PayPal Debt from my Teenager!

BooJewels

Whilst I'm not sure this is a genuine thread, I'm struggling to get past how a debt of £700 was built up between PayPal and an unsuitable bank account? I could understand it if a credit card was used for purchases, the cases I've seen on TV have been when a card has been linked to something like an app store or music downloads and the kids have accessed this registered card on the device when playing games on a parent's device.

I'm sure if I tried to buy something using my PayPal account with insufficient funds, it would respectfully point that out to me and not allow me to proceed. If it tried to secure funds from the supporting bank account, once any credit was used up, surely the same would happen - and if Sony wasn't getting funds, surely it would stop allowing in-game purchases?

Surely this scenario doesn't build up a 'line of credit', it just stops supply when available credit is used up?

masonic

BooJewels wrote: »

I'm sure if I tried to buy something using my PayPal account with insufficient funds, it would respectfully point that out to me and not allow me to proceed. If it tried to secure funds from the supporting bank account, once any credit was used up, surely the same would happen - and if Sony wasn't getting funds, surely it would stop allowing in-game purchases?

Surely this scenario doesn't build up a 'line of credit', it just stops supply when available credit is used up?

Most likely the transactions involved payment by so called 'Instant Bank Transfer'. This name is misleading as it is actually a credit facility whereby Paypal funds the payment on your behalf and later attempts to collect it by direct debit 5-7 working days later.

If Paypal allowed multiple payments of this type totalling £700 without performing any identity or credit checks on the individual, then that's quite surprising.

BooJewels

Thanks for the explanation masonic, I'd not heard of such an arrangement before.

I'm still surprised, as you say, that they'd allow the debt to reach this level. You'd also think that if the associated bank account was a junior account it should have been picked up and alarm bells rung sooner - I thought there were clues in account numbers etc. as to the nature of a bank account.

And don't PayPal verify associated accounts in the first instance, so would that process not identify it was held by a minor? I feel there are far too many holes in this story for it to be for real.

Emily_Joy

Sparx wrote: »

Really not following your logic here... What do you expect OPs complaint to be when contacting PayPal?

"Hi my son committed fraud, lied about his age and then kept buying things he didn't have the money for via your service. Please void the debt as he's not old enough to enter a contract..."

???

We (or OP) don't know what have actually happened. Basically, in my experience, PayPal would suspend the account once the Direct Debit failed. The only way I can think it could happen is that £700 was accumulated over a couple of days.

glider3560

BooJewels wrote: »

You'd also think that if the associated bank account was a junior account it should have been picked up and alarm bells rung sooner - I thought there were clues in account numbers etc. as to the nature of a bank account.

There is no way of knowing what type of bank account is being used. PayPal only know that it accepts direct debits, or not, and also the bank's name/address.

Many under-18 accounts accept direct debits, so PayPal would accept this without knowing it is a child's account.

They really should've done a basic identity check with a credit reference agency, IMO.

JmeS

unforeseen wrote: »

As he opened an account fraudulently then the police should be involved.

Or are you suggesting that PayPal should have insisted on evidence such as driving licence or passport to prove age and maybe credit check them as well

You'd have to do the same if you were applying for a new bank account or credit card? They ask for some form of proof of identity.

societys_child wrote: »

That's like saying a minor shouldn't steal from their local supermarket, as the shop should have prevented it, so it's their fault!

No its not, you don't enter into a contract to steal from a supermarket. He entered a contract with PayPal.

masonic

BooJewels wrote: »

And don't PayPal verify associated accounts in the first instance, so would that process not identify it was held by a minor? I feel there are far too many holes in this story for it to be for real.

There are hoops the child would have to jump through in order for instant bank transfers to be made available. They would need to add and confirm the bank account - but this just involves accepting a DD mandate and proving control of the account by entering a code sent by Paypal in the reference field of a 1p deposit. They would also have to add a debit card to their account.

One would hope that behind the scenes Paypal was doing more than just this.

18cc

If funds are in the Paypal account, then they would be remitted immediately to Sony. If no funds were in the account, and a debit card was on the account, then Paypal would get the funds from the debit card (or an authorisation code) and only then release the funds to Sony. If there was only a bank account added to the Paypal account then Paypal will do the equivalent of a Direct debit pull to get the funds (used to be called an e-cheque), and will notify the merchant (Sony) that it will be several days before the funding is confirmed. Only when the funds were received from the bank would Paypal remit them to Sony (several days later). There is thus no question of the Paypal account going 'overdrawn'.

Sony, on the other hand, might allow the in-game purchase to go ahead only to later find out the direct debit pull had failed and Paypal not sending them the funds. Itis Sony who will lose out.

Emily_Joy

societys_child wrote: »

That's like saying a minor shouldn't steal from their local supermarket, as the shop should have prevented it, so it's their fault!

Nope. It's like saying that a minor shouldn't be allowed to buy a bottle of wine/whisky or a knife. In case the minor bought it, it is the shop who is responsible.

masonic

18cc wrote: »

If funds are in the Paypal account, then they would be remitted immediately to Sony. If no funds were in the account, and a debit card was on the account, then Paypal would get the funds from the debit card (or an authorisation code) and only then release the funds to Sony. If there was only a bank account added to the Paypal account then Paypal will do the equivalent of a Direct debit pull to get the funds (used to be called an e-cheque), and will notify the merchant (Sony) that it will be several days before the funding is confirmed. Only when the funds were received from the bank would Paypal remit them to Sony (several days later). There is thus no question of the Paypal account going 'overdrawn'.

Sony, on the other hand, might allow the in-game purchase to go ahead only to later find out the direct debit pull had failed and Paypal not sending them the funds. Itis Sony who will lose out.

That's not quite true. An eCheque is used only if the bank account is not confirmed and the paypal account does not have a card linked to it (see https://www.paypal.com/gb/selfhelp/article/why-has-my-payment-been-sent-as-an-echeque-faq962).

The default payment preferences are outlined here. Instant bank transfers are immediate payments and do not have the same clearance delays as eCheques, because Paypal funds the payment initially to bridge the gap between the transaction and collection of the funds by direct debit. The receiver (Sony in this case) receives a cleared payment and is only at risk in the case of a Paypal dispute being raised or fraud. In this case, it appears the debt was sold on by Paypal and it has not yet come to light that the debtor is under age, so Sony is in the clear.