phone (thank god for "free" LD on my cell). I was told it was a "routine" random freeze, blah blah blah, several days later they "unfroze" my account. And yes it was a major and total bitch, but there really aren't any other shows in town, so what do you do?
  • Okay, I took a gander at the horror stories and it seems that most of them flow along as such:

    Buyer PayPal's somebody money for good/services. PayPal withdraws money from Buyer's bank account, holds it and places it within the Seller's PayPal account. Seller sees money in PayPal account and then sweeps it into their own bank account. Buyer never gets goods and complains to PayPal.

    Well, duh. PayPal no longer has the money, why in the heck would they start shelling out money from their own pocket becuase -you- purchased something from a crook?

    Use your heads... if you don't feel comfortable sending money to somebody use an escrow service or take your risks. Personally I think it's a great service. I mostly used it though to split bills w/ my roomate. No checks, no running to the bank, and I knew the guy wasn't going to hawk my half of the rent and run out on me.

    PayPal's not trying to rip anybody off here. No evil corporation trying to take all of your money, no conspiracy theory and no black helicopters. Move along n ow.
    • So, when several problems are mentioned you find ONE of them to be not a big deal, that means the rest all are too?

      What about shitty security that lets other people spoof being you and use your account for their purchases?

      What about the shitty customer service where when you have a problem you can't get anyone to talk with about it? The fact that mistakes are made from time to time is inevitable with an operation the size of PayPal. The fact that they stick their heads in the sand and pretend there are no problems, and assume all complainers are lying is not acceptable.

  • by Chibi ( 232518 ) on Monday December 10, 2001 @03:31PM (#2683392) Journal

    Just an aside, if you are signing up for a personal account, you only need your credit card. It's merchants who want to use PayPal's premium features who have to specify banking information as well.

    First of all, some corrections of what was stated above...PayPal requires only a credit card, but you can only make $1000 worth of transactions with the account. This doesn't mean that it's a $1000 per transaction limitation, but more like all of the money you can ever use with them. Once you give them a bank account, *then* this $1000 restriction is removed. I believe their single transation limit is $250, but this might be for accounts without a banking account linked to them.

    About 6 months or so ago, I noticed a $250 charge on one of my credit cards from PayPal. It struck me as odd, since I had only performed a single $50 transaction. I contacted PayPal and my credit card company, and found out the following:

    The card with the $250 charge on it had actually not been the card I registered with PayPal. The info had been stolen from some other online vendor, and the thief created a new PayPal account with my card. The PayPal rep I spoke to claimed that the name on the account has to match the name on the card, so, obviously, this person found a way around their system (or the rep was wrong).

    But, both PayPal and my credit card company handled the problem well. I wasn't accountable, and I had all of the money returned to me. The moral of this story is to make sure you check your credit card statements, because when mysterious charges start popping up, it's ultimately your own responsibility to catch them. How many people even bother to look at their monthly statements?

    • How many people even bother to look at their monthly statements?

      I bounced a rent check to him about 4 months ago. I've been waiting till he notices to give him the money.

  • by Kphrak ( 230261 ) on Monday December 10, 2001 @03:31PM (#2683393) Homepage

    If you sell normal items with PayPal, I can say that I've never had a problem with it. I know a few people on here have horror stories to tell, but I really can't.

    If you are selling anything where the sender is most likely going to specify a different address (i.e. gift sales), DON'T USE PAYPAL UNLESS YOU'RE DESPERATE. PayPal insists that the two addresses agree. I did a payment system for a Chicago popcorn business, whose main revenue comes in at Christmas when everyone's buying those big cans of caramel corn to send to their relatives. At that time, PayPal allowed different shipping addresses.

    As Christmas season started, they changed their policy and stopped allowing it, basically axe-murdering my neat little scripts. :\ I wrote a work-around so they could specify their shipping address on our site, then buy the popcorn using PayPal...but it's ugly and I don't recommend it.

    So if you're a gift smart...keep in mind the constraints you have to work within if you're going to do a front-end to PayPal. PayPal doesn't work for everyone, although it can be really useful sometimes.

  • by sigma ( 53086 ) on Monday December 10, 2001 @03:32PM (#2683400)
    I recently had 2 ~$500 payments sent to my dormant for months paypal account, which apparently set off some trigger, and my account was subsequently frozen.

    To unfreeze it, I needed to fax them:

    • A copy of my driver license
    • A copy of my most recent credit card statement
    • A copy of my most recent bank statement

    Despite the glaring violation of privacy, I did get the account unfrozen in under 24 hours, and I did find them easy to communicate with.

  • I have been using paypal's webshop stuff for about 6 months for my store [] and it so far seems to be reliable very very doable for a small hobby/business like mine. Its just me here, selling the stuff I make and not wanting to worry about processing credit cards. That is not my core competancy, it is, however, paypal's. I also jumped through some hoops to verify some extra accounts and now have my business account set up as a money market [] account. So now the money I make selling my jewelry online earns monthly interest. This pleases me. I have also never had any trouble scooping out those funds and electronically transferring them to my normal checking account at Wells Fargo. They seem to be a careful business, and the only complaint that I ever got from a customer was that PayPal can be pretty picky about verifying credit card accounts. This seems like a small price to pay for added security.
  • I am a Canadian... I went through their stupid process, and it decided to "reject" both of my credit cards, one saying that it was "locked" and the other one just didn't give me a reason. So I sent them an email and got a canned response back in return:

    Thank you for contacting PayPal. We apologize for the delay in responding
    to your service request.

    I apologize for not being able to add this card to your PayPal account.
    Unfortunately, this card was not accepted by our verification system. This
    does impact valid cards occasionally and is not reflective of your credit
    worthiness. For our security, we cannot register any cards that cannot be
    verified by our system. Sorry for this inconvenience.

    If you have any further questions, please feel free to contact us again.

    However, to my surprise, BOTH CARDS were billed for their $1 fee... So I wrote them back saying "here's the code from my credit car statement proving that I own it, would you like a copy of my drivers license as well?" (well, I went on for more than that, asking them about how come their credit card verification system is so flawed), and what did I get back in return?

    The same goddamed response.

    So I replied again.

    The same goddamed response.

    I gave up. They get a bigass F- for customer service, and a A+ for incompetence.
  • For small online businesses, I would advise looking into using itransact []. They work rather well, don't require quite as much financial disclosure, and have an online API for webshop developers.

    Disclosure: I don't work for them, though I recently built an online shop that uses them, and we've had only minor glitches that got resolved quickly.
  • First off, there happens to be an article in a special section of today's (Monday, Dec. 10, 2001) print edition of the Wall Street Journal which lists some of the payment sites like PayPal, c2it, billpay, etc.

    I'm developing a web site that sells links on our site to select merchants. It's building up a following, so we're thinking about how to accept payment on-line. Based on the WSJ story, I was thinking of recommending PayPal to the owner, but after reading this slashdot article, I'm not so sure. Each sale is on on the order of $200 - $200.

    Scenario: our sales person calls a potential client and makes the sale (though sales are currently made in person, we're also considering selling over the phone.) The question: What is the best way to get the money from the client to us?

    In short, I don't have the slightest idea where to start, and would appreciate hearing other's experiences in setting up such a system. (FWIW: Our web site is hosted on an IIS 5.0 server. I know, I know, but the price is right and we get unlimited bandwidth.:)

  • Here [] is a list of some past slashdot discussion on PayPal. Do keep in mind that these discussions, as well as the site references, are anecdotal evidence, I.E. not something I'd make a real business decision based on.

    FWIW, the site [] now has a disclaimer on the front page that they had nothing to do with the spam.
  • by RobertFisher ( 21116 ) on Monday December 10, 2001 @03:54PM (#2683507) Homepage Journal
    How curious. Just today I got a forwarded e-mail from a friend who hadn't set up her PayPal account to receive a payment I sent her. The e-mail read :

    Dear [recepient's e-mail address suppressed],

    On 09/03/00 you received $10.00 from [my e-mail address suppressed].
    Our policy is to cancel unclaimed payments after 30 days, so
    unless you sign up for a PayPal account these funds will be
    returned to the sender. Don't let your money get away!

    Note that this warning was sent some 14 MONTHS (!!) after the payment was sent. This is in gross violation of the stated policy of returning funds after 30 days. Moreover, as a sender, you don't have any clue in many cases whether the funds were actually credited or not.

    In my case, it was only $10 at stake, but if many other payments were similarly misused, the interest racked up could have been quite substantial.

  • PayPal Tips (Score:5, Informative)

    by Maxwax ( 6219 ) on Monday December 10, 2001 @03:55PM (#2683521)
    I've been using PayPal for 3 months to sell a variety of items and I've been very happy with it.

    My tips are:

    1) Setup a "Firewall" bank account. This allows me to receive payments from sellers to my PayPal account, then have PayPal direct deposit the money into this "firewall" bank account. This bank account has no money in it and once money has been transferred from PayPal to this bank account, I use the bank's tools to transfer the money to a checking account or savings account. This way, if someone gets into my PayPal account, they'll have very little or no money to rob from my associated bank account.

    2) Use a dedicated Credit Card for Payments. With so many Credit Cards offering me free cards with 0% interest rate, I have the ability to use one just for online transactions. When the bill comes every month, it is easy to review. Fraud, or simple mistakes like double billings, should stick out greater than they do on my primary card.

    3) When making Payments, use an affinity credit card that provides you with some benefit instead of your bank account. Using a bank account is preferred by PayPal because the cost to withdraw money from your bank account is significantly lower than charging your credit card. But their savings doesn't give you anything, so turn this neutral into a positive. By using an affinity card you can earn points on each of your PayPal purchases. I even had one case where someone on ebay bought something for me from $300 and due to problems I had to refund it. His $300 went to my bank account, then $300 came from my credit card to refund it back to him through PayPal, then I used the $300 in my bank account to pay off my credit card. I lost a little bit of money in the process due to PayPal's receiving fees, but at least I got 300 frequent flyer miles out of it!

    4) Withdraw money promptly from PayPal. ANY company can suddenly go bankrupt from bad financial decisions you don't know about. It is therefore wise to use PayPal as a payment service and not a virtual bank account. When someone makes a payment, transfer it to your firewall bank account immediately so that it's in your control.

    5) Read the fine print on PayPal's website. They have some very good fraud protection services that will protect you from evil people. But these services require specific things like "advertising PayPal as the only electronic Payment service you will receive." This really isn't much of a problem, it seems, since 90% of my ebay electronic payments have been made through PayPal (other 10% are BillPoint/Ebay Payments or Money Orders.) But you need to realize that if you take them up on their fraud protection, they have many ways to disqualify you if you don't follow their rules.

    6) Trust your credit card. If you're using Credit Cards to handle purchases, many states like Maryland have VERY tough credit card laws which protect consumers. If you're using a 'new' service like PayPal, hide behind more conservative, regulated things like traditional credit cards and bank accounts.
  • I use Kagi (Score:4, Informative)

    by Arkham ( 10779 ) on Monday December 10, 2001 @03:58PM (#2683539)
    I have some shareware that I sell online []. I use Kagi [] as my payment processing company. They are VERY responsive to questions, both from sellers and buyers, and I have never had a problem with them in over 3 years of online sales.

    Another thing I like about Kagi is that unless I sell something, I don't get charged anything. And when I do, it's a flat rate, and very reasonable for the ability to take checks, credit cards, and foreign currency.

    I'm not affiliated with them, but I am a satisified customer. If you're looking for a way to safely process a small number of payments online, look no further.

  • Some Advice (Score:3, Insightful)

    by wizarddc ( 105860 ) on Monday December 10, 2001 @04:03PM (#2683576) Homepage Journal
    From reading these posts and linked websites, I think I have some advice. I understand PayPal could be a great way to accept payment over the Internet, but there are some things companies need to do if the absolutely rely on PayPal for commerce.

    First, have your PayPal checking account seperate from your company's checking account. This will be good for several reasons. If they dispute your account, and freeze your funds, your main checking account will be fine. Next, if you transfer all funds from you PayPal account to it's associated checking account (nightly, hourly whenever), and then from that checking account to your checking main account, the money will be safe. And since most banks nowadays let you manage your account online, this becomes very simple.

    Second. If you are relying on PayPal, have more than 1 account. This is called redundancy. I'm sure most of you have heard it. If your main paypal account goes down, fall back to your secondary. And if you have 3 or 4 accounts, this only makes you more protected. Having these multiple accounts, you will need a quick and easy way to change from one to the next in your ordering procees.

    Now, I've never dealt commercially with PayPal, only buying a few ebay items, and making my monthly donations to I don't even know if what I said abaove is "allowed" in PayPal's TOS (or TOU, where U = Use), but if they aren't, and all these problem occur as often as I've read, then PayPal isn't something you should be relying on anyways as a company.

    Just My 2x10^(-2) Dollars
  • Spooky timing. Just this week I got an e-mail from Paypal saying that I had sold something to someone involved with credit card fraud. According to the very lawyerly doc, I had 72 hours to send them MY SIDE of the story (?) to qualify for their Seller Protection Policy. I also had to meet a six or seven other requirements, most of which I assumed were handled by Paypal. (How would I know if I shipped to his verified credit card mailing address or not!? He was a "verified buyer" according to PP.)

    So I get 700 characters to tell them that the guy had said the item arrived broken (see UPS thread here for that) and I should file a claim and send him the money. I offered to take the item back and give him the money back, he declined. (Now obvious why.) UPS kept saying things were being investigated and I haven't followed-up very often.

    I go through the Paypal form (no other contact permitted, they make this quite clear). Then I log into my account to find they have debited the $1800.00! I don't keep much money there, mostly for impulse E-bay items, but it's gone now. I have received no communications from them at all.

    Basically they seem to try to pass the fraud buck along to the seller if at all possible even though the breakdown was clearly on their side. It's even worse because like most people I never would have dealt with such a transaction without Paypal's supposed verification and protection. So they are just facilitating fraud if their protection is no good. This review process had better be simply nominal or I'm going to pitch a fit.

    Saludos, Mig
  • I don't know, I don't use PayPal.

    BUT... The people behind the web site have been spamming Usenet with multiple warnings, using bogus email addresses. I'd take it with a grain of salt.
  • Hi, (Score:2, Interesting)

    by paypaldamon ( 213832 )
    Thank you all for your comments about PayPal.

    I realize there are some concerns whenever a site such as PayPalWarning comes up, but please realize:

    a) the internet is a free forum where users can state whatever they want
    b) you can find horror stories about many companies on the internet

    PayPal is a payment service that allows parties to pay one another for a variety of reasons. All customer situations that do not violate our terms of can be resolved.

    Account restrictions, which are brought up on a regular basis, are quite rare (reasons for an account restriction can be found in our terms of use) and they can be resolved with the assistance of the user.

    Points to ponder
    -PayPal continues to add 20,000+ users per day.
    -We also conduct well over 200,000 transactions daily.

    At times, our anti-fraud measures do catch legitimate users, but these can be rectified. These measures, while viewed as extreme at times, has allowed us to keep our fraud rates extremely low.

    Some of the issues on PayPalWarning involve:

    -Seller not shipping goods to a buyer (we offer limited protection and do not guarantee recovery from a seller)
    -Payments reversed due to chargebacks (explained in the terms of use)
  • Paypal is not an escrow service.
    Paypal is not a bank.
    Paypal is not a credit card company.
    Paypal IS convenient, and easy to start using for the merchant.
    Paypal DOES take a larger chunk of your money than, say, VISA would.

    Given that.. you should be able to figure out what the right thing to do is.
  • by Skapare ( 16644 ) on Monday December 10, 2001 @06:04PM (#2684233) Homepage

    After visiting that same site [] myself, I decided not to use PayPal any longer. I had never lost any money through PayPal, though I've used it only a few times to buy stuff on Ebay. I went to cancel my PayPal account to simply be sure nothing would happen (it had zero, but it could have potentially be used). However, I could not log in on the site, and got an error message saying I did not have cookies enabled, even though I did (and confirmed it by logging in to here [] and a couple other places that use session tracking with cookies). I sent email to their various support addresses the web site indicated. The reply on those said I needed to submit the request on the website. But I needed to login to do that, which I could not. I called them on the phone but got stuck in menu hell and voice mail hell. No one ever returned my calls.

    A few months later I got email from PayPal. It was promotional. Technically it was not spam, since my account was still active, but now I really wanted it canceled. I tried the web site again, and it had not yet been fixed. I tried mail again and got the same stupidity. I tried calling a few phone numbers. I actually got someone on the phone, but it sounded like the phone system redirected incorrectly as they were not expecting an inbound call. As soon as I explained what I wanted, they said I needed customer support, and forwarded me to menu hell. After spending at least $5 for long distance calls I gave up calling.

    I then proceeded to "get attention". Since the email was on an automatic bounce, I set up an automatic system to send them email. It was adjusted to send every 2 minutes so as not to cause damage, but perhaps get attention. After a couple hours of this, it did indeed get attention. I got email back from someone with a direct phone number. I cut off the process and called them. Although this person was in the technical area, he did promise to get my account closed out. He was unaware of the technical problems, and I tried to convince him he needed to get them fixed, although I didn't know what the cause was. We tried a few things, but it didn't fix it.

    It's a shame that the only way to communicate with a company is by tactics like this, but this is not the first place this kind of thing has had to be done.

    I have since found the problem and I know what fix is needed on their server(s) to correct it, although obviously that's not my job to do, so I won't.

    My whole point is, this is a company that does not give a damn about customers, only about money. If they cared about customers, they would have much better customer support. If they had better customer support, they might be able to deal with some of the fraud problems people have a little better. Instead, they seem to be trying to cut back on staffing costs by cutting out customer support and trying to discourage customers from calling them. I even read in one of the various news articles that were linked from here [] that the president of the company had actually said they don't want to deal with people calling in to complain. To me that means they don't want their service to get better.

    This is definitely a company that needs to go into bankruptcy. Just be sure your money is out before that happens. And if you have any reason to send me money for anything, please read my /. signature first.

Someday your prints will come. -- Kodak