Sold an item on ebay, money in paypal - can I still be screwed?
August 7, 2006 11:52 PM   Subscribe

I've just sold any item on ebay… The money is in my paypal acount... Am I now immune to fraud?

I've just sold a rather expensive item on ebay. The buyer is using a hotmail address, has good feedback (for some other rather expensive items) but only a limited amount of feedback. The buyer bought the item using the "buy now" option for a price I wouldn't consider purchasing it at used, let alone new (I set my "buy now" price probably unrealistically high).

The money is now in my Paypal account. Am I now immune to fraud - or the could the user still screw me somehow using a charge-back or something else?
posted by schwa to Shopping (24 answers total)
The status of the paypal payment is "cleared" ("eCheck payment cleared the sender's account and was credited to your account"). This is as good as cash?
posted by schwa at 11:57 PM on August 7, 2006

Until the money is in your hand and not in the PayPal account you can still be screwed.
posted by fenriq at 12:02 AM on August 8, 2006

So is it bad form to wait until the money is in my hands before shipping the item?
posted by schwa at 12:04 AM on August 8, 2006

I believe it is correct form to wait until the money is in your hands before shipping the item.
posted by BuddhaInABucket at 12:05 AM on August 8, 2006

Not only that, but paypal has been known to take money back. Without asking. From your bank account.
posted by mmdei at 12:06 AM on August 8, 2006

So basically I can be screwed at any time?

I could transfer the money to my bank, ship the item, cash the money - and then the buyer could issue a charge-back and paypal would then try to charge my account?

I'm going to ship the item insured and with confirmed delivery. But is there anything else I can do make sure no one gets screwed?
posted by schwa at 12:13 AM on August 8, 2006

As a seller you're usually on the hook -- that's why it's good to avoid unscrupulous buyers and people with negative feedback.

The main thing you can do to cover yourself is send the item in a manner where you get a tracking number, a delivery confirmation, and a signature. Most shenanigans start with someone claiming they didn't get the item... the first thing Paypal will want is this tracking info. The other main dispute mode will be if they claim the item is not as advertised. In that case it would be better to work with the seller (and Paypal, if it's in dispute) to accept the item back.

FWIW, I always tie my Paypal account to an empty bank account. Withdrawals go into that account then are moved out. But the intent here is just to make sure they don't foul up my bank balances or clean me out. If you're looking to not honor a chargeback, I'm not really sure what would happen. Logically Paypal would be stuck with the debt and would just turn it over to collection, but banks are weird and I'd wager some will move money to cover the charge without your permission.

If it makes you feel better, I have 250+ transactions logged with Paypal, mostly as a seller, and have only had one dispute. Paypal did a shoddy job on that one dispute and ignored where I said the buyer was cancelling the dispute and to talk to him... they refunded him anyway and made a mess. So I'm convinced that standard operating procedure for them is rubber-stamp most disputes.
posted by rolypolyman at 12:23 AM on August 8, 2006

Typo: In that case it would be better to work with the buyer
posted by rolypolyman at 12:24 AM on August 8, 2006

Transfer the money out of paypal, and make sure paypal cannot get funds from your bank account (which they can do if you've ever given them your account info. At the least, make sure that you have explicitly removed all overdraft facilities and that the bank will bounce any attempt for funds beyond what is in the account. Also, make sure that if paypal issues a freeze on your account, it will not freeze your other accounts. (Eg if a freeze on your checking account will freeze your savings account, etc etc).

Even then, I wouldn't be certain you're fully protected (a fee stuck once on an empty account which I was assured would bounce anything that went OD. It was oversight on my part that there wasn't money there for the fee, but as a n accidental test run of the protections, it was cause for concern), but you're in much better shape to weather any storm. (As opposed to discovering that you can't even buy grocieries until a freeze is lifted).

Keep the postage tracking/insurance/delivery documentation.

It all sounds very scary when put like this, but unless you have a reason to be worried, you should be ok - these proceedures are no different from setting up any other system properly. You only need to do it once, and then you're good for all future sales :)
posted by -harlequin- at 12:58 AM on August 8, 2006

Cleared means the money was yours.

Now immediately initiate a withdrawal to your primary bank account so that recourse is far more difficult.

Otherwise, go ahead and ship through a secure channel so that you have some recourse. And the money, once cleared, isn't going anywhere without a bit of effort and malace. You're mostly safe.
posted by disillusioned at 1:05 AM on August 8, 2006

My absolutely current experience is that Paypal can put the money on hold, and reverse the payment.

The money was transferred to me fraudulently as payment for an ebay sale. I shipped the goods without realising.

I await the Paypal judgement.
posted by olvar22 at 1:25 AM on August 8, 2006

olvar4: the money was in your bank account when the transaction was reversed?
posted by schwa at 1:37 AM on August 8, 2006

No, the money was in my paypal account, as cleared.
posted by olvar22 at 2:04 AM on August 8, 2006

Pay with paypal by all means; but accepting it for payment leaves you open to all sorts of issues.

Having said that, limiting peoples ability to pay also means you reduce the ability to sell items - careful vetting of bidders and their history is therfore a must.
posted by DrtyBlvd at 2:12 AM on August 8, 2006

So, then, doesn't the question become: "How do I vet buyers?"

As general interest, what are some good steps for this?
posted by converge at 2:36 AM on August 8, 2006

This recent livejournal post (from a friend of a friend) shows that you should be quite careful with paypal. Good luck!
posted by cactus at 4:00 AM on August 8, 2006

Is the address you are shipping to confirmed by Paypal? It will say whether the address is confirmed near where the address is listed.
posted by MegoSteve at 4:05 AM on August 8, 2006

I also tie my Paypal to a second bank account which is kept empty. I transfer my funds from Paypal into that account, then into my main account.
posted by fire&wings at 5:07 AM on August 8, 2006

No, you are never safe with PayPal. Even if you withdraw the funds and disconnect any funds from the account (so they can't take the money back), they can decide that the payment was fraud/invalid, and put a negative balance on your PayPal account. At this point, you may hurt your credit score by not giving the money back, and things may become more difficult depending on what sort of collection agencies PayPal chooses to work with.

The bottom line is that unless you can trust the company to behave in a generally fair way, you'll never be safe with the money you get.
posted by rxrfrx at 5:11 AM on August 8, 2006

If he starts a dispute the first thing paypal does is subtract the money from your account until the dispure is resolved. People are very casual about starting disputes, so be careful. Keep a record of everything especially shipping receipts and tracking numbers.
posted by the ghost of Ken Lay at 5:26 AM on August 8, 2006

Make sure, also, that you saw the money was cleared in your paypal account by logging into paypal, not by receiving an email "from paypal" that shows what is basically a doctored screen shot.

(you probably did this already, but for the benefit of any less experienced paypal/ebay users reading this in the future, this is a common scam)
posted by mikepop at 5:36 AM on August 8, 2006

ah! you're not in the clear! Even if you move the money out of your account, Paypal can create a negative balance in your bank account, and then turn you over to the debt collectors!

In a way, PayPal is actually pretty useless. The buyer sounds a bit sketchy to me. Are you shipping it overseas? If so, it's probably a scam. Overseas buyers can't get a verified paypal accoutn, so they often hack other people's then walk away scott free.

If you're shipping overseas, call paypal and ask if the account is verified. If they say it is, make sure you get the name, id, etc of the person you talk to.

In my mind, Paypal is junk. This sort of thing happens all the time, and you end up saying to yourself "WTF, why the hell do I use paypal for then?"
posted by unexpected at 6:40 AM on August 8, 2006

The seller's address is confirmed by Paypal. The seller is in the US. And the emails sent to me were not phishing style emails (i.e. I went to to get my information).

I think all I can do now is send the item off with as much documentation/proof/insurance as possible - once the money is in my bank account.
posted by schwa at 7:35 AM on August 8, 2006

If your gut is really bothering you, you can always simply refund his money and declare an "accident" with the merchandise. You'll be out the listing and selling fees, but it could save you much hassle down the road.
posted by kimdog at 8:29 AM on August 8, 2006

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