By Kurt Kuersteiner Monsterwax Monster Trading Cards) for The Wrapper Magazine



If you're like many eBay users, you probably use Paypal. It's an online paying service that eBay bought out, and they entice customers to join by making it the easiest form of payment when an auction closes. They even offer a "buyer and seller protection service" which assures users they are protected against fraud and other abuse.

I confess, I bought into the hype. I thought with eBay standing behind the service, it had to be safe. But I was wrong.

Since the best tragedies are ones that happen to other people, you should enjoy this tale of woe. But don't laugh too hard, because it could happen to you.

Let me say up front that the greatest problem with eBay and PayPal is that they have little or no time to deal with customer service. Anyone who has every tried to contact eBay probably already knows that they do not want to hear from you. Finding an address on their website is difficult enough. Finding their phone number is impossible. I've written them on three separate occasions regarding different matters, and although I asked for a response each time, I never once received a reply. PayPal seems to have inherited the same attitude. But I'm getting ahead of myself. Let's start at the beginning.

Paypal insists "you may be protected up to $500" with their buyer/seller protection policy. The important word here is "may be". In other words, you may NOT be protected. I found out the hard way. I sold a $200 unopened box of vintage cards in an eBay auction and took payment with Paypal. Over seven weeks later, I received an email that I thought was fake claiming there was a problem with the transaction involving "fraudulent funds" and they needed personal information. I sent the email to because I thought they were identity thieves.

Then I checked my account and found $200 had been deducted. I knew something was up.

Lesson #1 to avoid Paypal pain: Always transfer you PayPal balance to your bank as soon as possible. It's okay to leave a little money in it if you plan to buy things using PayPal, but be aware that if problems occur, your funds will be confiscated immediately. I lost my money seven weeks after the transaction. If I had just transferred it promptly, I could have avoided most of this mess (as might you).

I emailed back to Paypal and they wouldn't give me ANY details about what went wrong. I don't know if the buyer was the one engaged in fraud, or if he was the victim of fraud. All I got was computer generated automated responses. It was very frustrating.

What did the responses say? They said that since I had the more expensive form of postal insurance, the kind that both tracts and requires a signature, I was NOT covered by the buyer protection plan. They only accept the cheap version of delivery confirmation that allows them to tract it online. Never mind that I faxed them copies of the signature and receipt card. They look for reasons to worm out of coverage and I provided them one. Here are the other conditions they list (their official terms):

The buyer must be in the USA.

You must mail it to the verified address on the transaction details page.

You must mail it within 7 days.

It has to be tangible goods.

You can't accept multiple partial payments.

You can't surcharge the buyers.

You must respond to Paypal's inquiries within 72 hours.

That's right. If you're out of town when they email you and don't check your email for 72 hours, you're screwed. Never mind they took 7 weeks to contact me, I had just 72 hours to contact them.

So lesson #2 is: Follow all of Paypal's terms TO THE LETTER or they will use whatever excuse they can find to deny you your claim.

Remember, I provided them documented proof of delivery and they refused it because it wasn't the specific type that they requested. If that's not obvious enough, check out what happened when I returned to the post office...

I tell my story to the postal clerk and the next guy in line overhears it. He says Paypal did the exact same thing to him, only they took $2,000 from his account when they left him holding the bag. Again, they claimed "fraudulent funds" were involved but provided no details. He swears he'll never use them again.

I thought to myself, "This is pretty eerie when I only tell two strangers and one of them had the same thing happen." But it gets better. I'm led to the Postal Supervisor to explain the details. She tells me Paypal did the same thing to her as well, only in her case, they denied her $190 claim because it was made a couple of days beyond the 30 day limit that buyers are allowed to make their claims. (She bought a item from someone with Buyer's Protection, and that person told her it was in the mail and stalled until the 30 days had passed.)

Funny, isn't it? Paypal allowed themselves seven weeks to claim my money, yet they give buyers just 30 days to claim theirs. Methinks there is a double standard.

Lesson #3: If you bought merchandise under the Buyer's Protection Plan, don't believe any excuse from the seller and delay making your claim before the 30 days expire. They'll use that to deny you your claim.

The clerk who sold me the insurance said it was tracked on line. The Supervisor said he meant "inTRAnet, not InTERnet." She went on to explain that the post office used to put the tracking for all their insured items on the web, but discontinued five days before I bought my insurance. Gotta love it.

I would never have sent $200 worth of vintage stuff to a stranger without demanding more information or a money order, but I was lulled into trusting them because of that Buyer Protection Plan "guarantee." I'll know better next time.

So remember, read and follow all the rules to the letter, because they have lots of qualifiers that allow them to avoid paying your claim. If you're a buyer, don't let sellers convince you to wait past 30 days to make your claim. Read your email every 72 hours or risk losing coverage. And most importantly, keep your Paypal account balance as low as possible, because they can go back and subtract it at any time for any reason, and all you'll get is an email saying "we regret to inform you that..."

By the way, Paypal is now offering a "money market" incentive to encourage users to leave their money in their account, claiming it's "one of the Country's highest yielding Money Market Funds" (Only 1%! They claim that's is twice what an interest bearing Checking account pays. But what kind of comparision is that? Checking accounts pay some of the lowest intest offered by banks. They are also insurred by the FDIC, and Paypal is not.)

Can you imagine anyone being foolish enough to invest their money in a financial institution that doesn't provide their address or phone number in an obvious location? I'm being generous here, because the truth is, I still haven't been able to locate any of that information on Paypal's website. It's probably listed somewhere in real small print, but it sure isn't obvious. And the phone number is not toll free. I found it by emailing a tech and when I called the number, it was answered by computer. I waited on hold for 30 minutes long distance at my own expense. When the real person finally answered, they provided no real help. They let me Fax them the receipts, but never responded other than to eventually send more computer generated rejection emails.

Trust me when I say don't trust anyone who will take your money but not take your calls.

Having said all that, I still plan to continue to use Paypal, but only when I have to. That means never again with big ticket items or anything I can't afford to lose. And I sure as shoot'n plan to follow my own hard-learned lessons.

As my parting gift, allow me to provide you the contact information they don't seem to want anyone to know:


P.O. Box 45950

Omaha, NE 68145

(402) 935-7733

fax (402) 537-5760

Tell 'em Kurt sent yah. They'll remember me. I'm the guy who made the $200 donation.




Thanks for the informative article.

You can go into paypal, and edit your preferences of what type of payment you will accept. You can change your options to only accept money from someone's bank account rather than their credit card. This way you can increase your chances of eliminating the charge back problem.

I agree with you, though, paypal is not the most ethical company.


Thanks Dave. An excellent suggestion. But now you have me wondering if Paypal could just deduct any charge backs from my bank account! They seem to be the only ones protected in the event of any problems. The part that bothers me most is that they won't provide any information to the wronged party, to help them sort out the matter. Since Paypal didn't lose any money, they seem to care less about anyone else.



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