Helping people with computers... one answer at a time.

Paypal is perhaps the largest online payment processing service. With that size come issues and problems. Should you avoid Paypal because of them?

I wanted to buy you a latte, but it seems you only accept Paypal. I've seen warnings about Paypal - Paypal fraud, Paypal phishing and the like, so I've avoided Paypal completely. I don't want to get my Paypal account hacked.

Am I over reacting? Should I avoid Paypal?

Personally, I'm always a little mystified when I hear of folks who don't like Paypal, or who are afraid of it. You just have to treat it for what it is: another on-line banking service. Personally I find it fast, convenient and reliable.

Are there horror stories? Of course. But then, the same's true for whatever institution you keep your money in.

There are definitely some steps you can take to keep your Paypal account safe.

First, even though I said Paypal is "like" a bank, they are not, actually, a bank. As a result, they are not subject to some of the rules and regulations that banks are. Knowing that, I simply choose to not keep large amounts of money with Paypal.

The horror story that I hear the most frequently (important: I'm not saying I hear it often, just that of the infrequent stories I hear, it's the most common) is an account lock-out. If Paypal suddenly decides to restrict access to your account, (typically as part of some fraud investigation) just make sure that they're not holding a lot of your money while things get sorted out.

So, how do have a Paypal account, and keep it safe? Pretty much the same way you keep your bank account's on-line access safe.

  • Never click on a link in email that purports to be from Paypal. Never. If there's something that needs to be checked out, go to the Paypal site yourself by typing "" in your browser's address bar, or clicking your own bookmark. Never click on an emailed link to Paypal. Got that?

  • Choose a good password for your Paypal account, and change it regularly.

  • Don't share your Paypal account information with anyone.

  • Make sure that the Paypal site is always accessed through an "https" connection, not just "http".

  • Check your Paypal account regularly. If there is unexpected activity, you'll want to catch it as soon as possible.

"...if you're OK with online banking, then there's no reason at all, in my opinion, to avoid Paypal."

Most all of that is simply common sense, or "best practices" for accessing any account on line.

Now, do you use on-line services from your bank, brokerage house, credit card company, or other financial institution? In that list I just provided, replace the name "Paypal" with the name of the institution you use. That exact same list of precautions applies to any online banking service just as it does to Paypal.

So if you're OK with online banking, then there's no reason at all, in my opinion, to avoid Paypal. In fact, there's every reason to add it to your mix, as a fast and convenient way to make payments online.

Personally, I've used it for years. I actually have three accounts: personal, my wife's business, and my business. It's been particularly helpful with my wife's business as she's taken more internet sales.

Article C2656 - May 16, 2006 « »

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Leo Leo A. Notenboom has been playing with computers since he was required to take a programming class in 1976. An 18 year career as a programmer at Microsoft soon followed. After "retiring" in 2001, Leo started Ask Leo! in 2003 as a place for answers to common computer and technical questions. More about Leo.

Not what you needed?

February 18, 2007 9:55 PM

Leo you don't get it PayPal won't help if there is a chance they could be out $$$$$$. Your are right when it works it works fine but if you have a problem you have a big problem. PayPal doesn't care, if it comes down to them loosing money or you it will be you no if ands or buts.

March 3, 2007 1:46 PM

You must be on their payroll... paypal takes moeny from the small guy (seller) and passes it on to the credit card companines
have you sold anything with them?

Leo Notenboom
March 3, 2007 4:47 PM

Hash: SHA1

Yes, actually I have. And I do. A lot.

My wife's business accepts paypal, and it's been a great, even an
important addition to her ability to serve customers on the internet.
We've never had a problem. And their rates for business transactions are
comparable to the rates we pay to take credit cards via traditional
means. Perhaps slightly higher, but the convenience is well worth it, in
my opinion.

About the only thing I do is make sure to transfer money from Paypal to
our regular business checking on a semi regular basis. That's free.

Version: GnuPG v1.4.6 (MingW32)


Mike Oshinaya
March 12, 2007 1:46 AM

Ha ha. Sure PayPals fine for the first few years you use it, then one day you'll run into a problem and realize how horrible their company really is.

March 19, 2007 6:50 AM

I have been on Paypal for many years with no problems. My account is linked to my Credit card account and I use it to buy Postcards which I collect on Ebay. I settle up with the card provider monthly. Two days ago I got two Paypal debit notifications, sent at almost the same time, from one of those US virtual world sites, for two amounts of 30 USD debited to my Paypal account. I thought it was a scam but I looked up Paypal and the debits were there on my account. I called up my credit card provider and they confirmed but said they couldn't remove them until the statement came out at the end of the month and I queried it. I don't know what was purchased by the scamster as the details are blank, but I assume some sort of virtual money for the virtual game world. Meanwhile I have notified Paypal and the virtual world game company that they are fraudulent transactions and I have changed my password. What puzzles me is how the fraudsters they got my details, I never respond to phishing exercises or click through from another site to Paypal. I have an unusual first name, an unusual address, neither would be picked up on a random combination of names, and an unusual alias. I have never been a member of the virtual reality game which debited me or any of its associates. It really looks as though someone has either hacked into my ISP service provider or into my Paypal account. I will keep you posted on the outcome.

Andrew Maddison
March 27, 2007 8:22 PM

Leo. Ask Leo?
To be honest I wouldn't ask you if it was raining outside.
Any pompous ass can set up some ego massaging site of no or little value. The first thing you state in this trite little article is "another on line banking service" even though you then go to explain it's not a bank. Sheesh. Before you give half witted opinions masquerading as fact, take some time to check what you are commenting on; Check the volume of problems experienced by customers of paypal. Check out the £9 million class action settlement. Observe the quotes from Paypal MD that they "deliberately hid contact information' from customers. With paypal, if it's okay, it's okay. If there is a problem then you are helpless. Decisions "cannot be appealed" etc. Accounts locked for a minimum 180 days. Decisions taken solely at Paypals discretion (or lack thereof).
As for your ridiculous, useless advice "If Paypal suddenly decides to restrict access to your account, (typically as part of some fraud investigation) just make sure that they're not holding a lot of your money while things get sorted out." How, precisely, are people supposed to achieve this. Paypal has proven it freezes accounts with distressingly regularity upon large purchases etc. Do you have access to an excellent psychic advisor? Quite frankly Sir, it is blatantly apparent you are next to clueless on financial realities. Just because you eat a lot of pies, it does not make you a master baker.
Your advice is clueless, incorrect, and most importantly, potentially dangerous.
Your opinions are not based on recognised facts. They are merely unfounded opinions based on pompous, delusional opinions of self worth. Blowhard buffoons like yourself are one of the major irritations of the net.

June 24, 2007 3:30 PM

Hi Leo, some of the above comments have a very true side. If you have problems with PayPal you have huge Proplems. They answer e-mails after 5 days but the answer is rubbish. So you need to write again - wait another 5 days just to get rubbish again. My friend has GBP 6,000.00 parked (frozen) by PayPal even though he regularly transfered the money away from them. Why such a high balance? Well he has a high cashflow (now frozen cash flow)from selling stuff on EBay. Now the account is frozen he has zeeeeero cash flow. He still needs to pay for Postage, storage, Rent and food but has NO income whatsoever anymore as PayPal has frozen his account. You can all help him by spreading the word and linking to this blog: Perhaps a PayPal employee with a heart and a brain will read it and will help. Thanks a lot for your help guys. André

July 16, 2007 5:19 PM

I found this site while searching google for paypal troubles, in hopes of solving my own. Fortunately it's a small amount of money (80 EUR), but seems that I will have to wait 6 months to get it back.

I will NEVER use paypal again, ever!

July 19, 2007 2:58 AM

This article seems to interest a lot of people. I have so far not read 1 positive response. Is this now the time to rethink your initial article? The reason I found this site is because I was looking for the Term "PayPal Problems" and it seems not only I am suffering from an incompetent Customer Care Centre there....

Leo A. Notenboom
July 19, 2007 4:56 PM

Hash: SHA1

No, I'm standing by my position, with the addition that I do make sure to keep
the amount of money in my paypal account "low". If it's an income generating
account, I regularly widthdraw into my bank account (which is free to do.)

I wouldn't expect positive comments on an article like this. People who are not
having problems with paypal have no reason to come here. And I do, still,
believe that they are the vast majority.

I don't mean to ignore or belittle the very real problems that some people have
had. And in fact I think it's good for everyone to know that they can happen.

But my experiences, and the experiences of many around me, have been good.


Version: GnuPG v1.4.7 (MingW32)


September 18, 2007 10:14 AM

I have been using Paypal for about three months and in this time I have decided never to use this sorry excuse for a company ever again. For starters why do the ask for a credit card if there just going to take from your bank, and why do they overdraft your account twice before there system says hmm, "There's no money I better try something else". See the thing is that when I bought my product it asked the credit card, the expire date, and the security code, and after all this Paypal takes the money from my bank account. At first I was like, it was just a computer error but was I ever wrong. I called Paypal and asked the what had happened and the told me that beings I had a primary bank account, "That is where the money is defaulted to", she said. Then why does it ask for a credit card and she said so they can verify who it is using the account. Well that would be okay the (credit card) that was use was not even linked nor did it belong to me, because my dad was using my account to buy himself an ipod. She said, "Well I'm sorry there's nothing we can do its already went through to your bank". I asked her again why wasn't the taken from the card that I put in to begin with, and will not believe what she said to me, "I'M SORRY BUT THERE'S NOTHING I CAN DO AND I CAN'T HELP YOU".

September 21, 2007 12:08 PM

Well, I am just setting up on e-bay and as an independent merchant. I am in no financial position to cope should I suffer from one of paypal's bizarre freezings or inexplicable debits of my account. Reading all of the above has convinced me not to register with paypal. Thank you everyone.

October 11, 2007 8:55 PM

Then Anna, you'll have a bunch of ticked off customers who will complain about you making them jump through hoops.

Five years ago, Paypal was optional. Today, Paypal is the norm.

Lesia Nordell
October 29, 2007 9:17 PM

It is quit obvious that you do not know alot on this subject. I sold a Vintage Shirley Temple Doll on ebay for $1000.00. The fraudulant buyer paid for it with her credit card. 5 days after signing for this item, she filed a chargeback with her credit card co. I did not find out for 1 month after all this happened. I took the 1000.00 out of my account before all this happened, and now they are trying to bill me for $1000.00, and the buyer still has the doll, for which she got free. I pointed all of this out to Paypal, but they said it was up to the buyers cc. company. I was a verified seller, so I should of been covered by their so called "SAFE WAY OF PAYING", well, that is also a bunch of B.S., bEcause the buyer said it was not as described. It has been over 6 months now, I am out over $2000.00 over this, with a frozen acct. BUT.........I have turned all of this info over the the Nebraska Attorney Generals Office. FRAUD IS FRAUD, AND PAYPAL IS THE LEGAL BUSINESS OF FRAUD. For this buyer has done this before to others in the past. She buys expensive items, pays with her cc and then files for a chargeback through her cc. She then is not charged for the item, and keeps the merchandise for free. So,LEO, Tell me now that your advise is valuable????!!!! They have caused me to close my bank acct, lose over $2000.00 and sent a collection agency after me, for whom I told to go "POUND SAND"! I hope anyone that reads your advise remembers, that talk is cheap, and you have missed the boat on this one!! It doesn't matter if you keep a little or alot in Paypal's acct, for they go after everything you own. Another point I find out, is that all your banking and fianance info you give Paypal, that Paypal's OWN EMPLOYEES have been found to use this info for their own criminal minds. BEWARE OF PAYPAL, AND AVOID THEM AT ALL COST!! IF YOU DON'T REMEMBER....EVERY DOG HAS IT'S DAY, AND PAYPAL WILL GET YOU SOONER OR LATER.

S. Nilsen
November 18, 2007 5:53 PM

I was also a very pleased user of PayPal for several years... until now. I transferred funds into my PayPal account, the same way as I have always done, and they were never registered. I have now tried everything, including lots of expensive long-distance phone calls, complicated faxes with bank receipts, etc., and have sent PayPal the name, tel. number and e-mail address of a bank employee who will be happy to confirm that the funds were sent to PayPal's correct account number - all to no avail. PayPal is a rip-off, but unfortunately you won't know it until they rip YOU off. Their customer service is non-existent. I hope somebody puts them out of business.

November 21, 2007 12:52 AM

Leo you're right about 1 thing - keep your balance low and 2) have a backup processor like StormPay or even better an actual merchant account, because if you deal with PayPal long enough and often enough you WILL run into a problem that may range from an inconvenience to a business threatening freeze. Since they are not a bank, and are very careful not to become one, they do NOT have to follow banking laws or regulations and can pretty much do whatever the heck they can get away with. I disagree with your overall tone, although I agree they re necessary to serious oline businesses anymore - they are necessary as in "necessary evil".

December 17, 2007 3:40 PM

I agree with others. The rosy picture painted is belied by the statement to withdraw money as frequently as possible. If this was a trustworthy service that would not be required.

The statement that PayPal is "like" a bank is erroneous. It has not covered by any banking laws and unlike a bank your funds are not secured.

The irony is as everyone says that until you have a bad experience with them you simply don't know how bad an experience that can be.

By the way StormPay is a dubious option.

A proper online merchant account is the only alternative.

December 20, 2007 1:11 PM

Paypal has been concealing a defect in its anti-fraud software that produces "false positives". Their failure to disclose this fact constitutes fraudulent misrepresentation when they tell members that the only way they can get their accounts "limited" is if they violate the contract. Papal knows that this is not true. Members can get their accounts limited without good cause due to false positives; but Paypal fails to tell members of this danger so Paypal can keep registering new members and keeping old ones. Paypal has been sued in New York and there is a hearing on January 23, 2008. You can read the memorandum of law filed in that lawsuit that will disclose the complete allegations against them:

Memo. of Law

December 20, 2007 1:20 PM

Mr. Notenboom,

I must agree with some of the comments here when they state that you don't know what you are talking about. You statement about Paypal is so limited that it does not exhibit any extensive knowledge on how Paypal's software actually functions.

Are you aware that if a buyer sends money to say 10 sellers and 1 of those sellers immediately transfers the funds to their bank account Paypal's software has been known to freeze all 11 accounts. Paypal is then incapable of reviewing all the frozen accounts in a timely manner due to their lack of employees in that department that they refuse to release the funds and require the sellers to wait 180 days because they don't want to take a hit from a charge back if the buyer files for one. This is due to Paypal's own negligence in failing to timely review and release funds. Paypal then sends out emails that falsely claims that an investigation is occurring. When Paypal also tends to release a percentage of the frozen accounts without an investigation due to their desire to protect themselves from lawsuits. This allows them to say they are investigating and releasing funds. This comes from a manager who worked at Paypal.

December 20, 2007 1:27 PM

One last point. You comment that the majority of paypal members have not had a bad experience is ridiculous. Why? because you fail to realize that besides thousands of members being seriously harmed, there is a great potential that those member will be harmed too.

Are you even aware that people are getting arrested due to Paypal's defective software?

What do you think will happen if you sell something and Paypal's software freezes your account and spits out an email telling your buyer that your under suspicion of fraud. Unfortunately for Matt Mill in 2004 and Sarah Holland in 2007, their police office clients used Paypal's email to have them arrested falsely for "felony Internet fraud". Or how about Ms. Frost who lost her job when a member sent Paypal's email to her boss accusing her of fraud. There are thousands of cases like this.

For you to simply dismiss these thousands of people and say well Paypal is ok just show what type of person you are and that isn't very good. It makes me think what kind of morals or ethics do you have that you can dismiss these innocent people.

Jeff Cox
February 25, 2008 11:33 PM

I would suggest to never deal with paypal,in my case it was not even a ebay issue, I was selling an animal to a lady in Texas who wanted to pay me thru paypal ,I had an account that I had occasionally used on ebay,anyway she transfers the money from her bank to my paypal,so I transferred it from my paypal acct. to my bank acct.I would never leave money sit in paypal because they are not fdic. I waited a couple days for the money to transfer and they stopped the transfer and froze my account.Fortunately I had not shipped the animal yet,but the buyers money was frozen in my paypal acct.and with no reason,just because they felt like it. After being nice didn't work I made a bunch of threatening emails and phone calls and finally got them to transfer the money from my paypal acct. back to the buyers paypal acct.where it is still frozen and maybe for some time to come, it was almost $ 3000.00 tied up until they decide to give it back,if they give it back,and all this was without cause,,,just because they could.Unless you like being jerked around and losing control of your money and maybe losing it altogether.NEVER NEVER NEVER DEAL WITH PAYPAL sooner or later they will get you!!!!!

Pay Pal Blows
March 25, 2008 2:53 PM

Pay Pal froze my account because of my credit. Then they give me a number to equifax who wants to sell me a credit report. They froze 1500 bucks I needed to eat off for the month. My family is starving and we are eating hot dogs and balogna without bread because of Pay Pal THE PAL YOU PAY!

April 10, 2008 5:53 AM

Hi, I know a company called Claim and Collect Ltd which specialise in recovering losses incurred through Paypal on a no win no fee basis. This covers cases of chargebacks, reversed payments or goods not received in the last six years. Visit for full details or call them on 0800 030 4624.

July 24, 2008 3:33 AM

Just like an ordinary bank?! And I thought I was naive. I was one of those previously happy to use Paypal people until a couple of weeks ago. Sold tickets for a gig through Paypal which the buyer lost - sorry, but not my problem! I had positive feedback confirming speedy receipt and an email confirming receipt and subsequent loss. 3 weeks ago and chargeback time! Paypal gave me 10 days to respond and said that they would have 75 days to consider this response. I responded in 1 but received an email, sent before my response, advising that there was nothing they could do and that they were closing the case. They have stated that their decision is despite my feedback, but given the timings of emails, they could not have given due consideration to my feedback. They have also stated that they have passed on all the information to the card company, but again this was impossibleThey are doing nothing with my proof of receipt, are not sending this on to the card company concerned, and generally, despite their protestations of powerlessness and faux expressions of sympathy, seem disinterested. Their last email suggested I ask the buyer for the money back or for the 'return of the merchandise'! Not much use when the merchandise was tickets that have been lost, and I somehow doubt that a buyer will respond to a polite request for my money back! I'm so angry!

July 29, 2008 7:11 PM

PayPal blows chunks. There is nothing convenient about it. They will keep your money at their whim for reasons they won't disclose. It costs you great amounts of time to try to get it fixed. I use computers and do electronic transactions daily, but will not use PayPal again - trouble is, they won't let me close my account! No one needs this kind of brain damage, and even if I have to deal with payment via snail mail, it is well worth it, because at least I know I will get it eventally. Can't say that for PayPal.

January 6, 2009 12:28 PM

I know a company that does the same thing against Paypal. It's called

Jason Melancon
February 10, 2009 4:40 AM

PayPal recently released my funds to someone after that other party provided a bogus tracking number for an item delivery. Even after I've provided USPost Office investigation information documenting that the tracking number was bogus PayPal just blows me off. PayPal blatantly says that the other party provided "a tracking number" etc. so the case is closed, even though the tracking number has been documented as having nothing to do with me or my transaction - Incredible.

April 5, 2009 7:41 PM

I used to sell computer related items on ebay. There was a point where I was at my peak with laptops, my most expensive item. I sold over 10 in one week(averaged 3 a week), among other things, and paypal immediately gave my account 'limited access' and ebay in turn suspended my account, both actions occured nearly simultaniously without any warning. My feedback was almost 200 without any negatives. As requested, I provided receipts for all my merchandise, some dating back a couple months and faxed over my apartment lease agreement. My buyers were somewhat understanding at why I wasn't shipping their items. After nearly TWO WEEKS paypal tells me to ship all items. After the buyers state they received them, they would consider releasing the money. I didn't think it would be wise to ship over $5,000 of merchandise only to have paypal 'consider' if they would give me back my money. I refunded all the money to my buyers and let each one know my situation. Some were understanding, some left negative feedback, some had already filed chargebacks with their credit cards and some even had their accounts set to limited access and were very angry with me. I had NO INCOME from my ebay business and was sitting on close to $15,000 worth of inventory with a paypal account that had limited access and a suspended ebay account. I ended up paying finance charges on my credit cards for a few months while taking a hit on my remaining inventory by dumping it ASAP on craigslist. The funny thing is, when my account had a few thousand dollars in it while it was 'limited access' paypal stated they wanted to start to process of closing 'our relationship'. They said I would get the money back in 180 days. Well, after the chargebacks hit and I refunded all it, my account was negative. At that point paypal said they cannot close an account with a negative account! I had to close my bank account and all my credit cards that were tied to paypal in fear what paypal might do. Looking back at my ebay account littered with negatives at the end and no longer a registered user, ebay/paypal made me out to look like a deadbeat seller who tried to pull a fast one. I HATE ebay/paypal.

PayPal Not
April 26, 2009 6:35 AM

You just have to treat it for what it is: another on-line banking service. Personally I find it fast, convenient and reliable.

I have to disagree with you. PayPal is NOT a on-line banking service in any way, shape or form. They are not regulated by any government entity and follow no banking accounting practices but their own. They are NOT FDIC insured either. Should they disappear from the internet some day, so will your balance within PayPal.

Don't get me wrong, I've been a member of PayPal long before they were even called PayPal. I just want the facts to be clear.


1. PayPal is NOT a Bank.
2. PayPal will do Credit Checks on you when you sign up with them.
3. PayPal will request your Social Security Number (SSN) when applying for their credit card (HIGHLY NOT recommended).
4. PayPal will request access to YOUR bank account (NEVER use your daily bank account, always open a new empty Bank account to link).
5. PayPal is NOT FDIC insured.
6. PayPal WILL take your money without your authorization should their be any chargeback's or buyer claims against you (and charge you $10).
7. PayPal is the number one hacked site in America.

Bridge Ste
May 6, 2009 11:54 AM

I’ve read your comments on Paypal and the follow up’s from your readers. I have to say I am on the side of your readers.

Ask yourself the answer to this question:
Paypal were purchased by Ebay in 2002. They tried to integrate it into the Ebay solution by getting sellers to ‘voluntarily’ adopt Paypal, for 6 long years. A very large number of sellers did not take this up or, like us, took it up (got some experience) and then dropped it like a stone. Why do you think this is? Also, Ebay/Paypal failed so catastrophically to achieve the ‘voluntary’ integration that they had to make it compulsory in 2008 to get the take-up. Why do you think this is?

We are a seller on Ebay, and have been for years. We had a couple of ‘nasty’ experiences with paypal and refused to take their payments. Now, Ebay forces seller to accept Paypal. Its supposed to be an option but, given the way the buyer is taken through the process, 99% of the screen is Paypal, 1% is alternative methods. Hardly fare.

Now we are forced to use Paypal again, we are back into the realms of their ‘processes’ again. To put this into perspective, we sell 25,000 items each year, less than 1,000/4% of which go through Ebay/Paypal (therefore 96% go through other sales and payment methods). However, in the last year, 96% of our ‘issues’ have been with Paypal and 4% with the others. To give you two cases briefly:

1. Guy buys an item. It arrives on a tracked service. The box (designed to protect an item in transit and take the knocks and blows of the process) was marked upon delivery. Guy refuses to sign for it until he has inspected it. He and the driver open the box (160cm x 60cm x 55cm and 34kgs) to find the content is perfectly fine. He signs the drivers ticket accordingly. He then squeezes the item back into the box (it never fits the same afterwards) and puts the item in the cold store at his work for 17 days. He gets it out of the cold room and carries it for 30 minutes in the rear of his car, to his home. The boot/trunk was left open, and the parcel bouncing around inside, because he couldn’t close it down securely. When he gets it home he takes it up stairs and unpacks it. He found it was substantially damaged (any wonder). Made a claim through Paypal and won!!! His money was refunded despite reams of evidence provided by us.

We appealed the case and it was overturned, based on a written statement from the delivery driver. The twist was that Paypal will not now put the situation right financially. They want us to pursue the customer through the Small Claims Court process in the UK.

2. Guy buys a home build self assembly childs ride on jeep from us. Arrived OK, no issues reported at point of delivery. 44 days later the guy contacts us and says ‘its damaged’. He made a chargeback through his credit card company to Paypal. Paypal failed to represent us, telling us they didn’t have sufficient resource (head: Paypal wins; Tails: Seller looses). His money was refunded.

In both of the above cases, our terms and conditions of sale are very clear and the customer committed to them. Also, Statutory legislation in the UK/Europe is very clear as to what the buyer and seller must do and was 100% in our favour. Paypal has considered it self above the law in both cases.

Our solution, and I suggest you all consider this as well (the more of us that do it the better).

a. Open a case with the Financial Services Ombudsman (UK) 0845 080 1800. Although Paypal are not regulated, they have to comply with this in order to be able to trade in the UK. You have to prove a financial loss (easy to do). The FSO will examine the case and impose a decision. In both of our cases this has yielded a positive outcome for us. Can’t disclose the full details because of the ‘gagging order’ imposed (but I’m sure you get the idea).

b. Ask the Financial Services Ombudsman to liase with the Financial Services Authority. Whilst Paypal are not regulated (and work very hard to make sure they never will be) the FSA has the power to revoke their licences to trade in the UK. The more cases they see/hear of, the stronger the argument for compulsory corrective action and/or revocation.

c. For those Ebay sellers, ask the FSO to also involve the Competition Regulator. Ebay forcing seller to use Paypal is anti competitive and not good for the market or users (only for Ebay/Paypal share holders).

d. Paypal record your telephone calls. They will tell you one thing and then do something else. Ask for a copy of the conversation. They MUST provide you with this, if requested, within 30 days of receiving your request. If they fail to provide it (as they have with every request I’ve made), report them on line to Again, these are the regulators and can stop Paypal trading IF enough complaints are received.

In summary, if you can avoid Paypal, then do so in any way possible. This applies to both buyer and seller. If you have to use them, always always always fight your corner. Go to the FSO every time (it works) and ask them to involve their colleagues at the FSA and (for Ebay users) the Competition Regulators Office. We do not have to tolerate Paypal’s hiding behind their Luxemburg address OR using the Monopoly created for them by their parent company Ebay.
June 22, 2009 3:08 AM

No you should not use paypal, visit to find out why, and these reasons will blow your mind!

July 12, 2009 8:45 AM

Paypal is for people who are lacking in some way. With all the information out on the Internet about Paypal it is incredible that people use it at all. It is a wolf in sheep's clothing, a trojan horse, a predator. People who can't get credit, people who can't take credit, young people with no experience with credit, these are people who might need to use Paypal. It actually mystifies me that people who don't need to use it, especially as there are now other ways to send and receive money, are still using it. Leo, your lack of responsibility in taking your tenuous credibility and using it to defend Paypal is a major life error. Clean up your act.

Martin Strotten
August 18, 2009 7:19 AM

I bought two XP Professional discs from a man on ebay and paid using paypal.When the discs arrived they didn`t work properly(they registry keys weren`t correct)so I made a claim with paypal.In the end they emailed me saying I would get a full refund once I had posted them back to the seller,I sent them special delivery to the address suplied by paypal but they were returned to me saying addressee unknown.I phoned paypal in Luxumberg and explained what had happened and was told not to worry ,they will sort it out.....well it`s 15 days since I last heard from paypal and still no refund!!! I would say only use paypal if there is no other way to pay and certainly don`t believe them when they claim to protect your rites as a buyer or seller,THEY WILL DO WHAT IS BEST FOR PAYPAL and sod the rest of us

Jon Cybrax
September 9, 2009 6:25 AM

Thanks for the link to the FSO, PayPal has 'lost' £500 somewhere between the USA and UK. PayPal claim they sent the funds transfer, my bank says nothing has arrived.
Cybraxjon on yahoo

December 26, 2009 10:43 AM

The same kind of thing happened with me like(Jason Melancon) They limited my account one day and they asked for all the info etc. I sent them everything, every receipt etc still they emailed me and said they will keep my money for 180 days. Remember if you get money fast or in large amount they will limit your account.

Marnix Thienpondt
January 9, 2010 10:54 AM

I bought some used car parts with paypal. I sent the seller $662.00. The parts never came. I put in a claim within the 45 day deadline. Paypal investigated. They said that they sided with me. They contacted the seller. They say the seller has no money in there account and that I'm out the $662.00. They signed the email "We hope you understand our policy and that
it assures you that you are safe using PayPal."
Sorry I don't feel safe. I'm out the money, no parts, and no help from paypal. Good luck to the rest of you. ( I kept all my correspondence)

Rebecca Weimer
January 11, 2010 3:32 PM

PayPal seems to make problems for a lot of people. I had a PayPal account for a few months without problems. When I sold something on Ebay, I got the money from the sale paid to me via PayPal. Bottom line: my buyer got his stuff AND his money back because he filed a fake claim with PayPal and PayPal gave him his money back without even investigating!

I found this website called I learned a lot of facts there about PayPal. This webpage here only confirms what I read on Screw-PayPal! The site is a little out there and weird, but I think the guy who made it must have been as mad as I was....

Bill P.
January 22, 2010 10:10 AM

I whole heartedly disagree with the author when he states "Personally, I'm always a little mystified when I hear of folks who don't like Paypal, or who are afraid of it. You just have to treat it for what it is: another on-line banking service." That is simply untrue. Online banking services has fraud protection. There are banking laws that protect the individual account holders and the banks bring in law enforcement to help. PAYPAL does none of this. PAYPAL requires the individual account holder to present the proof, and do not make the account holder whole immediately during the investigating like the banks do.

So to the author of this fairy tale I say be honest.

Stay away from PayPal. If the merchant is upstanding, they will have the abiity to accept credit cards.

Jeff peters
January 29, 2010 2:58 PM

Paypal is about a million miles away from being a proper bank! Sadly if you wish to use ebay then paypal is a necessary evil but it is far from safe. I feel that using ebay or paypal is like the wild west - plenty of cowboys.

Good luck when using both.

Jim R.
January 31, 2010 3:43 PM

If you like playing Russian Roulette you will love using Paypal. As someone who has sold several million dollars online I thought Paypal was great until I was burned. I shipped $500 worth of merchandise and the buyer did a reversal and ended up with his money and my parts. Paypal was impossible to deal with, they can hold your funds (all of them) for 6 months while they investigate and then keep them after all of that time. I had proof that the goods were received including FedEx receipts and emails from the buyer discussing the items after he received them. Paypal is the sole arbiter of your complaint, they will give you no information and you can go out of business while they make their decision. I know people who have lost their business because Paypal held thousands of dollars over a small dispute. If you must use Paypal do not leave a large balance in your Paypal account or the checking account you have it tied to and use a CC with a very small limit or a Walmart Visa Debit card with no more than a few hundred dollar balance. If you even use an email address that was once used by a scammer you can be shut down. We had a 5K instant transfer approved and then after shipping the product the transfer was reversed by Paypal. We had to track down the package and get it back. Paypals user agreement has been declared unenforceable by Courts in California. Be very wary.

February 4, 2010 2:41 AM

What an absolutely irresponsible comment you make Leo. Using Paypal is NOT the same as online banking and your uneducated statement to the otherwise is an offense to all of the regulated, certified, monitored, policed banks in the United States. A bank would never freeze access to a customer's account "just because", nor would a bank take your cash deposit and "put it aside" for 21 days pending approval from some outside source that the money was really green, nor would a bank run you in circles for months instead of answering a question or resolving an issue. Are the banks benevolent gangs that deserve to be lauded? No way - but because they are government regulated the don't pull scams like Paypal does on a regular basis. If they did, they would be sanctioned, fined and possibly closed. Paypal is adamant they are not a bank and they do that purposefully to avoid the laws that govern banks and which protect their customers.

You should remove this post, or edit your comments to be something factual, useful, responsible and safe. I shudder to think the number of people who will read this and assume you know what you are talking about.

February 4, 2010 4:55 PM

Paypal sucks. I recently had a problem with Paypals debit card. When you use it on USPS click'n ship it charges you twice. After speaking with a customer service agent at USPS I was informed this was the 2nd case that day of the same thing happening. I sent in all my information to paypal to get a refund and they denied my claim. After getting the letter I called Paypal again to speak to them directly about the issue and they magically "didn't have any information on file". I filed a complaint through my attorney general! Paypal is notorious for these "Phantom Charges". Glad to know I wasn't the only one they ripped off. Hopefully I will end up getting my $27 back.

February 17, 2010 10:36 AM
I'm closing comments on this article because many of the folks who are taking issue with me are missing my point. Yes, I said it's like a bank, but if you take the time to read further you'll see I clarify it explicitly: "...even though I said Paypal is "like" a bank, they are not, actually, a bank. As a result, they are not subject to some of the rules and regulations that banks are." That's an incredibly important point everyone seems to be missing.

Secondly, I had my account locked out. And I recovered. It wasn't as clean as it should be, but Paypal came through. Read more about that experience here: What does "Notification of Limited Account Access" mean?

Finally, since the article was written, I've added both Google Checkout, and Amazon Simple Pay as alternative payment methods for those who wish to avoid Paypal. There's enough anti-Paypal sentiment - and honestly, some risk - that anyone who accepts payments needs to include alternatives.

Comments on this entry are closed.

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