PayPal, as most people know, is a huge company that allows you to accept payments online. Now owned by eBay, Paypal is used by nearly 164 million people worldwide every year.I've read about horror stories with Paypal, but never knew anyone who personally had problems with them - until now.
A constituent of mine was telling me how frustrated she was that she had been a victim of identity theft, and that there were some fradulent charges that wiped out the balance in her Paypal account.
I decided to help her by phoning Paypal myself, only to find out that Paypal would not replace the money in her account. In addition, they said it would take them 10-30 days to "investigate" the situation.
I asked the representative what would happen if a person had an extremely large amount of money (such as $5,000) in their Paypal, and it was removed fraudulently. He told me that that too would take 10-30 days to be returned.
I know tons of entrepreneurs who use Paypal, and my advice is to be careful. The people at Paypal do not seem to be in any kind of hurry to return your money to you - if you become a victim of fraud and identity theft.
I did further research and found a site called PayPalSucks.com which claims that when using Paypal, you are "waiving your rights to credit card consumer protection laws." It also states that Paypal does not allow you to "issue a chargeback for unauthorized use of your credit card and PayPal account".
As for me, I will keep my usage of Paypal to a bare minimal - and I will never keep large sums of money in that account.
If you need to accept credit card payments, I highly recommend that you contact your bank about opening a merchant account. Or you can sign up through Authorize.net - an industry leader for credit card processing.
Also, make sure that your bank offers "zero liability" for identity theft and fraudulent charges. There is no reason why a victim should ever be penalized as if they were the criminal!
This is an excellent article on PayPal. Good advice in financial matters is always based on prudence and good common sense. Thanks for a balanced view and information about the potential risks of this service, as well as a good recommendation of an alternative.
ReplyDeleteI have used both (PayPal and Authorize.net), and your advice is right on target.
Dante,
ReplyDeleteFirst, we'd like to say that we're very sorry this happened. It sounds like your constituent was a victim of identity theft – possibly through phishing - and we understand that this is a frustrating and oftentimes unnerving customer experience.
PayPal takes identity theft and cybercrime very seriously. Our system was built from the ground up for security and our fraud models and verification techniques are recognized as some of the best in the industry. Because of this, we often catch fraudulent activity in our system before it affects buyers and sellers. However, if an account, such as that of your constituent’s, ever experiences unauthorized activity, we will compensate that individual for any financial losses he or she may have incurred as a result.
In your post, you stated that it takes PayPal 10 to 30 days to reimburse account holders in these situations. I apologize if this was the case with your constituent. In fact, many of our claims for unauthorized account activity are resolved within 72 hours, and it is our commitment that claims will be resolved within 10 days. If fraudulent activity has occurred, we reimburse the account holder 100%.
Also, your post quotes misinformation from paypalsucks.com. If a PayPal account holder uses a credit card to fund his/her purchase, the transaction is always protected by credit card consumer protection laws. This means that consumers still have the ability to file a chargeback with their credit card company if need be. Put quite simply, because of these protections and the fact that we don’t share credit card numbers or other financial data with merchants, PayPal is one of the safest ways to pay with your credit card online.
All this aside, PayPal is dedicated to providing businesses of all sizes with a safe, easy way to accept payments online. In exploring the available options, I hope you and your readers find that PayPal offers a number of competitively priced products that meet a wide variety of online payment processing needs.
-Michael Oldenburg
PayPal Corporate Communications