Summary: 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?
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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.
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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.
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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 "paypal.com" in your browser's address bar, or clicking your own bookmark. Never click on an emailed link to Paypal. Got that?
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Choose a good password for your Paypal account, and change it regularly.
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Don't share your Paypal account information with anyone.
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Make sure that the Paypal site is always accessed through an "https" connection, not just "http".
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Check your Paypal account regularly. If there is unexpected activity, you'll want to catch it as soon as possible.
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
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.
Posted by: Jeff peters at January 29, 2010 2:58 PMIf 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.
Posted by: Jim R. at January 31, 2010 3:43 PMWhat 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.
Posted by: Megan at February 4, 2010 2:41 AMPaypal 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.
Posted by: Kali at February 4, 2010 4:55 PMSecondly, 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.
17-Feb-2010