My PayPal Horror Story

In January, 2002 someone using my credit card number made a "purchase" from FirePay.com for $500.00. I attempted to call them (an 800 number was listed on the credit card bill). They told me that they were a third party paying service (similar to PAYPAL). Someone had set up an account on their system with my credit card number and address but a different name. I called my credit card company Citi Bank and told them that the $500.00 charge was not mine and had the card canceled (and a new one issued).

Since this was the card I was using on PAYPAL I went to www.paypal.com and added a different card and delete the one used fraudulently. I had informed the credit card company (Citi bank) that all the other charges were valid.

Towards the end of February, 2002 I found my PAYPAL account restricted. This was done with no warning and with no reason given. I called PAYPAL and found that the reason it was restricted because someone had told them my credit card had been used fraudulently. It took me about a week calling PAYPAL and waiting on hold to finally convince them that the card used fraudulently was no longer listed on the account. THIS SHOULD HAVE BEEN A WARNING OF PAYPAL'S SHODDY BUSINESS PRACTICES, however thinking nothing else would happen I continued to use the service. I found it useful to pay for auction purchases from Australia (where it is hard to pay any other way).

Thing proceeded nicely until Monday April 22, 2002 when I suddenly got nine emails from PAYPAL about charge backs. I immediately called PAYPAL, since neither my wife or I had requested any charge backs. The resolution team could not even tell me where the charge backs came from (i.e. whether it was the old or new charge card), so I called the new credit card bank and they assured me no charge backs had been made. I called Citi Bank and the customer support had no record of any charge backs. They suggested I call the fraud department the next day. Meanwhile I began getting emails from the sellers asking what was going on. I replied I did not know what was happening.

On April 23, 2002, I talked to the Citi Bank fraud investigator, Roger, who finally admitted to doing the charge backs. Why he did this was never explained. He said he would set them off so that the merchant could simply re-request the money and they would be accepted. I called PAYPAL and told them this but they insisted they could not do that. I called back Citi Bank and talked to Roger again and he insisted that they needed to reissue the charges. I asked to talk to his supervisor and was given Laura Ewing. I asked her for a letter stating that the charges were made in error by the bank, so that I could give that to PAYPAL. She emailed me a letter later that day. I had hoped to forward this to PAYPAL; however the only way to get email to PAYPAL is through their web-pages where you are restricted to 700 characters and no attachments. Any documents need to be faxed and mailed. Paypal, however, only contacts people via email. Anytime they want more information the email it to the user.

Now I believe that the problem should have been resolved with this but then I did not know how PAYPAL worked. They kept insisting I send in affidavits for each of the "charge backs I had made". I kept trying to tell them I HAD NOT MADE THE CHARGE BACK that the BANK HAD DONE THEM IN ERROR, but they did not seem to hear. I spent every night that week calling PAYPAL and waiting 30-45 minutes to get customer service. Giving customer service all my information that then can not do anything but forward you to the resolution team. Here you again wait on hold for 30-45 minutes and tell the same information and then tell them that I had not made the charge backs and that all they needed to do was reissue them and they would be accepted.

I continued talking to the bank, which had started the problem, trying to get them to fix it. I talked to Kathy Woodsmith, Laura Ewing's supervisor, and even to Pauline Wong Furqueron the VP of the Citi Bank Fraud Division, trying to get this resolved.

Meanwhile PAYPAL kept sending me emails to submit affidavits for the charge. Now no-one from PAYPAL had given me the amounts that were charged back and since I had not requested the charge backs I did know the amounts. Also they wanted affidavits filled out but I had gotten no affidavits to fill out. Also one person who had received a charge back (a Jeffreyab) began posting feedback comments on transactions done in January that I was doing fraud on my credit card and should be avoided. He had never posted any feedback before and had been harassing me about giving him negative feedback, even though I had posted positive feedback saying "he delivered quickly, but I would like to buy more items" Jeffreyab restricts buyers to 8 items and will never sell to them again after that. I had won 7 auctions from Jerreyab that cost less than $10.00 combined auction charges but cost $28.00 for postage (they were 8 CDs that he mailed for less than $5.00).

Now when this fiasco started I had $196.61 in my PAYPAL account. Which I was not allowed to access. PAYPAL allows you to keep receiving money, but not get the funds or pay anyone with them. I asked them to stop accepting money, but they claimed they could not do that. They said it was my responsibility to let all the senders know not to send money and to send out merchandise to anyone who did send money even though it could be 45-75 days before this problem was resolved. By May 3, 2002 my PAYPAL balance had grown by another $169.76. I signed on to the account and selected all the different do not accept money functions (i.e. no credit cards, no bank funds, no non-verified, etc.).

I did eventually learn that the total charge back were for $549.34. But it was over two weeks into this fiasco before PAYPAL sent me the amounts and sellers. They also finally emailed me a copy of the affidavit, but refused to send copies in the mail, however I would be required to print them, fill them out, get them notarized, fax and send them back.

I also on more than twelve occasions asked to talk to a PAYPAL supervisor about this problem and was told I would be put on a call-back queue for sometime in the next 48-72 hours. However no-one ever called.

The bank (the VP) tried to deal with PAYPAL and was hung up on. By May 13, 2002 the bank decided to deal with PAYPAL's merchant bank to resolve the problem. By Friday May 17, 2000, I was informed by Laura Ewing of Citi Bank that the funds were back in PAYPAL's Bank. On Saturday May 18, 2002, I got emails from some of the sellers I had paid, stating that PAYPAL was taking the money back and charging them a $10.00 charge back fee.

I again sent email from their web page asking why they were taking this money since the funds were back in their bank. I called on Tuesday May 28, 2002 and told them that their merchant bank had the money and that they needed to end this nightmare. I was told that the charge back department would look at it and that the problem would be resolve in 24 or I should call 402 935 2268 (a direct line to Tiffany, a manager) after 5:00 CDT. On Wednesday May 29, 2002, I receive an email from the charge back department saying again that I needed to submit the affidavits. I waited till 6:15 pm EDT and called the number given and got Tiffany's voice mail and left her a message. I called again latter and left another message.

I called the 402 935 2268 number twice the next morning and again left messages. I never received a call back on any of these. On Friday May 31, 2002 at about 2:15 pm EDT (right before leaving work for the day) I made my final call telling the person who answered my only recourse, since they had the money back for almost a week and refused to release my money and were "stealing" the seller's money was to call the California authorities and accuse PAYPAL of fraud and theft. The support person reviewed the account and asked me to hold. He came back after about 10 minutes and transferred me to Beverly and account manager.

I asked Beverly why I had never been called back on this matter and she said that the charge back people never make call backs. I told Beverly about being told to call the Tiffany and she said that Tiffany was not in that department. Beverly then said that I needed to send in the affidavits before they could get their money back. I told her again that PAYPAL already had the money and that Susan DiSantis of their merchant bank had dealt with Citi Bank to get the money back. She said she needed to get with the charge back department and look at the documentation on this case and she would call back. I gave her my home number, since I was leaving for home and by 2:55 she had called and told my wife that the restriction was lifted and that they were resolving the problem.

I went on line (Friday May 31, 2002) and issued the command to transfer the money to my bank account. On Monday June 3, 2002 the funds were in my bank, so I closed my account and will never do business with them again. To show you how screwed up PAYPAL is at about 11:30 June 3, 2002, they emailed that the account would not be unrestricted until I replace the funds.

It is my belief anyone doing business with PAYPAL is living on borrowed time till they to have a PAYPAL nightmare.

WARNING: Sellers you have no protection from PAYPAL if a user wants his money back unless you send everything certified. You must prove you sent to a PAYPAL verified address. Tracking by USPS shows how package moved but does not track to address.

WARNING: Buyers your only protection is using a credit card, bank transactions have no protection.

WARNING: If you do both buying and selling you have virtually no protection, especially if you leave any money in PAYPAL's hands. They restrict your money with no notice and hold it until they get what they want or simply take out what they claim is theirs.