PayPal: Libel, Slander, Theft and Extortion

How PayPal is the Biggest of Online Scammers

Thu May 13 14:40:33 MDT 2004

Squido - squido[at]attrition.org

Cliff Notes: PayPal, an eBay company, has no regard or respect for their customers. This article summarizes my personal experiences with PayPal and further demonstrates their practices are deceptive, fraudulent and illegal. This is yet another horror story that can be added to the countless others out there. [1] [2] [3]

I approached writing this article with a shred of hope that my complaint would be resolved and my money returned to me. However, after just one hour of researching and reading other people's horror stories, including extensive details from ex-PayPal employees, it's a given that PayPal has stolen money from me as per their standard operating procedure.

Several weeks ago, I realized I wouldn't have enough money to fly to Arkansas to attend my twin sister's wedding. Since I recently quit playing Everquest and had millions of platinum (the virtual currency in game) sitting there doing nothing, I decided to sell some of it to help make the money to fly home. I read up on popular scams and went into this with a paranoid outlook, knowing there was some risk when selling virtual property. I read that there was little to no protection when making these kinds of transactions and that caveat emptor wasn't the case anymore.

My first transaction was selling a small chunk of the virtual money for $75. The process was easy, both sides were happy, PayPal (our method of money transfer) made their slice of the profit. The second transaction was for a much larger chunk of the online currency, sold to a company that buys and resells such virtual property. They transferred $600 to my PayPal account, received the propertly, PayPal took their cut of the transaction, and everyone was happy. The third transaction is where the nightmare began.

A lady named "Reida (redacted)" wanted to buy some of the virtual money. While new to the site that caters to selling virtual property [4], her e-mails seemed legitimate and doing extensive digging produced a ton of information on her. I knew where she worked, where she lived, address, phone numbers and countless other personal details. When "Reida" provided this information, it all matched. When we met online in Everquest to trade the virtual property, her PayPal transaction came from "Reida (redacted)'s" account, was verified through PayPal, and her e-mail address matched the one used to register her business domain. In short, this wasn't a garden variety scammer, rather it was someone that had stolen Reida's identity by compromising her PayPal account and likely her e-mail accounts since most transactions send e-mail confirmations. Since the money appeared from "Reida" quickly and she wanted to buy more, I sold off the rest of my virtual money in two more transactions. When all was said and done, she had transferred $900 to my account, enough to cover all the costs of attending my sister's wedding.

Event	Money
First Sale (Person -> Me)	75.00
Second Sale (Company -> Me)	600.00
Third Sale (Scammer -> Me)	900.00
Sub-total	1575.00

Since my PayPal account did not have a verified bank account, I transferred a portion of the money to my boyfriend who I live with. His PayPal account has been around for years, has a verified credit card and bank account, and he would be able to give me the money within hours of the transfer, rather than waiting up to a week to verify my own account or waiting several weeks for a PayPal check.

The next day, I received the dreaded e-mails I had read about. "Reida" had reversed the charges on each transaction. PayPal put a hold on the $900 while it investigated the claims. Further, they put a reverse on the funds I had transferred to my boyfriend claiming it was a potentially fraudulent due to the "Reida" transaction. I called in to explain everything I could and answer any questions they had, but it eventually yielded nothing. The representative told me that once the "Reida" transaction was cleared up, and they verified my account wasn't hacked, they would unfreeze the rest of the money. They claimed that the locking of my transfer to my boyfriend was "protection for me".

Event	Money
Sub-total	1575.00
Transfer (Me -> Boyfriend)	-740.00
Reverse Charge ("Reida" -> Me)	-900.00
My Balance	-65.00

Several calls produced no information and there was no visible progress on the investigation. In an attempt to clear things up, we both called PayPal on the same line, had them verify both of our identities, and confirmed that the transaction was legitimate. Despite this, they still have the transaction reversed from his account and frozen on my account. PayPal has confirmed that the transaction was not fraudulent, yet they are holding that $740 transaction in limbo, like the $900.

Regardless of their decisions, $675 of the transactions have not been reversed, is not being contested, and are entirely legitimate. Despite that, PayPal has essentially locked all of those funds as well. After several more phone calls, both of us having to re-verify details about our accounts, and provide additional information, the money is still sitting in limbo, untouchable to anyone except PayPal. There are only two people in the world who can provide information for their "investigation" of this transfer, and any information we provide is ignored. Until this article, I was resigned to wait on PayPal to resolve the issue, but during my research I found out this is basically futile, all of the money is gone. One of the confirmations of this comes from an ex-PayPal employee and manager exposing their fraudulent practices.

After the "Reida" transaction was finally cleared up (they deemed it fraudulent and returned funds to her), I called back to find out why my transfer to my boyfriend was still locked and was told by a rude and patronizing associate that it was a seperate investigation because "no one transfers money to their roomate, that's weird". Not only did they change their reasons for locking the transfer, they told me it could be 45 days before the investigation was completed. During this call, she kept implying I was selling sexual services. When I explained exactly what was bought and sold, she pretended to understand and say that was fine. Minutes later, I received an e-mail saying my account had again been locked! Attempting to log in brought up the following message:

May 7, 2004: We have recently reviewed your account and have noticed that you are selling items on your website that violate our Acceptable Use Policy. We value you as a member of our community and wish to continue our relationship, so we ask that you remove all items from your website that violate our Acceptable Use Policy.

Please note that subsequent violations will result in the closure of your account. (Your case ID for this reason is PP-xxx-xxx-xxx.)

How can I return my account to regular standing?

To return your account to regular standing, please complete the remaining checklist items below as soon as possible. Each link can be clicked for more information on how to complete the step.

1. Submit Online Affidavit [ ] To Do

Once you complete all of the checklist items, your case will be reviewed by one of our Account Specialists. We will send you an email with the outcome of the review.

This action and resulting message was pure harassment. My recent research has revealed that one of PayPal's methods of keeping your money is to find a reason, no matter how absurd, to lock your account so that they could wait out a 180 day period that would result in letting them keep the money. Instead of signing this "Online Affidavit", I called back and spoke to a more polite customer service rep. When I asked him what was going on, he told me that my web site was "selling pornography"! I asked him exactly what page he was talking about since my page only contains pictures of my cats. He replied that "attrition.org is selling pornography" and that is why my account was locked this time.

The first thing I had to explain was the basics of e-mail addresses, domain names and web sites. Just because my page was hosted off Attrition didn't mean it was my web site. By PayPal's logic, someone@yahoo.com is responsible for anything found on yahoo.com. The second thing I found out and had to explain was the "pornography" they found. Apparently, the lady I had previously spoken with was unable to read the page she deemed pornographic AND had to make a huge stretch calling it as such. Attrition.org makes a few custom wallpaper images available to anyone, absolutely free. The images are not pornography, rather digital art that comes with a detailed description on what tools were used to create it. For those who think this may be an innocent mistake, consider all the pages the PayPal employees visited on Attrition to make this determination (along with Attrition staff comments)! Despite his acknowledgement that the page does not sell pornography, he says I must contact paypal-compliance@paypal.com to resolve the matter. I find it very odd that PayPal would actively search for material they deem inappropriate to attempt to link to my account while they list PayPal Shops on their own pages that sell pornographic videos that violate the PayPal Acceptable Use Policy in regards to buying and selling items.

Based on PayPal's comments about Attrition, I inform the staff of what has transpired. Shortly after this, I receive a copy of an e-mail sent from Jericho to the PayPal compliance department making it perfectly clear that PayPal's comments were libelous and untrue. Since I was told the same thing over the phone, it is also slander. A few days later, I try to log into my PayPal account to find out the status of the "investigation" and see the following:

Affidavit of Compliance with and Acceptance of PayPal's Acceptable Use Policy

I have read and agree to the terms of use specified in the Acceptable Use Policy section of the User Agreement for PayPal Service.

I understand and agree that I am responsible for making sure that the transactions I enter into using PayPal are legal and do not violate the terms of PayPal’s Acceptable Use Policy.

I understand that my previous activities have been deemed by PayPal to violate the Acceptable Use Policy and I agree that if I do again violate the terms of PayPal's Acceptable Use Policy, my account access may be limited or my account may be closed without advance notice, regardless of whether the violation takes place through eBay or another online marketplace, through my own website, or through any other forum.

I also pledge that my current usage of PayPal is legal under the terms of the User Agreement and that I will not use PayPal in the future to accept payment for goods or services that are illegal or are prohibited as described by the Acceptable Use Policy or the Restricted Activities Section of the PayPal User Agreement.

Type "I Agree" here: ______________

By typing "I Agree" in the box above, I hereby agree to the terms of this affidavit.

Despite the issue supposedly being resolved, PayPal is forcing me to admit that I was selling pornography before they will unlock my account, even when it was proven that I was not. This is the text book definition of extortion. To gain access to my account and the chance of getting my money, I have to admit to a crime I did not do.

Three days ago I called PayPal back, to make one final effort to resolve the issue. I finished a second glass of wine to help deal with rude employees I invariably get, picked up the phone and let out a sigh. Since I had read a lot more about their tactics in dealing with customers, I found this call to be amusing and disgusting at the same time. Every single thing the ex-employees had posted were played out in detail. I was put on hold a dozen times, the first two people I dealt with kept saying they couldn't help, didn't offer to find someone who could, or seem to care beyond their basic duty to answer the call. After twenty minutes of frustration, I kept telling him "if you can't help, transfer me to someone who can right now". Eventually I ended up with "Scott" in "Resolutions Dept" who started the same routine and put me on hold. After I explained everything for the fifteenth time and asked him exactly why they were holding the legitimate funds, he couldn't provide an answer. He timidly asked "can we cancel the reverse of your transfer, would that be ok?", acting as if he knew I would say no. Since that would put the money in my boyfriend's account, where I wanted it all along, that was fine. "Please! That's all i've wanted all along!" and a few minutes later, it actually happened.

In summary, PayPal has once again gone to extensive lengths to cause problems for the legitimate user who has been scammed. Rather than work with me to resolve the issue, they held my money without providing an explanation as to their decisions and claims my transfer was fraudulent. No matter how many times I called, they refused to resolve the issue, and refused to provide me with a legitimate and legal way to resolve this. Only after spending countless hours over the course of two weeks and making dozens of phone calls did they finally realize I wasn't going away. Compared to several other people I spoke with during this saga, I was extremely lucky. They had to resort to filing a lawsuit to make PayPal return their money, or they simply didn't get it back.. ever. Libel, slander, extortion, and theft, the PayPal way.

- Squido

Footnotes:
[1] www.PayPalSucks.com
    PayPal Sucks is an anti paypal site to expose the nightmare of doing business "the paypal way."
[2] www.PaypalWarning.com
    This page is intended to provide advance warning to users of the Paypal.com transaction processing system.
[3] www.AboutPayPal.org
    I started writing about PayPal out of frustration of being unable to communicate with PayPal..
[4] PlayerAuctions.com