PayPal’s public face is very different from the private PayPal that many of us never see.
While PayPal denies publicly they have a customer service problem, they admit they have a customer service problem in private.
While PayPal denies publicly they don’t make any money off of your money, PayPal admits it in legal documents.
PayPal publicly says their buyer protection is there for buyers, but in private PayPal admits the policy is there to prevent costly chargebacks.
So take a peek and find out, Did You Know?
OK, LETS OPEN THE MASK OF PAYPAL IN FRONT OF THE WORLD:
1.PayPal: A Delaware Corporation
PayPal operates out of San Jose, California, but is a Delaware registered corporation.
Instead of supporting their home state of California, PayPal chooses to opt for Delaware’s secretive and anti-consumer corporate laws — corporate laws that favor the corporation and not the general public.
Let PayPal provide you with one: “As permitted by the Delaware General Corporation Law, we have adopted provisions that limit or eliminate the personal liability of our directors for a breach of their fiduciary duty of care as a director.”
PayPal’s IRS Employer Identification Number is: 77-0510487.
2.Two Sides of PayPal’s Mouth
PayPal tells the public they are “on your side” and offer top buyer and seller protection.
However, PayPal’s main concern is: ” Maintain low variable costs, particularly transaction losses.”
PayPal WILL NOT protect you, they want to protect their bottom line at your expense.
3.PayPal NEEDS Ebay
“We depend on online auction transactions for a significant percentage of our payment volume.
We generate a significant portion of our business on eBay…”
Those are PayPal’s own words. Should real competition be allowed on eBay (such as Google Checkout), PayPal would loose enough business to endanger PayPal’s business as a whole.
Almost 70% of PayPal’s cash flow is generated through eBay.
One of eBay’s requirements for allowing a new payment service on its auction site (according to eBay’s “Accepted Payments Policy”) is a company that does not have a “substantial historical track record” may not be used on eBay.
At the time eBay purchased PayPal and allowed its users to use its service, PayPal had already admitted: “… we have operated our business only for a short period of time and have only limited operating history upon which to evaluate our business.”
PayPal does NOT even meet eBay’s requirement to be used on its auction website. So why is eBay keeping Google Checkout banned?
5.PayPal Cannot Make a Profit…So They Take Your Money
“We have not reached profitability to date. We have accumulated net losses of $231.0 million…”.
PayPal continues to say, ” We intend to continue to make significant investments in our systems, infrastructure and customer service operations.”
So they are operating at a loss, but continue to invest funds into their company.
Where do you think that money is coming from?
Why to they hold on to YOUR money for so long?
Is it a Ponzi scheme?
Freeze millions of dollars of customer funds for 6 months, use those funds, then pay back those people by freezing the funds of other customers for another 6 months?
Let PayPal PROVE otherwise!
6.PayPal Will NOT Protect You Because it is NOT Profitable
“We face significant risks of loss due to fraud and disputes between senders and recipients…”.
PayPal continues with the following:
” When a sender pays a merchant for goods or services through PayPal using a credit card and the cardholder disputes the charge, the amount of the disputed item gets charged back to us and the credit card associations may levy fees against us.
Charge-backs may arise from the unauthorized use of a cardholder’s card number or from a cardholder’s claim that a merchant failed to perform.
Charge-backs result not only in our loss of fees earned with respect to the payment, but also leave us liable for the entire underlying transaction amount. If our charge-back rate becomes excessive, credit card associations also can require us to pay fines.”
That’s right: They DO NOT WANT ANY CHARGEBACKS.
How do they do this?
They force you in the TOS to go through their “buyer or seller protection policy” FIRST or risk account limitation.
If a buyer goes through PayPal’s system, PayPal will see to it the buyer wins the dispute just to avoid a chargeback!
The seller always looses!
Chargebacks cost PayPal money.
Chargebacks results in PayPal loosing their transaction fees.
Chargebacks cost PayPal money in terms of fines they must pay to credit card companies.
PayPal’s entire system revolves around making the buyer or seller pay for PayPal’s mistake or obligations.
You have it in PayPal’s own words!
7.PayPal Can’t Fight Fraud So They Stay In Business to Punish Everybody
PayPal wants to be the biggest and the best, but they cannot fight fraud.
So they decide to have their cake and eat it too!
Since PayPal cannot fight fraud: catch the fraud while letting us honest persons go about our business with no problems, PayPal said it must make a choice:
” In configuring our product, we face an inherent trade-off between customer convenience and security.”
Do you think they chose “customer Convenience” or do you think they chose “security”?
Yes…they chose to accept your money and business and then charge you guilty until your proved your innocence!
Millions of accounts frozen and millions and millions of dollars of other people’s money sitting in PayPal’s bank account.
PayPal says it is only “protecting you” from fraud. But who protects us from PayPal’s fraud?
8.PayPal Protects Their Own Interests While Lying to YOU!
PayPal likes to treat its customers like they are God and you are an ant. But PayPal is not God — in fact they have real fears.
Here is what PayPal had to say about this: “We incur charge-backs and other losses from merchant fraud, payment disputes and insufficient funds, and our liability from these items could have a material adverse effect on our business and result in our losing the right to accept credit cards for payment.”
Since PayPal is incapable of preventing fraud on their network (they “verify your account” and “verify your credit card” yet somehow they still cannot protect its users from unauthorized use of their cards or spot a real fraudster from a thousand miles),
PayPal lies and tells you that they can, and they offer great buyer and seller protection.
But that is a lie: PayPal makes you pay for their mistakes so their business is not “adversely effected.”
9.Fraud Can Be Committed By PayPal’s Own Employees
There is no question that PayPal employees with PayPal accounts know how to manipulate the system.
Since they are poorly trained and poorly paid, you can bet PayPal employees are out there committing fraud.
Do you know who is REALLY buying from you on eBay (could it be a PayPal employee intent on taking your product AND your money?).
PayPal fraud doesn’t stop there. PayPal says that, “The large volume of payments that we handle for our customers makes us vulnerable to employee fraud or other internal security breaches.
We cannot assure you that our internal security systems will prevent material losses from employee fraud.”
CUSTOMERS ARE VULNERABLE TO EMPLOYEE FRAUD OR OTHER INTERNAL SECURITY BREACHES.
WE CANNOT ASSURE YOU THAT OUR INTERNAL SECURITY SYSTEMS WILL PREVENT LOSSES FROM EMPLOYEE FRAUD.
I don’t recall seeing that anywhere in the PayPal User Agreement. Do you?
10.PayPal Tells US What it Would Take to Change Them
PayPal’s business model is so purposely complex to avoid having to comply with as few state and federal regulations as possible.
Here are PayPal’s own words: ” Our status under state, federal and international financial services regulation is unclear.
Violation of any present or future regulation could expose us to substantial liability, force us to change our business practices or force us to cease offering our current product.”
OUR STATUS UNDER STATE AND FEERAL LAW IS UNCLEAR.
How convenient. PayPal goes on to say, ” We currently are subject to some states’ money transmitter regulations, to federal regulations in our role as transfer agent and investment adviser to The PayPal Money Market Reserve Fund and to federal electronic fund transfer and money laundering regulations.”
Okay, so what happens, PayPal, if you are found in violation of these laws or any future regulations that might apply to you that you are found in violation of.
PayPal tells us: “If we are found to be in violation of any current or future regulations, we could be: exposed to financial liability, including substantial fines which could be imposed on a per transaction basis and disgorgement of our profits; forced to change our business practices; or forced to cease doing business altogether or with the residents of one or more states or countries.”
That would be unfortunate! So PayPal tells us the only way we are going to force them to change their evil ways is to make them change.
11.One Example: PayPal is a Hypocrite
PayPal has gone on record as saying they believe their service is subject to the Electronic Fund Transfer Act and Regulation E of the Federal Reserve Board.
Here is an official quote from PayPal:
“… we have assumed that our product is subject to the Electronic Fund Transfer Act and Regulation E of the Federal Reserve Board.”
That was before PayPal got sued. In 2004, when PayPal settled the California filed class action lawsuit against it, they admitted no wrongdoing and said the following:
“PayPal believes it did nothing wrong. In fact, PayPal disputes that the EFTA, originally passed in 1978, applies to its business.”
BEFORE PAYPAL WAS SUED: We are subject to the EFTA
AFTER PAYPAL IS SUED: We dispute the fact the EFTA applies to our business.
The EFTA is one federal regulation that protects you and me from companies that do not want to give their phone number out, that want our money but don’t like to give it back, that want our business but then limits our accounts.
PayPal you *******.
12.PayPal Claims to Protect Your Privacy, but… (IRS)
PayPal is the ultimate hypocrite.
When you experience account problems, the ask you to fix it, but then refuse to give your information citing “third party privacy concerns.”
PayPal claims to protect your privacy from third parties.
That is a lie. In fact, not only does your private information end up in the hands of other companies that are NOT PayPal (read the TOS you agreed to), PayPal reports you to the IRS!
Here are PayPal’s own words: ” We are subject to regulations that will require us to register with the Department of Treasury and to report suspicious activities involving transactions of $2,000 or more.”
There are no clear definitions as to what constitutes a “suspicious transaction.”
So PayPal reports ALL transactions over $2,000 to the Department of Treasury (which administers the IRS).
Want to try and close your PayPal account and there is more than $2,000 in it?
PayPal will report you.
I don’t remember seeing that in the PayPal User Agreement either!
13.PayPal Will Do Anything to Prevent Chargebacks…
Including screwing you. Why? Here are PayPal’s own words:
“… excessive charge-backs, could result in a termination of our ability to accept credit cards.”
So the next time you wonder why PayPal screwed you and gave a buyer his or her money back (from your account) and let the buyer keep your product too, just keep what PayPal said in mind!
PayPal Gives Us Another Tip on How to Beat Them…
“Customer complaints or negative publicity about our customer service could diminish severely consumer confidence in and use of our product.”
Thank you PayPal. So let’s get going on those complaints!
14.PayPal Comments on Frozen Accounts
Here is one thing PayPal has said about frozen customer accounts: “Measures we sometimes take to combat risks of fraud and breaches of privacy and security, such as freezing customer funds, can damage relations with our customers.”
So why do they keep doing it? First, to get your money.
They make money off of your money. Second, there are always more new customers to fleece!
That’s right, PayPal made those comments when they were trying to build their business and get more customers.
Now that they have eBay and a large and growing customer base, they can afford to “damage relations with customers” because they can always get more customers that have NOT HEARD OF YOUR PROBLEM.
You need to get out there and complain.
15.Why Does PayPal’s Customer Service Suck?
Here, let PayPal tell you why their customer service sucks: “Effective customer service requires significant personnel expense, and this expense, if not managed properly, could impact our profitability significantly.”
Good customer service costs too much.
The very customers that make you money and keep you in business are not good enough to get the care they deserve.
Is this a company you want to trust your money with?
16.From India…With Love
Ever wonder where those maddening customer service emails come from?
The ones that never answer the question that you really asked?
America made PayPal the success that it is today. How does PayPal reward America and the customers that it has? It sends jobs to India.
PayPal sends your PERSONAL CUSTOMER information to India. Here is what PayPal has written on the subject:
“Our outsourced New Delhi, India customer service team provided through Daksh eServices Private Limited, responds to the bulk of our initial email customer inquiries.”
THE BULK OF CUSTOMER SERVICE EMAILS TO PAYPAL ARE HANDLED THROUGH OUTSOURCED INDIAN COMPANIES.
When you send your private information to PayPal, along with your plea for help, PayPal does not read one word.
Some 22 year old making $300 per month is typing in what he was trained to type in.
Meanwhile, in America, PayPal claims customer complaints are resolved “quickly.”
So think twice when you write that email to “PayPal.” That email just might come back, “From India, with love…”.
17.PayPal Admits it Cannot Handle Increased Customer Transactions
Here is what PayPal says: “We cannot assure you that our infrastructure could handle a larger volume of customer transactions.”
And that is exactly what happened.
PayPal did receive large volume customer transactions that its infrastructure could not handle.
So what did they do?
They decided to freeze accounts, limit access to your money, and terminate accounts all in the name of security.
Later, when PayPal could deal with the larger customer volume, they stuck with the practice.
Because they found a way to make even more money for themselves and because they found out they could get away with it.
Plus when PayPal limits your account and denies you access to your money PayPal avoids another possible problem: “Because our customers may use our products for critical transactions, any errors, defects or other infrastructure problems could result in damage to our customers’ businesses.
These customers could seek significant compensation from us for their losses.
Even if unsuccessful, this type of claim likely would be time consuming and costly for us to address.”
So, to avoid customer lawsuits claiming PayPal made a mistake, PayPal just freezes as many accounts as possible to avoid actually having to manage those accounts.
18.PayPal Started Screwing Their Customers Because They Couldn’t Handle “Growth”
What? Let PayPal explain: “Our inability to manage growth could affect our business adversely.”
“OUR INABILITY TO MANAGE GROWTH…”
PayPal, on one side, is making promises to its customers that it KNOWS it cannot keep — on the other hand knowing they cannot manage the volume of customer transactions that come with the promises they are making to attract new customers.
To “manage” growth, PayPal freezes customers’ accounts.
Again, PayPal got away with it in the past, and now continues the practice to this day.
19.PayPal Uses Customer Funds
Your money, when with PayPal, is not YOUR money.
PayPal uses your money.
Corporate accounting allows companies to fudge their numbers and play tricks with the books.
Who knows WHAT they are really doing with your money.
PayPal tells us a little bit.
Here is a quote from PayPal: “We reinvest customer funds in the PayPal system…”.
WE REINVEST CUSTOMER FUNDS IN THE PAYPAL SYSTEM
PayPal goes on to explain that while they invest customer funds in “high grade securities,” the securities may lose value.
PayPal has your money and PayPal can gamble it all away.
And what can you do about it?
Your money is stuck with them for 6 months!
20.Investing in PayPal’s Money Market Can Wipe You Out
Here is what PayPal says about its Money Market Fund: “Customers that opt to invest their money in the PayPal Money Market Reserve Fund may lose the original principal value of their initial investment.”
MAY LOSE THE ORIGINAL PRINCIPAL VALUE OF THEIR INVESTMENT
Investing in the PayPal Money Market is dangerous. There is no risk to PayPal — they make money either way. They make money off of investing your money and then giving you some back.
But wait. What if your funds are frozen by PayPal and sudden economic factors suggest you need to get your money out right away?
You can’t do anything. Your money is frozen. You have to trust that PayPal is going to make the right decision with your money.
21.PayPal Sources of Revenue…You Guessed it!
PayPal outlined exactly what their sources of revenue are. Let PayPal tell you:
“We earn revenues from three sources: transaction fees, interest on funds held for others and investment management fees. The following describes these revenue streams.”
INTEREST ON FUNDS HELD FOR OTHERS
Still wondering why PayPal freezes customer funds for any reason they can think of?
You guessed it.
They make money off of your money to this very day.
What’s that PayPal, you have something more to say? Let’s hear it:
“We invest the balances in most of our customers’ accounts in short-term money market and money market equivalent securities..”.
PayPal also pools customer funds in bank account under PayPal’s own name.
“Interest on Funds Held for Others. Revenues from interest earned on funds held for others increased…”.
I hope the $40,000 of my money that you have helped you a little.
22.PayPal Employees Have Incentive to Freeze Your Funds
PayPal employees can participate in a PayPal stock options program. What does that mean?
It means PayPal employees get special deals on PayPal stock and reap all the benefits when the stock prices rise.
How do stock prices rise?
The more money PayPal makes, the more money a PayPal employee can make.
Since we know PayPal earns money off of your money, what better way to keep earning more money for the company than freezing customer accounts?
“…we adopted a liquidity program for the benefit of employees, designed to allow participants the opportunity to diversify some of their holdings of PayPal stock.”
Thanks PayPal, we got it.
23.PayPal Caught in Another Lie
Here are some of things PayPal says its service can be used for:
“Our business accounts conduct a wide variety of commercial transactions using PayPal, including the sale of goods online such as electronics and household items, the sale of services online such as web design and travel, and the sale of digital content.
Offline businesses, including lawyers, contractors and physicians, also increasingly receive payments online through PayPal.”
Now go to PayPal’s supposed “seller protection policy.”
If a buyer pays a seller money for designing a website via the PayPal service using a credit card, PayPal’s own system allows fraud to occur.
How? The buyer pays with a credit card. The buyer receives the web design work (through email or P2P file sharing).
The seller receives payment through the PayPal service.
Then, the buyer threatens PayPal with a chargeback claiming they never received the item.
The seller gets an email from PayPal saying he or needs to provide a tracking number for the product they sold. The buyer can’t.
He or she delivered the item using a means that doesn’t employee tracking numbers!
The seller looses.
The buyer walks away with his or her money back, plus the item or service they paid for.
PayPal’s whole system is set up for fraud. In the end, only PayPal wins.
24.PayPal Cannot Handle Customer Needs
Please do not take my word for it. Here is what PayPal says on the subject:
“Our customer service needs have not grown as quickly as our user base, and we expect this trend to continue.”
WE EXPECT THIS TREND TO CONTINUE
And it has continued.
Trying to contact PayPal is like trying to walk up a wall.
Getting an answer from PayPal is like talking to a wall.
Dealing with Paypal customer service makes you want to punch a wall.
How was your customer service experience with Paypal?
25.PayPal is licensed in the United States as a Money Transmitter in 36 US States
There are a lot of people out there who deny PayPal is licensed to operate on a state-by-state basis.
You guys are wrong.
PayPal is currently licensed and regulated by the following U.S. States:
Alabama, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming.
PayPal was put into business by these states, they can be put out of business by these states.
Residents of all these states have been victimized and defrauded by Paypal. Go to our RESOURCES area and find out how you can file a complaint to your state’s appropriate agency for this.
26.PayPal Admits They Are Subject To Consumer Protection Laws…Then Breaks Them
That’s right. Here are PayPal’s own words:
“We are subject to state and federal consumer protection laws, including laws protecting the privacy of consumer non-public information, prohibiting unfair and deceptive practices…”.
Okay, if you are then why do you break them every chance you get? PayPal does not disclose all of the terms of doing business with them in their own User Agreement.
The User Agreement they make you agree to is one sided, contradictory, and designed to screw you out of your money.”