I will never voluntarily use PayPal.

A friend of mine posted a 700 dollar item on eBay for me. After a buyer was identified he credited my friend’s PayPal account with the money, which PayPal verified and deposited it into his bank account.

The credit card used by the buyer turned out to be fraudulent. PayPal immediately reversed all the transactions, without permission or notification they withdrew the money from my friends account. Somehow in the process they double charged him, luckily (or bad luck?) my friend didn’t have the funds in his account. He only incurred overdraft fees from other purchases.

PayPal insisted my friend owed the money and sent him and his bank, letters threatening court action. PayPal had the “debt” put on my friend’s credit report. After about 3 months of this my friend got fed up and hired a lawyer. The lawyer wrote a letter to PayPal providing copies of bank statements indicating PayPal was in error. A little while later the “debt” disappeared off my friend’s credit report and PayPal acknowledged an “accounting error.”

In the meantime I sent the merchandise on the verification by PayPal that the money was indeed legitimate. Only to be told 12 hours later that it wasn’t. By that time I had spent 40 bucks and sent a package in which I was unable to stop delivery. After many phone calls PayPal said there it was not their fault and essentially it was our loss.

What irritated me was if PayPal had waited 12 hours they would have been able to verify the transaction was fraudulent. So if they were not sure it was a valid transaction why did they notify me it was? I thought their job was to provide secure valid transaction between two parties?