Saturday, November 1, 2008

Security Spotlight PayPal Questions

My friends at the Brews News noted glitches at PayPal in their blog earlier this week. The eBay boards have been in uproar about it since the morning of October 28th.

Well so far PayPal has not manually released my funds from my unclaimed eChecks, as they had promised. My Buyers are not happy, as they of course already see their funds cleared from their account.

I ask PayPal if they would as least send emails to the buyers affected to explain. They acted like, "why?". I had to explain it three times before they even understood how the buyers expect shipments after they pay. It's like they don't even understand how eBay works!

PayPal now has $1000 of mine on hold FOR NO REASON AT ALL, which makes it pretty hard to run a business. If they, for example, have only 2000 $250 'holds' at any time, that's half a million of our money they are earning interest on.

That is five days ago and co-incidentally the same morning John Canfield eBays' Senior Director for Fraud Prevention Policy made an announcement regarding eBays Shill Bidding Initiative
Based on the positive results we’ve seen by anonymizing bidder User IDs, as well as our commitment to protecting all bidders from becoming targets for fraudsters, we’ve decided to extend anonymized User IDs to winning bidders, as well. This change will be implemented sometime this week.
and the Trusted Selling with Identity Confirmation plan. That is the one where if you attempt to use eBay with a computer they have not seen before, they freeze your account and make an automated telephone call. If you are not home, or like me, do not have touch tone telephone service, you get to deal with Live Helpless. Hello hello!

But I digress!

I asked a question on eBayInkBlog several times this year to which

Richard Brewer-Hay was unable to get a sensible (to me) answer, although he did try. A post introducing Rich LaMagna this week offered an opportunity which I took. Much to my surprise Mr LaMagna responded. In fact, he responded to everyone who posted not just the cheerleaders. Positive Feedback to him.

Remember the minor news item earlier this year about fake Skype subscriptions being used to defraud PayPal accounts? Here is a well written complaint dating back to March 2008.

The Industry Standard, a San Francisco based publication, features news and analysis that covers emerging technologies and companies, venture funding, acquisitions, site launches, and other developments in the internet space. An article goes into great detail including many screenshots.

I am wondering if there is any connection to the 'glitch' above. What do you think?

Y'all come back!

Links & Related Articles

The Industry Standard 10.28.2008

Orange County Register June 2007


Kevin_T said...

I have so far only had one transaction affected by the eCheque scandal. It was a small amount, and since I don't hold cheques for clearance, I also (until now) send items that are paid with echeques immediately (although I had problems with European echeques when they were first introduced).

The transaction cleared while I was away this week:
Payment was made as echeque on 23/10/08.

Echeque was cleared on 28/10/08.

I was advised to follow an email link to claim my money on 29/10/08.

Buyer cancelled payment on 2/11/08.

So, I am not able to access my funds after they have been cleared, but the buyer can decide to reverse the transaction after either receiving the item, or being advised that the item has been sent. I know of a number of people who consider the buyer is not responsible for this situation, and are sending out the items when payments are cleared even though they can not claim the moneys.

PayPal staff are leaving sellers with the impression that they feel they are doing sellers a special favour by crediting funds to the account, as though the sellers are not entitled to their cleared funds - who knows where this will leave those unfortunate enough to have 21 day holds on their accounts.

The final insult in all of this, while I can pretty much forgive PayPal for computer glitches which can happen to anyone, is that the email they send to claim your money has a direct PayPal link as the only way that you are "able" to claim your funds - this is a slap in the face for online security, and unravels every bit of education that Ebay and PayPal try to put out there about how not to be stung by online fraud. It is ludicrous that the email was ever designed in such a way whether or not it is being sent out currently due to a glitch.

Meanwhile we are now about a week into's electronic payments only policy, which effectively rebders Ebay PayPal only for the majority of American Ebay sellers. How does any of this instil trust or confidence in a payment system that is tying up thousands of dollars of people's livelihoods through glitches that have not been fixed after several days of continued trading which can only compound the backlog of affected transactions? Will money be lost for some users through this fiasco? Will sellers be booted off Ebay for non-delivery of goods after funds have cleared but are not claimable (thus sellers are not sending the goods because they have not been paid)?
And... could this adversely affect the overall confidence in such a marketplace, compounding the effects of the general economic downturn?


Henrietta said...

For US readers the dates would read:
Payment October 23rd
Cleared October 28th
Claimed October 29th
Customer chargeback November 2nd

Kevin_T said...

If the bulk of the dates were earlier in the month I would have been more careful, but figured they should make enough sense after the twelfth of the month. :)

Thank you, Kevin

Kevin_T said...

I was unfair on my buyer above. I tersely asked them by email:

"Please advise why you cancelled this non-payment?

They have repaid today with an instant payment, and explained the situation from their side of the transaction:

"hi kevin,

the reason i cancelled the transaction was because paypal indicated to me that the transaction had been completed but it had remained unclaimed. i checked my bank account and the money had been taken out of my account on the 23rd. when i saw on my ebay that the payment was still floating around in paypal somewhere some 9 days later i thought im not going to pay twice for this postcard so i cancelled the 2nd payment, or at least what i thought was the 2nd payment. it probably sounds like bull but i was going to contact you today to see if you had been payed and thats how i found your email message, i dont usually go to my email box. anyway i will try and put the payment through again now.

thanks, ******."

I have thanked him for his honesty, and this gives a perspective of the view of this problem from the buyer's side.

Just imagine if PayPal wasn't the safest, easiest and most secure way to pay online.....

Shudder, Kevin

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Anonymous said...

Sellers with Amazon auctions you get paid right away. No hazzles.

In these hard economic times we cannot afford to have payments held for days unnecessarily.

See eBay sales have gone down, way down in the past months. That money they lost they are making it up by holding your cash while they make interest. Millions while your small business can go down the tubes. Not acceptable.

Solution: Move to another auction site, I've started selling on Amazon two months ago and its ok.

armando said...

Looking for another payment company found your site. What I read is awful.

Well one of my customers tried to pay for an auction, (not an eBay auction) but did not have a paypal account. The customer signed up for paypal and then tried to pay me. What happened, paypal denied the payment saying it was too high an amount to approve for a new account.

What is that, the customer is paying with a credit card. The credit card company should be the one denying the transaction not paypal.

The only reason the customer signed up with paypal was it is the only payment method I can use without having to get costly credit card merchant accounts.
I used to use Bidpay but they are out of business.

Paypal is a monopoly and its got to stop. We need other fast and affordable payment companies to compete with paypal.

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