Is PayPal safe to use on eBay?Recently when checking some facts on PayPal, I had cause to read the
PayPal User Agreement and was shocked to find what I had believed as a long term eBay user was incorrect.
I was of the understanding that
any auction on eBay that had the PayPal protection logo ensured that I was protected and would be refunded should the seller fail to send an item to me (say, in the case of the seller absconding or the item disappearing for whatever reason).
Here is the section of the PayPal User Agreement that shocked me - it's actually from the associated
Buyer Protection Policy specifically for eBay transactions.
PayPal Buyer Protection Policy
This policy applies to eligible transactions on www.ebay.com.au.
PayPal Buyer Protection Policy is our policy to help buyers to recover payments made in respect of eligible items purchased from the Australian eBay website (located at www.ebay.com.au) when: (a) goods are purchased but not received by the buyer (also known as “item not receivedâ€), or (b) goods are delivered but are "significantly not as described" in the eBay listing.
If your purchase meets the requirements for the PayPal Buyer Protection Policy (set out in paragraph 4 below), PayPal may try to recover your payment from the seller, ie to attempt to reverse the PayPal transaction. IMPORTANT: If you are eligible under PayPal's Buyer Protection Policy, and you claim that the item purchased is "significantly not as described" or you did not receive the item PayPal may attempt to recover your payment from the seller, but recovery of your payment, whether in whole or in part, is not guaranteed. However, where PayPal is unable to recover the whole or any part of your payment from the seller for a claim, PayPal may at its absolute and sole discretion, decide to make an ex gratia payment, not exceeding the financial limits set out in paragraph 3 below.
In order to be considered for such a discretionary payment under the PayPal Buyer Protection Policy, your purchase must have all of the characteristics set out in paragraph 4 below and you must comply with all of the buyer responsibilities in paragraph 6 below. IMPORTANT: Payment by PayPal under PayPal’s Buyer Protection Policy is at PayPal's absolute and sole discretion. You have no automatic entitlement to receive any payments. PayPal's Buyer Protection Policy does not indemnify you for the loss which you, as a buyer, may incur and it is not a contract of insurance.
This has been this way since 17 June 2008.
PayPal also has refused to be party to the EFT Code of voluntary conduct that all OZ banks and financial institutions have signed.
The EFT Code of Conduct is administered by ASIC, who recommended during the ACCC submission period that PayPal sign the EFT Code.
The reasons they won't sign is that it would make them conform to Australian legislation making them accountable and they would also have to guarantee your funds.
Does that worry you? It should.
PayPal has the reputation of refunding buyers in case of a problem of item not being received or item Significantly Not As Described (SNAD), but did you realise PayPal consider this a "discretionary payment"? That means none of us can think, "Yeah, we're safe. We paid by PayPal" without fooling ourselves. At the moment, PayPal are paying those refunds. Most of the time, they're getting those refunds for eBay purchases back from the seller. Sometimes they're not. But the worrying thing is that they have contracted themselves out of their obligations to their members.
PayPal may work fine in many cases. But I realise that there's no guarantee of PayPal protecting its users. That scares the living daylights out of me. Many people trust PayPal - but the user agreement is practically saying, "Don't trust me completely! I'll only protect you for as long as I feel like it, if I feel like it."
PayPal - Safe, yeah.