have not checked out this source to see if they have
some sort of gripe against PayPal but this website (www.PayPalwarning.com)
does at least cause me some concern. I am not trying
to single out PayPal. Some people have told me that
they are very happy with this service. It just seems
whenever I start shopping one of these Third Party Services
the other foot drops sooner or later. I just received
an offering from StormPay which was "ready to take the
internet by storm". Digging down in the site I found
that customers must open an account and pay a 10% discount
fee for deposits from their credit cards!
Anyway, here's a text of the page that was sent to me.
This page is intended to provide advance warning to
users of the PayPal.com transaction processing system.
It also provides information on resolving your PayPal
issue and an alternative for anyone who may be considering
a PayPal account.
PayPalWarning.com is in no way affiliated with PayPal,
1840 Embarcadero Rd
Palo Alto CA 94303
11128 John Galt Blvd
Omaha, NE 68137
Known phone numbers:
(402) 935-2000 / (402) 935-2001 / (402) 935-2062 / (402)
935-2258 [this is Craig, complaints resolution manager]
/ (402) 935-7733 / (402) 537-5740 (fax) / (650) 251-1100
/ (888) 221-1161 / (800) 836-1859 / (877) 672-9725 /
(866) 272-9725 / (402) 935-2338 [Carrie, PayPal Security]
Last updated: November 4, 2002
eBay tries to bully our domain from us!
SCAM ALERT!!! EVERY PAYPAL USER NEEDS TO READ THIS NOW!
Judge says PayPal's arbitration rules unfair Company
attempts to isolate itself from challenges, he rules
Be warned that PayPal is not a bank and is not
FDIC insured. PayPal provides for a new concept - pass-through
FDIC insurance coverage. They do this by pooling funds
into checking accounts at about four different banks.
This is great in case any of those banks go out of business
(highly doubtful), but we are not yet sure of the coverage
offered in case of another PayPal "dot com" failure.
Many PayPal accounts are frozen for almost anything
and without warning until the owner faxes in lengthy
and intrusive private information several times over.
Even then, the account may not be released. The account
can usually receive money while it is frozen, but it
certainly cannot withdrawal money.
Merchants finding themselves on the wrong end of a frozen
PayPal account will still have to find some way to pay
their obligations and fill orders for the weeks and
months while the account is restricted. A domino effect
occurs when a merchant's account is frozen, leaving
them with no means to fill orders. Those orders are
then disputed by customers, creating more chargebacks
and the illusion of fraudulent activity on the part
of the merchant.
While anyone paying into the PayPal system with a credit
card does still have the protection of their own bank
by disputing the transaction to create a "chargeback",
PayPal will eventually insist that a customer begins
depositing money through their checking account. This
will eventually prove to be a mistake as all chargeback
protection through a credit card is then lost, leaving
the customer at the mercy of PayPal.
Anyone experiencing these PayPal nightmares could always
threaten to sue them, but that may be difficult at best.
A thorough reading of the PayPal terms of service will
reveal that you cannot even sue them should you have
a legitimate claim. Their terms of service make it very
hard to sue them! There have been several class-action
lawsuits filed against PayPal.
Fraud seems to run rampant on the PayPal system. Merchants
doing business through PayPal are simply not given any
of the same tools to identify fraudulent transactions
that real credit card merchants enjoy, yet they seem
to take even more risk. PayPal is quick to chargeback
transactions months after the fact, for seemingly any
Any PayPal customer with a problem typically has an
impossible time calling and talking to a real live person
and personal attention to electronic mail is virtually
non-existent. According to Vince Sollitto (PayPal spokesman),
PayPal intentionally makes the phone number very difficult
to find in order to save costs. This is fine, except
their Email "customer service" also leaves a lot to
be desired. Many times you will get a canned response
that doesn't address your initial Email message, if
you get a reply at all. It doesn't do any good to complain
anyway. When asked about customer complaints, Sollitto
said the company reads them, but takes them with a grain
of salt... (source MSNBC article, above).
None of this is very surprising when you consider that
PayPal, Inc. publicly admits "we have limited experience
in managing and accounting accurately for large amounts
of customer funds." Their EMail "customer service" is
also outsourced to a company in New Delhi, India. Additionally,
regulatory authorities in three states (California,
Idaho and Louisiana) are investigating whether PayPal,
Inc. is engaged in a banking business because of their
customers' ability to retain a balance for future transfers.
Because PayPal is not licensed as a bank, they are not
permitted to engage in a banking business! (Source,
IPO Prospectus) Louisiana has already ordered PayPal
to stop doing business in the state. This could spell
REAL trouble for anyone with funds "deposited" in PayPal.com!
PayPal also recently shelled out $200,000 to the NY
Attorney General and has agreed to stop service to NY
This website is a collection of horror stories, news
reports and other information addressing problems with
PayPal, Inc. While we do not have the resources to verify
each and every complaint we receive, we do believe that
all reports posted here are true based on our own experience
with PayPal and the growing number of corroborating
horror stories we receive every day.