Searched and searched, finally decided to post as I'm not getting the clarity I need to know what to do next: Short version: I'm a small-time Ebay Seller, I get paid using Paypal, some criminal compromised another victim's Paypal account, paid me for a laptop, I send laptop, receive $$$, everything's fine. Then 2 months later victim's CC company issues chargeback, Paypal, being the hero they are, pass-the-buck to me, as though this is completely my fault. Spoke with police, and have information to offer Paypal if they'd like to go after the fraudster, but I'm quite sure from the e-mails I've received that they are only interested nailing the merchant (me). I had cleaned out the funds I was paid from my Paypal account, and closed the linked bank account for unrelated reasons, so Paypal basically is out the money, due to a fraudster compromising one of their accounts. Sucks for them, but maybe they should learn to do a better job with security. Heck, it was a Paypal "VERIFIED" account, and the fraudster had access to the e-mail account, Paypal Account, and Credit card of the victim. In Paypal's view, I owe them $618, and from what I've read on the web, they'll be forwarding this debt to NCO within 6 months, for collections. What grounds do they have to claim this as a binding debt? (It's not a revolving line of credit or a loan, and I don't really believe their Paypal User Agreement (which strips away all user rights) will stand up in court, nor would they really want to go through that. But I have no doubt NCO will try to collect, and I'm trying to avoid tarnishing my credit, while taking a stand against having the big financial companies slap the little guys for fraud problems that the big guys should be handling. When I get a letter or phone call from NCO, I plan to send them Debt Validation letter also incorporating elements of C&D to make them stop harrassing me (as I'm sure they will do). I'm guessing they'll check with Paypal, and send me back a form letter saying Paypal believes I owe them $618. Then what? I don't want to be in an endless round of back & forth, and yet I really don't feel like I should be hung out to dry here. I suppose if they don't respond to my validation, Estoppel by Silence might work. I've heard that some CAs respond to Debt Validation requests by issuing summons, which I understand is a violation of Brennan vs. Spears, and could earn me penalty fees which would outweigh my "obligation". Thoughts? I'd like to have a near-bulletproof strategy so I don't have to damage my credit (Currently 720s) Thanks, Jay
If it was a CC payment, there is federal law protecting the consumer, provided they catch it soon enough. The contract between the bank and the merchant spells out the responsibilities of each. Depending on the contract, whether the bank pays or the merchant is stuck may depend on how the merchant verified the card (for a card not physically presented). If it was a forged check, again federal law protects the consumer, provided they catch it soon enough, and the merchant could be stuck. In general, whoever thinks they are being paid, should beware. That is the first point of contact with the fraudulent act and the person committing it. What does your Paypal agreement say? What representations did Paypal make that the payment was legitimate, and what does your agreement say reguarding fraudulent payments? Does Paypal provide any guarantee of payment on a Paypal Verified account?
It was a CC payment, consumer is already being protected by his CC company. Question is whether the chargeback they did against Paypal can simply be bounced by Paypal to me. It would seem Paypal is refusing all liability here. As far as validation goes, for people receiving a Paypal payment, Paypal is responsible for verification - All I do is provide my Paypal e-mail address, and allow my account to receive CC payments. What I do for diligence' sake, is check to see if the account which paid me is Paypal Verified, meaning Paypal has checked that the listed address on the account matches the CC billing address. In this case, I also corresponded by e-mail with the buyer, who used the e-mail address linked to the Paypal account. So to me, this was a complete snow-job - Someone's entire Paypal account, AND e-mail account were compromised, and used in this fraud. To the credit card company, Paypal is the actual merchant-of-sale - that's how the charge appears on a CC statement - and it is their duty to verify the cards. Paypal is not a true bank, but rather they process credit card payments, and forward the funds (minus Paypal's fee) to Paypal users. So they are basically an unregulated payment processor. Their user agreement says basically that merchants have to eat cost in this circumstance. However their user agreement also says that if you pay someone else using paypal, you give up your right to do a chargeback, which is entirely untrue, as that is a consumer protection afforded by law. So the Paypal User Agreement is not a valid legal contract, rather a set of rules they use to regulate the user's relationship with Paypal. Simply, they try to use their user agreement to force users to comply with their wishes, and they'd much prefer conflicts be resolved using their in-house methods (i.e. Paypal dispute resolution), as opposed to consumers exercising their legal protections afforded by their credit card agreement. All of which puts the user agreement into the category of a flimsy document, which already has not stood up in court. (Witness a class action settlement, check Google). Further, they continually revise this agreement, tweaking it again and again to further isolate themselves from liability in any circumstance. The only Paypal-provided guarantee I could have exercised was if I had mailed the item to the Paypal address of record. But I relied on the Paypal Verified status to assure me I was dealing with a legitimate customer, so I was willing and able to mail to an alternate address, which I did. This is probably the only weak point of my case, a mistake I will doubtless not make again. However I do not believe this absolves Paypal of liability, as I cannot be reasonably expected to know if a Verified Paypal account has been compromised. So, as it stands, Paypal believes this is my liability, I dispute that, and we're at a standoff. Paypal is out the funds, and they're going to come gunning for me, I have no doubts. What are my options, and how will this be treated by a Collection firm? What I'm really hoping to find out, is that this "debt" is not enforceable to the degree an outstanding CC debt or Mortgage balance is, since there's been no actual "credit" extended by Paypal to me. They have not signed repayment agreement where I agree I owe them these funds. That doesn't mean a Collection Co (NCO) won't try and slap me with a negative on my credit report, but I'm thinking that there might be an advantage to be gained by disputing the validity of the debt in the first place. Any experience or ideas for my dealing (in the near future) with NCO?
Either the alleged buyer, or the thief, has your computer. You have the money, obtained from Paypal. Paypal is out the money. They have no interest in the computer. They can go after either the buyer, or you. Given that the buyer alleges theft, they will go after you for their loss. You may or may not be a consumer in this case, since you were the seller. You might not have any of the protections under state and federal law, or it might be ambiguous. If you regularly sell, you might in effect be a merchant. The agreement between Paypal and the alleged buyer may provide no protection for you, since it is Paypal's choice how they follow it. The agreement between Paypal and you may be binding if it was posted at the time you chose to use their services. If you go down that path, you would need to go to court. Can you show the alternate shipping address was used by this person in the past, or that they had claimed fraudulent transactions in the past, in effect showing that their claim they did not make this purchase is fraudulent? You could sue the alleged buyer directly, but unless you can show they actually made the purchase, and their claim is fraudulent, you would likely lose. They are probably protected against your claim they were somehow negligent by CC law. You were also negligent in sending the computer to the alternate address. Have you filed a police report on the theft, since that is what it is? In fact, you might want to do this anyway, to at least take the tax loss, either as a theft loss itemized deduction, or as a theft loss against your business income, if you sell as a business. You might also want to file a police report in the city where the computer was delivered, so if they are seeing other complaints involving shipments to that address, they might get interested. It probably boils down to this: Are you willing and able to go to court, over this amount of money? Otherwise, you will be dealing with a CA.
The law protects the consumer who does not initiate a transaction, provided they catch the fraud and report it timely. The risk is born by the party who proceeds with the transaction. If they don't like the buyer's credentials, or even the "vibes", they can not proceed. They better have their eyes open. The intermediaries, Paypal and the CC company, have obligations defined by law and contract. You can decide whether you like their terms, or not. You can juggle the duties and liabilities some other way, but there is no free lunch.
I am not regularly a seller, I simply have off-and-on sold on the side on Ebay. It is not a substantial portion of my income. (< 5%) I don't see how the agreement between Paypal and me is binding, at least not legally, as there exists no contract between us at all - they have no documentation of my agreement to their claim I owe them money, no signature, and the claim that "using their service is taken as agreement to all terms" doesn't fly in court if it is determined that their terms strip consumers of protections that are supported by existing regulations. It really boils down to whether Paypal can officially declare this a debt of mine, and how actionable that claim is. I have contacted the police, and will likely complete a police report, if only to add an arrest warrant to the list for the fraudster who is at-large. Quite honestly, I'd be happy to work WITH Paypal if they would provide transaction and contact information about the Paypal account, so I could communicate with the scammed victim, and try to zero in and target the original criminal. But they claim "privacy", and won't pursue this. So essentially, I look at it like this: Paypal is a transaction processor, and the merchant of record for the (now-reversed) credit card transaction. They chose to accept funds from a Verified buyer on their system using a credit card. For a fee, they provided a service to pass these funds to me, validating that this is their user, and I am eligible to receive his funds. Later, Paypal comes back, saying, "Oh, wait, I didn't really mean to verify those funds, I'd like them back." Yeah, well I'd like a million dollars. Sorry, but Paypal is the true merchant Much has been made how unlike true merchant accounts, Paypal accounts operate by Paypal holding the funds of its users, and in many cases freezing them or taking them. True merchant account give control, transaction detail, and legal rights to the merchant, as well as liability. So Paypal is the merchant of record - I am sorry they got scammed, but it is their own responsibility to police their own user accounts. I simply want to cover my behind so that this doesn't hurt me. And yeah, I'd pay it if it looked like that was the cheapest way out. But with the way Paypal is treating sellers, and purposely not helping to investigate/track down perpetrators of fraud, I can't see how they can try to stick this on someone else, when legally, they are responsible for the transaction, and they are in possession of all relevant transactional detail. That said, I've heard horror stories about NCO, and would like to be prepared for what lies ahead.
You may, or may not, be a consumer, as defined in either FCRA or FDCPA, since you are selling, not buying. As to whether the contract is binding, if you went to court, a judge would decide that, and if you didn't, Paypal or NCO will claim it is. You can have a binding contract without signing it. It would require that you and they "agreed" to some terms, evidenced by then acting as if you had an agreement, such as by doing a transaction. Their disclosure to you of their terms, followed by you using their service, might create that contract. They made an "offer", you "accepted", using their services. Paypal did not represent that they themselves were buying your computer. You knew you were buying from another party, to be paid thru them. What their liability in this is, depends on what the agreement between you says it is. You probably won't get far saying there was no agreement, since you would not have transacted business with no agreement. So what would a court find that agreement was? Was it what they posted on their site as their terms? Did they make some representation beyond what they say their terms are, perhaps in their advertising, or in their description of how they handle dispute resolution? Did they misrepresent what they were doing, in their offerred terms? Were they negligent in upholding their responsibilities as outlined in the "contract"? Did they violate some state or federal law, or some consent agreement? Are their terms somehow "unconcionable"? Is there anything in UCC that applies? Etc.... A court might decide on any of these issues, but for $600 you can't buy a lot of justice. Note: I am NOT an attorney.
Thanks, Ontrack for your thoughts. For $600, I do not expect to be fighting Paypal or NCO before a Judge. I also do not currently find myself with a grievance along the lines you suggested that would provide a firm grounds for a countersuit. I do believe there is merit in claiming that I have received no actual proof of a chargeback, just their e-mail saying so. I have no proof of a fraud victim, only that a (shady) buyer who now has disappeared with my laptop, and the burden of proving that would fall upon Paypal. They have refused to help me seek any restitution that could be used to repay them, and haven't shared transaction details backing up their claims. These are not violations of a contract, but they would need to provide such facts to establish a valid debt in a court of law. Otherwise, I can simply say, "no, you haven't proven there was a chargeback, I owe you nothing". I hope I can steer this towards the here and now, though. Long before court matters will be the CA dispute (NCO). My strategy with them should definately include challenging the validity of this debt, and requiring proof of my "obligation" to them/Paypal. It sounds like you think I owe them this money, or at least that in a judge's eyes, I will have no case, and that is fine, if you feel that way. However, I am a far cry from many of the deadbeats who crawl away from real personal debts they incurred. While CA's may be wretched outfits of contemptible people abusing those with few means to defend themselves, (often with harsh life circumstances that pushed them into deliquency) there are just as many people who simply refuse to declare themselves responsible when they run up debt, ducking it, hiding from it, and hoping to cash out on some FDCPA/FCRA violations (a la LizardKing). But hey, everyone, CAs included should have to play by the rules, so fair is fair. So, ASIDE from court perspectives, will I need to plan on a letter campaign of Debt Validation, Estoppel, etc, or will this play out easier than that? Anybody with thoughts or experience in this? I'd rather not be harassed, but paying $600 is a high price just to tell Paypal/NCO to shut up and quit bothering me.
You say the PayPal account paying you was verified. Did you ship to the Cnnfirmed Shipping address that Pay Pal had or to the address the buyer gave you?
Sadly, it wasn't mailed to the confirmed shipping address. That is the only weak spot of my case. Of course, this is because the person had a confirmed Ebay identity with good feedback, (although the transaction was not done thru ebay), which matched the verified Paypal identity, and e-mailed back & forth with me corresponding thru the e-mail address listed in Paypal. When asked to ship to an alternate address, I wasn't skeptical as I now would be, especially since I'd done this before, carefully, and with no problems. The buyer even corresponded after the shipment (and even after receipt, the buyer thanked me & had additional questions, which I answered). Nothing screamed fraud until Paypal came after me, when the CC chargeback hit them. Which is why, quite honestly, Paypal has no case with me, yet, as they have offered no proof whatsoever of the chargeback. I don't particulaly doubt this happened, but they haven't proven squat. Which is why I intend to nail NCO with a validation letter when they come calling. Anybody know how PP will respond to a validation demand?
Did you actually provide the fraud information from the police department to PayPal? There are a number of things that I see. First, if you upgraded to a business account, which you probably did, chances are that the FDCPA doesn't apply to you, since they are attempting to collect on a BUSINESS debt, not a CONSUMER debt. Second, you are only protected under the PayPal Verified option if you ship via trackable method to the verified address. Use of any other address leaves you to be responsible for any fraud. Hey, I had someone try to put 2 $1,000.00 charges through my PayPal account, and liquidate the recieving PayPal address within seconds of the fraud being committed. I had to go through the long, tedious, fraud process, filling out the forms, getting them notarized, sending them out CMRRR, and all the while getting e-mails that they would be sending the account to a CA, even after they had the documentation and just hadn't gotten around to it. So I understand what you are going through. But there is a process in place, and unless you sent it to an unverified address, you should have been able to get assitance by followin the process.
