Tuesday, December 27, 2005

Paypal Ain't My Buddy

This is one of the most hit stories on FixYourThinking.

Apple announced that they will be accepting Paypal for the iTunes Music Store.

Many people have misconceptions about Paypal. Those that have had a problem with the service, I have often found did not resolve their issues promptly, nor did they carry out the transaction in the proper procedure.

This story is a lengthy read, but worth it for the insight to gain about the inner workings of some popular websites.

Forum post on Macrumors by me:

Originally posted by GizmoToy on MacRumors.com:

"Did you ever stop to think that maybe not everyone sees PayPal as such a great service? I started using PayPal long before eBay purchased them. Their service has gotten better since then, but not much. I'm a verified seller. I sold a laptop on eBay, and the buyer paid through PayPal with a credit card. The item qualified for their so-called "Seller Protection Policy". The payment cleared, I sent the laptop. About a week later I get a notice from PayPal that I had accepted a fradulent credit card, and that they had deducted it from my account, which I now owed quite a bit of money on. Of course, THEY accepted the fradulent card, I had nothing to do with it. That didn't bother them.

I did end up getting my money back, but not until after I took them to court. Of course, this doesn't apply to buying songs from iTunes because you know Apple is a reliable party... but plenty of people have had similar experiences. There was a huge Class-Action Lawsuit for similar situations to mine a few months back.

I think THAT'S why its getting negative ratings."

_________________ MY REPLY BELOW _________________

I'm not trying to be a Paypal fanboy. I am trying to clear up a lot of the myths that exist about Paypal. There are ways to safeguard yourself against what happened to you.

You can register without a credit card actually:

Just get a temporary $20 credit Mastercard.

Link a bank account that is a free account that only holds a $200 balance - when you sell something big, bring that balance down to nothing, and tell the bank why you are doing it so maybe they will not charge you a low balance fee, or just get an account with a no balance requirement.

You realize that both the buyer and the seller are protected by an insured package. If you didn't insure the package - that's just silly.

All you had to do was file a claim that the items were lost or stolen in delivery - the burden to prove that they delivered to a valid address and that it was signed for by the actual person to whom it was delivered falls on them. Many people have a false notion that Fedex/UPS/DHL can just say, "Hey, we just delivered the package" and they can get off with that. There have been many court cases that say they have the burden of delivering to the actual person and an actual valid place of delivery.

Point being; many con artists do not get things delivered to the house they've been in for 5 or more years!

It's pretty common knowledge that Paypal doesn't like chargebacks, but that credit card companies MAKE chargebacks with them all the time! If the charge from Paypal was unauthorized and you can prove that you did NOT tell them to make the charge and you have no asset of the same value in your possession - then you have a 99% chance of getting your money back.

You should verify all buyers and sellers through feedback/through Paypal verification/even escrow.

One thing you can do to look up a buyer or seller is type their name or email address in to google.

Their are list of bad buyers and sellers on several websites - if you google any of those email addresses or eBay IDs those sites come up.

Further, you can send a 1 cent payment to the buyer - this will show you if the buyer is verified and how long they have been on Paypal.

Finally, you can use the eBay contact information, with phone number and address. If the buyer has false information here - you as a seller qualify for $1000 in insurance.

It sounds like a lot of work. But once you know the steps to take (and the fact that it just doesn't happen that often) will be well worth it."

______________ ORIGINAL STORY ______________

In the time passed since this editorial was posted, there have been a few updates:

• The webmaster at paypalsucks.com has made a rather vocal sustained attack against me on the internet

• Paypal has agreed to settle a class action lawsuit with users who lost money through the service

• Paypal & eBay have completed their merger - Paypal now constitutes 85% of all payments processed on eBay (Before the merger it was 67%)

______________ ------------------- ______________

Over the past week, I've been posting on a website called PayPalSucks.com. There's an interesting thread there called; "ex managers/ former employees stories". This thread, as with most threads on the site, has a bevy of fanatical posters claiming Paypal has scammed them. I admit that Paypal policy sucks if you have a problem, but if you are a careful consumer and retailer, you will rarely have a problem.

As of February 9, 2004 I had 4683 verified member transactions, over the course of my 4 years of having a Paypal account. I have had close to 6000 total transactions paid by Paypal. I have tried all the other failed services. I'm a member of all the other popular payment sources; Yahoo PayDirect and BidPay. There are others out there that exist:

A couple hundred people have posted to PayPalSucks.com. They have about 4500 members and about 16400 posts as of February 9, 2004. There are only a handful of people who post, and most post anonymously (and obsessively) on the site.

One of the things that Jack Campbell got onto his critics about was that the majority of his critics were anonymous. I consistently pointed out in forum after forum that I ALWAYS posted under the same name and never anonymously. The only problem with his anonymous posters is, that the majority of them, were pointing to the facts, I had already assembled, or to evidence elsewhere on the internet; whilst making their point of critique. But Jack has a point! Unmoderated forums, especially those containing critique, should be looked at with extreme caution. The bias will often post in an anonymous forum. Often they post without facts, but rather silly behaviour. The criticized; will often try to move the forum off topic. Usually they rely on infinite registration/aliases.

This is what paypalsucks.com is all about. It is a site put up by Paypal's competition, and NOT a consumer awareness website; as it pretends to be. This payment service is the main banner ad on the page:

PayPalsucks.com gets commisions for every banner ad on the site that is "clicked through".

So, I decided to post on this website after reading what seemed to me fictional and fanatical posts. This is the last post to the site's forums from February 8, 2004:

"... I would also like to point out that you guys ARE advertising for this site by posting here - IT IS POSTED HERE BY PAYPAL'S competition!! The site makes MONEY from everyone that joins yowcow.com payment services and iKobo payment services. Have you not noticed the banner ads? Websites depend on 1/10 of 1% of website visitors to follow through on banner ads. I would love for the owner of this site to report to us how much he makes in commissions. Advertising for "other companies" is a conflict of interest. It would be like Best Buy doing a review of Circuit City!

This website also makes a big point out of Paypal not posting a customer service number that is easy to find - so why doesn't [The Paypal Sucks Dot Com] website make it promininent? (It's 1-888-221-1161 by the way) - there is also a direct toll number, where; you won't have to wait at all. Why aren't there any tips on this site to better use Paypal? People ... you are being exploited by this site!!!

Restated from my previous posts here:

1) You were scammed! Paypal is the mechanism not the activator/initiator.

2) The Paypal site goes completely down at times on weekends for maintenance. It goes down most nights from 1am-3am PST for maintenance.

3) Why did you pay with a balance or a checking transfer when in EVERY case you get your money back if you use a credit card? Did you send personal information or Paypal account information to "the other party"?

4) Did you research your seller? What was their feedback level? Did you file an affidavit with Paypal for the "other party's" information?

5) Did you buy [the item] on eBay or Yahoo? Did you know you are partially insured by Cyno-sure financial? Up to $200! You only have to prove you were involved in a fraudulent transaction and lost money - not anything about Paypal.

6) Fact: Paypal does almost 1 million + transactions a day

Fact: Larger banks do about the same
Fact: Based on the number of posters here & my OWN transactions ( 3 losses out of 4678) - say Paypal's "perfect transaction rate" 99.99%.
Paypal has over 14 million members / paypalsucks.com has 4500 members & 9200 individual posts from unique posters.

7) Without IP address registers and too many anonymous posters - it's hard to tell exactly how many people posting here are real or who are employees/friends of paypalsucks.com or employees of yowcow.com or ikobo.com or even other posters that posts 100's of times.

Nothing can justify your loss. But scammers exploited you, by exploiting Paypal. A better than 99% transaction positive rate is better than JUST about ANY BUSINESS MODEL THAT EXISTS!

As for merchants - I'm mad at paypal for not assisting you more. Have you filed an affidavit? Losing Paypal would be a huge blow to my bottom line as a website owner/eBay auction seller - as well as my local business and ease of transactions between friends in need of fast funds."

PAYPALSUCKS.COM is a scam site; masquerading as a consumer watchdog site. Paypal can do little about it. If they were to sue (which I think they could be), the hounds at PayPalSucks would say they are trying to "hush the truth".

I personally have had 3 losses resulting from Paypal. One I was able to recover $54.50. The other, I applied for a Cyno-sure insurance claim and was just approved two weeks back for reimbursement. It will only be $200 - I paid $303.76, but that's better than nothing. The other transaction I lost on, well, I learned a lesson ... don't accept email offers. I sent $120 to a "Canadian" - no shipment received in 30 days - I filed a Paypal complaint - he typed in a tracking number - that appeased Paypal - I received a brick via FedEx. Yes folks, a brick!

That said, I have saved COUNTLESS amounts of time and money with the conveiniance of Paypal. I can also instantly refund money with little hassle. If you don't use Paypal, you're an idiot in my opinion.

Lastly; scamming sellers on eBay, and even more on Yahoo Auctions, link to the paypalsucks.com site to show why they don't accept Paypal payments. They use this as some sort of verification that THEY aren't a scammer. By pointing to the paypalsucks site they give the illusion; "see I care for you, I'm not a scammer, I'm telling you Paypal is a scam" If you think Paypal won't give you back your money - try getting your bank or a Money Order creditor to "recall" your check!

Update: Since doing this article in early 2004, many of the payment services mentioned here cease to exist. Citibank's C2it and Yahoo's PayDirect have both been axed.

In an insightful slashdot post, on the topic of Yahoo eliminating PayDirect, a forum reply thought it would take a brand name, not a better service, to compete with Paypal. I agree. In fact, I think this would be a great market for Google. Something like Gpay. A site to send money called Gpay already exists, but the website seems so overnight; there's no way I would trust my money with it. I'm sure Google could pay the right amount for the name and the website. It should instantly garner a lot of news and a lot of support. A possible incentive could be: Google Gmail users get discounted fees sending money.

[UPDATE] Google now has a pay service

eBay, really needs competition concerning online payments. Customers who have had problems with Paypal, now foolishly send cash, checks, or money orders. To some, the stigma of Paypal's past has also made them wary of doing business on eBay. eBay has also tightened a lot of the incentive for sellers, but locked them all into using the service as the ONLY way to accept credit cards without having an expensive merchant account.

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