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Thread: PayPal debt (negative balance) charge backs

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  1. #1
    Brenning's Avatar

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    Default PayPal debt (negative balance) charge backs

    Hi All,

    I came across this forum whilst searching for some advice on my situation. I've used the search function and can see that there are some similar topics, but none i could see were exactly the same as mine or came to conclusions. I'm based in the UK.

    I've been using Paypal for years and until about a week ago, wasn't aware of the charge back "feature" (scam). I sold some Crypto currency (similar to bitcoin) via a reputable website and the buyers used Paypal to pay. All seemed good at first, the money came through and i withdrew to my bank account (mostly without issue, though one transaction was delayed whilst Paypal apparently checked it). The trades over the last couple of weeks total about £4500 and I've just noticed most came through as personal payments. Since the new year I've had a few cases raised against me with the buyer claiming fraudulent activity on their account, Paypal have decided in the buyers favor and so far I'm in negative balance at £1800, which Paypals collection team are now chasing me for. These cases we're decided in the buyers favor despite me providing evidence of the trade that took place including screenshots from the reputable website (similar to localbitcoins) showing i sent the cryptocurrency to the buyers wallet. Paypal just keep saying I'm not elligable for seller protection as its not a tangible item that was sold, which is news to me despite using it for years.

    What appears to be happening is that the buyers are simply "claiming" fraudulent activity on their account because they know how to work the system, Paypal have not asked the Cryptotrading website for any connection IP addresses or any information that might show this as being a genuine transaction, nor will they give me any information on how they came to their conclusion.

    So as it stands, I'm in negative £1800 balance on my Paypal account, potentially £4500 if the other transactions get charged back too (which is highly likely). As soon as i was aware Paypal could be charged back i stopped trading with it.

    So in summary, can anyone offer any advice on what my options are here? I genuinely wasn't aware Paypal was this high risk despite using it for years. For example did you know if you sell an item on eBay, the buyer pays with Paypal and collects the item locally (which is a valid option on eBay), you aren't covered by seller protection? Can i take Paypal to court? My opinion has always been that if i shouldn't be doing something on a system, the system should have measures in place to restrict me from doing it. Yet if you receive payments on Paypal you aren't given an address to post goods to by default. So even if i wanted to post something to the buyers address, i can't because all i have is an email address.

    Brenning

  2. #2
    R0b's Avatar

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    Default Re: PayPal debt (negative balance) charge backs

    Hi Brenning

    Are you certain that the cases raised were through the charge back scheme and not the Buyer Protection Scheme offered by Paypal? The reason I ask is I am not sure why Paypal told you that you were not eligible under the Seller Protection Scheme as charge backs are governed by a set of rules depending on whether it is Visa, Mastercard or American Express. So presumably in your situation, the buyer requests a chargeback from their card issuer who will contact Paypal's bank and it will be up to Paypal to submit the evidence (provided by you) to dispute the grounds of fraudulent activity.

    Whether Paypal actually submitted any evidence I am not sure as I've heard stories that they tend to have a bias towards buyers anyway but thats beside the point. I think you ought to be entitled to the decision of the charge back dispute so that you can ascertain the reasons why the buyer succeeded in their charge back claim, especially with the evidence you submitted to Paypal. I believe Paypal's T&Cs do make mention that you are liable to pay them if a charge back occurs but I would think those terms would be unfair where you have provided them with sufficient evidence to dispute the charge back and they've done nothing about it.

    As for Paypal not engaging with the trading website, I think the onus is on you to provide the evidence as to why the payment was not fraudulent, not Paypal. I don't think there's any need for you to take Paypal to court, particularly if you have stopped using it. I don't know if Paypal will take you to court over this (they may do as it's not a small sum) but if you want to dispute it then, you can have your say in court at that point and defend it. Again, you will need to provide sufficient evidence to show that you thought the transaction was not fraudulent.

    Have you receive any debt collection letters either from Paypal or a third party?
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  3. #3
    Brenning's Avatar

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    Default Re: PayPal debt (negative balance) charge backs

    Quote Originally Posted by R0b View Post
    Hi Brenning

    Are you certain that the cases raised were through the charge back scheme and not the Buyer Protection Scheme offered by Paypal? The reason I ask is I am not sure why Paypal told you that you were not eligible under the Seller Protection Scheme as charge backs are governed by a set of rules depending on whether it is Visa, Mastercard or American Express. So presumably in your situation, the buyer requests a chargeback from their card issuer who will contact Paypal's bank and it will be up to Paypal to submit the evidence (provided by you) to dispute the grounds of fraudulent activity.

    Whether Paypal actually submitted any evidence I am not sure as I've heard stories that they tend to have a bias towards buyers anyway but thats beside the point. I think you ought to be entitled to the decision of the charge back dispute so that you can ascertain the reasons why the buyer succeeded in their charge back claim, especially with the evidence you submitted to Paypal. I believe Paypal's T&Cs do make mention that you are liable to pay them if a charge back occurs but I would think those terms would be unfair where you have provided them with sufficient evidence to dispute the charge back and they've done nothing about it.

    As for Paypal not engaging with the trading website, I think the onus is on you to provide the evidence as to why the payment was not fraudulent, not Paypal. I don't think there's any need for you to take Paypal to court, particularly if you have stopped using it. I don't know if Paypal will take you to court over this (they may do as it's not a small sum) but if you want to dispute it then, you can have your say in court at that point and defend it. Again, you will need to provide sufficient evidence to show that you thought the transaction was not fraudulent.

    Have you receive any debt collection letters either from Paypal or a third party?
    Hi R0b,

    Thanks for reply. I've not had any letters from PayPal or 3rd party debt collectors (yet) but PayPal's collection team did ring me twice chasing for payment due to the negative balance on the account - until i told them not to phone me again, they haven't called since last week. As part of the last call they said they'd frozen my account, which to be honest isn't the end of the world since I'm not really planning on using PayPal for anything again in light of the high risk. The cases were raised / closed last week to give you an idea of timescales. I've found quite a few topics on the internet about people being in very similar (if not the same) situation, and sometimes the cases being closed in the sellers favor when they submitted the same evidence as I have, but none specifically mentioning anyone challenging PayPal which is potentially what I'm looking to do as they appear to have virtually no measures in place to stop this kind of apparent fraud taking place. The charge backs stand at circa £2000 at the moment, but could go as high as £4500 just looking at the other transactions of similar nature. I've read these charge backs can happen up to 6 months after the transaction took place - which is going to be a long wait.

    In terms of the way the cases were raised, PayPal haven't told me anything, they used the line "we can't discuss details of other users accounts" when I asked how this had been raised on the buyers side. Then simply wen't on to say I'm not covered by seller protection since I was selling an intangible item, nor did i have any proof of postage. - which baffles me a little since by default you don't get a postage address sent through when you receive a payment, it's almost like the system is set up to try and wriggle you out of any kind of protection.

    Trying to "nip this in the bud" so to speak before it goes any further, but not sure who to turn to other than a solicitor perhaps?

  4. #4
    Brenning's Avatar

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    Default Re: PayPal debt (negative balance) charge backs

    Does anyone else have any other advice at this point?

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