UPDATE February, 2022
This page used to be about some of the difficulties navigating PayPal’s bureaucracy, the ways they can be difficult to deal with – and the ways (and some contacts) for resolving those difficulties. Now, it’s a warning not to risk doing business with or through PayPal; an urging to boycott PayPal; and a link to a resource useful if PayPal has robbed you.
THE STORY
For TWENTY YEARS, PayPal was my primary payment processor. And, other than a few bureaucratic screw-ups, we had no losses and no insurmountable business interruptions.
In late 2021, this changed.
Unlike some other processors, PayPal requires a separate PayPal account for each Internet domain (web site) through which one does business. My company maintains multiple web sites. Therefore, I must have separate PayPal accounts for each one. This is a PayPal requirement.
PayPal also refuses to connect multiple PayPal accounts to a single bank account for transfer of funds. Therefore, I must either open a separate bank account for every web site, or I must move funds between PayPal accounts, and then onward to the bank.
PayPal has a system for this, called “child accounts” – which sorts the non-bank-connected accounts under what they call the “parent account” – which is connected to the bank. The PayPal dictated protocol for moving money from the child account to the bank is to first transfer it to the parent account.
This all seems to make sense, even if it’s really clunky…
However, PayPal’s system continues to default to “purchasing goods or services” – even when the transfer you’re making is from a child account owned by the same corporation as the parent account.
They’re laying the “default error trap” – because if you fail to un-check that box, or if their interface fails to register your click …
… even though they’ve forced you to do the transaction this way
… even though they’ve forced you to jump through many hoops to set up “child accounts” that are documented to be sub-accounts all owned by the same business entity
… even though you may notate the transaction “transfer funds child –> parent”
… they will charge you the 3% transaction fee
… even though you already paid the transaction fees when your customers made the initial purchase through the child account.
(In our case, the fees charged exceeded $800.00)
When we contacted PayPal, their representative at first tried to stonewall me about returning the fee charged in error (and illegally, because it was not my intention to sell myself goods or services).
Persistence on my part, confronting them with both the illegality and the immorality of that behavior elicited a promise to refund the fees “within 24 hours”.
The refund was not forthcoming. And, all further communication with PayPal was rude, obnoxious, arrogant stonewalling, no matter them being confronted with the fact that keeping funds transferred in error was a crime. Many, many communications took place, with many representatives, via chat, email, and phone over a period of months. They all followed the same pattern of blaming me, telling me not to make the mistake, and stonewalling about the refund.
This cannot have occurred without each of these things being a matter of intentional structure and policy: Clearly, PayPal forces businesses into a protocol that baits them to miss a step (or for their system to fail to process it) – and then they criminally refuse to reverse a documented unintentional transaction.
I wrote letters of criminal complaint to the appropriate authorities, and retained a company specializing in dealing with such matters.
THE CONCLUSIONS
- I believe PayPal to be operating with a criminal level of bad intent, and that they are over time and over a large number of their customers managing to steal large amounts of money.
- I believe anyone who transacts business with a bad-faith-operating company will eventually.
- I recommend this company: FairShake.com
NOTE: PayPal, as a condition of settling with people who pursue legal action against them, are likely to insert something that looks like this into their settlement agreements – preventing people who have prevailed against them from even confirming that such settlements exist:
What to do Instead
I no longer recommend doing business with PayPal at all; I personally will boycott PayPal for the remainder of my living days, and I encourage everyone else to also do so – including not just refusing to use them as a processor, but also refusing to transact business through them as a buyer. (I now have vendors to whom I mail paper checks rather than cutting PayPal the slice I know they’ll get.)
There are a large and growing number of alternatives.
Different alternatives will be better for different people, depending on what kind transactions you’re doing – if you need to send invoices, or integrate with a shopping cart, or move funds internationally, etc. DO YOUR RESEARCH – and also take care to insure the “alternative” you’re using isn’t owned by PayPal (at this writing Venmo is).
Diversity is good: Set up multiple alternatives. Do this because the “financial services sector” is largely both parasitic and despotic. They will screw you when and how they can. Cover your bases so you can quickly pivot from whomever you’re using.