The Problem with PayPal
3/28/2008
Over the years I've used PayPal to pay for things occasionally. Each and every time I've encountered small problems and generally came away with a bad feeling about PayPal which generally caused me to avoid them whenever possible. But a recent encounter is utterly disturbing.
Ranting or Reality?
If you are using Paypal, I'd strongly suggest that you read this. It started simply as a warning about my personal experience. However since that time I have done more research and found our experience to be very typical. I have since read about numerous individual and class action lawsuits. If you actually read the experience of others as well as the Paypal end user agreement, you should be very concerned about using Paypal even for small transactions.
Lack of Countries
Generally in recent times this has been greatly expanded. In recent years, it used to be the case that if you were not in Western Europe or North America you were out of luck. Finally, PayPal is expanding to more and more countries.
Ever Contacted PayPal?
I've tried. Very frequently they simply do not reply to e-mail or support messages. And until recently they actively hid their telephone numbers, and only published it after being found to be in violation of US law.
The Problem
Recently a member of my family needed to receive $7,500 US from another party. This person has been a Paypal member since 2005. They asked me if they should use Paypal and I said no but the payer wanted to pay using Paypal. So they agreed. The payee paid and the money was received. Then they transferred to their bank account. Immediately Paypal marked the account as limited and reversed the funds transfer to the bank account.
The payer has NOT filed any complaint. This action was purely initiated by Paypal. The person is already a verified Paypal member with verification by credit card and checking account. How to remove unlimited? Well you have to go through a complete series of invasive procedures.
- Verify address and telephone - Paypal has already verified the credit card and checking account and verified the billing address of the credit card. Yet we have to verify it again?
- Social Security number - This family member is not a resident of the US, and does not have a social security number. In addition, US Citizens are not required by law to have a social security number, although most do.
- Provide Shipping information - They do not have a shipping tracking number as the item transferred was performed through a third party via phone. Remember - the payer has NOT disputed this transaction.
- Upload Invoices - The invoice was generated using Paypal. Should that be uploaded?
- Set Credit Check address - Is this supposed to be different than the address in step 1, and the already verified credit card address?
Attempt at Resolution
Bypassing the frustration, let's assume it is simple to resolve.
Step 1 - Call Paypal
Paypal informs us they cannot help us by phone. We have to send an e-mail to appeal@paypal.com.
Step 2 - E-mail
We emailed paypal. They reply with a form letter that our account cannot be lifted and that we have to follow the procedure listed, even though we have explained to them why we cannot.
Step 3 - Upload more Documentation
Read the fine print - all information must be submitted within 7 days. We have called the company responsible, and we will receive a letter with proof of transfer in 8-10 days. So we will miss the magic 7 days, assuming Paypal will even accept the letter.
Step 4 - Legal Action
It seems that if you get a lawyer to send a threatening letter to Paypal, they very frequently unlock the account no questions asked. So this is our next step, followed by NEVER USING PAYPAL AGAIN.
Resolution?
I originally posted this in late March 2008. We repeatedly explained the situation to Paypal both on the phone, and via e-mail. We asked them also repeatedly to simply contact the buyer and ask for their confirmation. All such requests were completely ignored. Finally, after asking for the legal correspondence address to give to our lawyer, magically Paypal decided to contact the buyer.
Nearly a month later Paypal finally unlocked our account, but only after a massive amount of hassle and threats on our behalf. And as soon as we performed a transfer to our bank account, they relocked our account again. Then they demanded several new verification steps. After we performed them, they gave us a new list including faxing bank statements to them which include copies of private transactions and other personal financial data.
Fortunately, the last statement had no activity. It still has information I am not keen to hand over for no reason, but we tried. Yet Paypal seems to be forced into obstruction mode. First they do not accept PDF attachments, only PNG, JPG, and GIF. So I had to convert the PDF statements to PNG. Then we finally uploaded them, pressed submit resolution and received this gem of a screen.
The number of errors in the Paypal system is truly scary.
Final Resolution
After dozens of phone calls, and nearly 4 months later the issue was finally resolved. Every time PayPal would unlock the account, it would get relocked and they would ask us for the SAME information again. Every time they were told this on the phone, they would tell us to e-mail them, which put us into the infinite loop. No one at PayPal would actually look at the history and notice that we had been through this several times already. Only by threatening to have a lawyer bother them and forcing them to look at previous case numbers was this finally resolved.
Other PayPal Users
It turns out our experience is very typical. During my recent encounter I ran into PaypalSucks.com. Most large companies have hate sites. Just about every airline does. But many hate sites are just venting areas for disconnected complaints about customer service. Those sites have their place.
But PaypalSucks.com has collected users with similar grievances and exposed what I always felt to be true. What was lying behind my long time gut feeling about Paypal. Give it a read, I think at minimum you should be very concerned about your Paypal account. There are more than 60,000 users registered in the forums, and over 10,000 threads alone in the problems forum.
Credit: PaypalSucks.com
More Sites
- Paypal Criticism section at Wikipedia entry
- HowStuffWorks.com - Paypal's problems
- PaypalWarning.com
- Screw-Paypal.com
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