My name is Mike Feldman, and this is my PayPal horror story:
I used PayPal to try to send $24.52 to a seller on an e-Bay auction I had won. Unbeknownst to me, the seller was a disgruntled former PayPal user who wanted never to have anything to do with PayPal again, because of his own bad prior experiences with PayPal.
The transaction was "completed,"
PayPal-speak for the money being taken out of my checking account, but
the seller/payee never received the money. Instead, PayPal
held onto it. Initially, PayPal claimed that the seller/payee had
a PayPal account which had never been "verified," PayPal-speak for a PayPal
account which is not yet active and which can only be activated by the
customer providing PayPal with certain confidential personal information.
When my seller/payee contacted PayPal to request that they send him a check
for the $24.52, PayPal insisted that the seller/payee give them his bank
account and/or credit card information. The seller
PayPal failed to acknowledge receipt of this information from the seller/payee, failed to respond to communications from the seller/payee, and failed to send my $24.52 to the seller/payee. I became involved, and started demanding that PayPal either send the seller/payee a check for $24.52, or else return the $24.52 to me so I could send him a check for $24.52. PayPal refused to do either of these two things. They said that they could not return the $24.52 to me because the transaction was "Completed" with the result that my $24.52 had already been "received" by the seller/payee. They said they could not send the seller a check for $24.52 because he had already "received" the $24.52 through PayPal.
Since to my knowledge the seller had not received anything from PayPal, I kept demanding that PayPal provide documentary evidence of where my $24.52 was, and/or evidence that PayPal had actually remitted the $24.52 to seller and was no longer in possession of my money. PayPal failed and refused to provide any such information despite numerous telephonic and e-mailed requests. On several occasions, I expressed my belief that my money was still in PayPal's hands and asked them to either confirm or deny this, which they steadfastly refused to do. Instead, they cited "privacy" and "confidentiality" reasons, saying once the transaction has been "completed" to the payee, they cannot divulge any information about what the payee has or has not done with the funds.
Finally, PayPal admitted that the funds were still in their hands, and had been in PayPal's hands all along, but that PayPal had credited the funds to my seller/payee's PayPal account, and that it was up to the seller/payee to withdraw the funds by providing PayPal with confidential personal information. I repeatedly pointed out that the seller/payee had already provided this information to PayPal, but PayPal failed to acknowledge or respond to this. Also by this time, the seller/payee had washed his hands of PayPal and was refusing to have anything further to do with PayPal and was unwilling to do anything more with PayPal other than receive a check in the mail for his $24.52.
After about 2-3 months of phone calls and letters, and a formal demand for legal arbitration of my claim before the American Arbitration Association, PayPal agreed to contact the seller/payee by telephone, and accept his verbal authorization to return the $24.52 to me. A week or two later, I got my $24.52 back, and was able to send the seller a check for my purchase.
I might add that during the 2-3 months when I was trying to get information and action from PayPal, I was forced to deal with about half a dozen different "Customer Service" reps. Every time I had a customer service rep cornered with questions they could not/would not answer, or issues they could not/would not address in a substantive intelligent manner, I would get pawed off onto a different customer service rep who usually was ignorant of the history of the matter, and ignorant of the content of the prior e-mails and phone conversations. So with every new customer service rep, it was practically like starting all over.
My e-mails were responded to, but the e-mails I got from PayPal were form/junk responses that failed to answer my questions, and/or failed to substantively address the issues raised in my e-mails.
I repeatedly demanded in writing and by telephone that I be allowed to speak to an officer of the company, or someone in the legal department, and my written demands for this were ignored, and my telephonic demands for contact with someone in a position of authority was refused.
In fairness, I would like to point out that, prior to this debacle, I had used PayPal to pay a couple other E-Bay sellers without incident or problem. But these payees were seasoned and experienced PayPal users who played the electronic payment game PayPal's way.
PayPal's basic promise to would-be users is that PayPal can effect payment on your behalf to anyone with an e-mail address, and that PayPal is the electronic equivalent of your mailing your payee a check. That basic promise is false. The truth is: PayPal can effect payment on your behalf to anyone with an e-mail address, if and only if the payee either has a PayPal account, or is willing to open a PayPal account (read: willing to provide PayPal with their bank account, credit card or other confidential personal information) as a condition of receiving their money. If the payee is not willing to divulge confidential personal information to PayPal, and/or refuses to deal with PayPal, you are at grave risk of losing your entire principal to PayPal, PayPal will impound your money indefinitely in PayPal's own hands, and neither return your money to you, nor send your payee a check for the money in PayPal's possession.
As a result of PayPal's conduct toward me, I was deprived of the use of my funds, and deprived of the receipt and use of the merchandise I had purchased through the e-Bay auction for about 2-3 months. I spent countless hours of my time e-mailing the whole history of the matter to a never-ending parade of PayPal customer service types, futile telephone calls to e-Bay, e-mails to my e-Bay seller, and long distance telephone calls with my e-Bay seller. I'm sure most people would have just given up, taken the $24.52 loss and walked away, but I just could not abide by the fact that a big company had essentially stolen $24.52 from me and was not willing to return it.
The bottom line here is that you should not use PayPal unless you are willing to accept the complete loss of the entire amount of your payment, and/or you are willing to spend several months and many hours of your time fighting to get your money returned to you or forwarded to the payee.