Paypal steals users' money. Sad, but true.
If everything works well, a paypal payment receipent gets 4,8 or 12% less than what is charged from the sender. But it can get much worse than that, and everyone using paypal is at risk (by accepting the paypal user-agreement).
Unbelievable? No, just Paypal.
When you agree to paypal terms of conditions (essential to payment or withdrawal), according to Paypal you agree
- that Paypal can take away your money any time without any explanation other than Paypal found it "suspicious". No referral to actual chargeback that happened (because none happened) or any fact other than they just don't allow you to withdraw money from the account (in other word, they keep your money - sometimes "just" for 180 days, but often forever.). In legal terms, they just pick a sentence like "Receipt of potentially fraudulent funds" from [account closing policy] that is part of the [25 pages of terms of agreement] and feel that they acted legally.
- [ paypal steals from wikileaks.org]
- you agree that you will not file suit against paypal. See [Paypal's way to make users sign the New User Agreement] that prohibit users from filing suit against Paypal for any dispute under $10,000. Unbelievable? No, just Paypal.
- Some examples:
Everyone thinks that it only happens to others - until it just happens to him / her
We thought http://www.paypalsucks.com/ is not serious. Unfortunately we had to find paypal is worse than one would imagine.
Paypal has unbelievable number of dirty tricks to rip off paypal users (sooner or later you, if you use paypal).
Tricks in short
One would think some of the stuff is just "processing error" or "well, expensive", but when it gets obvious that
- PAYPAL uses a simple trick to push up transaction cost of one transaction to 12% (from 8%). The transaction cost is 4% + 4% (hidden in currency rates) when one currency conversion is involved.
- Example: 1000 USD is paid. The recipient keeps his balance in GBP (the only he can withdraw from). The recipient is offered to accept the sum in a different currency, like EUR !!! Than he loses another 4%. Finally on his balance he receives 12% less GBP than was sent in the first place
- PAYPAL fraud through the card-gateway: we contracted with verisign to operate our card-transaction gateway. We never contracted with paypal. We invested in setting up the system, and verisign operated it well for years. Unfortunately PAYPAL acquired it (without our consent of course). PAYPAL intentionally let's through fraudulent 0.01 USD transactions despite our several written requests. Even if we can "void" the transactions manually through the transaction terminal, this causes lots of problems, work and transaction costs and extra fees. Also some angry phonecalls from cardholders who blame us because paypal intentionally letting through these obviously fraudulent transactions (it would be easy for them to filter 0.01 USD: eg. make it possible to set lower limit so we can filter less the minimal fees or appr. 1 USD)
- Paypal artificially makes it almost impossible to withdraw money to an bank account via IBAN (the international standard for money transfer). They deliberately provide a textfield where IBAN number does not fit (14 characters or so. should be 34). This happened to a friend from Denmark in 2004. This trick might not be used nowadays.
- Paypal artificially makes it almost impossible to reach their support (no telephone number, email, just webform with "Page not found")
- Paypal just closes the account and take away 1000s of Euros when someone report eg. that the IBAN withdrawal does not work
Planned Actions ("the time is out of joint"...)
- We are thinking about a few % extra fee for paypal payments to cover such losses (or discount if payment is not via paypal) before eliminating the paypal option completely. Fortunately there are many other supported options. See WebShop.
- tell about paypal to many users, link this page or http://www.paypalsucks.com/ to pages dealing with payment options
- compose mails about experienced theft by paypal
- send above mails (printed) to attorney general and customer protecting agencies.
- helping http://www.paypalsucks.com/ to build a database of theft done by paypal (much more useful than the forum), categorized and options to provide evidence (database based on ofbiz).
- We will find the way to sue paypal. Probably with some help from customer protection agencies and http://www.paypalsucks.com/. As there are millions others ripped off by paypal the same ways, a class-suit is probably the best. Easier to finance, and the database makes it easy to provide evidence for thousands of cases.
Artificial Trick's List - there is no excuse for
- paypal has a method of "flagging" an account which is approximately taking the money from the flagged account and the amounts tranferred from the flagged acount. This happens not just because of chargeback (chargeback means the credit card payment that topped the account was withdrawn).
- Paypal applies exchange rates when it shouldn't: eg. Paypal decides on it's own to change money to foreign currency back and forth (!!!) apply exchange rate commissions twice when withdrawal from Paypal account fails due to Paypal's fault. See IBAN trick below.
- paypal has too short field for IBAN number (the best representation of the bank account) used for withdrawal. IBAN standard allows up to 34 characters, but the paypal webform does not allow to enter an 18 character long IBAN number. It is possible to enter the shorter form of account number, which still routes perfectly with the help of the bank name and address (given in separate fields). Paypal simply rips 6% from the account as a conversion to X currency, a fee for a failed transfer (remember: the account number is absolutely correct together with the bank details!!!), than fee for conversion back to original currency (smart, isn't it?). Guess: paypal does not even attempts the money transfer.
- support telephone number is hidden on paypal webpage (even for authenticated users)
- support email address is hidden on paypal webpage (even for authenticated users)
- When you report them via the only "supported" way, webform (after going over their dirty "page not found" tricks regarding the support form!)
- they just take the easy route and close your account, taking away several thousand Euros from you. Unbelievable? No, just Paypal.
Many hidden charges - could be OK without the Artificial Trick's List above
- horrible paypal => paypal transfer fee (10* of domestic bank transactions). The fee on credit card payments could be justified by chargeback-based-frauds, but for transfer between paypal accounts the only way to experience fraud is paypal itself
- Paypal adds significant amount of extra commission when receiver or sender is not from US
- Paypal applies unrealistic exchange rates
Paypal card-processing gateway - TOTALLY confusing message
This is not a security problem, but wastes time, causes confusion and hurts reputation.
AFTER the cardholder enters card and address data, pp gateway (with the transaction-terminal gateway messed up by paypal internally) presents the following message to the cardholder:
''"Transaction declined. We were unable to process your transaction due to one of the following reasons: the credit card or expiration date you entered is invalid, the street address you entered does not match the address of your credit card, the zip code you entered does not match the zip code of your credit card or there are insufficient funds available on the credit card you entered.
Click back and check to ensure your payment information is correct."''
With a good card, and data (address does not actually matter, mostly), no matter what he writes (no use to "click back"), he will always get this (and perhaps blame his bank instead of the paypal card-processing-gateway). The gateway should write BEFORE presenting the card-form, that the "gateway is inoperable due to internal problem (transaction terminal link is off temporarily)".
Important: the merchant is a passive party, has absolutely NO control on this. Actually paypal often confuses the merchant as well by showing "approved, result=0 (no error)" transactions in the report, for transactions that didn't actually "settle". Paypal report should show big red UNSETTLED in the report to the merchant, especially for week-old transactions.
Paypal - operating a card processing gateway unbelievably negligently
Abstract: paypal: the negligent card-processor-gateway with card payment settlement "speed-record": 2+ months (!!!!)
- Seriously misleading cardholders, even cardholder banks
- also taking somewhatmore EUR from cardholder in the end than it should.
- need we mention this ? Paying none to merchant during these months (surprised with Paypal ?)
- Note: We never contracted with PayPal? to provide card-gateway services. We contracted with VeriSign?, and VeriSign? actually worked reasonably well. Than PayPal? acquired VeriSign? (without our consent), and things got worse. Almost unbelievably worse.
On a query about OID3582 payment (without names):
On 2009-11-16 payment of 627.97 USD was initiated and approved by the customer related to oID=3582 (items were sent out on 2009-11-16 - same day)...
Card clearing happens in USD (there is no currency selector in the card-processing system, and Visa ALWAYS works in USD). IBAN is the only method where the bank charges exact value. That's why IBAN is recommended. For card payment, for certain USD value the cardholder bank can charge as much EUR value as it likes. Totally out of control of the cardholder and the merchant.
Card payment costs 2.5 % fee for the merchant (and usually+1..2% for the customer - hidden in the exchange rate: the cardholder bank charges as much as it likes). 417.91 EUR was 627.97 USD with actual rate at the time (1 EUR = 1.5026) - according to rate by the merchant's store. The customer saw the 627.97 USD during the card payment.
Now xe.com/ict shows 1 EUR = 1.49747 USD for 2009-11-16. For real-time rates, rate depends on the time the rate is refreshed from xe.com server. Can change by the minute. Sometimes >2 % change within a day).
Unfortunately the card processing gateway operated by a bastard negligent company called "PayPal?" did not "close the transaction terminal" until 2010 January, effectively delaying card transaction settlement unbelievably long (it's an automatic process that worked with verisig, and worked with paypal as well. Why didn't it close the terminal ? Paypal messed up something internally - probably related to their fraudulent thousands of 0.01 USD transactions - another story ).
Unfortunately exchange rate changed in the meantime, 1 EUR = 1.4378 USD (627.97 USD = 436.76 EUR). On top of that, the cardholder bank apparently charged +1.66% = +7.2 EUR from the cardholder (worse than an average bank) account.
The whole money supply creation by private banks that result in:
total debt owed to banks > total money supply
which (although a simple fact) even economists are blind to conceive of (and the media never even discusses it!), is very bad to whole society (the whole world is in debt because of this, and will be, as long as money is created in this fraudulent way, by banks loaning it), but at least it usually completes transactions within a week or two.
This time the banks and their card system didn't work well at all, to any standards.
PayPal? is the same well-known bastard company that operates the "easier, safer method to pay". They probably shouldn't even be trusted to operate a mail-server, yet financial services.
We never contracted with PayPal? to provide card-gateway services. We contracted with VeriSign?, and VeriSign? actually worked reasonably well. Than PayPal? acquired VeriSign?, and things got worse. But it mostly worked for some time until it degraded to grave. We didn't expect that any card-processing gateway can be operated as poorly and negligently as PayPal? succeeded (otherwise we'd broken up already, obviously).
We do not know exactly how wide this problem is but it's apparently only a problem of the negligent Paypal card-processing-gateway.
Other participants involved: Nova (and the merchant's bank, TDBankNorth?), Visa and Mastercard don't seem to be responsible for these severely delayed transactions.
We sorry about the inconvenience the extreme negligence of PayPal? card-processing gateway has caused to all of us. We will move to another card-processing gateway as soon as we can.
(as of 2010-01-22) merchant has seen 0 (read zero) USD from this (and several similar) transaction (we sent out items more than 2 months ago in November). Although we are spending USD on chips and accessories. We hope to recieve in a few days if all goes well. That's how these "prompt" card transactions go in a completely broken banking system ruled by the FED (the privately owned USA central bank that creates USA dollar out of thin air - paper and digital money too - since 1913 December).
We are considering a legal case against the negligent card-processing-gateway company, PayPal?. Unfortunately in reality it's almost impossible to win in court against the biggest mafia on Earth, the financial mafia. A better way - and the only way to help people at the same time - could be to teach people how a group of people and/or businesses can create convertible, non-inflating money, and operate a related clearing system based on modern technology and cryptography.
We are actively helping development of such system:
- currency issuer with auditable total amount, yet transactions and balances are private
- related digital market to help make these small currencies convertible and trade ; only 1/100 of the cost of current international transactions, and quicker settling as well
- private anonymous wallet software and highly redundant safe data storage
In short, paypal is the worst partner to handle your money. Very said. But good to know so one can make better decisions.