KateArtist
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posted on October 4, 2000 12:10:48 PM new
PayPal requires permission to withdraw funds to verify people but it doesn't need that permission to verify people and won't explain why it wants permission to withdraw funds. When asked why it offers misdirection.
I suspect that basically PayPal is gouging sellers by charging them approximately 2 percent on the same kind of transaction that typically is offered at a flat rate of 25 cents a transaction. (ATM purchases from stores and gas stations) The amount of this gouging is hidden from the seller as he has no way of knowing without asking the buyer how he or she funded the purchase.
Any internet seller would be a fool to accept these kinds of charges if they knew they were paying them.
In an attempt to push as many buyers towards this incredibly lucrative way of making money, Paypal is positioning it's customer base towards as many of them as possible set up to use their checking accounts at a moments notice. This is being pushed even though the buyer doesn't want this and may cause him or herself a lot of problems by accidently using a checking account. The methods used to push the customer towards giving up this control are so close to misrepresentation that they may as well be.
I suspect also that after a while, the buyer will find him or herself inundated with 'short time buy now offers' to buy overpriced merchandise conviently with their PayPal checking access from contracted 'sellers'.
I also suspect that buyers will pushed harder and harder away from credit cards towards using checking accounts to pay for items.
The gouging is OK ethically. PayPal has the right to be undercut by the next electronic transfer company to realize the gold mine there.
The handling of the customers is not OK. The misrepresentation of Paypal needing to use the 'permission' to 'verify' is unethical. (lie) You yourself told me that PayPal needed it to get verification of a customer's name and that was untrue.
The misrepresentation built into the seller notifications that only credit card transactions would be charged for is unethical. (lie)
The extortion used to pressure customers into giving up control over their bank accounts is unethical. (doesn't matter if you actually do or don't use it - using extortion is wrong Damon).
The stupid thing is that PayPal had the edge - even though it cost them. The same edge that Ebay enjoys now - being the one and only internet service that has almost all the auctions - Paypal was 'the service' at first. Anyone can offer the same service PayPal can, just the same as anyone can offer the same service Ebay does
But Ebay has a position of trust which it cultivated. This keeps customers from walking away to other auctions - trust that you are getting a decent deal and trust that Ebay won't change the charges without proper notification. PayPal is blowing that right out the window for a quick buck that won't last. They are offending sellers left and right. Paypal could make it on a low profit margin with a huge loyal client base and be rock solid. By going for that gouge, the company is setting itself up to be undercut by the next company to offer better rates.
You can always change your rates to compare, but trust is overwhelmingly expensive to repair.
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abingdoncomputers
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posted on October 4, 2000 12:42:38 PM new
PayPal Damon said:
Bank account verification is an identification measure only. We will not withdraw from your account without your permission (logging in and requesting it) and all accounts are insured up to 100,000 against unauthorized access.
Verifying the account is so we can verify the identity and thereby guarantee protection when making a transaction.No other payment service, to the best of my knowledge, extends this service to their users.
This method of verifying a user's identity is completely worthless. As a matter of fact it is worse than worthless. It's hard to tell just how many CROOKS have been "verified" by PayPal due to this scheme. It's rediculously easy to get another person's bank account number, social security number, and mother's maiden name. This is all that's needed to "verify" a fraudulent account.
Damon hinted at the real reason for this verification scheme in another thread. After the Yahoo "hard drive" scandal, PayPal took a lot of heat in the press. They felt that they HAD to do something fast to try to steady the nerves of their customers and investors. Unwilling to cough up the money to do a real verification (credit check), they came up with this scheme as a CYA.
Damon let this slip out in another thread when he said that a credit check would be a more expensive verification option than the bank account fiasco. This is true. But while no verification measure would be foolproof against the most clever crooks, a credit check would be SO MUCH more effective than the bank account scheme. That's why the credit card companies themselves run a credit check when you apply for a credit card, even if they KNOW that your credit is in the dumpster (i.e. secured credit cards). They do the credit check anyway for ID verification.
Of course Damon comes back with "Most users don't feel comfortable giving up their social security number". I don't believe this is true. Most people are well accustomed to providing an SSN when opening ANY financial account ANYWHERE. I think that most users would much rather give PayPal their SSN than access to their bank account. After all, SSN's are readily available to crooks on-line and elsewhere. Many people even have their SSN printed right on their checks.
IMO what PayPal should do is drop this silly excuse for a verification scheme and do a credit check instead. It can be done on-line during the registration process in 30 seconds. No more waiting 3 days to get the 2 deposit amounts to jump through PayPal's hoops with. And how to pay for the credit check? Simple. Stop giving $5 referral fees as bribes to their user base. Oh sorry, I forgot. They have ALREADY effectively stopped paying out the referral fees. My mistake.
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paypaldamon
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posted on October 4, 2000 12:53:27 PM new
Hi abingdoncomputers,
I offered the reasons for verifcation and I have taken the suggestion for a credit check forward.
However, I can't change a perception or an opinion on a subject matter. From my experience, many people are hesitant to give a social security number over the internet.
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abingdoncomputers
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posted on October 4, 2000 01:06:20 PM new
Damon:
So PayPal is going to define a policy based on YOUR experience? Based on MY experience and from reading these threads, I believe that MOST people would MUCH rather give PayPal their SSN than access to their bank account. If you don't believe me, take a survey and ASK them.
Also, since when does a financial institution even CARE if their customers are willing to give an SSN? They do what they have to do for their own safety as well as the safety of their customers.
PayPal obviously didn't care that MANY users didn't (and still refuse to) verify their bank account. And many of the ones who did felt pressured and bullied into doing it and hold a resentment towards PayPal for the bullying tactics, such as the "This recipient is not verified. Do business with him at your own risk" pop-up screen.
If you're going to risk alienating customers and potential customers with a verification scheme, would it not make sense to choose one that ACTUALLY works. The bank account "verification" process is a crook's best friend. Not only can he scam people, he can do it while proudly displaying the "I'm Verified By PayPal" banner. This whole thing is a joke.
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labbie1
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posted on October 4, 2000 01:16:44 PM new
This just underscores what many have learned from the many Ebay fiascos--Don't put all of your eggs in one basket and don't lose any sleep about cutting ties. They will do what they need to do and we must do what we find is best for us which may be to diversify to create a stronger environment.
NO way would I give anyone my SS# if they are not a verified bank under federal regs. Nope! I just needed to move some money back and forth, I didn't need a bank. I have a bank.
If I give them a bank account number, it doesn't mean that they can take much from it because it can be "beamed" into the bank account and I can remove it immediately or have my bank put a halt to any activity from their transmission number. At most, I will lose some money.
If they have my SS#, I can lose much more than that! So, if PP/xcom is serious about getting rid of the rest of the PayPal'rs (as compared to the xcom'rs), requiring a SS# just may be the way to do that.
Of course, since they plan to go international, not every country has a SS#.
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abingdoncomputers
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posted on October 4, 2000 01:28:27 PM new
I guess I stand corrected. Obviously there are people who would rather give PayPal access to their bank account than a piece of information (SSN) that can be discovered with 30 minutes of half-hearted searching on the web. My mistake. I'm sorry Damon.
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paypaldamon
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posted on October 4, 2000 01:32:42 PM new
Hi abingdoncomputers,
I do not make the company decision regarding verification or credit checks. What my experience is based on is interaction with users.
Bank account verification has been successful. I can't go into specific numbers, but more than 70% of users active with bank accounts have verified them.
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abingdoncomputers
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posted on October 4, 2000 01:38:57 PM new
Successful doesn't make it reliable Damon. It won't be long before a "verified" scammer akin to the Yahoo "hard drive" guy take a bunch of people to the cleaners again. At least with a credit check you would have a true identity to go after, not just a fraudulent bank account.
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kasue
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posted on October 4, 2000 01:42:30 PM new
Whoa! Hold on there Damon. I am one of those 70% that have verified their accounts. I felt forced to. I did it for the same reason that was stated above. I didn't want the buyer scared off by that drop down box "This seller is not verified BOO!"
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paypaldamon
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posted on October 4, 2000 01:44:33 PM new
Hi abingodoncomputers,
Thanks again. The logic here is that you traditionally have to provide a SSN and other identification to open a bank account. Banks do their own checks on the user and establish the account. There is a greater certainty of identity.
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labbie1
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posted on October 4, 2000 01:44:51 PM new
kasue But would you rather give PP your bank account or your SS#?
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paypaldamon
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posted on October 4, 2000 01:51:04 PM new
Hi kasue,
Here is the short end of it:
1. Buyers want protection from sellers and want their charge back rights
2. Sellers want protection from buyers and don't want charge backs.
In order to verify the identity, to reduce the probability of fraud, a protection program had to be designed.
A verified user is protected from losing money on fraudulent transactions to 5000.00. This protection is not available on a merchant account.
A verified buyer has the same guarantee.
We are guaranteeing the transaction at our cost if it does not go through. This is for the benefit of our buyers and sellers.
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abingdoncomputers
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posted on October 4, 2000 02:02:30 PM new
Thanks again. The logic here is that you traditionally have to provide a SSN and other identification to open a bank account. Banks do their own checks on the user and establish the account. There is a greater certainty of identity.
There is NO CERTAINTY of identity when a crook illegally uses someone else's bank account to "verify" a PayPal account. And it's rediculously easy to do. All you need is:
A) The bank account number (easily obtained by stealing a bank statement from a mailbox or bribing the minimum wage clerk at the corner convenience store who takes your check every time you buy gas).
B) The account holder's SSN. Obtained within 30 minutes on the web with a basic search. Or if the crook is lazy, $75 paid tp one of the many "for pay" search services available on the web. Or for free from the account holder him/herself if you're a fast talker on the telephone as most scam artists are.
C) Mother's maiden name. Common knowledge if you live in a small town or are willing to do a little research or pay someone else to do it for you.
D) The 2 small deposit amounts, obtained by calling the bank with the info in A and B OR C above.
Walla! The crook has now "verified" a bank account. All he/she has to do now is sell a few thousand dollars worth of bogus items on eBay, collect payments with PayPal, request a check to be sent to a drop-box or an accomplice.
Refresh my memory here. This is more secure than a credit check how?
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VeryModern
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posted on October 4, 2000 02:49:12 PM new
I quit using my REAL mother's maiden name many years ago. My dog and my mother have the same name and I change it every few months!
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fountainhouse
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posted on October 4, 2000 02:55:17 PM new
The fact remains that none of the other online services requires their users to be "verified" like this. If your process is superior to any other methods, why hasn't billpoint, for instance, which is backed by a bonafide financial institution, implemented this Mickey Mouse scheme?
And Damon, paypal may have verified "... more than 70% of users active with bank accounts," but it's been my experience that many who have done so don't have a clue what they've done.
Since this fiasco began I've been actively steering my customers to other services. I point them to these threads and voila! The light goes on for them and most (80%) use another service. You may want to note that their follow-up comments to me are not at all flattering to paypal. They feel betrayed and taken advantage of.
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paypaldamon
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posted on October 4, 2000 03:37:42 PM new
Hi fountainhouse,
Correct me if I am wrong, but doesn't Billpoint charge for charge backs? I may be wrong, but I do know that other competitors can charge for charge backs.
Our verification program is to verify identity and to guarantee the transaction(s).
This applies to transactions made from bank accounts as well, so there is no risk of losing money.
Buyers want charge back rights and sellers want to be protected from charge backs.
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labbie1
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posted on October 4, 2000 04:08:54 PM new
abingdoncomputers So I can't take the same info as in your post and submit it for a credit check?
VM I didn't know that anyone but me was like that! LOL I like you more all the time! 
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VeryModern
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posted on October 4, 2000 04:25:54 PM new
labbie - ain't it great when you get caught?
them: "what is your mother's maiden name??"
me: thinking as fast as I can uh, uh, what era did I open this account ..,
"I can probably get it in 3 guesses..."
So far, that's always good enough.
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labbie1
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posted on October 4, 2000 04:41:18 PM new
VM ROFLMAOPIMP! I KNOW the feeling! 
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VeryModern
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posted on October 4, 2000 04:55:13 PM new
They have a new one now "name of the street you grew up on"
I just told my husband last night if he were every trying to access anything no matter what they ask you the answer is that fake dog's name.
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barrelracer
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posted on October 4, 2000 05:01:31 PM new
I had an auction winner who is demanding to use paypal and wants me to ship Express to Indonisia, a big credit card fraud country.
Yeah right. I don't even offer paypal. Seems to me though someone found a way to work around the fraud checks.
~Not barrelracer on ebay, don't pick on them!~
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labbie1
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posted on October 4, 2000 05:05:46 PM new
VM--don't do that to me when I am drinking hot chocolate! It hurts when it goes through the nose! Now I have to clean it off of my computer screen. ROFL! 
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labbie1
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posted on October 4, 2000 05:07:10 PM new
barrelracer Did you tell them that PP doesn't work for international trade at this time? Weird!
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barrelracer
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posted on October 4, 2000 05:12:10 PM new
labbie1
Last year I was frauded out of almost $3000.00 in 8 days with my merchant account from the countries of Hungary, Indonisia and Romania.
I have no doubt this guy has stolen some poor American's number and registered it with paypal.
He states he is sending it to his family in Indonisia.
I told him send me cash or forget it.
~Not barrelracer on ebay, don't pick on them!~
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labbie1
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posted on October 4, 2000 05:15:03 PM new
barrelracer Ouch!  You made a wise choice and thanks for the heads up regarding those countries.
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barrelracer
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posted on October 4, 2000 05:19:49 PM new
labbie1
You are very welcome.
At one time I think it was Billpoint who had a list of countries they do business with. If the country isn't on the list and you ever do international sales, I wouldn't take credit cards from them.
Maybe someone can give you a link to that list.
Russia is a big no go too!!
~Not barrelracer on ebay, don't pick on them!~
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kasue
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posted on October 4, 2000 05:32:50 PM new
Well, I finally looked at the fee schedule with my own eyes and saw that they WILL be charging for payments even from your bank account or the PayPal balance. I was hoping someone was misinterpreting something.
It has only been this last week that I have been getting hardly any PayPal payments from people. I can see how this could mount up. I guess I am going to have to disconnect their PayPal logo.
I have heard PayDirect mentioned on here. I know it is free now, but I also suspect that will change. In the meantime, I may as well save myself a few coins and sign up with them. They are affiliated with Yahoo Auctions aren't they? But I can still use PayDirect for Ebay? If I go to the Yahoo site will I be able to easily find my way to PayDirect? How does one go about signing up with them?
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labbie1
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posted on October 4, 2000 05:41:42 PM new
kasue PayDirect is part of the Yahoo! family of which Auctions, Maps, Search Engines, News, etc. are a part. Everything else that they do is free so far. They do say that they may charge at some point in the future.
If you go to Yahoo.com and then choose auctions, there is a banner on the right side that you can click that will take you to PayDirect. It can be used anywhere to move money to any e-mail. (If the AW CG's allow, I can post a link to the PayDirect site)
It is simple to sign up and you will get a confirmation snail mail as well.
You can either have your money transfered to your credit card or to your checking account. They do not offer paper checks.
I have had several transactions and they have all been very smooth.
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kasue
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posted on October 4, 2000 05:56:49 PM new
Thank you labbie1. I'm going to head over to Yahoo right now. I can't disconnect from PayPal until this passel of auctions have ended, but as soon as they do, I'm outa there.
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labbie1
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posted on October 4, 2000 06:42:51 PM new
kasue Good luck!
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