Monday, April 7, 2008

How Safe is Paypal for Sellers?

So Many Horror Stories

I use Paypal because it has been a good service for years. I will continue to use it because you can't run an online business without it. That doesn't mean I use it with blind faith that because I am good person nothing bad will happen. I have had emails telling me that none of the horror stories we hear could possibly apply to 'good sellers'. I am not going to argue with those who believe this, it is pointless. We are all grown-ups here and should be capable of making our own decisions.

The Paypal warning sites are full of unverified information, some of them are no more than affiliate sites to steer you to another service provider (which has had its own share of problems too). It is entirely possible that some of the posters are not sharing everything, many of them might have been shut down for good reason. We shall never know. However, there is no smoke without fire!

It is very important to remember that eBay OWNS Paypal. If you want to know what Paypal can and cannot (not much!) go to Paypal and read ALL the LEGAL AGREEMENTS. You will find them at the very bottom of the login page, you do not need to sign in or have an account to read them.

I want you to be aware of what applies to EVERYONE who has a Paypal account. Quite simply, every word in the User Agreement that you e-sign when you click I accept. Do not make the mistake of assuming that specific wording means "insert your own interpretation here". If the wording is vague and ambiguous it is because sharp legal minds intended it to be so. That is why lawyers get the big bucks.

Vote! >>

Paypal can (and does) change the User agreement frequently. They do not have to email you and tell you. When you sign in, on the left is a link called Policy Updates, it is wise to check it each time you log in. There have been SIX updates this year and YOU are bound by them. Some may not affect you, many will.

For example, from the Paypal site effective March 5th 2008: "PayPal is amending section 10.2 of the User Agreement to allow PayPal to take the actions described in that section if PayPal has reason to believe that you have engaged in any of the Restricted Activities. The prior language allowed PayPal to take the actions described in that section if you engaged in any of the Restricted Activities." A good synopsis would be "If we THINK you are up to something we can shut you down" NOT "you did it and we can shut you down".

Here is another change, to the Privacy Policy effective May 7th 2008:

"Beginning May 7, 2008 the PayPal Privacy Policy is being amended as to the purposes for which we share personal information with other companies in the eBay Inc. corporate family. These purposes are now as follows: to provide joint content and services (like registration, transactions and customer support), to help detect and prevent potentially illegal acts and violations of our policies, and to guide decisions about these related companies' products, services and communications."

Seems to me a whole bunch of folk in and around eBay are going to have access to my Paypal information. That would include what I bought, where, from whom, what I paid for it, if I made political donations, my social security number, bank account locations, account numbers. I know there is not much I can do about that if I continue to use Paypal or the Paypal CC. Perhaps we can all look forward to receiving even more personally tailored results in eBay search.

What to do?

STEP 1: Find a bank that will let you open a free, low balance account. Link that account to Paypal. Withdraw from Paypal into your special bank account as soon funds reach a level higher than you could manage without if you were shut down because of 'suspicious activity'. Remember that an $8 per hour worker has the power to freeze your account for 180 days or more. They are just doing their job but it can SINK you if they are mistaken!

STEP 2: Remember also, Paypal can withdraw from your bank account because the User Agreement allows them to. Even if it is all a terrible mistake they can empty your linked account. They can fine you $2500 for every perceived infraction, and take the fine out of your bank account. Do not keep a higher balance in your special bank account than you could manage without if you were shut down. Withdraw and deposit to an account that is not linked in any way to Paypal.

STEP 3: You will be asked to link a debit/credit card to your Paypal account. Do not make the mistake of using one that is linked to anything other than your special account, Paypal can draw from your Credit or Debit card. Do you want ANY possibility of having to pay off thousands of dollars in credit card debt for fines imposed without trial or conviction? If the answer is NO, use a debit card.

This may seem like a lot of effort. It is. I worked hard for my money and I intend to keep it. It is like what your Mom probably told you as a teenager "If you can't be good, be careful" I plan on being good, but I am also being careful. If someone makes a terrible mistake and freezes my account, there is not much in it. Same goes for the account it is linked to and the linked debit card will reject any charge over the balance in the bank account.

I welcome your comments and invite you to vote in my poll.
Comments are moderated and will not appear instantly.


Anonymous said...

Hi, this all sounds good but when I had a special account with a debit card, they charged me and I racked up huge overlimit fees from the bank, as they are out to make money too so they allowed the charges. I really don't think there is any way to cover your self with Pay Pal. Shari

Henrietta said...

You may be right, but I think that with your warning we can ask a bank if that is a possibility and take steps to prevent it.

Henrietta said...

I have also been told that having your account at a Credit Union is safer, they are more customer minded and also offer more flexible account options.