I almost didnt post this but after a friend of mine just told me how she get ripped for the tune of 1,700.00 dollars and PayPal locked down her account, I can see things have not gotten any better. So here is my rant about PayPal.
I have been asked several times if I take PayPal and each time I tell the client, no, I do not. They look quite surprised since most have used PayPal for eBay and other web purchases. Each time I have to explain to the client that PayPal is not nearly as safe as they would like you to think it is.
I have a merchant account that costs me money each and every month. I pay the money each month because PayPal has inherent risks to the seller that in my mind, are unacceptable. First is that PayPal is heavily weighted to the buyer to the point of reversing hundreds of dollars on very suspect claims by a disgruntled buyer. The seller or merchant has virtually no recourse to this reversal in spite of what the PayPal website says. The merchant could easily find themselves with hundreds of dollars charged to their credit cards and/or cleaned out PayPal account without any notice or any chance of offering up their side of the dispute.
Paypal is NOT a bank nor does it have to follow the same rules as banks have to regarding your money. PayPal transactions do not have the same protections as credit cards or limits to liability. There is virtually ZERO protection of your money with PayPal no matter what the reason.
PayPal can shut down your account with no notice and locked down any funds in the account for 180 days at their discretion. Think about this and how it impacts a merchant, one day you can take a client’s payment for their wedding and the next day, WHAM.. locked account and NO MONEY FOR 180 days! Thats three months in the future. And that also means the merchant has to follow through on whatever service was contracted since it’s the merchant’s account locked and since the money is still theoretically there. And while the account is locked down, you as a merchant can NOT accept any payment other than checks and cash. Bad idea when booking high end weddings or commercial gigs.
PayPal is the judge, jury and sentence regarding any disputes. There is no litigation or appeal to a higher authority. They do not have much of a track record since they were fined 150,000 USD for never honoring their guaranties. The court used the word NEVER, not sometimes, not occasionally, they said NEVER.
Even though PayPal is NOT a credit card company, they charge fees like they are. The fees are hefty and turn a nice profit for PayPal and of late, the credit card fees from swiping a card is cheaper than using PayPal. And you get all the protection accorded a credit card user.
Much of the post was from source material on:
So what can a poor buyer do? If you insist on using PayPal then get the Security card which ties a “random” PIN code to your account so someone can not log into the account even if they know your password without it. It will also tie into eBay’s login process. Yes, it is a pain in the ass but it is one of the few things that can you can do effectively to help lock down the account.
From PayPal’s own service agreement:
1.1 PayPal is Only a Payment Service Provider. PayPal helps you make payments to and accept payments from third parties. PayPal is an independent contractor for all purposes, except that PayPal acts as your agent with respect to the custody of your funds only. PayPal does not have control of, or liability for, the products or services that are paid for with the PayPal Services. We do not guarantee the identity of any User or ensure that a buyer or a Seller will complete a transaction.
4.4 Risk of Reversals, Chargebacks and Claims. When you receive a payment, you are liable to PayPal for the full amount of the payment plus any Fees if the payment is later invalidated for any reason. This means that, in addition to any other liability, you will be responsible for the amount of the payment, plus the applicable Fees listed in section 8 of this Agreement if you lose a Claim or a Chargeback, or if there is a Reversal of the payment. You agree to allow PayPal to recover any amounts due to PayPal by debiting your Balance. If there are insufficient funds in your Balance to cover your liability, you agree to reimburse PayPal through other means. If a sender of a payment files a Chargeback, the credit card issuer, not PayPal, will determine who wins the Chargeback
Receiving (selling) Standard rate: 2.9% + $0.30 USD (no protection- at least credit cards give something back for the fee)
10.1 Your Liability. You are responsible for all Reversals, Chargebacks, Claims, fees, fines, penalties and other liability incurred by PayPal, a User, or a third party caused by or arising out of your breach of this Agreement, and/or your use of the PayPal Services. You agree to reimburse PayPal, a User, or a third party for any and all such liability.
Liability for PayPal Claims. If you are a Seller and PayPal makes a final decision that you lose a Claim filed directly with PayPal, you will be required to reimburse PayPal for your liability. Your liability will include the full purchase price of the item and original shipping cost (and in some cases, you may not receive the item back).
- To PayPal or Not to PayPal? (businesspundit.com)
- Now You Can Deposit Checks Into PayPal With Your iPhone (webpronews.com)
- PayPal increases buyer protection, West African scammers rejoice (thenextweb.com)