Beware of PayPal: A cautionary tale

I recently had a very disappointing incident regarding PayPal. I have chosen to use my PayPal account where I was able, because I assumed it would be more secure, as I would not have to give out my credit card information to other people. Mostly, I have used PayPal to purchase software online.

Anyway, two days ago, I checked my e-mail after arriving home from work and found six message from PayPal saying I’d authorized $400 in total sales in six separate transactions with two companies I’d never heard of. Instantly alarmed, I called PayPal’s customer service line. I expected to get immediate assistance and assurance that I was not responsible for these payments as I had not, in fact, authorized them. Instead, I got the feeling the customer service representative I talked with could not have cared less about my problem. Her solution was to give me the phone numbers of the two companies involved so I could call them and see if they’d refund my money! What! If that didn’t work, I could wait 19 days and file disputes for each of the transactions. There must be something else that can be done, I said. Nope. That’s it.

So I got the phone numbers from her, called the two companies who had taken money from me and — here’s a shock! — was not able to actually talk to a living person. The first company, something called Zynga Game Network, automatically directed me to there customer service line, where a robot voice informed me I could not leave a message as the voice mailbox was full. The other company, Spare Change, did allow me the honor of leaving a message, for which I was assured I would receive a response — 48 hours later, nothing. I then went to my PayPal account where I filed a dispute for each of the six transactions, and change my password and security questions.

I was a long way from satisfied, so I called my credit card company, got the fraud division, told my story and received satisfaction. The agent said I would not be responsible for those six transactions, that they would not pay them out. He canceled my card number and is sending me a new card.

So, I guess this is a somewhat happy ending. However, I will never trust PayPal again. You would think they’d have measures in place to guard against this type of theft. I mean, any rational person could see from scanning these transactions that they had to be a ripoff. One was for $150, and each of the other five was for $50.

I’m canceling my PayPal account A.S.A.P.

One thought on “Beware of PayPal: A cautionary tale

  1. Canceling your PayPal account is a slight over-reaction (unless you never need to make a purchase that requires PayPal, in which case “go for it!”).

    The problem with PayPal is in giving it a permanent link to a bottomless source of funds (like a credit card or bank account). What’s the alternative? To link it to a limited-credit instrument, such as CitiBank’s “virtual account number” credit card or Bank of America’s “shopsafe” credit card. In both cases, their services allow you to create a credit card number that has a limited amount of credit and a limited life.

    I’m currently using Citi’s VAN service (I’ve used BofA’s in the past) for my online shopping, including for putting money in my PayPal account (for those rare times that I have no other purchase option, such as on eBay). By creating a single-use number that has a credit limit equal to the purchase price and a limited life (2 months is the minimum), I’ve minimized the risk of online shopping.

    FYI, I’ve also used VAN with sites that even remotely imply that they’re going to autorenew me in a year–the expiration date on the VAN card gets them squawking about needing an updated payment method just enough in advance of expiration for me to decide whether to renew or plan a cancellation (or just ignore them, if there is, in fact, no autorenewal). This works well with domain name registrations, for instance.

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