Why I Don’t Trust PayPal
Back when I was a new eBay Powerseller, I loved PayPal. People paid me instantly, and I didn’t have to run to the bank to deposit checks and wait until they cleared. Of course some people had problems, but I figured they were probably doing some sketchy stuff and had it coming…. Until it happened to me.
They don’t tell you this, but just one nervous buyer or seller can file a complaint against you, and that’s that. Even if they just don’t want to pay for it. Your account is disabled, a happy word for frozen. As in no access to your money. And you don’t get access until you do all of the following:
» Submit to a credit check
» Be home while they call you to verify phone number
» Fax them receipts from your inventory proving you have the stuff you’re selling (How do you prove you have an old computer???)
» Fax them driver’s license, utility bills, and more.
And then, after a week, if they deem you legit (which they did), I got my account access back. It can take longer if they ‘misplace’ your documents or somehow don’t receive your fax. And what if they don’t, in their almighty power, decide you are legit? Who knows.
And that, my friends, is why I don’t trust PayPal. And why you will never see me promote keeping funds in their Money Market Fund, which is also not FDIC Insured (although this is not necessarily a big deal if you trust the institution). There’s not way I’m leaving thousands of dollars with them to freeze at their whim. I do continue to use PayPal for small money transactions because, well, what choice do I have? I accept the risk, and withdraw all funds immediately. Besides, they already have my entire identity now…
November 6th, 2005 at 10:18 am
offtopic, but what is the name of your poker related blog?
November 6th, 2005 at 10:23 am
oh my.
you actually got your account UNfrozen? wow! there’s so many poor horror stories out there, and back then Paypal was pretty rough. I heard its a wee bit better now after ebay bought em out, but who knows.
I never leave money in there too, its wild how we still use it too. what a bummer. nothing beats giving money to a totally unregulated industry.
after I read all those horror stories on paypalsucks.com, paypalwarning.com etc. I setup like backup checking accounts. it was such a hassle. ie: i transfer funds to one checking account then loop it out after that. my linked paypal accounts were always empty, just incase paypal decides to take money out due to some silly buyer complaints.
their money market is definitely a bad idea, i mean dont forget that you’ll get taxed on those too.
ah, paypal, can’t live with you, but can’t live without you too. I was rooting for citi’s c2it, and HSBC’s yahoo paydirect. they had their chance but blew it.
they probably realized they couldnt make money unless they start freezing accounts with thousands .
November 6th, 2005 at 10:29 am
I have heard PayPal horror stories as well. So far I have not been directly impacted and have had a very good experience working with PayPal. However, I have made a point of keeping my PayPal account funded with just a few hundred dollars. If I don’t plan on purchasing anything for awhile I will draw it down to about $100.
Regularly sweeping any large profits out of PayPal and into your checking account is a prudent thing to do.
November 6th, 2005 at 10:53 am
hey Jane, you shouldn’t have to have ur account funded to be able to make payments, I think.
say you have $0 in balance, whenever you make a payment to someone, just select the checking/savings account you want the money to be withdrawl from, and paypal will automatically withdrawl whatever amounts you need to fullfill that payment.
these would be instant payments too, and shouldn’t be those slower echeck ones. especially if you have already confirmed and verify your linked accounts.
November 6th, 2005 at 11:10 am
mblogpoker.blogspot.com
November 6th, 2005 at 12:39 pm
Chances are, PayPal is going to have to get there business in order if they don’t want to be crushed by Google Payments (or whatever they’re going to call it). I know I’ve been less than happy with some of PayPals policies, and I’m personally really excited for more competition in this area!
November 6th, 2005 at 2:17 pm
Wow, I somehow missed all the paypal horror stories. I’m parking all the money we’ve been saving for my wife’s new car in there. Guess I better find a new parking space!
November 6th, 2005 at 2:51 pm
dont worry. google paypal will be here soon!
November 6th, 2005 at 6:51 pm
I always wondered why you didn’t recommend Paypal over ING. Makes sense now.
November 7th, 2005 at 5:39 am
Yeah when I was a seller on Ebay, I really preferred money orders and stuff over Paypal even with the huge mailing delays. I also try to keep a $0 balance whenever possible… it’s scary.
November 7th, 2005 at 7:54 am
Thanks for that tip. I do a fairly large amount of transactions with Paypal and keep a hefty balance in there (because of the money market rate). I think I might have a reason to open an emigrant account and hold my business money in there.
November 7th, 2005 at 9:56 am
wow that sucks. I haven’t used paypal for a while but if i do i won’t be leaving a large amount of money there just incase…thanks for the information
November 8th, 2005 at 11:15 pm
Too many scams on paypal. Do not link a “real” checking acct. I sold a book and got scammed by an Ebay seller and Paypal just came in and did an ACH withdrawal of funds and I could not stop them. I have since deleted the checking acct link through PayPal. The trick is really simple: 1) buy something and ask the seller to ship via Media Mail (no tracking) 2) wait till you recieve the item 3) then complain to PayPal that you have not gotten anything 4) voila - you get an instant refund 5) Seller gets screwed twice - shipped item already and has to refund the money and pays for shipping too!
November 22nd, 2005 at 2:36 pm
I was a paypal victim but in a different way. Somehow my account was hacked and it was used to make transfers from my bank account through paypal to an online casino totalling $3000. Needless to say paypal did crap but let me know I owned them money until I dropped the lawyer card on them and provided documentation and statements aying I did not do it. Though the online casinos were very helpful. When I contacted them about the problem and to be reimbursed they had no problem with doing it. Especially when they found out that the name used to spend the money was not my name. Now like others above, I have a seperate bank account that I leave no money in to use as my linked account to paypal. This all happened about 3 years ago. To this day I have keeped all the emails to and from paypal about it.
March 25th, 2008 at 8:56 pm
[…] from MyMoneyBlog does not trust PayPal, as they blocked access to his money for over a week for no reason. PayPal […]
May 27th, 2008 at 9:19 am
Hey guys,
I have been reading lately about a lot of problems regarding PayPal and frozen accounts. If a new website emerges that offers the same service as PayPal would you guys deal with that website??? what i mean to say is, how would you trust a newly created website like paypal.