Is Paypal safe for use? Here is my view of Paypal Buyer and Seller Protection.
For those of you who don’t know what PayPal is, they are the biggest online payment handler within the world. They have just over 45 Million members worldwide.
-----PayPal Buyer Protection-----
This is for the protection and can only be used by EBay users. If your feedback score is more then 98% then your buyers will be eligible for £500.00 protection in the event that they do not receive goods of services. All buyers are eligible for the buyer protection.
With you as the buyer, the 'seller' must be registered with PayPal in one of the following countries:
Austria / Australia / Belgium / Canada / France / Germany / Hong Kong / India / Ireland / Italy / Japan / Korea / Netherlands / Singapore / Spain / Switzerland / Taiwan / United Kingdom / United States
To qualify the buyer protection, in that transaction, you must spend £15.00 and above.
-----PayPal Seller Protection-----
Below is a quote from PayPal's Help pages:
“2. Receipt of Payments; Risk of Reversal of Transactions; Collection of Funds you owe PayPal.
When you receive a payment through the service, unless you follow the steps necessary to qualify for our Seller Protection Policy, you are not protected against a subsequent reversal of the transaction. In the event that the sender's transaction is reversed for any reason and you do not qualify for the Seller Protection Policy for that transaction, you will owe PayPal for the amount of the reversed transaction plus any fees imposed on PayPal as a result of the reversal. Examples of such a reversal include, but are not limited to, a credit card reversal by the sender of the payment and a reversal of the transaction because the sender of the payment was using a stolen credit card or unauthorised bank account. PayPal will seek to recover the funds from you by debiting your PayPal balance and, if there are not sufficient funds in your PayPal balance, PayPal reserves the right to collect your debt to PayPal by any other legal means."
To qualify, the transaction must be within UK or between UK and US or Canada. In my opinion, this isn't good enough and some people take the advantage to con. What if you want to sell to any other country? People can register with PayPal in 19 countries, yet 16 countries are not covered? Why is it that buyers get more cover? If they can allow registrations in those countries, then they should be covered.
Buyer must have a confirmed address with Paypal. This is a problem as not all buyers have confirmed addresses! A lot of people who first join eBay will not have a confirmed address so these transactions are not qualified for seller protection. I have been informed some Paypal users cannot verify their address because they are not in UK nor US. Be aware if selling high value items! On top of this, the items must be sent via traceable means. For example, Recorded Delivery, Special Delivery, International Signed for, Airsure, DHL, FedEx, etc.
How does fraud occur? A buyer files a claim to recover money sent to the seller because they claim an item has not been received or significantly not as described. PayPal will see if the transaction qualifies for Seller Protection. If it does, PayPal will freeze the account to look into the case. Seller sends tracking details to Paypal. If the seller 'loses' the claim, then the seller will be CHARGED A REVERSAL FEE. Now, the buyer is the scammer and sellers have lost claims simply because the transaction didn't qualify or the buyer's credit card is a stolen card.
As a result of this, the seller has sent the item because he/she thought the money had been received (which it had) by the time, and the money is taken back from the seller AND he/she is charged the reversal fee. So that's, no more item, no more money, plus a fee for PayPal. This rubbish Seller Protection seems pretty useless.
I have experience this before. There is a buyer telling me she is buying a pair of shoes from me as a gift. The recipient is a man in Northern Ireland. She told me it is a gift for her husband. Later Paypal informed me it is a fraud, and the card issuer charged back and Paypal just took the payment from my account. Since the buyer has an unverified address with Paypal, I am not covered by the seller protection plan. How ridiculous is that? Obviously the buyer reported the card loss after the transaction. Why I should suffer the loss because insecurity of Paypal?
Paypal should increase their security, by only allowing verified buyer using the Paypal? Or require more security answers while the users using Paypal, or make phone call before approving the transaction? All these are needed to prevent Paypal become one of the tool by fraudulent users.
-----How to get verified-----
PayPal always ask for more ways to identify you before you can be approved. They usually ask you to complete a process called the expanded use program. This is where they will take little amount from your credit or debit card, when you receive your statement from your bank, you then can enter the amount Paypal charge you, this process is done through Paypal. Once you enter the correct amount, you will be verified and Paypal will refund you the small amount they charge you before. Note: the small amount I mention above is different from people to people, can be any amount, but it is always very small amount.
Pro: Easy to use, convenient, quick, free for buyer, can be used in multiple currency.
Cons: A lot of fraudulent users, high commission, less seller protection, less customer support.