PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. It serves as an electronic alternative to traditional paper methods such as cheques and money orders. PayPal performs payment processing for online vendors, auction sites, and other corporate users, for which it charges a fee. On October 3, 2002, PayPal became a wholly owned subsidiary of eBay.[1] Its corporate headquarters are in San Jose, California, at eBay's North First Street satellite office campus. The company also has significant operations in Omaha, Nebraska; Dublin, Ireland; and Berlin, Germany.
Safety & Protection Policies
The PayPal Buyer Protection Policy[3] claims that customers may file a buyer complaint within 45 days if they did not receive an item or if the item they purchased was significantly not as described. If the buyer used a credit card, they might get a refund via charge back from their credit card company.
PayPal protects sellers in a limited fashion via the Seller Protection Policy[4]. In general the Seller Protection Policy is intended to protect the seller from certain kinds of chargebacks or complaints if seller meets certain conditions including proof of delivery to the buyer. PayPal states the Seller Protection Policy is "designed to protect sellers against claims by buyers of unauthorised payments and against claims of non-receipt of any merchandise". Note that this contrasts with the consumer protection they claim to offer. This policy should be read carefully before assuming protection. In particular the Seller Protection Policy includes a list of "Exclusions" which itself includes "Intangible goods", "Claims for receipt of goods 'not as described'" and "Total reversals over the annual limit". There are also other restrictions in terms of the sale itself, the payment method and the destination country the item is shipped to (simply having a tracking mechanism is not sufficient to guarantee the Seller Protection Policy is in effect).
The company—by its own admission—uses automated systems to verify tracking numbers. If a seller has an item not received claim filed against them, they are required to enter a tracking number for the item. If they fail to enter a valid tracking number that shows a successful delivery, or even mistype the number by one digit, they will lose the claim automatically without a real person ever adjudicating the claim. In general, if a valid tracking number is entered which can be accessed online and shows a successful delivery, the seller will automatically win the claim.
The item significantly not as described claim is a more complicated matter. In this situation, the buyer has acknowledged the receipt of the item but has found the item to be "significantly not as described." The multi-level process provides an initial period of time for the seller and buyer to attempt to reach an agreement on their own. If the seller does not respond to the initial dispute from the buyer, or if the seller is unable to offer a settlement which is agreeable to the buyer, the buyer then has the option of escalating the dispute to a claim. If seller does not wish to communicate with buyer, the seller also may choose to escalate a dispute to a claim. The escalation from dispute to claim is not automatic; if a dispute is not escalated it will be automatically closed after a certain period of time. By escalating the dispute to a claim, the party is asking a PayPal representative to review the claim and make a settlement decision. In most cases, if the seller has been found to have misrepresented the item in a significant way, the buyer will be required to return the item to the seller at buyer's expense — and provide a tracking number for the return shipment — in order to receive their refund for the transaction. This policy is criticized as being in favor of the fraudulent seller. A seller can exaggerate the condition of his items and the worst that can happen is that he has the item returned. The innocent buyer has to pay return shipping and ends up out of pocket for something that was not his fault. This is in line with criticism of eBay's general policy of putting sales and its own profits above buyer protection against fraudulent sellers (for instance shill bidding).
If the seller has not been found to have misrepresented the item in a significant way, then the buyer's claim will be denied and the buyer will have no further opportunity for claims of any type using Paypal's systems. The only recourse the buyer would possibly have at that point would be through their credit card company (if payment was made using a credit card) or by filing a claim against Paypal through the Better Business Bureau or another similar consumer protection organization.
Security Key
In early 2007, PayPal introduced an optional security key to its users. This adds an additional layer of protection when logging into a PayPal or eBay account. Once a user enters their login ID and password, they are prompted to press a button on the small security key, then enter the six digit number to complete the login process. There is a one-time US$5 charge for this device, with no ongoing fees, however business accounts get them free of charge.
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