PayPal and Credit Card / Bank Security

Digital_Dan

Hi

First of all; apologies if I have posted this in the wrong section. My question touches on credit cards and bank accounts so I’ve posted it here. But mods; please move it elsewhere if there is a more appropriate section of the forum.

Until last year; I used to use PayPal. I used to use it for the occasional EBay purchase and from time to time to pay for goods bought on the classifieds of various forums. My PayPal account was primarily linked to my current account and as a ‘back up’ to my credit card.

Last year; one morning I was checking my e-mails to find a receipt from PayPal for a transaction that I didn’t recognise. So I logged into my PayPal account to find a completed payment for about £10 or so that I knew I had never authorised. More worrying there were two pending transactions for £200 and £2000 to the same person (William Hill!) that were also unknown to me.

I immediately contacted PayPal who said they would investigate the transactions. I asked them to cancel or suspend the transactions immediately which they said they could not do. They reassured me that if the investigation was found in my favour that they would fully compensate me for my losses and refund any monies taken. I said that I couldn’t afford for this money to be taken in the first place; but they said there was nothing else I could do. I asked them if I ‘delinked’ my current account and credit card from PayPal whether the payments would still be made. I was told that any pending payments would still be paid. Not at all reassured by this; I went to my bank and explained the situation to them. They told me that the only way of being sure that the payments would not be taken would be to close my current account. So I had the faff of closing my account and opening another and transferring all my direct debits over. Later on; I received a call from my credit card company advising me that PayPal were attempting to take Payment. They (luckily!) recognised that this activity was suspicious and when I confirmed it; they refused payment.

PayPal never offered me any explanation as to how this happened in the first place; though did finally confirm that all the transactions were fraudulent.

All this put me off using PayPal. But PayPal is useful and I would like to use it; but securely.

My question is this. Is there a secure way of using PayPal?

Ideally; I would prefer it if PayPal was linked to an account that you could receive money to and pay in funds for any payments you made. This account should have no way of being overdrawn and ideally not linked to any card. In other words; you could pay in or withdraw over the counter at a high street bank and your liability would be no more than the balance of the account. But as I understand it; PayPal does not work this way.

Given that; is there any current account or credit card that I could link my PayPal account to that guarantees I cannot have money taken that I have not authorised or at least sets a ceiling on what can be taken by PayPal?

It has been suggested to me that I should link my PayPal account to a pre-paid debit card. I know nothing about these. Would PayPal allow this and even if they did; what are the pro’s and cons of such cards?

It has also been suggested; that I should link my PayPal account to a credit card with an appropriately low credit limit. My concern about this option is that (as I understand it) the credit card companies liability is for transactions over £100; so presumably one could still be scammed for up to £100. Is that correct?

I’d appreciate any advice regarding securely linking your PayPal account to a credit card or bank account.

Thanks.

meer53

If you have fraud on any account, for any amount, as long as the financial institution is happy that you are not involved in the fraud, you will be fully refunded. There is no £100 limit. You are confusing it with Section 75 claims where the purchase has to be over £100.

Digital_Dan

meer53 wrote: »

If you have fraud on any account, for any amount, as long as the financial institution is happy that you are not involved in the fraud, you will be fully refunded. There is no £100 limit. You are confusing it with Section 75 claims where the purchase has to be over £100.

Thanks.

So I could securely link my PayPal account to any credit card or debit card and be sure that I could recover any losses in the event of fraud?

Is there any card - credit or debit - where I could be sure that any transaction over a pre set limit would be rejected?

Whilst I'm sure that in the event of a fraud I or the credit card company could recover any money dishonestly obtained; it would be reassuring to know that any money that could be taken was limited.

meer53

The only way you would be held liable is if the card issuer can prove you have been negligent. If they feel that you have been negligent with your card, or card details, you may find them unwilling to refund you.

I have no idea whether any issuer offers a card with a pre set limit. The only way to limit losses really is to use a card with a low limit

Digital_Dan

meer53 wrote: »

The only way you would be held liable is if the card issuer can prove you have been negligent. If they feel that you have been negligent with your card, or card details, you may find them unwilling to refund you.

I have no idea whether any issuer offers a card with a pre set limit. The only way to limit losses really is to use a card with a low limit

Ok; many thanks.

Gromitt

Are you aware of the Paypal terms and conditions that say even if you there is no valid payment method (ie, not linked to a bank account or card), they can still make a payment on your behalf, and you would be legally liable for that amount? So in this case, if it wasn't found in your favour, you'd still need to pay for the amount, or PP would take you to court.

Personally, I never link PP to my current account. Thats the best they can hope for. Near zero fees for getting access to your money and then they charge the seller 3.5% or so. Nice profit there. I have it linked to my CC. I get cashback on what I spend then, instead of PP.

Digital_Dan

Gromitt wrote: »

Are you aware of the Paypal terms and conditions that say even if you there is no valid payment method (ie, not linked to a bank account or card), they can still make a payment on your behalf, and you would be legally liable for that amount? So in this case, if it wasn't found in your favour, you'd still need to pay for the amount, or PP would take you to court.

No; I wasn't aware this and find that quite worrying. I wonder if this has ever been tested in court?

Gromitt wrote: »

Personally, I never link PP to my current account. Thats the best they can hope for. Near zero fees for getting access to your money and then they charge the seller 3.5% or so. Nice profit there. I have it linked to my CC. I get cashback on what I spend then, instead of PP.

Yes; I'm starting to understand that linking PayPal to a current account is not the best thing to do.

I wonder what would be the best credit card to link to PayPal? Is there one that would be safer / more secure than another? Or if they are all the same; I suppose I should choose the one with the best cashback?

I already have a (Nationwide Visa) credit card that I use for general use. That has a higher credit limit on it than I would want to link to PayPal. I suppose I would have to find another card; but would the provider be happy to issue a card where I'm only likely to transact very small amounts from time to time? I'd only want a credit limit of a few hundred pounds.

The other question would be, if I ever received a PayPal payment from someone, then I presumably couldn't access that payment. The best I could do would be transfer it to the card balance.

Thanks for your advice.

zerog

The most "secure" thing to do is to just open and close your paypal account every time you make a transaction, if you really only use it occasionally.

Digital_Dan wrote: »

The other question would be, if I ever received a PayPal payment from someone, then I presumably couldn't access that payment. The best I could do would be transfer it to the card balance.

No, this is incorrect, you are just limited to withdrawing £500 or something. But close the account and wait for about 2 months and it will let you withdraw another £500, apparently. The most I've ever had in a paypal account is £200, so don't know for sure.

Digital_Dan

zerog wrote: »

The most "secure" thing to do is to just open and close your paypal account every time you make a transaction, if you really only use it occasionally.

Thanks.

I wasn't sure if one could just open and close ones PayPal account.

When I had the problems described in the first post; delinking my cards (or so PayPal told me) would not have prevented the pending fraudulent transactions from being processed. If I remember correctly; I couldn't even delink my cards until the issue was resolved.

zerog wrote: »

Or don't link any card, and just type your card details in each time you buy something. There is no point linking to a bank account unless you sell more than £500 worth of stuff or something.

You mean once the transaction has processed (which could take some days) remove my card details. Then the next time I want to buy something; re-enter my card details?

It sounds like a good idea; but I'm not sure if it's practical. I believe that PayPal verify each account linked to it by making a small debit (pennies) and re-crediting the account. This isn't an instant process; and probably wouldn't lend itself to buying something from Ebay for example. Unless of course I've misunderstood you or things have changed with PayPal since I last used it.

If I ever sold stuff; it would only be for the odd small amount - £10 or £20 now and again. Getting the cash isn't a big deal; but it would be nice if it were possible!

Thanks again

Gromitt

Digital_Dan wrote: »

No; I wasn't aware this and find that quite worrying. I wonder if this has ever been tested in court?

Paypal are a business. If you hold a debit balance with them, they'll request it back (like any other business). If you refuse, they'll hand it over to a debt collection agency. Some people have tried to be 'smart' and have overdrawn balances with Paypal, thinking they can't do anything as they don't have their address. A few weeks later, they get a letter and start crapping themselves.

I wonder what would be the best credit card to link to PayPal? [...]I'd only want a credit limit of a few hundred pounds.

If you have a credit limit of £250 and someone buys something on Paypal for £300 (or you forget and make several £100 payments), then you get a £12 over limit fee from your credit card provider.

So it's easier to go for a standard card with normal credit limit, and if it gets fraudulently used, report it.

and of course, treat Paypal like your bank:
Use a long password containing of both letters and numbers, and enable the 2-factor authentication. I have Paypal to text me for any transaction, and I have to authorize it before the payment goes out. So even if someone gets my password (key logger, etc), it means nothing without having access to my phone as well.

Digital_Dan

Sorry, I replied (above) to you're original post, which you've now edited.

zerog wrote: »

The most "secure" thing to do is to just open and close your paypal account every time you make a transaction, if you really only use it occasionally.

zerog wrote: »

No, this is incorrect, you are just limited to withdrawing £500 or something. But close the account and wait for about 2 months and it will let you withdraw another £500, apparently. The most I've ever had in a paypal account is £200, so don't know for sure.

What I meant was; if your PayPal account was only linked to a credit card you could only (presumably) transfer any balance in your PayPal account to that card. You couldn't withdraw it as cash and put it in a savings account. Or at least if you can; I can't see how you would go about it...

Thanks for your comments.