PayPal Woes, Any Legal Experts?

Discussion in 'Et Cetera, Et Cetera' started by D_Roderick Beresford Stiffington IV, Jun 23, 2007.

  1. D_Roderick Beresford Stiffington IV

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    Hey boys and girls, I've been away a couple days having to go to a funeral. Anyway I get home only to read an email from PayPal saying that an item I sold has been chargedbacked. This item was a World of Warcraft account I sold for $560, yes...to you non-nerds who would pay that much for an item :tongue:. Anyway this was back in early May, and since quitting the game and selling the account I've obviously spent this money. Now PayPal tells me it was paid for with a stolen credit card and they've issued a chargeback, basically taking the money away from me.

    So now my PayPal account has a negative balance of $530, and PayPal is telling me to pay this money. I was trying to understand the best I can the User Agreement on PayPal but I didn't find anything helpful out of it. I did learn however that I am not protected by their "Seller Protection", because I did not ship the item to the PayPal address registered to the account. Why did I not ship to that address? Because it was intellectual property that didn't require shipping. I got screwed here and apparently owe them money. Back in January I was the victim of credit card fraud on PayPal yet again when I sold a video card and shipped it to Indonesia, yes that was stupid of me and my fault and I thought lesson learned, but in this case how am I supposed to know it was a stolen card? And PayPal waits over a month to let me know its a chargeback when the money is spent already. I'm 22 years old with no job and no time to get a job, I'm in a rigorous 14 week training to become a Court Officer.

    I'm extremely worried whats going to happen. I have no money to my name and just recently had to spent about $2000 on uniform and equipment for my job, now I supposedly owe them $520. Does PayPal have the legal right to and will they take money out of the bank account linked to the PayPal account? This is what I'm most worried about because there is no money linked in that account, and I don't want them to start trying to withdraw money that isn't there and costing me +$30 fees from my bank. I'm going nuts over this, what if any are my options, what is PayPal going to do? Has anyone had a similar problem like this? If it wasn't going to cost me more money I don't have I'd get a lawyer, I feel like a victim of PayPal's bad policy here along with a victim of credit card fraud. :confused:
     
  2. D_alex8

    D_alex8 Member

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    When you sign up to use Paypal, the user agreement stipulates that, to qualify for seller protection, you must (a) ship tangible goods; and (b) ship these with proof of trackable shipping.

    Since you did neither, accepting the payment via Paypal was strictly AYOR.

    A straightforward online overview of this can be found at:

    Understanding PayPal and Credit Card Chargebacks

    Can Paypal (attempt to) withdraw the money from your bank a/c? Yes, they can, and if they fail to get the funds (leaving you with the bank charges for the failed transaction), they can instruct a debt collection agency to do this on their behalf.

    Yep, that user agreement contains all kindsa stuff that people always fail to realize until they get their first chargeback.

    However... if you phone their customer service center [link to phone number and opening times] and get to speak to someone competent/sympathetic (often, asking for a line manager is the only way to achieve this, and even then, some of the line managers are useless too)... then you can sometimes get them to bypass the 'bank account' stage, so you won't be stiffed for the extra $30+, and can focus on repaying the money owed already.

    But, the short version, basically, is that you are accountable for this, as you (a) signed their user agreement, and (b) failed to follow the guidelines for seller protection stipulated therein.

    Good luck.
     
  3. ManlyBanisters

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    I'm neither a legal expect nor enve in America so I can't be sure but i'm fairly confdent that PayPal can't just take the money out of the account. If you have a standing order or similar pre-approved payment arrange with a company they can but I assume you do not pay PayPal on a regular enough basis to have set that up. If you ARE worried about that go in to you bank, or write them, and make sure they have it in writing from you that no payments are to be made to PayPal without new written premission from you. Make sure the bank has that in writing for starters.

    You may indeed owe the money - it sounds like the PayPal agreement has you. You are in a slightly legal grey area with the 'no need to ship' aspect of your transaction but, to be honest, for 520 / 530 bucks is it really worth taking it to court? You may not win and if you don't it will be A LOT more than $530. It's a real pisser and I totally understand where you are - I've been broke and found myself owing money too - it sucks. You sound like an intelligent person - read through the agreement again and unless you see any glaringly obvious loophole for your situation I would give up and get the cash together ASAP. (Maybe see if PayPal will accept $50 a week if that is more manageable - talk to them, they're a big company they can afford to wait for the cash and they know they can, they may even have a policy for your situation.)

    Maybe someone else here can offer more positive advice - Good luck man.
     
  4. ManlyBanisters

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    I defer to Alex's opinion here - but I still think you should contact the bank to make sure no payments go out - put it in writing to the bank. And yes - call PayPal and sort out a repayment schedule.
     
  5. D_alex8

    D_alex8 Member

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    Your tactic of approaching the bank might yet work... at least so far as to stop there being a $30+ charge for a failed transaction.

    However, to quote directly from Aboutpaypal.org:

    "Should I use PayPal to Accept Credit Cards Online?

    (...)
    If PayPal even wonders for a second about the validity of a transaction, they can freeze your PayPal account immediately and suck all your money out. They can even pull your money directly out of your personal bank account, many times without even a phone call or e-mail. (...) (You agreed to all of this, when you signed up.)"
     
  6. D_Roderick Beresford Stiffington IV

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    I've done some research and apparently it used to be PayPal's policy to just go into people's bank accounts and withdraw funds. From what I read, there was a lawsuit against PayPal and they are no longer allowed to do this. I'll place a block first thing tomorrow incase, but from what I read in PayPal's User Agreement I only see this...

    In the event that one of the currency balances in your PayPal account becomes negative, PayPal retains the right to offset the negative balance using funds maintained in a different currency balance.

    It seems like PayPal added various ways to get their money from you if you become a negative balance since they can no longer go directly into your account. I also read when PayPal cannot get their money from you in the ways set forth in their User Agreement, the PayPal account gets closed and the matter is sent to a debt collection agency. I was reading over the "THE FAIR DEBT COLLECTION PRACTICES ACT" and basically if you mail a certified letter to a collection agency stating that you dispute the debt because of fraud committed by one of the parties...which there was fraud in my case, that they cannot continue harassing you for the debt, because according to the Act they can only persue a "valid debt", which a disputed debt is not.

    I'm tired, pissed off, cranky and a lot of other things right now so I'll have to look more into this tomorrow. But fuck PayPal if they think I'm paying them this money. My mom had credit problems, so debt runs in our family :tongue:. I'll call my bank, PayPal and talk to her about it tomorrow.
     
  7. D_Roderick Beresford Stiffington IV

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    Yeah that is the reason for the lawsuit I mentioned. I'm fairly certain PayPal no longer has the right to go directly into bank accounts. I saw those articles as well and most of them are date 2005ish. Again I'll still place a block to be sure. I've seen cases where people with debt after people, and the people carefully document numerous times where they do not follow the laws they're required to follow, and you can actually end up suing them for up to $1000. I'm just really not in the mood to be bullied around and don't mind making a big deal over something like $520.
     
  8. D_alex8

    D_alex8 Member

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    Yep, so long as you have a US-registered account, you are quite correct. The same isn't true for me, under the Paypal (Europe) Agreement, hence my confusion.

    Be aware that, in addition to not receiving any money through Paypal right now, you also shouldn't attempt to make payments to anyone using Paypal (either through the account with the chargeback, which I imagine is frozen right now anyway, or through any other account held in your name), as Paypal in the US does retain the right to redirect any funds you attempt to transact through Paypal to others, and to use these in 'paying off' the chargeback.

    The Fair Debt Collection Practices Act may well not apply here, since neither of the parties involved (Paypal, you) has committed fraud, which would be the requirement for disputing the debt. Taking up the matter of the fraudulent transaction with the issuer of the credit card would be another matter entirely, although the onus here would be upon Paypal, as the transactee in this instance.
     
  9. dolf250

    dolf250 New Member

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    Well, first off read the cover page of PayPalSucks.com In addition to other interesting points it says:

    5.If you are a bona fide, up-standing individual with hundreds of successful transactions, but someone pays you with a stolen credit card, your account (by PayPal's own admission) is immediately flagged as being "criminal behavior" and any money in that account is confiscated. If a customer "disputes" the charge, same thing happens. (See email above.) PayPal claims that they will fight chargebacks, but read this before you fall for that one.

    It also has a list of telephone numbers and fax numbers including the U.K. But the toll free american number is (888) 221-1161.

    Good luck.
     
  10. dong20

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    Paypal have a dubious reputation when it comes to acting unlawfully and unreasonably. I have great sympathy for you but I suspect you may be unable to avoid liability in this instance. It's probably unlikely you would be able to recover the funds from the credit card issuer, and almost certainly not from the person using the stolen card, and being the innocent party in this is what must sting.

    Taking credit card payments is an essential part of modern business so one must accept some risk, all one do is be as aware as possible of what these risks are, their likelihood of affecting you and what you can do if that happens.

    I use PayPal a fair amount but I am becoming increasingly concerned about the potential for abuse by both PayPal and customers. I rarely accept PayPal payments for intangibles and never over $50. I always ship using tracked shippers with full insurance and always state quite clearly my returns policies before and after payment. It doesn't obviate the risk but does help reduce it. At the very least the claimant cannot claim ignorance.

    I remember your Ebay (broken PC) thread, what was the outcome of that? Anyway, best of luck.....
     
  11. B_ScaredLittleBoy

    B_ScaredLittleBoy New Member

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    To me, it's Paypal's own fault for allowing the stolen card to be used in the first place. What I find funny though is some 'nerd' stealing a credit card then using it to buy a WoW account, of all things!

    However, if you have to pay, you have to pay. Don't try to fight the power! You can't win. I use Paypal infrequently and have never had any trouble. But then, I sell random junk and its all tangible. Sold two keyboards...I impulse buy a lot. But then I do them up and sell them for a profit :cool:

    Good luck. Research it. If the person whose card got stolen has found out who took it, they could/should get the money back from them?
     
  12. dong20

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    Only if they knew it was stolen at the time of the transaction in which case they are criminally negligent and thus liable. Somehow I doubt that.

    Somehow, given the item in question I can't help but think it may have been unauthorised use rather than simple card theft, that may make no difference in reality but the liability for negligence would fall more squarely on the cardholder to prove it was stolen and not simply misused and they are trying to wriggle out of payment.

    In theory this may be an out for you, but what are the odds? Still, it never hurts to explore the option.
     
  13. Caelestis

    Caelestis New Member

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    I'm no legal expert, but I am a UK personal banking expert. Hopefully most of this applies in the US too.

    I strongly suspect (as noted in a previous post) that Paypal will have somewhere in their T&C that you are ultimately liable for successful chargebacks. You won't beable to challenge the chargeback as investigations are done before a chargeback is claimed.

    You'll find you *do* owe Paypal this money, technically, however you can withhold payment from them and discuss it in court. You'll lose though.

    If you have any doubt over whether Paypal will attempt to directly debit any of your cards, you should do 2 things:

    1. Contact the banks for all cards you have registered with Paypal and ensure there are no outstanding authorisations. Once a payment is authorised, even cancelling the card will not stop it debiting your account.

    2. Report all above mentioned cards as "Lost". This way no further authorisations or debits can be forced out of them.

    This means that Paypal will have to send the debt to a debt collection company and you can make repayment arrangements with them, or through a court.

    On a side note: No harm in speaking to the police about this. You never know: They *might* find the person who used the card based on Blizzard's useage logs etc (which they'll probably only beable to get access to with your help).
     
  14. Caelestis

    Caelestis New Member

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    That's not their fault by the way. They don't know it's fraud until the real credit card owner disputes the payment, plus the bank investigation time. I'm surprised it wasn't a lot longer before you found out.
     
  15. D_Roderick Beresford Stiffington IV

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    Kotch I had no idea you were such a Blizzard expert :biggrin1:, thats definetly a good idea I'll look into. You guys are right that theres no point in fighting it, but I wonder how much time I had to pay this money? Like I said I'm in training for my Court Officer job and its 8am-5pm every weekday without pay, so I don't have time for a job to pay this off. If I put this off for a couple months until my training is over and I have my job, is that alright? Or will interest or something build up or does the debt stay $520? I'm new to the world of owing money.
     
  16. dong20

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    I suspect this is something you will need to thrash out with PayPal. It's probably covered in the T&C's.
     
  17. SpoiledPrincess

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    Doesn't your bank offer you any protection from fraudulent transactions?
     
  18. nakedwally

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    PayPal is horrible and loves to discriminate, it used to be such a good thing i say we create a new thing like paypal for those are are getting screwed in the ass by paypal with sand and gravel
     
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