PayPal Float Concept

By Dan

Everyone:

I have worked with paypal via Ebay for a few years now. I learned something very early, which has made me cautious about using them, especially after Ebay bought them.  It is the concept of "float."

Float is basically squeezing an interest-free loan from someone by dragging one's heels in passing along a payment, cashing a check, etc.  It's tantamount to check "kiting" in its worst instances, where one essentially creates money out of nothing by escalating the amounts of floated checks.

This is almost what PayPal is doing.

My experience with them has been, that even at their best, they "sit" on our money for 3-5 days, interest-free, before  assing it along to the seller of an item.  At worst, they frequently experience "computer crashes," which in one case, froze my $500 refund money between the seller and me... it was in neither of our accounts.  I verified this with a phone conversation - once I got through!  I was on hold one time for 45 min's (I have a very cheap phone card, but it still cost me about $2.00 just for waiting.)

Many of the stories I've read on your site also involve PayPal "Bogarting" the money in question. Even if they eventually return that one guys $3k, think of the interest they make if they just take all that money and put it into a revolving money market account.  They'd have an average of easily $2-3 million in it, which over a year at 2% is $40-$50,000, without paying us for their "loan!"

Now add to that the money for special deals like that $3k, and you can add a few million to that account. Of course, PayPal probably has more creative things they can do with $3 million, like lending it through a mortgage broker, Money Tree (tm) or more likely, buying commercial paper (high-risk short-term loans to businesses).

So, whether or not they are crooks, they are learning from the biggest crooks of all, the US Government, who gets interest-free loans from all us working stiffs through "payroll withholding."  We HAVE to deal with the gov't, or they send their IRS thugs after us.  But, we DON'T have to deal with PayPal, right?

Do they have any competition? Using a competitor would be the best revenge, and also maybe clean up their act w/o trying to rely on prosecutors, courts, etc.  We've seen what those folks do to the Enrons and Michael Millikens' of the world... virtually nothing! Certainly reimbursing the victims is not on their "to-do" list!

Now that you've been cheered up... go forth and be happy!

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