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PayPal Massive Money

By Rob

Here are some facts to absorb:

1. Paypal has a new amendment to their subscriber agreement involving shipments of products to “unconfirmed” adresses.

2. In my personal opinion this amendment violates the RICO Act on racketeering.

3. Here is how it works:  a customer buys a product via ebay and already has a “verified” account with Paypal (you know, the deposit a few cents here and there, etc).

4. The merchant recieves the transaction via a deposit into the merchants acount but notices, while processing the account that the customer has a “unconfirmed” address and is intimidated by an agreement he/she signed with ebay/paypal that if he disregards the unconformed warning that if he /she goes ahead and ships the product that he/she will lose all insurance with ebay on the seller protection agreement (this agreement was initiated by ebay to attact more merchant accounts there but in the past sometimes fraudulant credit card tansactions have resulted in  a merchant sending products to false addresses — so in this case ebay is purporting to protect the merchant provided the merchant follow the rules).

5. Because the merchant is intimidated he/she refuses to ship the product until the customer has a “confirmed” address — (this doesn’t matter if the customer has a “verified” bank account or not — or if the address on he credit card transaction matches the visa/mastercard banking system billing address).

6. In a sense the funds are frozen at paypal while the merchant attempts to get the customer’s shipping address confirmed.  In order for the customer to find how to do this takes an extensive search of the paypal site — the instructions are well hid.  After a customer finally is able to contact a live person who is also the right person at paypal to get instructions on how to get a confirmed address the following has to happen.

7. The customer is directed back to the maze or rules and regulations of paypal and despite using a phone call confirmation (customer sends an email of the private phone number he/she uses to paypal and through an automated phone system paypal calls back the customer… the customer is still not confirmed and must now await a mail being sent by regular mail from paypal — promised in two days but often one to two weeks if at all.

8. Once the mail is received it contains a “secret code” that customer is directed to go back to the paypal site and insert on a special page… The the customer is also required to photocopy an official personal ID such as a driver’s license and then FAX this to a secret fax number at Paypal… all this to receive a “confirmed” shipping address…

9. Keep in mind that the transaction originally was a “instant bank transaction” which means the monies left the bank instantly much like a wire transfer and deposited into Paypal’s accounting system which is nothing more than their own bank account where it is held until disbursed to the merchant.

10.  Paypal is not a bank or credit union and is not subject to their rules BUT

11. Paypal’s bank, where the transactions funds are being held (with millions of other transactions by Paypal’s own admission) “sweeps” the funds at midnight every night which pays interest directly back to paypal — millions and millions of dollars from 25 million plus customers that have transaction funds being held by paypal earns paypal money in interst income using (other people’s money).

Don’t kid yourself, Paypal is using sweep accounting to earn interest on the money that they are holding.  The longer they can hold on to money the more interst they make — and their size is such that the income earned on a daily basis is substantial.

Merchants are not willing to sacrifice the “protection” of ebay’s protection plan so this translates into an intimidation practice designed to help ebay’s paypal program stay in business.

Posted: May 9, 2012 at 12:14 pm


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One thought on “PayPal Massive Money
  1. Leo Rubinson on

    Great point on number 10 and 11. This is why I had to stop using paypal. They just did as the pleased and had no concern whatsoever for my business. I went to pay pal to make money NOT loose money! WHAT A HEAD ACHE.

    Reply