Using PayPal for online sales can be great, but know the drawbacks of PayPal before you get burned.

I found out the hard way that online shopping can be a dangerous thing.

I’ve shopped on Ebay for years, back in the day when its url was actually eBay with a jillion letters and stuff, and many vendors didn’t even post pics of their products. And I was an early user of PayPal, too. It guaranteed your money was safe with Ebay transactions, and it made everything soooooo easy.

As PayPal expanded its services to other online venues, I continued to use it in good faith. I heard rumors of “issues”, but figured it was mostly the kinds of transactions I didn’t indulge in–gold coins, international purchases, deals that were somewhat shady to begin with, etc.

So when I found an ad with a great deal for custom-printed T-shirts on Facebook last month, I didn’t think twice about ordering a bunch for our family. (“I’d Rather Be Watching FIREFLY”, in case you’re wondering.) I paid with my Paypal account, which actually had a balance for a change.

Weeks went by. No T-shirts. I checked back at the website to email the company.

When I clicked on the “contact us” tab, a funny message appeared. And not “funny ha ha”, either.

It said the company was experiencing “problems” processing orders. And it said to be patient and wait “a few more weeks”, as orders would be processed in the order they were received.

Warning bells started ringing. For one thing, the vendor hadn’t been proactive and contacted me. I’d had to track them down. And “a few more weeks” would put me outside the 45-day safety period where I could still file a claim with PayPal.

I immediately filed a claim with PayPal, thinking of their buyer protection guarantee. But that turned out to be a little more difficult–and ultimately problematic–than I’d anticipated.

First the process and the form to fill out was a little confusing. I was asked over and over to contact the seller myself to resolve issues. Been there, done that, did NOT get the T-shirt. Duh!

Then I was asked to submit “documents”. What documents are there in an online transaction?? I left that blank. For the rest of the process, a stern and rueful “You did not submit documents!” glared at me from my report.

Then I was told I had to escalate the claim before any action could be taken. But if I waited too long, the claim would automatically be dropped.

I waited a few days, then escalated.

I waited a week for a report on my claim. And the results shocked me.

PayPal had indeed determined that I had paid for goods I had not received. They had determined the seller was not responded to emails. And then they determined the seller had no money in her account. Hence, no money could be refunded to me.

So the case was CLOSED. Thank you for using PayPal, the safe way to shop online.

I could not believe it. I called PayPal, and got the same answer.

Short story: PayPal guarantees buyer protection only for transactions made through Ebay. No other transactions are guaranteed.

I think of the hundreds of transactions I’ve made over the years buying books, craft supplies, all the shopping I’ve done on Etsy and other vendors over the years, and I’m floored.

I asked what happened to the vendor who’d disappeared with my money. “Oh, we’ll watch and make sure they don’t open another PayPal account!” Huh? How are they going to do that?? They don’t have any way of contacting this vendor other than an email address, and yet they were sure they could “identify” this person if they ever open up another PayPal account…..??!! Yeah, we all know how hard it is to get a new email account.

I feel fortunate. I am sadder, $36 poorer and wiser. But all I lost was less than $50 and a few hours of my time. It could have been worse, much worse.

And I’ve learned my lesson. I now make sure that when I pay with PayPal, I select the “other funding options” which puts the money on my credit card instead. I may pay extra fees, but if I have a dispute, my credit card company will do battle instead. And I believe they will take better care of me than PayPal did.

So be forewarned. Read the fine print. If “guaranteed buyer protection” means “We kinda tried to get your money back but we didn’t have much luck”, then that’s a guarantee I can do without, thank you very much.

Hellooooooo Visa!


17 thoughts on “KNOW YOUR PAYPAL

  1. wow. thanks for the info. I had no idea it wasn’t safe or guaranteed unless it was ebay. I use it all the time for etsy and other online purchases (lots of people can only take paypal payments, otherwise they want you to send a check…no way!)


  2. I have another Paypal story. A year ago I received an email from someone thanking me for having purchased software from them for $399, and having paid for it through Paypal, which withdrew the funds from my bank account. I assumed it was spam, but checked in my Paypal account, and lo and behold, this was the case. The software in question had something to do with Craig’s List, and the email address had a person’s name in it, so with a little Googling I discovered that this was the dirty-work of someone who was trying to sabotage Craig’s List, which I had been frequenting in search of a motorcycle (which I found). I contacted the perp who claimed innocence and returned my money, and then I contacted Paypal 3 times to alert them to this. I assumed that they would research it and plug their holes. Each time all I got was a form email that the situation had been resolved, and thank you for using Paypal. Pretty scary………….


  3. Oooh, thanks Luann. I use Paypal for my Etsy sales…and other transactions too. Once again we learn you can never take things for granted, especially on the internet. The Craig’s List thing is a little scary also.


  4. I’ve also had a very recent issue with Pay Pal regarding paying my e-bay fees. It’s so awful that I don’t know where to begin. I’m not getting proper customer service to resolve my issue. I plan to break away from Pay Pal whenever possible.


  5. This blog came up just when I was looking into PayPal as a way to receive money for the sale of my paintings. I’d be curious to know what risks are involved in having them send money to my checking account before I ship art. I’m not set up for that sort of PayPal account yet and will probably not have any payment systems on my website. If I did, my free web site through Earthlink would shift in to “merchant” and incur charges. I really don’t want to turn it into an online sales site, but just be able to receive payments should someone e-mail me about a purchase.


    • You have to initiate money being sent to or from your checking account via PayPal. For instance, when you go into your account, you can “send money” or “request money.” If you do not have “automatic draft from checking for overage” or whatever the term is, they will not pull money from your checking. (subscriptions.) Also, if your Paypal balance is enough for the purchase, they will not pull from your checking account.

      As for sending money from PayPal to your checking account, only you can initiate that, by going into PP and “requesting money.”

      Hope this helps.

      I’m sorry about these horror stories. They truly stink! I have been using PP for years and have never had a problem. In the case of the $399, I’m REALLY glad you got your money back!

      There is also a PP alternative called “Revolution Money Exchange” (RME.) That site has NO connection to your checking account. I mean it does not require you to provide one. That means it’s literally just a holding place on the net for your money. Only YOU can inititate a transfer to your checking account, ever, and I believe it does not draw from your checking if you don’t have enough for a purchase. It just means you can’t make that purchase. Some people may find that safer. I offer that as an option in my business, but no one has ever taken me up on it.

      Good luck to you all!
      Jennifer Moore
      JenniferLynn Productions, LLC


  6. Read the fine print on your credit card contract. They won’t followup or pay either.

    Ebay does not monitor new accounts either; I had a buyer whose money did not clear and they evicted him from ebay but he appeared several months later with a different name and the same address. Another buyer would pay for items and then claim the items did not arrive and put up such a fuss, I refunded her money—she did this several times and finally was removed from ebay–but there was no way to get money back.

    There will always be swindlers and cheats; I would not spend money on ebay or on-line that I cannot afford to walk away from.


  7. The same thing happened to me. Neither Pay Pal nor Etsy would help even though I followed their instructions to a T. Buyer beware on Pay Pal as well as Etsy.



  8. This, unfortunately, is not a new thing with Paypal. I’ve been a member there since its beginning and shortly after had heard my first horror story that essentially put a colleague out of business in 2000. Since then, I have been very particular how I do business over the internet and how I use Paypal to pay for services and accept payment.

    The best way to make sure you are protected is to know who it is you are dealing with.

    I have a verified account. I deal with those that have verified accounts. Those that don’t, I had better know personally. Even then, I have had to go to my old stand by. Postal money orders and cash. It’s a pain but it’s my safe guard these days.


  9. On the selling end I use PayPal Buy Now buttons and email invoices to take payment for commissions of my artwork. I’ve never had any issue with the transaction end of PayPal. I tell everybody they can use a credit card without even having a PayPal account. PayPal is the middleman, not the bad guy. All they do is process, it’s up to you or somebody whose verified the safety and record of the seller to make sure before buying. It’s like that with mail-order, phone ordering, anything where you aren’t in the store holding the item. Even then, you can get taken.

    To me, from the beginning when I first linked my checking account with my PayPal account I realized money in my PayPal account was like cash. Well *is* cash basically. Not credit. I’ve never used my debit/check card number online for anything other than government payments. Why would I use PayPal directly?

    The only time I use PayPal as a buyer *is* through eBay. Thank you for sharing this story, but I wonder if you’d’ve had the same assumptions about protection if you’d used a debit card?

    I don’t mean to imply “you should’ve known better” or anything attacking you, I know the frustration of bad customer service, especially from middlemen. But to impugn PayPal entirely is unfair too I think.



  10. Wow, I didn’t know that about PayPal either. But then I always pay with my credit card through PayPal.

    But then Ebay isn’t always helpful in seller ripoffs. My mom won an auction for a pocketwatch, for about $10. My mom paid via PayPal immediately. Some other Ebayer contacted my mom and offered to buy the watch for more money–I can’t remember how much, but less than $50. My mom was intrigued, looked it up, and found out the watch was worth a decent amount of money (couple of hundred dollars, maybe.) And she was happy, although she still planned to give it to my young nephew as a birthday present. But then, suddenly, the seller “canceled’ the sale & refunded my mom’s money. It seemed fairly obvious that the other person contacted the seller to do a deal, which is totally against all Ebay rules. However, Ebay wouldn’t do anything for my mom. They even warned her about the bad feedback she had left for the seller saying he was a thief (well, he was) and wouldn’t take off the bad feedback he left for her warning other sellers. All she wanted was the item she had won fairly and had paid for, and Ebay did nothing. It really left a bad taste in our mouths.


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