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P.s. never ever link any account with shared funds to PayPal. Business or otherwise, open a completely separate account for PayPal if you must use it. Imagine

P.s. never ever link any account with shared funds to PayPal. Business or otherwise, open a completely separate account for PayPal if you must use it. Imagine having PayPal place a hold on the funds in your account to make sure refunds/fraud can be handled. Then when a customer does request a refund you’re literally unable to process the refund because it won’t take it from the funds you just received that are held. So now you automatically lose all disputes and they just start raiding your linked bank account. So why did they hold the funds in the first place? PayPal needs to end IMO.

username444 7y ago
I just did this last month. It's a solid risk management move. Never had an issue with PayPal debiting funds though, in 10+ years using them.
stakhanov 7y ago
Actually that doesn't even work. When they don't have a payment method on file that they can abuse, they'll be happy to send your PayPal account into overdraft and start threatening legal action to bully you into settling the balance. Really the only thing to do, as soon as you see a "pay with paypal" screen is to go away screaming. Here's the anecdote: I had had a company with a bank account and PayPal account, then dissolved the company and closed the bank account. Months after that, a former supplier of the now nonexistent company who had PayPal authorization deducted funds fraudulently from the PayPal account, claiming they had rendered services that were never rendered to a company that obviously and provably no longer existed. PayPal sent the account into overdraft. When they couldn't deduct payment from the bank account that no longer existed, they started sending threatening communications to get me to settle the balance. I took things up with their fraud unit to get the transaction cancelled. Their fraud unit dismissed my case without looking into any particulars regarding the services that the vendor didn't render or the company that should have received services that no longer existed. To them the only thing that mattered was that, years ago, I was, in actual fact, stupid enough to click on "Pay with PayPal", the ramifications being that vendors are entirely within their right to use PayPal as an instrument of fraud and legal intimidation against me. It's your own damn fault, sir, for being so stupid and using PayPal. Knowing that taking the legal route would have been way more costly than the amount of the transaction, and wanting to sleep soundly again against the backdrop of PayPal sending threatening communications, I wired money from my personal account to settle the balance and jumped through a shitload more hoops to make sure the PayPal account was properly closed and couldn't come to haunt me again in the future. I think that's how they get away with it: Since the transactions they handle tend to be small, no one will take legal action.
- ikeboy 7y ago
  I would have just ignored them. Let them sue a non-existent company, let them win, who cares? You can't collect from a defunct company.
- noxToken 7y ago
  I'm starting to notice a trend in PayPal fraud cases: a user has an issue with fraud. User contacts PP. PP's fraud department won't discuss the matter. PP does something oafish to lose a customer. The critical point seems to be that fraud won't talk to customers. It makes sense that PP moves quickly when fraud is suspected. What doesn't make sense is that they're so secretive about the events that take place on a user's account. For all we know, user's could be facing legitimate fraud issues that can be addressed with cooperation between PP and user. However, a user cannot cooperate when they have no idea what's going on. If you can't discuss cases of fraud with your customers out of fear of revealing information to the defrauding party, you may need to do more in vetting the identity of users. I don't mean the intricacies of fraud with customers like patterns and markers for fraud. I mean getting to the bottom of the disputed transaction. You're shooting yourself in the shoot in any other case. PayPal is concerned more with user count and transaction volume than individual account retention. You would think that you want your customers to be proactive in cases of potential fraud. It seems like they never learned from their every-user-is-a-credit-card-holder days.
  - stratosgear 7y ago
    OP here. The fact that I am actively engaging in conversation with them, to resolve this, should bump me up a notch on their trust level (of course I could be playing an "iocane trick" [https://www.youtube.com/watch?v=U_eZmEiyTo0 https://www.youtube.com/watch?v=U_eZmEiyTo0] but there is no way to honestly prove this). Also the fact that they reply to my initial question about the refund, with an absolutist "After investigating, YOU have logged in and YOU have initiated the refund", when I know I have done not such thing, immediately makes me think that I've been hacked or somehow have fallen a victim of fraud. Further inquiries to clarify the issue, only leads me to get my account blocked/locked. I have no idea how this can be considered fraud protection from their side! And all this means that all in all I agree with you about the lack of competence of the fraud protection team...
jorvi 7y ago
> PayPal needs to end IMO You say that but it's literally the only way to counter scamming sellers on the internet. PayPal needs to stay, at least until there are viable competitors.
- fxleach 7y ago
  How is it "literally the only way to counter scamming sellers"? There are so many competitors out there that offer better services... Stripe, Google Pay, Moneris, Braintree, Square, WePay, Authorize.net, the list goes on...
  - crashtec 7y ago
    just fyi in your list, Braintree is a paypal service
  - deleted 7y ago
    [deleted]
  - jorvi 7y ago
    I'm talking about eBay and Craigslist sellers, not companies. Anything I buy from companies I can just put on a credit card and chargeback if scammed. Edit: also googling around none of those seem to have the solid buyer protection that PayPal has. With PayPal I can just open a dispute with a picture of the error (color is off or whatever) and within a relatively short time period the seller is forced to reimburse me the full purchase cost, including shipping. That's very valuable as a customer.
    - gambiting 7y ago
      Maybe in the US it's simpler, but recently I had to do a chargeback on my Polish credit card and first of all I couldn't even initiate one until the transaction was fully processed(while it was only showing as "pending" on my account), so that took 3 days, then I could file a chargeback by making a complaint about a transaction, which I was then told would be "reviewed in no more than 2 weeks" and that is genuinely what happened - the transaction was reversed and the money returned but it took the full 2 weeks from the day I requested a chargeback.
tootahe45 7y ago
Do you have an alternative? most of Paypal's conduct around these cases is defined by the regulations. If you think Paypal is bad, try Skrill (which I guess is the EU Paypal). And no, I don't mean actually try it, i still have $700 locked in there which i believe they're taxing for inactivity, because all they have for ID verification is an automated 3rd party system. What i would love is for these services to require ID for opening account, not after depositing over $250 (when you have skin in the game and have to verify your id or lose the $), they won't though because they would have a 95% churn rate on registration.
- DoingIsLearning 7y ago
  A _lot_ of banks allow you to generate 'virtual credit cards'. It's basically an auto generated valid credit card number. You can use them for recurrent expenses or make them single use (the card is cancelled after first payment). You can also max them to any arbitrary value. So if I need to buy 23.03 dollars of something online I can issue a card that maxes out at 24 dollars. So even if the details were stolen you could only take the remaing cents until it maxed. None of this is new or innovative I never really understood the need for paypal in online shopping.
peteretep 7y ago
Yeah, thanks, that's a great reminder to cancel the Direct Debits from my real bank account into Paypal.
astura 7y ago
Why would you "automatically lose all disputes?" This is what happened to me: I got an eBay order and shipped it out, transferred the funds out of PayPal. Buyer sends me an eBay message saying "OMG I'm so sorry but my eBay account was hacked." I believe them because when I googled the shipping address the package went to a foreign freight forwarder. I don't worry because the address was "confirmed" in PayPal, so I'm protected from fraud. I always make sure to ship only to confirmed addresses. eBay account owner initiates fraud investigation. PayPal refunds buyer while the investigation is pending, I have several linked bank accounts, they didn't touch them, my PayPal account just goes negative. PayPal sends me an email telling me I can't have a negative balance and I need to fund my account to get my balance to zero, against their TOS to carry negative balance. No biggie, I fund it. I think I was even able to fund it with a credit card. Fraud investigation proceeds. I have to provide a tracking number to verify I actually shipped the item. A few days later PayPal decides it's fraudulent, but I'm covered under their seller protection. PayPal refunds me the money, I transfer it back to my bank. I'm perfectly happy with how it was handled. I guess that doesn't make a good blog post though.
- voidwtf 7y ago
  We were on the merchant side. First, PayPal doesn't like it when your dispute ratio increases. The best way to handle disputes as a merchant is just to give the customer what they want. Most times this is a refund. Second, when fraud occurs most PayPal users dispute any transactions as soon as they get their account back. Third, You cannot refund a payment from a held or rolling hold balance. PayPal retroactively applied a rolling hold to our account of ~30% of our monthly gross transactions for a rolling 90 days. The way this works on PayPal, at least at that time, means that until your rolling hold balance is equal to 30% of your last 90 days transactions any funding of and payments into the account IMMEDIATELY get sucked into that rolling hold. We would auto flush the completed transaction account balance nightly. So now we're in a situation where trying to refund a customer wants you to add funds to your account, but as soon as the funds are added they are applied to the rolling hold. So, you click Refund on the dispute and you're unable to refund it. Eventually the dispute is automatically closed in their favor and the account balance goes negative. At that point you can fund the account and it'll apply to the negative balance first. This was my experience at least, and trust me it was one of the most stressful events I ever encountered. Most of that stress was not knowing what was going on and why, and trying to get anything out of PayPal. Their processes are so opaque for merchants in many cases.
tmaly 7y ago
Money Transmitters are a heavily regulated industry. I bet this way of operating is just standard procedure to save their own neck from heavy regulatory fines. What would be an alternative solution in your opinion?
- parliament32 7y ago
  Wouldn't it make sense for PayPal to take any returns/refunds out of their "held" amount?

username444 7y ago

I just did this last month. It's a solid risk management move. Never had an issue with PayPal debiting funds though, in 10+ years using them.

stakhanov 7y ago

Actually that doesn't even work. When they don't have a payment method on file that they can abuse, they'll be happy to send your PayPal account into overdraft and start threatening legal action to bully you into settling the balance. Really the only thing to do, as soon as you see a "pay with paypal" screen is to go away screaming. Here's the anecdote: I had had a company with a bank account and PayPal account, then dissolved the company and closed the bank account. Months after that, a former supplier of the now nonexistent company who had PayPal authorization deducted funds fraudulently from the PayPal account, claiming they had rendered services that were never rendered to a company that obviously and provably no longer existed. PayPal sent the account into overdraft. When they couldn't deduct payment from the bank account that no longer existed, they started sending threatening communications to get me to settle the balance. I took things up with their fraud unit to get the transaction cancelled. Their fraud unit dismissed my case without looking into any particulars regarding the services that the vendor didn't render or the company that should have received services that no longer existed. To them the only thing that mattered was that, years ago, I was, in actual fact, stupid enough to click on "Pay with PayPal", the ramifications being that vendors are entirely within their right to use PayPal as an instrument of fraud and legal intimidation against me. It's your own damn fault, sir, for being so stupid and using PayPal. Knowing that taking the legal route would have been way more costly than the amount of the transaction, and wanting to sleep soundly again against the backdrop of PayPal sending threatening communications, I wired money from my personal account to settle the balance and jumped through a shitload more hoops to make sure the PayPal account was properly closed and couldn't come to haunt me again in the future. I think that's how they get away with it: Since the transactions they handle tend to be small, no one will take legal action.

ikeboy 7y ago
I would have just ignored them. Let them sue a non-existent company, let them win, who cares? You can't collect from a defunct company.
noxToken 7y ago
I'm starting to notice a trend in PayPal fraud cases: a user has an issue with fraud. User contacts PP. PP's fraud department won't discuss the matter. PP does something oafish to lose a customer. The critical point seems to be that fraud won't talk to customers. It makes sense that PP moves quickly when fraud is suspected. What doesn't make sense is that they're so secretive about the events that take place on a user's account. For all we know, user's could be facing legitimate fraud issues that can be addressed with cooperation between PP and user. However, a user cannot cooperate when they have no idea what's going on. If you can't discuss cases of fraud with your customers out of fear of revealing information to the defrauding party, you may need to do more in vetting the identity of users. I don't mean the intricacies of fraud with customers like patterns and markers for fraud. I mean getting to the bottom of the disputed transaction. You're shooting yourself in the shoot in any other case. PayPal is concerned more with user count and transaction volume than individual account retention. You would think that you want your customers to be proactive in cases of potential fraud. It seems like they never learned from their every-user-is-a-credit-card-holder days.
- stratosgear 7y ago
  OP here. The fact that I am actively engaging in conversation with them, to resolve this, should bump me up a notch on their trust level (of course I could be playing an "iocane trick" [https://www.youtube.com/watch?v=U_eZmEiyTo0 https://www.youtube.com/watch?v=U_eZmEiyTo0] but there is no way to honestly prove this). Also the fact that they reply to my initial question about the refund, with an absolutist "After investigating, YOU have logged in and YOU have initiated the refund", when I know I have done not such thing, immediately makes me think that I've been hacked or somehow have fallen a victim of fraud. Further inquiries to clarify the issue, only leads me to get my account blocked/locked. I have no idea how this can be considered fraud protection from their side! And all this means that all in all I agree with you about the lack of competence of the fraud protection team...

jorvi 7y ago

> PayPal needs to end IMO You say that but it's literally the only way to counter scamming sellers on the internet. PayPal needs to stay, at least until there are viable competitors.

fxleach 7y ago
How is it "literally the only way to counter scamming sellers"? There are so many competitors out there that offer better services... Stripe, Google Pay, Moneris, Braintree, Square, WePay, Authorize.net, the list goes on...
- crashtec 7y ago
  just fyi in your list, Braintree is a paypal service
- deleted 7y ago
  [deleted]
- jorvi 7y ago
  I'm talking about eBay and Craigslist sellers, not companies. Anything I buy from companies I can just put on a credit card and chargeback if scammed. Edit: also googling around none of those seem to have the solid buyer protection that PayPal has. With PayPal I can just open a dispute with a picture of the error (color is off or whatever) and within a relatively short time period the seller is forced to reimburse me the full purchase cost, including shipping. That's very valuable as a customer.
  - gambiting 7y ago
    Maybe in the US it's simpler, but recently I had to do a chargeback on my Polish credit card and first of all I couldn't even initiate one until the transaction was fully processed(while it was only showing as "pending" on my account), so that took 3 days, then I could file a chargeback by making a complaint about a transaction, which I was then told would be "reviewed in no more than 2 weeks" and that is genuinely what happened - the transaction was reversed and the money returned but it took the full 2 weeks from the day I requested a chargeback.

tootahe45 7y ago

Do you have an alternative? most of Paypal's conduct around these cases is defined by the regulations. If you think Paypal is bad, try Skrill (which I guess is the EU Paypal). And no, I don't mean actually try it, i still have $700 locked in there which i believe they're taxing for inactivity, because all they have for ID verification is an automated 3rd party system. What i would love is for these services to require ID for opening account, not after depositing over $250 (when you have skin in the game and have to verify your id or lose the $), they won't though because they would have a 95% churn rate on registration.

DoingIsLearning 7y ago
A _lot_ of banks allow you to generate 'virtual credit cards'. It's basically an auto generated valid credit card number. You can use them for recurrent expenses or make them single use (the card is cancelled after first payment). You can also max them to any arbitrary value. So if I need to buy 23.03 dollars of something online I can issue a card that maxes out at 24 dollars. So even if the details were stolen you could only take the remaing cents until it maxed. None of this is new or innovative I never really understood the need for paypal in online shopping.

peteretep 7y ago

Yeah, thanks, that's a great reminder to cancel the Direct Debits from my real bank account into Paypal.

astura 7y ago

Why would you "automatically lose all disputes?" This is what happened to me: I got an eBay order and shipped it out, transferred the funds out of PayPal. Buyer sends me an eBay message saying "OMG I'm so sorry but my eBay account was hacked." I believe them because when I googled the shipping address the package went to a foreign freight forwarder. I don't worry because the address was "confirmed" in PayPal, so I'm protected from fraud. I always make sure to ship only to confirmed addresses. eBay account owner initiates fraud investigation. PayPal refunds buyer while the investigation is pending, I have several linked bank accounts, they didn't touch them, my PayPal account just goes negative. PayPal sends me an email telling me I can't have a negative balance and I need to fund my account to get my balance to zero, against their TOS to carry negative balance. No biggie, I fund it. I think I was even able to fund it with a credit card. Fraud investigation proceeds. I have to provide a tracking number to verify I actually shipped the item. A few days later PayPal decides it's fraudulent, but I'm covered under their seller protection. PayPal refunds me the money, I transfer it back to my bank. I'm perfectly happy with how it was handled. I guess that doesn't make a good blog post though.

voidwtf 7y ago
We were on the merchant side. First, PayPal doesn't like it when your dispute ratio increases. The best way to handle disputes as a merchant is just to give the customer what they want. Most times this is a refund. Second, when fraud occurs most PayPal users dispute any transactions as soon as they get their account back. Third, You cannot refund a payment from a held or rolling hold balance. PayPal retroactively applied a rolling hold to our account of ~30% of our monthly gross transactions for a rolling 90 days. The way this works on PayPal, at least at that time, means that until your rolling hold balance is equal to 30% of your last 90 days transactions any funding of and payments into the account IMMEDIATELY get sucked into that rolling hold. We would auto flush the completed transaction account balance nightly. So now we're in a situation where trying to refund a customer wants you to add funds to your account, but as soon as the funds are added they are applied to the rolling hold. So, you click Refund on the dispute and you're unable to refund it. Eventually the dispute is automatically closed in their favor and the account balance goes negative. At that point you can fund the account and it'll apply to the negative balance first. This was my experience at least, and trust me it was one of the most stressful events I ever encountered. Most of that stress was not knowing what was going on and why, and trying to get anything out of PayPal. Their processes are so opaque for merchants in many cases.

tmaly 7y ago

Money Transmitters are a heavily regulated industry. I bet this way of operating is just standard procedure to save their own neck from heavy regulatory fines. What would be an alternative solution in your opinion?

parliament32 7y ago
Wouldn't it make sense for PayPal to take any returns/refunds out of their "held" amount?