PayPal – Another (bad) example of the way things are in the United States
Ian Brockwell
April 12, 2008
Most people have heard of PayPal, they have millions of customers who use their service to send and receive payments (for which they charge a fee). Whilst many have used this service with little or no problem, there are thousands who have not been so lucky.
In the last few days I took a closer at the problems some customers have encountered and was shocked by some of the horror stories.
My interest began with a customer who had a PayPal account in the US, but now lives in the UK. According to PayPal, the US account must be cancelled and a new account (in the UK) opened.
That sounds like a lot of extra work, considering we are talking about the same company, but if that is the rule, so be it!
Unfortunately, the US account was "unverified", so when a cancellation of the account was requested, the customer was told that he can´t because the address (that the check will be sent to) has not been verified. This of course is no longer possible, as the customer doesn´t live in the US any more!
The customer sent a message through their online system requesting the following:
"I now live in the UK and have opened a new account with that address. BUT you have restricted my payments to "ZERO" without verification. As I am unable to do this now, how can I get my money????
You won't allow me to receive a cancellation check without a verified address, and don't appear to want to let me have my money (almost $500)
Can you provide some solution to this problem? Ideally, (easier for all) it would be good if you can permit me to send my money to myself (my new account), and then cancel the old one.
The new account has no restrictions, and I don't see why this one should have any either.
I look forward to receiving your advices shortly."
After a couple of days he received the following reply by email:
"Dear XXXXXXXXXXX,
Thank you for contacting PayPal. We believe we responded to your recent inquiry either through a call into our service center or through another e-mail from you.
Please know that we appreciate your business and we want to address your questions in a timely fashion. If you still need to speak with a PayPal representative, please feel free to contact us at (888) 221-1161 .
Thank you for choosing PayPal!"
This was the very first communication from the customer (no previous call or email), and he gets a reply like that. PayPal "believe" there has been a previous response to this inquiry, which means they didn´t even bother checking to see if it was true or not.
After reading about other people who have telephoned PayPal, and been placed on hold for more than 20 minutes (without any result), the customer was naturally reluctant to get involved in some "game" that appears to be designed to frustrate the customer even further (at best).
Following further research, I discovered that some customers (for different reasons) had apparently lost many thousands of dollars in accounts that PayPal had "frozen", or where they had taken money from the bank account/credit card (used to verify the account!) in error.
If you do a search on Google for "PayPal problems", you will discover more than half a million entries listed! Here is an example from just two of them:
http://www.aboutpaypal.org/
Does PayPal Care At All About Your Concerns?
Here is a clip from the San Francisco Chronicle:
Plaintiffs in the proposed class action suit say PayPal has a backlog of more than 100,000 unanswered complaints (are any of these yours?). A common allegation is that the company brushes off or stalls customer grievances for months and meanwhile freezes the customer's account and pockets the interest (that's how they make their money). The ruling by U.S. District Judge Jeremy Fogel of San Jose says PayPal has a mandatory arbitration policy that is unfair to customers who complain that their accounts are being mishandled. (finally, the truth is revealed!).
http://www.paypalwarning.com/
The Lawsuit You Need To Know About
As you will come to discover while browsing through the many horror stories posted on this site by current and former PayPal users, PayPal has some tough allegations to deal with. Allegations of mishandling money, unnecessarily locking funds, not providing adequate customer support, freezing accounts with no explanation and disregarding customer complaints, just to name a few.
In early 2002, Plaintiffs Roberta Toher and Jeffrey Resnick filed separate lawsuits against PayPal, Inc. These two cases were later consolidated into one lawsuit in the United States District Court for the Northern District of California.
The lawsuit alleges, among several other issues, that PayPal has placed inappropriate restrictions or other limits on customers' accounts and engaged in several other improper practices. Based on these improper practices, the lawsuit sought damages for money unjustly held, negligence, and violations of consumer protection statutes.
Rather than dealing with a lengthy public trial and being forced to clean up their act, PayPal decided to settle out of court and pay $9.25 Million Dollars to Tens of Thousands of PayPal merchants who processed with PayPal between October 1, 1999 and January 31, 2004. (A mere slap on the hand for a company this size)
Instead of a Judge forcing PayPal to change their questionable business practices, PayPal agreed to pay the settlement and walk away from the entire allegation.
So what does this mean to current PayPal merchants? Unfortunately, this means that PayPal is free to continue operating in the exact same way it always has. Judging by the number of PayPal horror stories we receive every single day, it appears that the situation has only gotten worse since the settlement.
Hopefully, the new President of PayPal, Scott Thompson, will read this article and make some serious effort to "clean-up" PayPal´s less than satisfactory image, without delay! The alternatives unfortunately (for PayPal) seem to be further lawsuits and a dramatic reduction in the number of people who use their service. It is worth remembering that PayPal are not the only company on the market that provides such a payment system.
Sadly, this "style" of doing business is becoming all too frequent nowadays, but even sadder that the US authorities allow it to happen. But then big businesses seem to be allowed to follow a different set of laws. Can you imagine what would happen to a member of the public who held money for someone and then refused to give it back without any reason?
In the meantime, I would strongly suggest avoiding PayPal until you hear some better news about their service, there seem to be enough "victims", let´s not add to these statistics. If I receive a "positive" response to this article, I´ll let you know later.
In the last few days I took a closer at the problems some customers have encountered and was shocked by some of the horror stories.
My interest began with a customer who had a PayPal account in the US, but now lives in the UK. According to PayPal, the US account must be cancelled and a new account (in the UK) opened.
That sounds like a lot of extra work, considering we are talking about the same company, but if that is the rule, so be it!
Unfortunately, the US account was "unverified", so when a cancellation of the account was requested, the customer was told that he can´t because the address (that the check will be sent to) has not been verified. This of course is no longer possible, as the customer doesn´t live in the US any more!
The customer sent a message through their online system requesting the following:
"I now live in the UK and have opened a new account with that address. BUT you have restricted my payments to "ZERO" without verification. As I am unable to do this now, how can I get my money????
You won't allow me to receive a cancellation check without a verified address, and don't appear to want to let me have my money (almost $500)
Can you provide some solution to this problem? Ideally, (easier for all) it would be good if you can permit me to send my money to myself (my new account), and then cancel the old one.
The new account has no restrictions, and I don't see why this one should have any either.
I look forward to receiving your advices shortly."
After a couple of days he received the following reply by email:"Dear XXXXXXXXXXX,
Thank you for contacting PayPal. We believe we responded to your recent inquiry either through a call into our service center or through another e-mail from you.
Please know that we appreciate your business and we want to address your questions in a timely fashion. If you still need to speak with a PayPal representative, please feel free to contact us at (888) 221-1161 .
Thank you for choosing PayPal!"
This was the very first communication from the customer (no previous call or email), and he gets a reply like that. PayPal "believe" there has been a previous response to this inquiry, which means they didn´t even bother checking to see if it was true or not.
After reading about other people who have telephoned PayPal, and been placed on hold for more than 20 minutes (without any result), the customer was naturally reluctant to get involved in some "game" that appears to be designed to frustrate the customer even further (at best).
Following further research, I discovered that some customers (for different reasons) had apparently lost many thousands of dollars in accounts that PayPal had "frozen", or where they had taken money from the bank account/credit card (used to verify the account!) in error.
If you do a search on Google for "PayPal problems", you will discover more than half a million entries listed! Here is an example from just two of them:
http://www.aboutpaypal.org/
Does PayPal Care At All About Your Concerns?
Here is a clip from the San Francisco Chronicle:
Plaintiffs in the proposed class action suit say PayPal has a backlog of more than 100,000 unanswered complaints (are any of these yours?). A common allegation is that the company brushes off or stalls customer grievances for months and meanwhile freezes the customer's account and pockets the interest (that's how they make their money). The ruling by U.S. District Judge Jeremy Fogel of San Jose says PayPal has a mandatory arbitration policy that is unfair to customers who complain that their accounts are being mishandled. (finally, the truth is revealed!).
http://www.paypalwarning.com/
The Lawsuit You Need To Know About
As you will come to discover while browsing through the many horror stories posted on this site by current and former PayPal users, PayPal has some tough allegations to deal with. Allegations of mishandling money, unnecessarily locking funds, not providing adequate customer support, freezing accounts with no explanation and disregarding customer complaints, just to name a few.
In early 2002, Plaintiffs Roberta Toher and Jeffrey Resnick filed separate lawsuits against PayPal, Inc. These two cases were later consolidated into one lawsuit in the United States District Court for the Northern District of California.
The lawsuit alleges, among several other issues, that PayPal has placed inappropriate restrictions or other limits on customers' accounts and engaged in several other improper practices. Based on these improper practices, the lawsuit sought damages for money unjustly held, negligence, and violations of consumer protection statutes.
Rather than dealing with a lengthy public trial and being forced to clean up their act, PayPal decided to settle out of court and pay $9.25 Million Dollars to Tens of Thousands of PayPal merchants who processed with PayPal between October 1, 1999 and January 31, 2004. (A mere slap on the hand for a company this size)
Instead of a Judge forcing PayPal to change their questionable business practices, PayPal agreed to pay the settlement and walk away from the entire allegation.
So what does this mean to current PayPal merchants? Unfortunately, this means that PayPal is free to continue operating in the exact same way it always has. Judging by the number of PayPal horror stories we receive every single day, it appears that the situation has only gotten worse since the settlement.
Hopefully, the new President of PayPal, Scott Thompson, will read this article and make some serious effort to "clean-up" PayPal´s less than satisfactory image, without delay! The alternatives unfortunately (for PayPal) seem to be further lawsuits and a dramatic reduction in the number of people who use their service. It is worth remembering that PayPal are not the only company on the market that provides such a payment system.
Sadly, this "style" of doing business is becoming all too frequent nowadays, but even sadder that the US authorities allow it to happen. But then big businesses seem to be allowed to follow a different set of laws. Can you imagine what would happen to a member of the public who held money for someone and then refused to give it back without any reason?
In the meantime, I would strongly suggest avoiding PayPal until you hear some better news about their service, there seem to be enough "victims", let´s not add to these statistics. If I receive a "positive" response to this article, I´ll let you know later.
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