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More Paypal Pain!
By Kurt Kuersteiner ©2010 Monsterwax Monster Trading Cards for The Wrapper Magazine

EBay and Paypal have been going through numerous changes of late, and many of them are controversial. Users complained when eBay increased their commission during the height of the recession, while advertising they were "lowering costs" by adjusting listing fees. The overall cost increased, as did their profits (up 16% to $2.4 billion in 2009). That's remarkable, considering the recession and the fact eBay doesn't actually manufacture, inventory, or ship any products. Customers have a right to know what's going on, so here are just a few of the more subtle "improvements" that have occurred of late.   

First off, the rules have changed for eBay "store" owners. It seems that items for sale in those stores now automatically go into general auction after the first 30 days. According to Times On-line, eBay has been moving to a fixed priced model in an effort to take on rivals like Amazon.com. The result is that now when you do a search, ten times more material shows up, but 90% of it has a "buy it now" (BIN) price. So now most of the items on the auction site are not auctions at all, but have higher "set" prices. These pre-priced items continue to crowd out the regular auctions by staying listed for another 29 days (compared to the 7 day listings of most auctions).

Another semi-recent change is reducing the time one can view completed auctions. It used to be items sold for the last 30 days would show up on searches if requested by the user. That gave customers a chance to get a feel for what items typically sold for. Now, however, the time reviewed is only 2 weeks--and they might reduce it more in the future. This change occurred without any fanfare, and it's unclear what the exact motive was. Perhaps eBay didn't like customers to see too many past auctions, out of fear it would discourage offers they made on current auctions. Server space is getting cheaper and cheaper, so any computer savings wouldn't seem that significant. Another site (Worthpoint.com) now offers to show completed auction prices from further back--for a price. Who knows, maybe they are owned by eBay? (It's just a conspiracy theory, but eBay did buy out Paypal, and how many of us saw that coming?)

April 15 is tax time, even for those of us who don't have much income to tax. But what little I do make, I sure as heck wanna keep. It is legal, ethical, and common sense to deduct eBay and Paypal fees from taxable income. (Otherwise, you're just paying taxes on money you spent to earn money to pay taxes on.) And when you add up all those fees that eBay and Paypal nickel and dime you for, it can be a pretty significant deduction. So I called Paypal to find out what my total fees were for 2009. I thought to myself, "Self, they have everything on computer, so they can just press a button and tell me my total within five seconds, max!" Oh, the naivety of it all! It turns out Paypal won't tell you squat. Oh sure, they know the total, but apparently, their bean counters determined it was bad marketing to reveal to customers just how much they actually spent in combined fees. What's that, you say? It's illegal for a financial service not to disclose what they charge you? Well, technically, Paypal does tell you. They list each fee, one by one, and you can add them all up yourself--if you have the spare time (which, like most folks, I don't). They offered to send a download of the hundreds of transactions within 24 hours of my request, but that would be 12 hours after the April 15 deadline. The rep was nice enough to apologize for the fact she wasn't allowed to just tell me the answer I wanted, but she did offer to kick the suggestion upstairs for next year. I thanked her and said, "Go ahead, but I won't hold my breath. I already made that same suggestion last year when they refused to tell me the total back then as well!"

Perhaps the most costly policy detail is one that Todd Riley alerted me about. He warned that a growing number of overseas customers were buying items and paying for them using Paypal, then getting Paypal to refund their payments by claiming the items never arrived. Of course the buyers refuse to buy overseas tracking because it's cost prohibitive-- and besides, that would spoil the scheme. So guess who gets left holding the bag for the bill? Big hint: It ain't the multi-billion dollar corporation. No way, Jose. Try instead the mom-and-pop home style eBay reseller who foolishly thought Paypal would investigate such claims for fraud before automatically siphoning the funds out of their bank account.

Todd is one of the most honest dealers I know, but his version of this story sounded so one-sided, I felt compelled to verify it. Certainly a big company like eBay/ Paypal would figure out that such a policy leads to rampant fraud as more and more foreigners learn how easy it is to order anything they want from "the Land of Milk and Honey" and get it for free. So I went on-line to chat with a Paypal representative to see what they had to say. They had a "real time" rep named Sarah who was eager to help me. The only problem was, she kept asking me to rephrase my question because she was having difficulty understanding it. It turns out, she wasn't real at all--she was a "virtual representative" (computer program) and only answered basic questions to discourage unnecessary calls.

I thought to myself, that's strike one.

So then I searched the website to find Paypal's phone number. They don't hide it per se, but they don't advertise it either. You have to follow multiple links to locate it. It's 1-888-221-1161. But don't bother writing it down, because knowing the number is worthless unless you follow the links and get a "secure web pen number" which is only valid for 60 minutes. When you call, you get another computer that gives you six options (none of the options being to speak to a live representative). I wanted to ask about Paypal's return policies, but that wasn't an option. So I chose the closest option they offered; "disputes". Alas, the voice recognition program didn't recognize my answer.

Methinks, hmmm, that's strike two.

Undaunted, I repeat "disputes" c-l-e-a-r-l-y. It still didn't understand. (Strike two and a half?) One can only imagine how frustrating this would be for people with strong accents or speech impediments. (There are no push button options offered as an alternative.) I tried again. No dice. (Strike two and three quarters?) After muttering some profanities--which I'm glad it didn't recognize-- I tried a fourth time and it finally worked. It mentioned I had one outstanding dispute, which was yet unresolved, and then rattled off another four or five options. Fortunately, one of those options was an agent, so I finally got to speak to real live human. Hurray!

The representative was friendly and pleasant. I suppose he had to be in order to calm callers who had become agitated running the gauntlet of the computer guardians. I mean, seriously, Paypal is basically an out-of-state banking service for millions of people who cannot drive to California to meet with the manager to get answers about their accounts. To have to jump through so many hoops just to ask a question about your money is really aggravating. But I digress. The saga gets even funnier (in a Kafkaesque sort of way).

I ask the human my policy question. (At least, I think he was human, he was able to understand me better than "Sarah", the simulated Customer Care Rep.) I tell him about the rumor I heard that foreign buyers can screw domestic sellers out of their products by just saying they never arrived, and Paypal will automatically snatch the money back from the sellers, no questions asked, even if the seller has a receipt to prove it was sent, and/or a letter from the buyer releasing the seller from responsibility in the event the item is lost in the mail. To my amazement, the rep says the rumor is fact. He says the only way to prevent a full refund it to use tracking, which for overseas items means Express Mail, which starts at $28 and goes up from there. I tell the rep that only a fool would buy something for $25 or $35, and then spend $28 in shipping. He agrees, but says most merchants chance the charge back as "a cost of doing business." (Funny how Paypal doesn't accept that loss, but passes it on to us, along with advice that we should be willing to absorb such costs.)

That's strike three. You might think I would take my ball and go play somewhere else, but where would that be? There are other stadiums, but nobody attends them, and what good is an auction with no bidders?

Down (but not out), I took the opportunity to ask my real live rep about the dispute I heard mentioned while traversing the dark labyrinth of computer generated voice prompts at the beginning of my call. I assure him, there must be a mistake, because I had not received any email from Paypal or customers about any problem whatsoever. Once again, the rumor is true. It turns out a domestic buyer had purchased an item from me using Paypal, but closed his bank account before Paypal could get the money. And for some reason, Paypal had failed to email me about the problem. His computer screen indicated no notification was sent, but it didn't say why. This is pretty spooky, because sellers only get 30 days to dispute such claims (not that it does any good). A bank has to mail a letter, and usually follows up with a phone call, but Paypal doesn't. Go figure.

I hung up thinking, these guys really are batting a thousand, or should I say, a billion? After all, they're hauling over twice that amount to the bank every year.

So you may want to take extra care when relying on Paypal for your banking needs (or, heaven forbid, credit card services). They are famous for taking the money out of your account if there are any buyer disputes. I would recommend no overseas bidders in auctions, and that you leave as little money as possible in your Paypal account. Transfer it to your bank where it will earn interest, and I don't mean the same account where they can pull it out if there is any dispute.

Come to think of it, maybe that's why the fellow who stiffed me closed his bank account. You might call it, Robbing Peter to Pay Pal...

 

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