Paypal Does Not Know How To Detect Fraud.

UPDATE!  PayPal has reversed their decision!

So, I got scammed.

Yep, it can happen to anyone, and this time that anyone was me.  But that’s really not the amazing part.  What’s truly shocking here, is how Paypal has behaved regarding this.  Pull up a chair, grab the popcorn, and settle in.  You’re not gonna believe this…

So a few days back, I’m browsing through ebay’s domain auctions (I’ve found this to be a great way to get really cheap domains that I can turn a very generous profit on via domain parking) and I stumble onto the domain shop.com for sale.  Yes that’s right, SHOP.COM.  And it’s listed at $500.  I figure that must be the starting bid… but no, it’s the BIN (Buy It Now) price!

Now I already know something funny is going on here, but it got even more sketchy when I looked at the seller.  0 feedback, and an account that was less than a month old.  So I already smelled a rat, and suspected this was bogus.  But, sometimes in business… shit happens.  Partners split up, and maybe out of anger or spite one of them sells a valuable asset way below market value.  Still, I wasn’t about to accept this at face value alone.

I called eBay to ask about the listing.  It expressly stated that it was not covered under eBay’s purchase protection program, and that wasn’t totally surprising given that it’s a digital, intangible item.  I spoke to an eBay rep who explained to me that, no surprise, the listing seemed suspicious and would not be covered by them, but that PayPal might offer some protection and I should speak to them.  So I did.

The very helpful gentleman I spoke to informed me that ever since the eBay/Paypal split recently, domains are actually covered by their buyer protection now!  This was great news and was a recent change, and this information gave me the confidence to roll the dice and see if I picked up a winning lottery ticket or not, knowing that PayPal would have my back if anything went sideways.

I purchased the domain immediately at the $500 BIN price, and was quite surprised that just a few minutes after the auction closed, the seller contacted me to ask for my Godaddy account number so he could push the domain to me.  Holy shit!  This might be my golden ticket after all!  I sent him the info he needed, and he replied saying the domain had been pushed.  But he also mentioned that it could take up to 24 hours to appear in my account, and I know from much experience that these pushes usually take only a matter of minutes.  Things were beginning to go sideways.

The following morning, I was momentarily pleasantly surprised to see a new domain waiting for me to accept in my Godaddy account!  But after I actually focused my eyes and saw that the domain was not the valuable shop.com domain, but was instead a worthless domain (gigvine.co), I knew I’d definitely been had.

No problem though right?  Just call PayPal and open up a dispute.  Easy!  This should be an obvious slam dunk… he sold me one domain name, and sent me a different one.  Doesn’t get much simpler than that!  PayPal even has that exact dispute option – “Significantly Not As Described”.  That certainly describes this situation!

I proceeded to open the dispute, and less than 14 hours later it was closed in favor of the seller.

HUH!??!????

I called PayPal again and spoke to another agent.  I explained the situation to her and she gladly appealed the decision for me, all the while being very polite and sympathetic.  But once again, less than 24 hours later, the case was again closed in favor of the seller.

OK, WTF PayPal… what is going on here?  Their email to me seemed to have a tidy explanation:

In response to your non-receipt complaint, the seller provided reasonable proof that the domain was transferred. Therefore, in accordance with our User Agreement, we cannot reverse the transaction. If any issues in regard to your claim remain unresolved, we encourage you to work directly with the seller to reach an amicable resolution.

Now I know something is really screwy at PayPal.  Whatever “proof” this seller has provided, is very obviously forged because I do not own shop.com but instead own the worthless gigvine.co!  Has nobody even bothered to do a whois lookup on shop.com?  Does nobody at PayPal use their brain?  Is there some OCR program scanning whatever fake documents the seller sent and deciding they look legit?  WTF!??!

I call PayPal again, and again explain the situation.  I’m put on hold a while this time and eventually the dispute is reopened once more, but I’m asked to provide some documentation regarding the situation.  Now I happen to have a large enough domain portfolio that I have my own personal rep at Godaddy, so I asked the PayPal rep if a letter from Godaddy would be sufficient.  I was told yes and to submit it with the claim as soon as I could.

One quick phone call to my stunned Godaddy rep, and a letter was on its way to me clearly stating that the domain has never been held by Godaddy in the first place and so could never have been pushed to me, and is also definitively not in my possession.  I attached this document to my dispute and waited once again.

Big shock… but less than 36 hours later the case was again closed, without any new reason being given.  I called PayPal once more, explained everything yet again (since you can never deal with a specific person there, everyone who answers the phone always has to read all the notes from scratch), and was told that the letter from GoDaddy was there but somehow did not get attached to my case.  He attached it for me and reopened the dispute yet again.

This time it was almost 2 days to get a response, but it was yet again in favor of the seller.  I placed one more (ultimately final) call to PayPal to discuss things, but this time I was flatly shut down.

The woman I got this time was unyielding in her insistence that the documentation provided by the seller was legitimate.  When I asked what exactly they had seen, I was told “screenshots”.

Yes, that’s right.  SCREENSHOTS!!  Not only that, but after I explained to her how easy it was to make a perfect fake of any screenshot (right click, inspect element, change to whatever you want, save screenshot), she was adamant that they could tell that this had not happened and that everything was real and legit.

To quote the great Gary Oldman – UNBEFUCKINGLIEVABLE.

The rest of our call was somewhat heated, as I was understandably more than a little frustrated.  But she would not budge, and simply stood by her assertion that they are trained to be able to tell forged documents from real ones and that everything the seller provided was legit, and that if I was unhappy with the decision I should contact my credit card company or seek justice via Small Claims Court.  Nevermind the small detail that this scammer is almost certainly in another state and that I don’t even know that I have a real name for him/her or any actual information to go on that would be needed in a legal action.  Oh yeah and he’s now deleted his eBay account so that I no longer have any direct means of communication to him and neither does eBay.  SMH.

Whatever “training” PayPal’s agents receive in fraud detection, they seriously need to go back to school.  To blindly accept screenshots as proof of anything in 2015, is absolutely mind boggling.  And to tell me that they can tell if they’re real or not is even more so!  This is such a simple transparent scam, I can’t imagine anyone with a brain stem would not see what’s happened here.  I’m fairly confident that it went down as follows:

Seller sets up a new eBay account expressly for this purpose and lists a very high value domain at a very low price.  Someone comes along and buys it, but since the seller doesn’t own said high value domain, he instead pushes a worthless domain over to the buyer.  But in so doing, he has created a perfect, authentic trail of screens showing the entire process.  All he has to do is right click on (in this case) “gigvine.co” on every screen, change it to say “shop.com” and capture a screenshot.  Do this for every page, and he has a perfect, time-accurate, set of screenshots showing the entire process of transferring the domain over to the buyer.  And there would be absolutely no way of detecting this at all, since screenshots done this way aren’t going to contain any digital artifacts the way a Photoshop-altered image would.  They will be absolutely perfect, and so for this reason would – I would expect – never be used as proof of anything!  But PayPal actually told me that they had screenshots of every step of the process the seller took to transfer the domain to me, and that it was all genuine.  Incredible.

So, that brings us, dear reader, to today.  I started asking around my various contacts to see if anyone has any connections high up at PayPal, but so far nobody does.  I’m half tempted to just go make a stink at PayPal’s offices since they’re like 5 miles away from me, but that would probably just get me arrested.  But just know that, should you ever find yourself in dispute of a transaction at Paypal, you are at the mercy of the Element Inspector as to whether or not you will get your money back.  PayPal will not apply logic, common sense, or even the slightest bit of investigative expertise to your case.

You are on your own.  And good luck with that!

JVC

 

29 Responses to “Paypal Does Not Know How To Detect Fraud.”

  1. Bob Vila says:

    I agree that paypal sucks and is in the wrong, but holy crap, are you that stupid? Yea, you have the right to walk down a dark alley at night, but should you? NO. Anytime you pay with paypal, consider the money gone for good. That’s why you should only fund through your credit card so you can dispute the tx.

    • ToolTrainer says:

      I was taking a calculated risk, so no I’m not “that stupid”. Never in my wildest dreams would I have expected PayPal to accept screenshots from the seller, as proof of anything. I suspected the whole transaction from the get-go, but like I said… sometimes in business, shit happens and someone ends up with an unimaginable deal because someone else acts hastily, angrily, or whatever. I expected PayPal would have my back and worst case, the whole transaction would be reversed and nobody would be out anything. Clearly, PayPal did not do even a minimum of what I would think would be expected of them.

      JVC

  2. jackson says:

    I am consistently amazed that PayPal is still in business. The extraordinary way they rip off everyone in the world with their massive currency exchange rate spreads is just the tip of the iceberg. We also used them for awhile as our company’s credit card processing agent. That was a fiasco. This company is so poorly managed or out of touch with the technology they are trying to sell, I can’t imagine why a fantastic competitor hasn’t sprung up to devour their market. I hope their days are numbered.

    • ToolTrainer says:

      I’ve also been amazed nobody has come along to unseat them. I’ve used them since they first started around 1999/2000 and there’s no denying the service is much needed, but yeah… they operate in a pretty poor fashion and pretty much with impunity.

      JVC

  3. David says:

    Why don’t you set-up another account showing, in 100% legit detail, someone “selling” you the PayPal.com domain.?

    • ToolTrainer says:

      LOL yeah someone in the ycombinator comments suggested the same (maybe it was you?) Brilliant idea, wish I’d thought of that when I had that idiot on the phone.

      JVC

  4. fnch says:

    I love to call this the “UX wall”. Once you get behind the expensively crafted UX of modern corporate SaaS you’ll regularely find that engineers can’t automate human behaviour and UX suddenly degrades. More often this is observable once a service rep can’t use standardized text templates.

    Propbably impossible to hire good service personal for reasonable money once your firm operates at scale.

    For the sake of paypal, i hope your case gets some traction. I actually love to use paypal and i don’t want them to stagnate on such important processes.

    Just posting here because of the vile content from Bob Vila. I hate to see unfriendly content and just went from invisible average guy to visible commenter to say: You don’t seem stupid for taking that risk under the assumption that paypals fraud protection works as intended. Thanks for sharing this story.

    • ToolTrainer says:

      I appreciate your sentiment, thanks. Scammers definitely don’t only succeed in scamming the stupid. In fact, quite often the smarter the person, the more susceptible to manipulation they can be because you can play on their logical mind. Like my logical mind expecting PayPal to protect me and not accept the seller’s word (which is all those screenshots are as good as) that he actually sent me what I paid for.

      JVC

  5. TR says:

    You should file a complaint with the FTC and your local/state consumer protection office. https://econsumer.ftccomplaintassistant.gov/
    You may not be the only victim.

    • ToolTrainer says:

      Yeah that sounds good in practice, however I’ve filed complaints before with the FBI and similar authorities about actual federal crimes I’ve been privy to online, and absolutely nothing was ever done. Nobody ever even contacted me or anything… so I don’t have much faith in such avenues. That’s why I decided to simply use this as a public service to others that PayPal may not be there for them – even in the most blatant egregious and obvious cases of a fraudulent sale. I could’ve just hid my head in the sand but I don’t feel that does anyone any good, including myself.

      JVC

  6. Cong Nguyen says:

    I feel bad for you, man.
    Why don’t you do the same and send it to PayPal?
    Let’s make a screenshot of your account showing that you own PayPal.com and ebay.com. They will think you are one of their CEOs or so 🙂

    • ToolTrainer says:

      Yeah I’ve had that exact thought. And if PayPal would communicate via email I might just do that. But of course they don’t so I have nobody to send it to… and they don’t want to take my calls anymore.

      JVC

  7. Ian says:

    You could try your hand in small claims court for shits and giggles, assuming their TOS actually does spell out buyer protection that they didn’t uphold. You might be surprised.

    http://www.huffingtonpost.com/aaron-greenspan/why-i-sued-google-and-won_b_172403.html

  8. tt says:

    This happens when you are too greedy, I can’t even feel sorry for you, a simple whois query would have save you the money. Look, I’m selling pizza[dot]com for one thousand dollar, do you wanna? LOL…

    • ToolTrainer says:

      Fortunately for me I’m not after your sympathy.

      A whois query will tell you nothing except who currently owns a domain. If I offered one of my domains that earns an average of $4,000/year in revenue for sale, all anyone would learn from looking at the whois of that domain, is that someone owns it. They wouldn’t see my name however, or my address, because everything is under my business. So unless they knew me personally, they would not likely be able to discern from whois alone that there is anything unusual about the ownership information.

      JVC

  9. A says:

    File a bbb complaint. You’ll get a response within a few days from someone who knows what they’re doing, and it should be resolved shortly.

    Or you could try PayPal executive escalations first (Google for various email addresses you can use).

  10. FratK says:

    Hi, I am selling google.com. Just 499$. Legit. Promise. Reply with credit card details.

    LOL!

    • ToolTrainer says:

      Yeah and PayPal will clearly side with you as long as you provide them screenshots showing that you transferred it. What a deal!

      JVC

  11. beagle says:

    You can file a Better Business Bureau , I’ve done it once or twice with major companies like Comcrap and At&t. After they get a noticed from BBB, they respond back to my cases like their @$$es was on fire.

    As for TT replies, I don’t think that person even read the entire story X_x. Paypal and eBay has been turning a blind eye to scams and counterfeits left and right. As long as they get their cut of the share in transaction fees.

  12. hrm says:

    If you bought it with a credit card (and I hope you did), just call the credit card company and file a chargeback. If you bought it with a debit card using credit, you also have this right.

    I do not rely on Paypal protection for anything, it is absolutely worthless. Even threatening Paypal representatives with a chargeback does nothing (once a chargeback is filed they must pay a fee, usually $20-40). I literally don’t even contact Paypal first anymore, I just file the chargeback.

    • ToolTrainer says:

      Yeah all but like $75 of the charge went on my Amex card, so I’m filing a case with them too. I just hope they don’t ask PayPal what they did about this because they’ll just say it was resolved and there was no fraud and that will be that. Hoping Amex is smarter than PayPal… wouldn’t take much!

      JVC

  13. chrisf says:

    Try this fraud lawyer. He sues paypal…

    http://www.consumerfraudlegalservices.com/paypal

    • ToolTrainer says:

      Appreciate the suggestion, but I really don’t have the patience or interest in dealing with a lawsuit on this. Not worth it to me for such a relatively small dollar amount IMO, better to focus my energy elsewhere. I think I’ve made my point with this post and the followup video, I’m getting a ton of traffic and it’s being retweeted & posted all over the place. Maybe it’ll get PayPal’s attention and cause them to re-examine their “fraud training” or whatever they do, and *maybe* even refund my money. I’m not holding my breath on the latter, but it would be nice to know that scammer isn’t getting away with it.

      Incidentally his primary domain is ineedgoodluck .com (don’t want to give him a backlink) in case anyone else has ever had dealings with him or any of his other properties.

      JVC

  14. Kristof Bernaert says:

    Shall I call Paypal claiming paypal.com is mine? That easy: http://screenshot.s.emp.re/image/3S061p3X250k

    tweeted here: https://twitter.com/ssstofff/status/639400405319991297

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