Newbie PayPal Questions and Concerns

[QueHuong]

Russ said the following in one of the PayPal threads concerning the possible situation that PP would freeze his account (and the money in it) due to a fraud charges:



<< You better also empty whatever bank account you have linked or Paypal will grab it also. >>



That scares me. I signed up with Paypal using my parent's checking account. First off, was that a smart thing to do or was I right because using a checking acct is the only acct to use? Secondly, when I turn 18, I'm gonna get my own checking account and will delete my parent's acct info from Paypal so no one is able to withdraw money from the acct. But when I delete the acct info, will Paypal still have access to it and could they start withdrawing money?

Any other advices for someone new to Paypal or similiar services (other than "don't use them)?

 

[NetworkDad]

I keep my paypal tied to a separate checking account (not my main personal one) that has a $5.00 balance. I'd suggest others do the same. Join your local credit union, they're usually free with a 5.00 balance.

 

[littlezipp]

<< I keep my paypal tied to a separate checking account (not my main personal one) that has a $5.00 balance. I'd suggest others do the same. Join your local credit union, they're usually free with a 5.00 balance. >>

Sound advice I might have to follow too!

 

[D0wnL0ader]

whats wrong with paypal.

what have they done?

 

[Smolek]

Check this out

 

[datalink7]

I signed up a long time ago and never use it.

How do you cancel your paypal account? I can't find an option.

Edit: Never mind... found it.

 

[Damon]

Hi Smolek,

Any party can throw together a web site of "horror" stories for any company. You will find, if you actually read many of the posts on any of the flame sites, that many of the complaints have to do with:

a) seller not delivering product to a buyer
b) seller getting a chargeback from a credit card transaction (chargebacks are always a risk when accepting credit cards)
c) account restriction -the reasons for an account restriction can be found in the USER AGREEMENT. While they draw a fair amount of attention on the boards, they are actually quite rare. They can also be resolved with the requested documentation.

None of the flame sites discuss what company policy is relative to a specific problem.

PayPal has well over 10 million users. I would ask people to compare the user base vs. the number of complaints on these sites.

 

[Lucky]

I've got 22K in my paypal account right now.

 

[iamwiz82]

<< I've got 22K in my paypal account right now. >>



You would be safer by throwing it in the middle Queens New York than keeping it there.

 

[Russ]

Damon,

Instead of going in to AutoReactionMode, why don't you address MindStorm's concerns? You know, as well as anybody, that the fact Paypal can freeze a linked bank account based solely of the word of the other party to a transaction is what has caused 90% of the complaints.

Now, in defense of Paypal, the "grab now, ask questions later" approach is exactly what a credit card processing service does to a merchant on a chargeback. The difference is that with a merchant services provider, the problem is handled quickly and efficiently.

The other key difference is that the major merchant services companies will actually be in business next week.

Russ, NCNE

 

[Lucky]

the only way I'd lose the money is if paypal went bankrupt, and it doesnt appear that is imminent. I have enough contacts inside paypal that I could get pretty much any problem-short of bankruptcy or fraud on my part-solved.

 

[Russ]

<< the only way I'd lose the money is if paypal went bankrupt >>



Kiss it goodbye.

Russ, NCNE

 

[Lucky]

<<

<< the only way I'd lose the money is if paypal went bankrupt >>



Kiss it goodbye.

Russ, NCNE >>




Russ, I've experienced some of paypal's ineptitude myself, but Im in no position to state something like that. At the risk of being at the recieving end of a smartass comment, do you really have anything to back that up with?

 

[Damon]

Hi Russ,

Once again, the information you are providing is incorrect.

" You know, as well as anybody, that the fact Paypal can freeze a linked bank account based solely of the word of the other party to a transaction is what has caused 90% of the complaints."

PayPal can only work restrictions against a PayPal account. It has nothing to do with an attached bank account.

In addition, the industry average for chargebacks/online fraud has been reported over 1.0%. Ours has been reported at about half of that.

 

[Russ]

<< do you really have anything to back that up with? >>



Yep, logic. They had a net loss of $105 million last year, and are still bleeding while bigger players are stepping in to the market. Unless they suddenly because profitable today, the money from their IPO will keep them in business about six months. What happens when that's gone?

Russ, NCNE

 

[Lucky]

I'd question that .5% figure. Not its truthfulness, but its meaning to real-world situations. I've done hundreds and hundreds of paypal transactions, but many of them are with friends. $50 loan here, $100 there, etc...I'd be interested in knowing (perhaps this is impossible though) what % of transactions conducted through a fairly anonymous outlet, ebay for example, are later chargedback. I would hazard a guess that its significantly higher than .5%.

 

[Lucky]

A little on their financial situation (for those who dont know, the following number omit 3 0's, so (107,802) means a loss of 107,000,000.



Year Ended:

12/31/99
12/31/00
12/31/01


Transaction Fees
?
8,476
101,068

Interest on Funds
?
2,046
3,763

Investment Fees
?
?
?

Service Revenues
?
3,938
?

Total Revenue
?
14,460
104,831

Transaction Process.
?
25,093
47,589

Loss Provision
?
11,028
14,760

Selling/Gen./Admin.
3,691
34,950
22,473

Product Development
483
4,419
8,819

Service/Termination
?
41,142
?

Depreciation
478
55,138
91,938

Customer Service
230
15,754
30,636

Total Expenses
4,882
187,524
216,215

Operating Income
(4,882)
(173,064)
(111,384)

Interest Income
264
2,124
2,865

Other, Net
(1)
1,434
717

Income Before Taxes
(4,619)
(169,506)
(107,802)

Income Taxes
?
?
?

Income After Taxes
(4,619)
(169,506)
(107,802)

Preferred Dividend
?
?
(1,350)

Net Available to Common, Before Extraordinary Items
(4,619)
(169,506)
(109,152)

Net Available to Common, Including Extraordinary Items
(4,619)
(169,506)
(109,152)

Average Shares (basic)
7,714.00
31,513.00
47,804.00

Earnings Per Share (basic), Before Extraordinary Items
(0.599)
(5.379)
(2.283)

Earnings Per Share (basic), Including Extraordinary Items
(0.599)
(5.379)
(2.283)

Average Shares (diluted)
7,714.00
31,513.00
47,804.00

Dilution Adjustment

?

?

?

Earnings Per Share (diluted), Before Extraordinary Items
(0.599)
(5.379)
(2.283)

Earnings Per Share (diluted), Including Extraordinary Items
(0.599)
(5.379)
(2.283)

 

[Russ]

<< Once again, the information you are providing is incorrect.

" You know, as well as anybody, that the fact Paypal can freeze a linked bank account based solely of the word of the other party to a transaction is what has caused 90% of the complaints."

PayPal can only work restrictions against a PayPal account. It has nothing to do with an attached bank account. >>



Damon,

There you go with the deception by omission again. Answer the following, and a simple yes or no without the crib sheet will suffice:

If a chargeback is filed against a seller, and the seller has no funds in their Paypal account, does Paypal have the right to recover by attaching funds in the linked bank account?

Just a yes or no, no BS this time.

Russ, NCNE

 

[Russ]

Lucky,

You should note, for those who aren't used to reading financials, that those numbers are missing three 0s on the end. In other words, they had a net loss of $107,802,000 last year.

Russ, NCNE

 

[iamwiz82]

<< Operating Income
(4,882)
(173,064)
(111,384)
>>



:Q

 

[Lucky]

haha, yes that correct. I just assumed folks knew that.

 

[Damon]

Hi Russ,

"If a chargeback is filed against a seller, and the seller has no funds in their Paypal account, does Paypal have the right to recover by attaching funds in the linked bank account? "

I've answered that in the past as well. Yes, for users that signed up after October 11,2001. Chargeback liability is still present for users that signed on prior to that date, but the recovery methods may include:

a) charging the credit card/debit card on file
b) deducting it from the PayPal balance

Users that signed on before that date won't have recovery made from the bank account. However, as I had mentioned several times before, very strict guidelines are in place for transactions.

It doesn't change the fact the information you are presenting is inaccurate.

 

[Lucky]

how do i find out when I signed up? I've got a friend who had an extra 16,000 sent to him in error by a business when refunding some money to him, Im sure he'd be interested in case they come after him.

 

[Russ]

<< "If a chargeback is filed against a seller, and the seller has no funds in their Paypal account, does Paypal have the right to recover by attaching funds in the linked bank account? "

I've answered that in the past as well. Yes, for users that signed up after October 11,2001. >>



Note for everyone: The answer is YES, they can attach your bank account. You may now feel free to ignore any of his denials to the contrary, regardless of how well the issue is obfuscated by the rhetoric.

Russ, NCNE

 

[Lucky]

well i guess im safe from that sheister policy. I did my first transaction on Apr 17, 2000