eBay.com purchase via PayPal.com - don't want to pay for fradulent item - not getting help wanted from PayPal

Complaints.com received the following consumer message on January 1, 2003:

From: Butch Collins [Email User]

RE: eBay.com purchase via PayPal.com - don't want to pay for fradulent item - not getting help wanted from PayPal

On August 2, 2002, I purchased three separate items from one seller on ebay. The items were described as authentic uniforms signed by "Mickey Mantle", "Joe DiMaggio" and "Ted Williams". When I received the items I immediately became concerned and immediately checked out the authenticity online. The items came from a company that was busted by the FBI San Diego field office in "Operation Bullpen", a counterfeit sports memorabilia operation.

Immediately I contacted the seller and let messages that I wished to return the item and get a full refund. I did this on three different occasions within 48 hours of receipt of the goods. I also notified that seller that if he did not respond that I would contact PayPal and my credit card company and request a reversal.

I immediately contacted PayPal and they immediately replied that they limit a buyers protection to whether the buyer actually received a shipment or not. They could not be involved with a dispute as to whether the merchandise was as described or even if there was any merchandise in the shipment. They were only concerned with whether a shipment was received and signed for and that it was shipped to a confirmed address..

At this point I contacted Citibank Visa and initiated a chargeback process. Needless to say this did not please PayPal.

I complied with all of the requests of Citibank and they reversed the charges against my credit card. On December 30, 2002 I requested that funds in my PayPal account be transferred to my bank account. I received notice that the transaction was complete and that I would receive the funds within 3-4 business days.

On 12/31/02 I received notice from PayPal that my account had been frozen and that my withdrawal of funds had been cancelled and further that I would not be able to withdraw any funds unless I agreed to reimburse PayPal for the chargeback. The funds were many thousands of dollars in excess of the chargeback. I believe that their actions were a form of extortion.

I immediately contacted PayPal and in a course of several emails and telephone conversations and the following details my contact to date with PayPal:

On December 30, 2002 at approximately 3:30 pm I spoke with Kenneth of PayPal customer service. He advised me that my funds were placed in a "Limited Access Account" which meant that I could receive money from people but could not get withdraw it. He said that this was related to the chargeback and specifically because the item was not returned. I stated to him that I attempted to return the item to no avail and that further I would be glad to return the item as instructed by PayPal with some reasonable assurances that my funds would be released. He gave me no assurances. I also notified him that I had advised my credit card company and PayPal my attempt to return the item on numerous occasions. I asked him by what legal means PayPal did this and he refused to answer. Indeed he became quite belligerent. He refused to provide an operator number or a last name. At this point I:

Emailed a letter to PayPal stating that I did not believe that the reasons stated were consistent with their own policies. I also asked for assistance as to which federal or state agency would regulate a dispute such as this. This is a copy of my email to PayPal:

You have limited access to my account. Your guidelines state: "Any of the following events may lead to your account being limited:

Reports of unauthorized or unusual credit card use associated with the account including, but not limited to, notice by the card issuing bank;

Reports of unauthorized or unusual bank account use associated with the account;

Complaints received regarding non-shipment of merchandise, non-delivery of services, merchandise not as described, or problems with merchandise shipped;

Initiation by a buyer of a reversal process through the buyer's issuing bank without first pursuing the Buyer Complaint process described below;

Receipt of potentially fraudulent funds;

Excessive disputes or reversals, or attempts to "double dip" by receiving funds in a dispute both from PayPal and through a reversal or a refund from the seller;

Refusal to cooperate in an investigation or provide confirmation of identity when requested;

Initiation of transactions considered to be cash advances or assisting in cash advances;

Sending unsolicited email or posting referral links on websites where they are not permitted;

Opening multiple Personal accounts;

The account has been used in or to facilitate fraudulent activity;

Violations of this User Agreement;

Name on the bank account associated with the PayPal account does not match the name on the PayPal account;

Return of an incoming Electronic Funds Transfer for insufficient funds in the bank account, incorrect bank routing number, or incorrect bank account number;

Use of an anonymizing proxy;

Participating in prohibited transactions and activities, including but not limited to multi-level marketing programs, gifting clubs and other pyramid schemes, and listing items for sale that have a delayed delivery date of 20 days or more after the transaction list, and other activities that are prohibited in Part II of this Agreement;

Reports from credit agencies of a high level of risk;

Receipt by PayPal of excessive complaints regarding your account, business or service; and/or

Logging in from a country not included on PayPal's permitted countries list."

Please advise under which of these events you have initiated this action and specially what I did in violation of any of these events.

Also your policies state:

"If the dispute covers only a specific transaction, we will only limit access to funds related to that particular transaction."

I would therefore request that you remove the "Limited Account Access" unless this transaction falls within the items listed in paragraph 5-3. If it does fall under the "events" as listed in paragraph 5-3 then I would request that you limit the funds excluded to only those specifically related to the dispute until such time as the dispute is resolved.

I have spoke to Kenneth from PayPal (he refused to provide a last name or any type of identifying number) and he stated that I had a chargeback and the merchandise was not returned. I informed him (as I have done several times with Visa) that I would be glad to return the merchandise to PayPal. I requested assurance that returning this merchandise to PayPal would result in release of all of my funds and a timetable for this. He said that he could not assure me that this would result in release of my funds nor would he provide any timetable.

Please provide me with answers to my questions as stated above. I would appreciate your response ASAP. I would appreciate it if this matter can be resolved immediately.

Nathan

The reply I got from Matt at PayPal was as follows:

Dear Nathan, Thank you for contacting PayPal. In the User Agreement is states that PayPal, at its sole discretion, can

put any account into a Limited access status, at any time, for further

documentation of account information. It also states that any account in a

Limited Access status cannot have any funds removed from the account.

If you have any further questions, please feel free to contact us again. Sincerely,

Matt

PayPal Customer Service

I then replied in an email:

Matt,

I am writing because I do not feel that you have properly address the questions that I raised in my email to you dated 12/31/02. I would appreciate it if you would attempt to answer the questions that I have stated in the email.

I take it from your reply that the reasons that were provided to me by Kenneth of PayPal on December 31, 2002 at approximately 3:37 pm were not valid since you have provided other reasons for freezing my funds.

Please inform me of what type "of documentation of account information" you will require and how you will obtain that. Please inform me of the reason or need to do this. It is my understanding that PayPal obtained all necessary account information previously.

In PayPal's initial email to me it stated that the "Limited Status" was placed on my account due to the fact that I initiated a chargeback. Please either confirm or deny this for me. Further please advise me of when I can expect the "Limited status" to be released.

I have stated that I would be glad to return the merchandise to PayPal and I would like assurances that this will resolve any outstanding issue and further once again when I can expect the return of my funds. I have attempted to return it to the person that originally sold it to me. Indeed I contacted him the day it was received and requested that the merchandise be returned but he refused to reply to my requests.

I would also appreciate it if you can provide me with any type of regulatory agency (either federal or state) that I can contact to safeguard my rights in this issue.

I feel that your policy is extremely unfair and arbitrary. Further you are attempting to limit consumer rights in a manner that is contrary to the generally accepted practices of the industry. You advertise protection from fraud but you do not attempt to protect the buyer from fraud. In thirty years of credit card usage, I have never initiated a chargeback prior to this incident. Indeed through the chargeback procedure, this whole incident has come under the close scrutiny of Citibank and I am sure that they have taken a fair approach to this issue. During this process I have responded to and provided every bit of information requested by Citibank.

I await your reply.

Nathan

The reply that I received from PayPal was as follows: Dear Nathan, Thank you for contacting PayPal. We have received notice of the chargeback you submitted through your credit

card company. Your account access has been limited because you initiated

the chargeback for an 'unauthorized charge'. This means that you had no

prior knowledge of the transaction and did not participate in the

transaction in any way. This type of chargeback is usually associated with

a fraudulent PayPal Account or a stolen credit card and automatically

results in the limit of account access. If you filed this chargeback in error, you can appeal by contacting us via

webform at https://www.paypal.com/wf/f=rw_default or by faxing the

following information to 1-402-537-5755 Attn: Appeals Team/Chargeback.

Please be sure to reference your Case # found above. 1. A copy of your current Driver's License. 2. A copy of your most recent credit card statement. 3. A copy of this email. If you are appealing this limited account access, you agree to hold PayPal

harmless for the chargeback amount and to reimburse PayPal either from your

PayPal Account or by other means. If you chose to reimburse PayPal by

check please send to: PayPal

Attn: Accounting Dept

PO BOX 45950

Omaha, NE

68145-0950 If you have any further questions, please feel free to contact us again. Sincerely,

Jim

PayPal Account Review Department

My last response to them was as follows:

Jim,

The chargeback was not for an "unauthorized charge". I initiated a chargeback through PayPal because the item was not an authentic item. PayPal refused this chargeback. PayPal said that the only way they would chargeback was if an item was not received. PayPal stated that I retained all of my consumer rights through my credit card. I therefore initiated a chargeback through my credit card. At no time did I ever dispute as to whether this was an unauthorized charge. I stated to Citibank that the item was described as authentic and provided information that the item came from a company that had been busted in an FBI undercover operation "OPERATION BULLPEN" out of the San Diego field office of the Federal Bureau of Investigation. I clearly stated that I had tried to return the item to no avail.

This is the third different reason that PayPal has given me for freezing my funds and none of the reasons have been correct. I have retained copies of all of our correspondence. I expect PayPal to resolve this immediately within the terms and conditions stated in the PayPal user agreement.

I have stated on several occasions now that I will return the item to PayPal. I need assurance that this will resolve the issue and that all of the money in my account will be released immediately.

Once again I believe that PayPal has acted arbitrarily and capriciously in this matter with a blatant disregard for my rights. You have given several reasons, all of which are incorrect. Please refer this issue to someone in your company that is aware of all of the legal rights and responsibilities.

Once again I request that you notify me of any agencies on the federal or state level that would have jurisdiction or regulatory control in this matter so that I might avail myself of their assistance. Surely there must be a governmental agency that oversees these type of complaints.

I hope that you will carefully study the particulars of this dispute and resolve it in a fair and legal manner. Once again please be advised that I stand willing and ready to return the merchandise to PayPal with some reasonable assurances. Thank you.

Nathan

As you can see PayPal has given 3 different reasons, none of which are valid. They have effectively held my money hostage without legal means and they have not provided me with any hope of resolving this issue unless I agree to pay for a fraudulent item. I have to believe that this is contrary to any legal and ethical banking and consumer laws.

PayPal clearly champions "buyers protection" on their banners in their website, yet, in my situation, afford consumers with none. Indeed they will not accept the ruling of an established and reputable source such as Citibank. In their own rules and regulations it clearly states that the seller must state any return exclusions if there are none. The consumer is naked against PayPal.

I have read numerous reports where many other consumers have had their rights violated by PayPal. It seems as though they are not accountable to anyone. I solicit you assistance in this matter.

Sincerely,

Nathan P. Collins

Burke, VA 22015