One of my most popular posts still seems to be “Apparently you can get scammed using PayPal and Gmail“, in which I received my first scam attempt from a Gmail address. The comments on this post typically are people who have avoided being scammed out of their goods, but a number of people recently are asking how the process actually works and why something’s a scam.
First of all, if the offer is too good to be true, there’s something wrong. Nobody in their right mind is going to willingly add an extra $100 upfront for shipping. People using Craigslist and Kijiji are universally cheap and will offer pennies on the dollar for your merchandise, or worse yet try to “trade” you. If you see an offer that comes in for more than you’re asking for, or adds an exorbitant amount for inconvenience, you’re getting greedy and stupid.
Second, nothing is ever final with PayPal. There are countless horror stories online, but let’s just be clear for people who think PayPal offers any seller peace of mind:
- If you sell an item and use PayPal for the transaction, and don’t ship with a tracking number, the buyer can just claim they never received the merchandise. PayPal will always side with the buyer and return the funds from your account to theirs.
- If you do use a tracking number, the buyer can lodge a complaint and claim that the item is not as described. Supposedly they are required to return the item to you, but PayPal will just return the funds to their account.
- In the event of any issue with the transaction, the buyer always wins.
Oh, wait, you say. But what if I immediately withdraw the funds from my account once the buyer has paid me? Then PayPal can’t do anything?
Actually, they can. PayPal will put your account into a negative balance and any funds you add or receive will first go towards that negative amount. If you keep a negative balance for over 30 days, they will send you to collections and close your account. This will eventually appear on your credit report and you will be constantly hounded to repay the negative balance. It doesn’t matter that you were scammed out of your money; you’ll have to dispute the payment and likely take the matter to court to have it resolved.
PayPal is not seller-friendly. The only reason people use it on eBay is that it’s the only allowed payment choice in many circumstances, and the high-volume sellers do a pretty good job of staying in PayPal’s good graces. If you’re selling 1000 items and 10 people defraud you, you still have a 99% success rate and it’s really just the cost of doing business. The same scenario doesn’t apply for a single seller selling a single item, especially if there are other signs of sketchy behaviour before the transaction.