Paypal's unfair 'SELLER PROTECTION POLICY'

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I, like many others learnt the hard way about PPs lack of protection for Sellers - I have just sent a letter to the Office of Fair Trading, as they were the body which put pressure on Banks with their unfair charges.  The more who protest/complain, the more likely to have an effect.


'Through a bad experience I had whilst selling an item on Ebay, payment received through Paypal, I have tried looking at the Terms and Conditions Paypal use - and how they display them. I would be grateful if you would take time to read my 'guide/warning -  although I have briefly mentioned details of my experience, it is more the way Paypal's advertising, set against their Terms and Conditions, appear very misleading, non-transparent, and the balance of risk to the Seller very unfair.

The main concern is Paypal, but as Ebay own Paypal, the problem is really with both of them. I do not possess a legally sharp mind, but I can see many instances where Paypal are putting Sellers on ebay at unnecessary risk, without adequate warnings, bearing in mind that, although there are business Sellers on Ebay, there are a lot of people who sell and buy in their spare time in the hope of making money - in the vast majority of cases, especially among low cost items, problems are few and far between, but once you move into what Ebay/Paypal call 'high-risk' items (but don't actually give Sellers a definitive list of what they are, though examples might be digital cameras, games consoles, expensive gadgets and the like) the probability of coming into contact with a fraudulent 'buyer' increases dramatically, as I found out to my cost in March this year.


I have been using ebay and Paypal both to buy and sell for about 5 years, on a fairly regular basis (though I do buy more than sell!). Paypal is safe and a useful tool in the main for Buyers, and a 'necessary evil' for Sellers, as it charges quite high fees for its services, but, as it claims 'The secure way for individuals and businesses to send and receive money.' 


Because Ebay own Paypal, and want their users to pay/receive money through Paypal, it is given a lot of 'hype' about its security, fraud-fighting teams etc, all in all makes you feel things are under control and secure when using this method of receiving payment.

Back to my case - in March, I sold a Nintendo Games Console for my son, it had been an unwanted gift at Christmas. The winning bidder paid through Paypal, I transferred the funds to my bank account, before passing to my son. A week after the sale, I received an email from PAypal saying they were putting a 'hold' on the funds (£270 was the amount of the sale) as they had had report of 'unauthorised use' on the credit card they, Paypal, had allowed to be used to open a Paypal account and pay me for my goods - they did say, if the transaction was result of fraud, Paypal would cover the transaction.


That was a relief - I knew, if anything was wrong with the paymant, it would be fraud, so I was safe. Paypal fight fraud, they lead the way in the field of online fraud, they had said they would cover the cost of the transaction if that was the case.


But no, they said a Chargeback had occurred, where the Credit Card company has claimed the payment back for its customer, and my Paypal account was now in a state of 'negative balance' to the tune of £270!
I tried ringing Paypal several times, spoke to pleasant people who assured me there had been a mistake, my account would be re-credited, but it never was. Countless emails I sent, complaining, but seemed to get automated replies back. Then emails asking me to 'bring my balance back into credit' - which would mean me losing both goods and money. Now I have had a phone call and letter from a debt collection agency asking me to pay Paypal back £270.


The 'buyer' who defrauded me (or Paypal) had carried out several large-ish transactions at the same time, and another defrauded Seller had contacted the Police, who have also taken a statement from me, and are investigating the crime. The policeman who took my statement also advised me not to give anything to Paypal until and unless monies/goods are recovered from the culprit.
That is the state of play.


This lead to me really examining closely Paypals T&Cs -


1. They said the transaction was 'ineligible' for Seller Protection - I wouldn't find this out until AFTER I had received payment, a little word among many, not a warning. So, I have been trying to find out what makes a transaction ELIGIBLE. Only Paypal know that, and they will not tell Sellers. Why not?


2. Until it happened to me, I had never heard of a Chargeback - it is difficult to protect yourself from something you do not know exists. I have now found, through searching the internet, various chat forums etc, these chargebacks have affected countless Sellers over the years, firstly in USA, but now increasingly in the UK. Sellers may not know about Chargebacks, but Paypal and Ebay do - why are there not prominent warnings displayed, on main pages, and especially when listing an item to sell? (The mention of them is deep in the T&Cs which themselves, along with their advice/help pages are very fragmented - you have to really go through umpteen links to find them)


3. It finally hit me what Paypals T&Cs are there for - Paypals protection!  In a nutshell, when a new buyer on ebay wins an item, and is an unknown risk, all the transactions he carries out would leave the Seller ineligible for Paypal Seller Protection - every one! However, once the buyer has become established, confirmed his address, carried out several transactions to the satisfaction of Paypal, and they deem, in all likelyhood, he is no longer a 'fraud' risk, Paypal give the Seller protection (along with certain other conditions) in case of fraud!
So, Paypal only take on any risk at all, once they deem that there no longer is a risk!


There does seem to be an imbalance in Paypals favour, way out of proportion.
Even worse, Paypal and Ebay make Paypal so attractive and easy to use for Buyers, that, obviously Buyers will insist on it, and Sellers, if they want to maximise sales, really have no option but to accept payment through Paypal. Paypal practically have a monoploy on online payments on Ebay.


However, I doubt most of the non-professional Sellers even realise they have no protection at all if things go wrong, because Paypal/Ebay do not tell them this upfront, in fact, not at all, they would have both Buyers and Sellers believe Paypal is safe and secure.


There are so many more ways I could see, once really looking at the Ebay/Paypal sites, with new (defrauded!) eyes, that Ebay/PP mislead their users, but I would obviously prefer somebody who really knows their legal stuff! to be able to comment/investigate. 


And, as Paypal are a US company, now in process of becoming a Bank in Luxembourg, are they bound by any UK law?
Many Thanks for listening to (reading) me.

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