Paypal charged my credit card, without my permission, and didn’t tell me about it

Adding to the growing number of stories concluding that Paypal is evil [1] [2], I finally felt their cold callus fingers myself. But admittedly, I had it way easier than the poor violin seller.

I sold an old laptop on ebay (try to avoid doing this, ebay charges a 9+% commission, yikes!). I received money, transferred the money to my checking account and shipped the laptop. What I did not know is that the person who bought the computer was technologically challenged. They complained that they could not use the computer because of a relatively simple software configuration problem. I emailed back a short response about about a potential fix; apparently this wasn’t helpful enough so they filed an official dispute with ebay without replying to me directly.

When a dispute is filed on ebay, paypal immediately places a hold on your account for the amount of the auction. In my case, this money was already withdrawn. So when my last.fm subscription tried to automatically withdraw $3 from paypal for the monthly fee, the transaction was cancelled because of the hold. At this point I was irked but wasn’t surprised that paypal was giving me minor grief. Around this time VISA called me to ask me if a paypal transaction was valid - Paypal was trying to charge me for the amount of the hold! I told VISA it wasn’t fraudulent but it was an invalid transaction and to block it; I emailed paypal with my distaste for their action. But a couple days later Paypal somehow charged my credit card for the amount of the laptop and the last.fm charge. without. my. permission. and without informing me.

One month later, or about 3 weeks after the ebay buyer stopped returning my emails and phone calls (I assume either they realized their error and felt shame, or decided to give up on new fangled devices all together), the dispute was automatically closed and Paypal returned my money. But not to my credit card, that would have been too simple. I have to withdraw the money to my bank account and pay my larger credit card bill (it wasn’t until I investigated the larger than expected credit card bill today that I realized that paypal actually succeeded in charging my credit card).

So what did I learn? I learned that:

• Don’t use paypal if you can help it.(alternatives Google Wallet, Amazon Payments, Moneybookers)
• If you must use paypal, try not to keep a credit card on file with them
• Don’t sell things on ebay if you want more than 90% of the value of your item. Are there other good and cheaper auction sites out there?

Poetic Justice?

Paypal may know my credit card number, but one thing they don’t know about me is that I’m the developer of a website which processes hundreds of thousands of dollars in credit card charges every year. And right now I am considering which credit card processor to use for the website. Paypal’s demonstration of customer unfriendliness has been duly noted for this selection process.