PayPal and Online Gaming
Sending money where it shouldn't be going
Paypal is a hotbed for illegal online gaming activity. A list of casino's that accept Paypal can be found here and here. These casinos are based overseas to get around US online gaming laws. Paypal can be used to send money to these online casinos. These are the same casinos from which many banks block their credit cards.
Much of the online fraud in the Paypal system comes from illegal online gaming. These are casinos that accept Paypal and are based in countries such as Antigua and Barbuda, China, Zambia, and Belize (a hotbed for International crime). Clearly, it is easy to launder money through these online casinos. One can only imagine where the money goes from there.
Remember, many credit card issuers will block their cards from being used at these types of online casinos. Paypal does not. This is probably responsible for much of the fraud in the Paypal network.
Paypal does have an insurance policy with Travelers Insurance to cover unauthorized transactions. So even though the criminals may still get your money, you should be covered. Unfortunately, it appears that even a $3,000 loss is not enough to reach the insurance deductible. Read this story from the PaypalWarning.com Wall of Shame.
A little deeper digging by a reporter turned up this information:
| "I found out what's going on with Traveler's. They're the insurer for PayPal's losses. So basically, they will not reimburse victims directly. When PayPal incurs a loss, aka they reimburse an innocent victim with their own funds, then they can submit claim to Traveler's. PayPal says they've not submitted a claim to traveler's yet because all the reimbursements they make to customers are below the deductible." |
So it sounds like you're still at the mercy of Paypal, even if you do try and go through the insurance company. Additionally, Paypal recently agreed to pay the NY Attorney General $200,000 and cut off service to gamblers in that state.
eBay said it would discontinue PayPal's online gambling processing when it acquires PayPal.
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