Why PayPal isn't your Pal
PayPal is one of the most popular online payment systems in cyberspace today. But did you know that it doesn’t provide as
much protection as a plain-vanilla credit card?
For eBay purchases, if you get into a spat with a seller, PayPal’s buyer-protection policy will issue a refund of up to $2,000 of the purchase price. But that’s only if the seller has positive feedback from at least 50 customers and the feedback is 98 percent positive. Sellers with fewer positive ratings are granted coverage only up to $200.
In addition, you must follow a labyrinthine grievance procedure to get your money back. You can file a complaint with PayPal or with your credit card company but not with both at the same time. Only after the card issuer has refused to credit your account will PayPal get involved to help you out.
The scenario is far different--and scarier--if you’ve linked your PayPal account to a checking or savings account. Before you can claim a refund, you must generally ship the item back to the seller. That means the seller now has the item and your cash, leaving you little leverage if, for example, PayPal can’t recover the funds from the seller.
If you really want to use PayPal, follow the advice of Sucharita Mulpuru, an e-commerce analyst with the consulting firm Forrester Research, “I don’t link my PayPal account to my checking account, and I discourage people from doing that.” To avoid problems, she says, “link it through your credit card.” It’s one more escape hatch if things go wrong.
For eBay purchases, if you get into a spat with a seller, PayPal’s buyer-protection policy will issue a refund of up to $2,000 of the purchase price. But that’s only if the seller has positive feedback from at least 50 customers and the feedback is 98 percent positive. Sellers with fewer positive ratings are granted coverage only up to $200.
In addition, you must follow a labyrinthine grievance procedure to get your money back. You can file a complaint with PayPal or with your credit card company but not with both at the same time. Only after the card issuer has refused to credit your account will PayPal get involved to help you out.
The scenario is far different--and scarier--if you’ve linked your PayPal account to a checking or savings account. Before you can claim a refund, you must generally ship the item back to the seller. That means the seller now has the item and your cash, leaving you little leverage if, for example, PayPal can’t recover the funds from the seller.
If you really want to use PayPal, follow the advice of Sucharita Mulpuru, an e-commerce analyst with the consulting firm Forrester Research, “I don’t link my PayPal account to my checking account, and I discourage people from doing that.” To avoid problems, she says, “link it through your credit card.” It’s one more escape hatch if things go wrong.
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