Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon Apr 23 2012 08:43:35

The Haggler Strikes (PayPal) Again

By: Ina Steiner

Sponsored Link

The New York Times "The Haggler" column put eBay on the spot again, catching its online payments unit PayPal in a, "our rules say one thing, our customer service reps say another" moment.

Readers of EcommerceBytes may remember when The Haggler investigated PayPal's 21-day holds policy on behalf of a reader last month. After the newspaper contacted eBay, the company told the columnist it would not only address the reader's problem, but would change its policy so it no longer earned interest from funds it held when it froze sellers accounts.

Now, PayPal told The Haggler it will retrain its customer service representatives when it comes to handling payment reviews, according to the Sunday column.

A reader of the newspaper had written to the columnist explaining that PayPal was holding its customers' credit card payments for up to 24 hours because the buyers were unverified. "This has happened even when the credit card was the corporate card of a well-known company," the seller wrote.

What was striking about the case was that PayPal customer service reps told the seller he could not opt out of the payment reviews. But PayPal PR told The Haggler the seller could opt out of payment reviews.

The newspaper then sent PayPal emails from its Executive Escalations team it had sent to the seller explaining that it was tool to prevent loss for customers and for PayPal and was not optional.

Wrote The Haggler, "it contradicts the point of the program, which a publicist said was all about protecting merchants. Now we learn that it's about protecting merchants and PayPal." It also wrote, "PayPal has a credibility problem," and said its fraud reduction policies appear to be "more about profits than risk prevention."

Be sure to read the full column about PayPal payment reviews from Sunday's New York Times here, and you can write to the Haggler (David Segal) using a form on this page.




Comments (55) | Leave Comment | Permalink

Readers Comments

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: seewhatimselling This user has validated their user name.

Mon Apr 23 11:07:50 2012

I too, was suspicious when Paypal began holding my funds last October and then again, in December and January. I called Paypal, and told them of my suspicions- that my funds were only being held in order to collect the interest it would acquire. Paypal ASSURED me that my funds were in a non-interest bearing account. I see now- that once again- I was lied to. I didn't understand the 'hold', as I had been selling on Ebay for eleven years with no problems what-so-ever, and suddenly I had become a 'Below Standard' seller..with 100% feedback and happy customers? I WILL say, in Paypal's behalf, that never were my funds held for 21 days- Only 72 hours after delivery was confirmed.  

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Steevo This user has validated their user name.

Mon Apr 23 11:51:00 2012

If you are selling high risk items (cellphones might be one, collectables might be another) and have any significant number of chargebacks or disputes paypal can be expected to hold funds to protect themselves.  

It would not be sound business practices for paypal to essentially give you unlimited credit by giving you the money and fighting you for the money back if the buyers does a chargeback.  

By their holding your money they are protecting themselves on the transaction.  Sound business practices.

You are just going to have to suck that up.  Or don't take paypal.  Or only sell those items face to face where the condition can be agreed on before cash changes hands.    

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Will This user has validated their user name.

Mon Apr 23 12:34:59 2012

Steevo, your assessment of ''high risk'' items is noted.

However, we've seen numerous instances of seller's items in other categories - not considered ''high risk'', but also had their funds held.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Henry This user has validated their user name.

Mon Apr 23 12:35:22 2012

This is interesting because just this morning I had a buyer want to cancel a purchase because PayPal told him if he did not become PayPal verified his number of transactions would be limited.

Now PayPal is limiting buyer's transactions even though they have a credit card in good standing.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: blaumann This user has validated their user name.

Mon Apr 23 12:35:27 2012

Steevo, your post is stomach turning. Collectibles is risky? Not after 25 years with few disputes at all. Paypal uses the holds to enrich themselves. If a seller is that shaky, EBAY should off them.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: TrentDep

Mon Apr 23 12:36:02 2012

~ On Paypal's behalf...~

Really?  ONLY held for 72 hours after confirmed delivery?  

At its current state, and considering the high fees sellers pay for Ebay / Paypal's services, ANY hold is a joke.

Payment processing involves risk - it is the nature of the beast.  While taking ( roughly ) 2 - 3 x the cut as more traditional payment processors, Paypal still wishes to absolve itself of any risk...

A hold of 72 seconds from the time they secure a CC authorization ( or - in many cases just deduct the amount from the Paypal balance ) is too long as far as I'm concerned.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: TrentDep

Mon Apr 23 12:43:26 2012

Steevo - while your point is certainly valid, the problem with it is...

From those I know personally, and from what has been posted on eCommerce, most sellers hit with holds are not problem sellers, are not selling in, nor recently moved into high risk categories - and generally are at or near 100%, with few if any claims...

As with much of Ebay / Paypal's policies, there simply is no ~real~ criteria - it would be a stretch to label these actions as ~ Risk Management ~ ...

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: elpereles
Web Site

Mon Apr 23 13:01:43 2012

I can understand that the system take 24 hours to check a sale and hold some money to pay charge backs, but if the seller business model is based on speed and easy to get the item like the one in the story. It isn't fair for the seller to wait for every sale. Some buyers out there believe that every seller control PayPal data and other that with just click in the keyboard the item is already ship.

For example as a buyer. If I buy a digital item like a software license that I need right now. Waiting 24 hours. It is a no go. What I will think first? Obviously, the seller is lazy and I will not recommend him/her.

''You are just going to have to suck that up.  Or don't take paypal.  Or only sell those items face to face where the condition can be agreed on before cash changes hands.''

@Steevo, I believe it is a better way to said it.  

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Red Ink Diary This user has validated their user name.
Web Site

Mon Apr 23 13:23:28 2012

@Steevo

The definition of high risk in Bayspeak is 'everything, including the kitchen sink AND the dirty dishes waiting to be washed.'

In the past 'high risk categories' in addition to the standard suspects, (electronics, computers, cellphones) have included beds, bedding, mattresses, baby goods, used clothing (not designer stuff), new doll clothes, books, greeting cards, craft supplies, quilt patterns and I am sure there were more I didn't hear about.

Rampant criminality and fraud in the greeting card and doll clothes sector? Who knew?

Real payment processors list categories they consider high risk, eBay/PayPal do not, for good reason. If you do not specify, then you can make anything you want high risk citing evidence from your super secret data banks.

After all saying 'everything is high risk' might raise some red flags in today's regulatory minded financial oversight circles.

If credibility is your goal (as opposed to cheerleading) a simple Google search including the words "PayPal," "high risk," and possibly "holds" and "rolling reserves" would have gotten you all that information in seconds.  

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: thehosst
Web Site

Mon Apr 23 13:38:57 2012

Hello Ina, great article. Paypal holds the money after we upload tracking, shows as delivered and it can hold it for months, I mean more than 6 months in some cases, the "we are reviewing the transaction" is nothing but a lie. I think is about time the IRS of any other government institution stops paypal from making money out of holds that do not have a base or on issues that have clearly been solved. Paypal used the hold money as collateral and makes billions on interest which are never given to the account holder. If you click on rolling reserve transactions, you will never see which transactions are part of the hold neither. temporary holds and rolling reserve scams are a huge problem that now after 4 years is not solved, that is quite a lot of money made for praypal and this has to stop.  

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Beth This user has validated their user name.

Mon Apr 23 14:06:44 2012

In 2008, at eBay Live in Chicago, the then President of Paypal stood in front of the audience and say ALL buyer accounts should be considered confirmed and that Paypal would protect us if we shipped to them asap even if it said they were out of the US or they were Unverified.  So is that null and void now?

They are SO not inspiring confidence these days.  Worse than eBay in fact.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: pace306 This user has validated their user name.

Mon Apr 23 14:10:13 2012

The bottom line for ALL of this is simple - Paypal is an eBay company and they follow eBays mantra - never loose any money - push it all on the seller.

eBay takes less then zero responsibility for everything they do, and that mantra is carried over to Paypal.

eBay cant tell you where your listing will be, it wont tell you exact times it will be shown, they make the buyer have almost NO responsibility in the sale process, refuse to let sellers leave feedback, make sellers responsible for delivery issues and more!

Paypal takes all a buyers information, takes YOUR money then doles out just enough to make sure THEY are covered in case of a chargeback - not you. Oh and then they charge you $25 for the priviledge of fighting it for you!

Paypal has told me everytime I had an issue ''loosing money is part of business - suck it up!''

Really Paypal .... ? seems like the shoe is on the other foot now, huh!

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: Ming the Merciless

Mon Apr 23 14:37:38 2012

Certain posters seem to pop in here only when the bright light of negative media attention is aimed under the slimy rocks where ebafia and PreyPal live.

But people know who you are now and won't pay any attention to you in the future.

To say that PreyPal has a credibility problem is like saying the ocean is a little wet.

PreyPal and its evil parent are far worse. They are a criminal syndicate whose policies encourage and assist massive buyer fraud, whose laughable "protection" policies protect no one except them.

The Haggler should send the ebafia and PreyPal UAs to one of their in house attorneys to examine.

While certainly a highly commendable start, the "Times" has just barely scraped the tip of the criminal iceberg.

Thank you, Haggler!

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: comet This user has validated their user name.

Mon Apr 23 14:41:37 2012

STEEVO----

I have never sold---or bought---a cell phone on ebay.  Nor do I buy other electronics there.

I DO sell used clothing tho.

And I really really seriously double dare ya to find me anywhere in the universe where selling a pair of USED SHORTS is HIGH RISK.

Unless they are Justin Beiber's shorts and being auctioned off to a room of tween girls with Daddy's charge cards---

Soooo----why oh why did PreyPal see fit to "review" and HOLD my $$$ from that transaction?  Dunno now and probably never will.  

Think these things thru before you post 'em,  OK?

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Steevo This user has validated their user name.

Mon Apr 23 15:28:31 2012

It's all about risk.  Every business has to take risk.  

You take risk when you describe something, post 17 pictures and sell it for $6.  The risk is the buyer might not like it, rip you off, charge you back, be completely unreasonable. The risk is you might not make any money at the end. There's plenty of risk with these kinds of transactions.  Way too much risk IMHO.  

The important lesson to learn in business is how to manage risk properly.  If your item is too cheap and the rewards are too small for the sales effort, labor, overhead and trouble the sale represents, that's a broken business model.

There's plenty of ebay sellers with broken business models and they all seem to frequent this forum.

I am always amazed at the sellers who call in on the ebay radio and talk about how they are selling a $3 item and shipping it free in a first class envelope.  I just can't see how you could make any money at all doing that. Too much motion, too many shipped items, too much risk for not nearly enough money.  That's not a business, it's a hobby.  I don't have time to deal with anyone who doesn't want to spend enough money to make it worth my while.  If I have an item that can only sell for $25 I throw it out, unless I have 50 of them and I got them free.  If I had to buy them I might need to have 200 to make it worth selling.

So learn about business risk and how to manage it.  What risk your business can take and what it can't. Mitigate your risk by charging correctly for your items so you make enough money to be worth the risk you are taking.  If you can't get that much find something that is more profitable or go out of business.  

Back to Paypal, they know more than we do about what transactions are risky.  They have metrics on that and they spend a lot of time managing the risk.  They *HAVE TO*, because they only get 2.5% of the transaction and they have 100% of the risk that they can't collect it back from you, the seller, and that does happen.  If enough transactions were to go bad and cost them money they would have to go out of business.  Think about it!  A $100 item, all they can get is $2.50, but their risk is the whole $100.  Ridiculous. That's risky!

So they manage their risk by holding the funds from a few transactions, and I am sure it's very few.  I have never had that happen in millions of dollars of sales through eBay and Paypal but we get almost no chargebacks and almost no disputes, mostly because I carefully manage my business risk to avoid that.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: Ming the Merciless

Mon Apr 23 16:15:06 2012

Poor, poor, POOR PreyPal!

Someone pass the collection plate for this corporation so close to going on welfare and life support.

I need a kleenex to wipe away my tears, but kleenexes are high risk items.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: Anonymous Annie

Mon Apr 23 16:23:08 2012

2.5 percent? Such open hostility toward the ''hobby sellers''? Smug and sanctimonious. Absolutely disgusting.


Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Steevo This user has validated their user name.

Mon Apr 23 16:29:23 2012

Har Har Har.  

If you have a hobby of selling things which don't make enough money to pay your electric bill stop complaining about everything.

In the scheme of things your hobby activities are just not that important, are they? Take up bowling instead, you won't have to worry about FB, DSRs, nothing.

I am doing all this to make money, as is ebay and paypal.

Get used to it.


Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

This user has validated their user name. by: Anonymous Annie

Mon Apr 23 16:39:25 2012

Honestly, I fail to understand what motivates someone to taunt and ridicule small sellers? What purpose does it serve? If the plight and complaints of small sellers annoy you so much, why do you come here at all? If you have any words of wisdom to offer, why serve them poisonous contempt? It's clear to me that you're not here to help... but merely to brag, boast, judge... and to belittle and find fault. Such petulant behavior reveals more about you, your motives, and possibly your identity, than you probably realize. Again... disgusting.

Perminate Link for The Haggler Strikes (PayPal) Again   The Haggler Strikes (PayPal) Again

by: Steevo This user has validated their user name.

Mon Apr 23 16:40:33 2012

I am starting to understand.  Ebay apparently has a serious problem with sellers who don't ship properly, which is why the DSR system.

Why they have set standards for seller performance. Why they demand you ship in one day.

They apparently have sellers who take a week to find time to scrounge a box behind the liquor store and ship that out. Buyers are dissatisfied, they don't know whether they are dealing with a seller who has a commitment to professionalism or not.  A seller who has a lukewarm approach to their business, or someone who will do what they are supposed to do. It's now part of the deal. Sellers who don't take their business seriously.  

They have a hobby, not a business.  

If something is worth doing it's worth doing well.  Manage your risk, concentrate on developing a business you can make money at full time.  If the item you are selling isn't profitable stop selling that and find something else.

Anything less effort on your part, it's just not that unimportant and that's the sellers ebay wants to get rid of.

I get it now.  

Click to view more comments
1 2 3  [Next Page]


Login is required to post comments.
To sign in to leave a comment using your AB Verify User Name, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.