[Leica] OT - PayPal

["Oliver Bryk" <oliverbryk@attbi.com>]

This item may be of interest to PayPal users. I copied it with the author's
permission from the RISKS newsgroup.
Oliver Bryk

"Date: Thu, 21 Feb 2002 14:14:16 +0000
From: <max7531@earthlink.net>
Subject: Re: PayPal's tenuous situation  (Jonas, RISKS-21.92)

"After using PayPal to buy something, I learned something. I recently made a
direct purchase from a web site through PayPal.  After it became clear that
the transaction would not take place, I issued a complaint through PayPal's
complaint service.  Not being satisfied at the short explanation of the
complaint process, I decided to give them a call to see where I stood.
After much cajoling, the operator told me that the person I transferred
money to had had her account frozen due to a fraud investigation! Of course,
PayPal never prevented her account from continuing to receive money after it
had been frozen. When questioned further, the operator said that it was
PayPal's policy to allow frozen accounts to continue to receive funds so
they could continue to payoff claimants!  It seems that PayPal has a
fundamental flaw in the way it "protects" users. With normal credit cards,
the credit card company must guarantee the transaction to the merchant,
since he takes a risk by accepting a flimsy piece of plastic instead of cash
for his valuable merchandise. With PayPal, the opposite should be true. They
need to protect the buyer, since the money is paid before she receives the
goods.  I can see how millions of dollars in fraud could be committed by
exploiting this flaw (as long as PayPal is willing to reimburse complaint
issuers. :)I'm still waiting on resolution, but I have no fear. Since I made
the payment with an actual credit card, I plan on challenging the purchase
through them if PayPal's response is unsatisfactory.  Must have been
something I read on RISKS about layered security.)"




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