cancel
Showing results for 
Search instead for 
Did you mean: 

The risks of using Paypal

Steve
Seasoned Pro
Posts: 6,696
Thanks: 249
Registered: 13-07-2009

The risks of using Paypal

Is Paypal really the safer, easier way to pay online?
Quote
Does Paypal actually offer extra protection?
If you pay for an item costing £100 or more using your credit card, you are protected under Section 75 of the Consumer Credit Act. So if the retailer goes bust, fails to deliver the goods or the goods it supplies are not up to scratch, you have the statutory right to compensation from your credit card provider.
But this statutory right does NOT apply if you pay for something on your credit card via Paypal. In this case, the very safeguard you sought - having a middleman - means you no longer have a direct, legal contract with your credit card provider.
Instead, you will have to make a claim for compensation with Paypal. And that means Paypal gets to decide whether your dispute is valid. You no longer have the protection of the law.
Having said that, Paypal does offer some protection under its 'Buyer Protection' scheme. It states that it will 'help you' if you didn't receive the item you paid for with Paypal or you received an item that is 'significantly not as described'. However, there are eligibility requirements you must meet:
    You must have paid the full amount in a single payment, not multiple payments, like a deposit followed by a final payment. (Under Section 75, you can put down a £1 deposit on your credit card and pay the remaining balance by another means, and still make a claim.)
    You must open a dispute within 45 days of the date you sent the payment, and follow the online dispute resolution process on the Paypal website. (You get up to six years under Section 75.)
Both of these restrictions make using Paypal worse than buying direct from the online merchant with your credit card - if the item costs more than £100. This distinction is important. If the item costs less than £100, you don't get any special statutory protection from your credit card provider.
However, even then, you'd have more protection if you paid with a Visa or MasterCard debit card, rather than with Paypal. This is because your bank will allow you 120 days to make a claim after realising there's a problem with your purchase under its debit card Chargeback scheme. You can also make a claim for fraud and unauthorised use of your card under the Chargeback scheme.
Unlike Section 75, there's nothing to stop you making a claim under the Chargeback scheme if you've paid with your debit card via Paypal, but it might make the process more difficult. And as some banks are notoriously rubbish at dealing with Chargeback claims, personally, I would be wary of adding a layer of complexity to the transaction.

Source
5 REPLIES
Community Veteran
Posts: 2,286
Thanks: 219
Fixes: 1
Registered: 04-08-2009

Re: The risks of using Paypal

All quite correct, but in practice, and in my experience, Paypal's dispute resolution procedure is very thorough and similar to that used by credit/debit cards. I've only had one occasion to refer to Paypal because of non-arrival of goods, and it resulted in a full refund, organised by them, within a couple of weeks.
Community Veteran
Posts: 5,467
Thanks: 280
Fixes: 4
Registered: 11-08-2007

Re: The risks of using Paypal

Isn't one of the major advantages of PayPal, that whoever you are buying from is NEVER in the possession of either your bank details, or your credit card information.
Effectively PayPal makes your payment details anonymous, plus you benefit from payment protection (particularly in the case of non-delivery), therefore YOU can buy in relative safety from suppliers or eBay sellers that you have doubts about.
For example, just after the London riots, a seller on eBay had 50 brand new and sealed Sony DVD players for sale at £20 (each) including P&P which normally cost £107 on Amazon.
The advert was very professional and looked to be genuine, but it did feel very much like it was "TOO GOOD TO BE TRUE" and was ringing alarm bells to me.
However after much soul searching and deliberation, I made a calculated gamble that there were only three probable outcomes if I did a 'Buy It Now' -
1) The item would arrive and it would be as described (happy me).
2) The item would not arrive - and therefore I would get my money back from PayPal (nothing lost).
3) The item would arrive and would not be as described - again get my money back from PayPal (nothing lost).
Therefore as the worst that was going to happen was that I would get my money back, so I placed my 'Buy It Now' and waited.
After three weeks it was obvious that nothing was going to arrive, and other buyers were leaving negative feedback for non-delivery.
I simply opened a PayPal claim, and a couple of weeks later my full money was refunded.
I doubt if I would have got any assistance or refund if I had bought this same item online using a credit card.
So the moral of my story is, that PayPal is a safe way to buy from dodgy suppliers, and sometimes you will get a bargain, or in the worst case you get your money back.
Community Veteran
Posts: 18,547
Thanks: 193
Registered: 12-08-2007

Re: The risks of using Paypal

I have no concerns with using Paypal.  Just made a groupon  purchase and they even take Paypal.
Moderator
Moderator
Posts: 16,562
Thanks: 1,801
Fixes: 125
Registered: 06-04-2007

Re: The risks of using Paypal

Of course, another advantage with Paypal is that you are not usually able to pay by credit/debit card to private sellers. So no waiting for cheques to clear.

Forum Moderator and Customer
Courage is resistance to fear, mastery of fear, not absence of fear - Mark Twain
He who feared he would not succeed sat still

Community Veteran
Posts: 5,345
Thanks: 609
Registered: 23-09-2010

Re: The risks of using Paypal

Never had any problems with paypal regarding items not arriving.
Over the years I've made several claims with all resulting in a full refund.