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PayPal In Settlement Deal With 28 States

 10:54 am on Sep 29, 2006 (gmt 0)

PayPal, the online payments unit of eBay, has agreed with attorneys general from 28 U.S. states to improve how it notifies users of their consumer rights, the company said Thursday.

Under the deal, PayPal will also pay $1.7 million to the states.

In addition, PayPal said it reached a settlement in a proposed class action lawsuit by PayPal customers in a U.S. federal court in Brooklyn, N.Y. PayPal agreed to set up a settlement fund of $3.5 million, less court costs and attorneys fees.

PayPal In Settlement Deal With 28 States [news.zdnet.com]



 12:35 pm on Sep 29, 2006 (gmt 0)

Thank god, pay pal needed to have this happen. We stopped using them a while ago because of their bad customer service and policies.


 2:50 pm on Sep 29, 2006 (gmt 0)

I have used PayPal for years with no issues. I don't understand how so many people can have so many probelms with the service.

Atleast from my point of view the system seams pretty flawless.


 3:08 pm on Sep 29, 2006 (gmt 0)

Paypal is corrupt as my account was terminted due to a policy saying I was selling something against their very broad legal terms. Problem is ebay has 1000's of items selling same item they said was what got my account cancelled. Sent links to all the pages turned them in nothing.

Paypal was a secondary processor as we have a merchant account so very little was being process through paypal but in ecommerce every little bit helps.
I am really looking forward to Google checkout as soon as our cart is ready we are adding them in the process.

We never had a complaint 2 years if I would have had 1000.00 or any amount in the account it would have been frozen for months I had heard these stories about paypal so we always drained it so if this happened we wouldn't be hammered.

I say it's to cheap they need to pay more.

[edited by: bwnbwn at 3:44 pm (utc) on Sep. 29, 2006]


 3:24 pm on Sep 29, 2006 (gmt 0)

Thank god, pay pal needed to have this happen. We stopped using them a while ago because of their bad customer service and policies.

My take on this is that it's going to make things worse for merchants who use PayPal. PayPal's emphasis seems is on the buyers using PayPal, not the sellers, and this is only going to strengthen that.

The AGs need to get together and file a suit on behalf of the merchants.


 4:40 pm on Sep 29, 2006 (gmt 0)

PayPal is notorious for having the worst customer service in the country. (Even worse than Sprint!) It is virtually impossible to contact PayPal about anything and receive a response that is something other than an automated form reply.

Any of you who have ever tried to close your PayPal account will have found that it's practically impossible to do. Years ago, I found the only place that explained how to close it on a site that also has forums that include testimonials from PayPal employees talking about how horrible some of the company's policies are. You can find the site by googling "no PayPal".

[edited by: Car_Guy at 4:58 pm (utc) on Sep. 29, 2006]


 5:08 pm on Sep 29, 2006 (gmt 0)

So happy to see PayPal getting sued - it's a long time coming. They nearly destroyed my business when they froze my account for no reason, not only holding $11,000 of my money hostage for six months but also rendering me incapable of accepting payments. No notice, no attempt to resolve the situation, no anything - just immediate freeze, lying about all the, all the while having no intention of releasing your funds. No way to talk to the people who make the decisions, either - you're totally helpless.

The customer service is horrendous, and they can freeze your account at any moment on a whim, and steal your money for six months if they want to. Anyone who relies on PayPal for accepting payments is at risk - they have no regulations like banks do, and don't care who they hurt - just google PayPal Sucks and you'll see many, many stories from people who have been victimized by them.

I can't wait until there are more lawsuits against PayPal on behalf of the merchants they've preyed upon. I think they should also be sued for their "protection policies" which are fake as well.

Life is SO much better now that we are using a real merchant account.


 8:04 pm on Sep 29, 2006 (gmt 0)

I have had three or four "issues" with PayPal over the past couple years. I have always been able to resolve them and once when I had a customer complain and get a refund, they actualy credited my account anyway, (they ate the loss for giving a credit to someone who didn't actaully deserve it).

The worst thing I'd say is how long the "Dispute Resolution Process" can take. I'd rather they just made a decision in 24 hours and seller/buyer could move on. Waiting for weeks and not knowing how much money you have in an account makes bookkeeping stressful.

Re: the amount they settled for --- it's peanuts. Here's some numbers... (and don't forget that eBay owns PayPal... these numbers do not include eBay profits).

"...eBay's PayPal service fared well in the second quarter, generating $330.7 million, a 39 percent increase from the same time last year. PayPal ended June will 114 million account holders, a 44 percent increase from a year ago."

-Antique Trader, August 9, 2006


 9:38 pm on Sep 29, 2006 (gmt 0)

Gbuy is already competing with pay pal! Soon as google rolls out their own "no fee's" free auction site, kiss ebay/paypal goodbye!


 9:57 pm on Sep 29, 2006 (gmt 0)

We've always had problems with paypal. The only reason we accept it is that we ocasionally sell our returned or scratch and dent items on ebay.

They do not back up their retailers and dont forget they are not insured like a bank so don't leave your money sitting in the account.


 7:46 am on Sep 30, 2006 (gmt 0)

I agree, paypal is indeed a problem to work with.I have used paypal for 5 years without problems, and then all of a sudden, they freeze your account for no reason, no problem. Hopefully lawsuits like these will improve CS issues there at Paypal.


 8:25 am on Sep 30, 2006 (gmt 0)


[edited by: Brett_Tabke at 3:43 pm (utc) on Sep. 30, 2006]
[edit reason] spam - just say no [/edit]


 10:43 pm on Oct 1, 2006 (gmt 0)

if it weren't for wannabe ecommerce magnates (ebayer's) with paypal accounts...there would be no way we would include the paypal payment option. We all remember paypal's theft on a grand scale a few years ago with account locks. I don't trust paypal as far as I could throw them...auto sweep should always be activated.

It is an unregulated so-called "financial payment services broker". Their TOS reads like a health insurance policy that can and alway is interpreted to Paypal's advantage.

With that said, Paypal is a great platform for in-house payment services for ebay members...and should be restricted to ebay. It is definitely not suitable for real ecommerce.

I wish the attorney generals stipulated in the settlement that Paypal put in bold letters on the home page..."caveat emptor"..."buyer beware".


 10:52 pm on Oct 1, 2006 (gmt 0)

I agree, paypal is indeed a problem to work with.I have used paypal for 5 years without problems, and then all of a sudden, they freeze your account for no reason, no problem. Hopefully lawsuits like these will improve CS issues there at Paypal.

To illustrate my attitude reflected in the above post...

Used paypal for a couple of years when it first came out...no chargebacks during that time until 3 occurred in one month. Proof of delivery by signature confirmation proved the customer did receive the product. We had allowed our paypal balance to grow to over $30,000.00. The chargebacks amounted to a culmulative total not exceeding $200.00. Our account was locked and it took almost $2000.00 in legal expenses and 8 months to get our money from Paypal.


 1:41 am on Oct 4, 2006 (gmt 0)

How about doing daily sweeps of money from Paypal to your main account?


 9:34 pm on Oct 4, 2006 (gmt 0)

How about doing daily sweeps of money from Paypal to your main account?

Because when Paypal first came out (and probably still is the case), the associated checking account could/can be debited by Paypal for any amount it sees fit...then lock your Paypal account. This is according to the Paypal TOS.

To circumvent this process you need to auto sweep your Paypal account, then transfer the funds from the associated bank account into another.


 11:46 pm on Oct 4, 2006 (gmt 0)

the associated checking account could/can be debited by Paypal for any amount it sees fit. [...] This is according to the Paypal TOS.

This is not the current PayPal policy. (I don't have older revisions of the User Agreement at my immediate disposal, so I can't speak to what the exact policy was "when PayPal first came out.")

According to the PayPal User Agreement, and specifically the Payments (Sending, Receiving, and Withdrawals) Policy (located at [paypal.com...] )

[1.3] Electronic Transfers. When you make a payment through PayPal that is funded by Instant Transfer or eCheck, and when you initiate an "Add Funds" transaction you are requesting an electronic transfer from your bank account. Upon such request, PayPal will make electronic transfers via the Automated Clearing House (ACH) system from your U.S. or Canadian bank account in the amount you specify. You agree that such requests constitute your authorization for such transfers. PayPal will never make transfers from your bank account without your authorization.

(Emphasis added.)

PayPal will not initiate a request to transfer money from your bank account without getting your approval. In the event that a transaction is put on hold, PayPal may cancel pending withdrawals from your PayPal balance to keep the funds from being released, but will not automatically debit your bank account. If your account has a negative balance, you will be asked to approve an additional amount to restore the balance the next time you attempt to send a payment or use the "Add funds" feature.


 3:03 am on Oct 5, 2006 (gmt 0)

It originally was in their TOS...the change was probably stipulated in the class action lawsuit a few years back. I became very familiar with their TOS at that time as a result of our legal dispute. In any event, now we do not run paypal payments through our gateway and keep the paypal payment option low profile on our site...and stand alone account.

Paypal is probably an okay organization now, but it is a shame that it has taken merchants to fight its unfairness through legal action to get there. With this being so, IMO they have permanently tarnished their reputation with the more established ecommerce merchants.


 3:33 am on Oct 9, 2006 (gmt 0)

I just had a bad experience of buying a defective product oline and then realized with Paypal I had no recourse. I spent a lot of time writing up a description of the complaint and then just got a an automated form email back saying they wouldn't do anything.

I won't use them anymore except maybe for very minor purchases. With a charge card you can at least contest the charge if you get sold a defective product, but Paypal doesn't have any meaningful grievance procedure for customers.


 6:17 pm on Oct 13, 2006 (gmt 0)

It's about time..!
Never seen a company that can hold money that a sender sends you.. then once it's free from HOLD THE SENDERS MONEY LAND.. then when you get it, they hold it again in HOLD THE RECEIVER'S MONEY LAND.. then once available, you can only withdraw in installments, unless of course you upgrade your account, then thereafter, something else flips the script.. leaves you wondering... HUNH? It took almost ten days to make a withdraw happen...

Better way people!

Never again...
I couldn't wait to close my account..!

PS: Don't go for it on Ebay..
It's easier to overnight a money order! Than HOLD YOUR BREATH waiting on funds to clear... whether your the sender or receiver!


FRAUD mean anything?


[edited by: Lexi_Lilley at 6:19 pm (utc) on Oct. 13, 2006]

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