PayPal Jeopardy

Evan Kleiman - 2002.04.03

While eBaying has been around for a relatively long time now, another trend has just been emerging in the past few years. The latest and greatest trend of online shopping is PayPal, a service that lets you pay for otherwise risky to pay for online auctions and other things via your credit card or bank account - all in a nice "secure" package.

Now we have a wonderful alternative to the otherwise unsafe ways of sending money of the olden times of the 1990s. And since that little "lock down" icon pops up in Internet Explorer's bottom right corner of the status bar, it obviously must be some form of an Internet-age armored truck!

Once hearing about this wonderful little service, everyone quickly grabs their credit cards, bank cards, small animals, etc. and quickly converts them into PayPal money. After all, if Internet Explorer says it's safe, why doubt them?

PayPal is the safest thing in the world, right?

Wrong.

Once lured into the false sense of security that a flashy Web page with all kinds of beautiful logos and magazine quotes proclaiming PayPal's safety prowess, one is now willing to pay for all kinds of things, because, after all, if they say it's safe, it must be safe. However, the cases of Internet hacking and bank account fraud on PayPal would amaze anyone.

A quick glance over to PlanetFeedback.com reveals over one hundred complaint letters regarding money stolen from bank accounts, non-sending sellers, etc. The amount of praise for PayPal? None.

More and more every day, more and more people are being gypped out of their money and/or items newly won on eBay auctions. Everyone is at risk.

Once example is Amy Koresdoski, whose PayPal password was given to a hacker with the common hacking knowledge needed for getting into an email account. A few more security features on PayPal's behalf, and none of this would have happened. Amy would still have her $3,500+ that was stolen from her - taken directly out of her bank account! And this is not an isolated incident.

I surmise that PayPal realizes that things like this can happen, so they have many services in place, such as their insurance policy that promises to refund up to and including 75% of lost purchases, to protect people such as her. However, their insurance is nothing more than a façade for a seemingly endless chain of auto-reply message and not at all helpful tech-support people.

PayPal's customer service and their representatives are deplorable. In theory it's a great idea for a service for people wanting to buy and sell items online, the system is flawed. Anyone who does not want to run the risk of losing money or eBay items should never use PayPal. While the majority of people that use this service are able to successfully complete their transactions, there are way too many people who have had the opposite result in their PayPal endeavors.

I, too, am one of those many people in the PayPal Victims Club.

Upon breaking my third cellphone in two years, I was once again faced with the dilemma of where to buy my next rather expensive cell phone. As always, I made a very careful choice about where I bought my phone, since the price warranted a little thought in where my money went. Innocent enough, I found a nice little place on the Web called GSMandmore.com, and they had the phone I had been looking for, new, at an even sub-eBay price!

I was quick to jump on this deal and get the phone. However, something inside of me told me this might be too good to be true, so I contacted the webmaster, who too was quick to assure me of the quality of his product and the safeness of his website - which of course used PayPal. This guy seemed to know what he was talking about.

Little did I know that six months later I would still be without a phone or without a resolution from PayPal, who promises protection in a case such as mine. My money was taken by a business and then the site closed, leaving me and probably an endless stream of people without phones or money.

I had considered this an isolated incident and went on with my life until I figured out that millions of other PayPal users were affected in some way by their customer support negligence. I am not alone.

I have a very risky feeling about my recent purchases using PayPal, which thankfully have been sent correctly. Wishing to play it on the safe side, I decided that I should consider trying to close my account - little did I know that it would be impossible!

Among the lost money complaints at PlanetFeedback are many other complaints of PayPal not allowing people to cancel their accounts. That is a rather childish business tactic.

What is one to do to avoid being afflicted with the PayPal money losing bug?

First, all I can recommend is don't use PayPal unless you are one-hundred percent sure the person you are sending your money to is reliable, get proof of this in writing if you can. If you can't trust this person wholly, send a postal money order. While it might be slower, you're more guaranteed safely here.

Secondly, I recommend removing as many bank accounts and credit or debit cards as you can from your PayPal account, because any hacker with your password will have no problem getting any bank account numbers, etc. that they want.

While using a credit card for a purchase from them and then deleting it from your profile until you need it again will take more time than usual, it can save you future heartaches.

PayPal's idea is a terrific one, but its future is in jeopardy if they cannot better their customer support.

Further Reading

• PayPalWarning.com
• PayPal no friend to online buyers, MSNBC/ZDNet, 2000.07.19.
• Micropayment Wars Over . . . PayPal Wins?, Slashdot, 2000.08.31.
• Losing Faith in PayPal, Damien Cave, Salon, 2001.02.23.
• How PayPal Works, Dan Knight, Mac Musings, 2001.03.07.
• Feedback on PayPal, Dan Knight, Mac Musings, 2001.03.14.
• Dealing with Internet Fraud, Evan Kleiman, Mac Daniel, 2001.12.26.