EcommerceBytes-Update, Number 104 - October 05, 2003 - ISSN 1528-6703     5 of 8

Ask Nick Advice for Auction Users: PayPal Protection - No Protection At All?

By Nick Sevino

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eBay PowerSeller Nick Sevino (a pseudonym) answers questions about buying and selling on eBay.

Dear Nick,
I read your article on Insurance, but the part I am interested in is Credit Card Law. I bought an expensive item using Paypal. I waited for it to arrive, but the seller kept sending emails explaining why she hadn't sent it yet. After 30 days, I never heard from her again, nor did I receive the item. I found out that Paypal will not assist in recovery of money after 30 days. So, now I am out the money. Is there a way I can get it back?

Thanks for any help you can give me.

After receiving this letter I wrote Brenda for more information and found that there was much more to the situation. The item was never actually bought through eBay. The seller, who had a 0 feedback rating, put a high reserve on it and negotiated a price with her for $200 off eBay. Brenda paid through Paypal using a bank transfer, not her credit card.

This is one of the most popular scams on eBay. A seller puts a high reserve, and after the transaction is over, contacts all the buyers and negotiate deals outside of eBay. The buyer never gets the item and canít use the eBay system for accountability.

Buyers, you should know "off-eBay transactions" are against eBay's policy, it's called "fee avoidance." When a seller has zero feedback and wants to violate eBay's policy, you are asking for trouble. They donít have a reputation to protect!

As for PayPal protection, if you read PayPal's policy, youíll find that PayPal's guarantee is no guarantee at all. If you don't file a complaint in 30 days, you void the Buyer Protection. And if a seller doesn't have any money in his PayPal account and PayPal canít get the money from the seller, you are out of luck:

"You will be entitled to the return of any funds PayPal is able to collect on your behalf. However, fund recovery is not guaranteed. We will make every effort to complete our investigation and any reimbursement within 30 days of the date the Buyer Complaint Form is filed."

If Brenda had run the transaction through eBay, eBayís Buyer Protection would have covered her and she would have been refunded for $175 ($200 - $25 deductible). If she had paid by credit card, she could have charged back the transaction.

There are several ways to fund a PayPal transaction: with a U.S. checking account, a credit or debit card, or the balance in your PayPal account. If you use a credit card, PayPal "affords customers the rights and privileges expected of a credit card transaction." So using a credit card gives you extra protection should something go wrong.

It looks like Brenda is out of luck. She should file complaints with the proper authorities, , but she'll likely never get her money back. Hopefully other readers can learn from Brenda's experience.

To comment on this letter, post a message in the forums at

About the author:

Nick Sevino is a pseudonym for an eBay PowerSeller who wishes to remain anonymous. In "Ask Nick," he will answer questions about buying and selling on eBay. Send questions to

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