Is PayPal safe? How are you Covered by PayPal Policies?

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Is PayPal safe as a Payment Option? – A deeper look at PayPal Policies for Buyers &Sellers

A close examination of PayPal's much touted Protection reveals that it is full of holes. There are so many holes it is hard to understand how PayPal has the audacity to claim ownership of the scheme or that their payment service is 'safer'. Yes PayPal has a guarantee, but the merchant is the one that pays.

Dealing with PayPal as a merchant it is important to understand that PayPal protects itself first then buyers or sellers. Paypal conducts super secret investigations and has never responded to any inquiries on a reversal. They do not want seller facts to interfere with their reversals. They do not have any provision for their customers to talk to a live human being on a phone. That should tell you something right there.

1. According to PayPal accepting their ToS (Terms of Service) in effect means you waive your rights to credit card consumer protection laws if you want to use their service, and that you may not issue a chargeback for unauthorised use of your credit card and PayPal account, or if you do, then they have the right to limit your account.

2.  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 behaviour" and any money in that account is confiscated. If a customer "disputes" the charge, same thing happens.

3. PayPal is only a Payment Service Provider. PayPal helps you make payments to and accept payments from third parties. PayPal is an independent contractor for all purposes, except that PayPal acts as your agent only with respect to the custody of your funds. PayPal does not have control of or liability for the products or services that are paid for with our Service. “We do not guarantee the identity of any User or ensure that a buyer or a seller will complete a transaction” - PayPal is NOT only a service provider. PayPal is implying here that all they do is transfer money from Point A to Point B. PayPal involves itself in all aspects of your business: PayPal will limit your account if they do not agree with the content on your website, limit your account if it does not like the product you are selling, tell you how to run your business, invade your personal privacy and freeze your funds. PayPal claims to act "as your agent only with respect to the custody of your funds." PayPal implies here they are a neutral holder of your money, with no rights to it. PayPal freezes customer funds and holds their money for long periods of time. PayPal claims to have NO control or liability for the products or services that are paid for with its service. This is an outright lie: PayPal's own user agreement bans certain items from being bought and sold using the service. Again, PayPal will freeze your account in an attempt to punish you from buying or selling items they do not approve of. PayPal cannot guarantee the identify of any user...then why have customers fax over copies of identification, bank statements, utility bills and credit card statements? If they checked this information out, they could guarantee the identity of a person to a reasonable certainty.

Seller Protection Policy: (This is the SAME seller protection policy PayPal publicly admitted it had "limited ability" to comply with)

1. Coverage. The Seller Protection Policy is limited to the payout amounts per year for combined eligible Charge backs and Reversals - There it is right there, not only has PayPal admitted it has limited ability to comply with its own seller protection policy, you give PayPal permission to limit how much coverage you have per year! If you are a business, or a high volume seller, one potentially large charge back could leave you without seller protection for the rest of the year! Plus, the amount PayPal gives is good IF YOU QUALIFY for the seller protection policy!)

A Charge back is covered if it was due to non-receipt of merchandise, or an unauthorised payment. A Reversal is covered if it was due to an unauthorised payment. The Seller Protection Policy does not cover Claims for ‘Significantly Not as Described’ or for non-receipt of merchandise, or sales of intangible goods, services, or licenses for digital content. (You are not covered if you sent an item to a scammer, and he or she claims the item is not as described and initiates a chargeback! This is one of the biggest scams that PayPal helps perpetuate. Either way, in most cases, as PayPal already wrote in the user agreement, YOU ARE RESPONSIBLE for any fees and chargebacks. PayPal will not take the loss. You will!)

2.  Qualification Requirements - In order to qualify for coverage under the Seller Protection Policy, you must meet the following requirements: (PayPal makes it very difficult in the first place to even qualify for seller protection! Even if you manage to qualify for protection on one item, it does not mean you will qualify for it with the next transaction!)

a. You must have a Verified Business or Verified Premier Account at the time of the transaction, The transaction must be between a US, UK or Canadian buyer and a US, UK or Canadian seller, (You automatically have NO SELLER PROTECTION if you complete a transaction with somebody from France, Germany, Italy or another country that is NOT the U.S., U.K., or Canada! PayPal claims their service is a "business solution," but limits your protection options to only three countries, while PayPal leads the average user to believe that protection applies to any country PayPal has on its "approved list" of where you can send and receive money).

b. The payment must be listed as "Seller Protection Policy Eligible" on the “Transaction Details” page, (It is virtually impossible to know if it is "eligible." There are NO eligibility requirements listed on the site. If you are a high volume seller, you must check this page each and every time. PayPal makes this difficult so that YOU WILL NOT CHECK and hence not be covered!).

c. You must accept a single payment from one PayPal Account for the purchase, You must not charge a surcharge for accepting PayPal, (PayPal can deny your claim for seller protection right here by claiming your "handling" fees were to high and that constitutes a "surcharge" for accepting PayPal).

d. You must ship the purchased item to the address listed on the “Transaction Details” page, and that address must be identified as a Confirmed Address, (YOU have no idea what the confirmed address of a buyer is. Plus even if you manage to ship it to the "confirmed address," a scammer can forward the package to another address! When you provide PayPal with a tracking number, the tracking number will show your package was delivered to a non-confirmed address. That means you loose. Lastly, the confirmed address must also be the same address used for the buyer's credit card! A buyer can still have a "confirmed address," but that confirmed address could be different from the address that the buyer has his or her credit card statements sent to).

e. You must ship the item to the buyer within 7 Days of receiving payment, (Ship it on the 8th day, and you will loose. If the 7th day happens to be a Sunday when you cannot ship, you still loose!). 

f. You must have trackable online proof of delivery from an approved shipper to the address on the “Transaction Details” page. For transactions involving £150.00 GBP or more, you must provide a proof of receipt that was signed or otherwise acknowledged by the buyer and can be viewed online, (If you paid in a currency other than GBP, the following amounts apply for this section: $250.00 USD, $325.00 CAD, €200.00 EUR, £150.00 GBP, ¥28000.00 JPY, $350.00 AUD, 330.00 CHF, 1,600.00 NOK, 2,000.00 SEK, 1,500.00 DKK, 800.00 PLN, 55000.00 HUF, 6,000.00 CZK, $400.00 SGD, $2,000.00 HKD, $380.00 NZD), and (If you do everything right up to this point, BUT you use a shipper not approved by PayPal, you loose. Second, for any items shipped valued at £150 or more, you must provide proof to PayPal that the buyer signed for the item personally! Not only is this service an extra cost that most sellers don't even know about, the package must be send "restricted" delivery. If your buyer is not home and it takes a few days extra for the shipper to get the signature, you LOOSE. Why? You failed to deliver the item within 7 days of receiving payment! Scammers know this. A Royal Mail ‘proof of delivery’ saying the package was delivered to the right address will not suffice. There are many ways in this portion of the protection policy where you could go wrong and end up not covered by the policy! Finally, the tracking verification number must be viewable online.)

g. You must respond to PayPal’s requests for information within the time period PayPal specifies. (PayPal might tell you that you reply to requests for information within 7 days or within two days. If you fail to reply within that time frame, you automatically loose your appeal or application for coverage under the seller protection policy!). All of these requirements MUST BE MET on each and every transaction a seller makes in order to be qualified for the seller protection policy. PayPal makes it intentionally difficult to meet these requirements. Additionally, even if you manage to "qualify" for the seller protection, it is NO GUARANTEE YOU WILL RECEIVE ANY MONEY SHOULD YOU BE SCAMMED or otherwise separated from both your item and your money!).

3. If there is a Chargeback or Reversal, and the seller’s account is a Verified Business or Premier Account, PayPal will place a temporary hold on the transaction amount, and evaluate the transaction to determine whether it is eligible for the Seller Protection Policy. If the seller’s Account is not Verified, or is a Personal Account, then the amount of the payment will be automatically debited by PayPal, and PayPal will transfer the funds back to the buyer’s Account, as appropriate. If PayPal determine that the transaction qualifies for Seller Protection, they will lift the temporary hold and restore your access to the funds. Please note that eligibility under the Seller Protection Policy is not a requirement to win a Claim filed by a buyer.  You are giving PayPal permission to limit or freeze your account. That is what happens often. It is rare when PayPal will actually freeze DISPUTED FUNDS, they often freeze ALL of the funds in your account in order to protect PayPal from any losses...not you! If you are the victim of a chargeback, and are NOT verified or you are not a business or premier account, PayPal automatically gives the buyer his or her money back! And that is BEFORE the buyer sends you your item back. You have to hope that the buyer is honest and will send you your item back AFTER the buyer gets his or her money back too! A great environment for scammers to prosper in!.

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