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PayPal Warning: Your Online Purchases May Not Be Protected When Using PayPal

If you use PayPal and think you are secure from being ripped off, be aware that PayPal may not have your back after all! If you use PayPal, you need to read this and understand when they will allow you to be ripped off and do absolutely nothing about it.

I have used PayPal for several years as a way to protect me from fraud with online purchases. Rather than give an unknown seller my Credit Card information, or any account information, I trusted PayPal to keep this information private and to add a layer of protection to my online purchases.

Until last month, I had never had the occasion to file a claim with PayPal for a purchase gone wrong.

I downloaded a software product from a company called VB Gold that is an “add-on” product to computer software development applications. Specifically, it allows me to use Microsoft’s Visual Basic Programming Environment to write programs that print documents to a printer. The software “add-on” saves hours of coding when creating printed documents and makes life much easier.

The product came with a 30 day “try it before you buy it” trial. I downloaded and installed the product and it worked perfectly. When the trial was over,  I went to the website and purchased the product for $39.95 using my PayPal account.

I had done this type of transaction many times and usually within a couple of minutes, you receive an email with the license code and instructions for activating the product.

I got my confirmation from PayPal, but no license arrived from VB Gold.

After a few hours, I sent an email to the sales address. No response. I called the phone number and left a message. I sent a fax. I left a message with their online chat representative who was not available. After a few days hearing nothing, I turned to PayPal and filed a dispute.

They have a rather long, drawn out procedure where you wait 10 days, then escalate from a dispute to a claim. Wait another 10 days and then they actually have someone review the claim and resolve the issue.

PayPal’s emails to the merchant were unanswered. No response at all. I was pretty confident that they would reverse the charge and put the $39.95 back in my account.


A short while ago I received the following email from PayPal informing me that my claim was denied.

Unfortunately, we are denying your claim because your purchase was for a
virtual, digital, or intangible item, which is not covered under PayPal
Purchase Protection.  We only cover claims involving physical items that
can be shipped and tracked.

We encourage you to work directly with your seller to resolve the problem.
You’ll find their contact information on the Transaction Details page.

Ok. Perhaps there is some fine print telling me that they only have your back if there is a physical shipment. But I had absolutely no clue that was the case. PayPal has built a business offering to protect and shield the consumer from online fraud. But apparently “digital” products are not covered.

I have purchased everything from Tax Software to Server Time with PayPal erroneously believing I was being smart and protecting myself with an additional layer of security for online purchases.

I was wrong.

It is entirely possible that the software developer who created this product is deceased, incarcerated, or just a Democrat who believes they are entitled to my money (see how I made this a political post? Clever, heh?).

The product is real. The developer or developers did a good job and created a product I was willing to buy. But something has gone wrong and PayPal is not concerned. Not their problem. And if you want to visit the same website and purchase one of the products they offer with your PayPal account, you, too can get ripped off. PayPal apparently is not concerned that they are transferring money to a ghost. I’m sure they got their cut.

I am appealing the PayPal decision. One valid reason to appeal is if you failed to receive the complete order and the product is inoperable or adversely effected. I picked that option. But I have little hope that the appeal will turn out any better.

I also stopped payment at my bank and disputed the charge. Stopping payment was probable futile at this point, but they waived the fee, so what the hell. The dispute probably has a better chance with the bank than with PayPal. But I fully expect to be out the $40 at the end of this process.

It could have been worse.

Lesson learned. I hope you will consider another method besides PayPal if you purchase a virtual, digital, or intangible item. And I hope I can save someone else from the same loss.

I have ordered a debit card attached to a savings account I already have. This account was mostly set up to receive payments online from a few advertisers and other sources, and I transfer most of that money into my other accounts, so the balance is usually not much. From now on, unless there is a really good reason to use PayPal, I plan to simply make sure there are sufficient funds in this savings account to cover any online purchases I might want to make and use my Visa Debit card. If the card is “compromised” I probably stand to lose less than I have lost with PayPal. And banking laws offer protections on bank cards that probably exceed PayPal’s benefits anyway. And as long as I limit the funds in the account to only what is needed at the time,  I really have little need for PayPal. (Which, by the way, is attached to the same savings account.)

I am sure that the fine print says exactly what PayPal claims it says and my ignorance is no excuse. And I have no one to blame but myself for foolishly and blindly trusting PayPal. And I should have spent a few hours going over the agreement and frequently updated agreements. That’s my bad.

I hope this post keeps someone else from getting ripped off. They are not worthy of blind trust and they have a lot of fine print that allows them to legally pay money from your account and not actually be your Pal.

But on this, you probably won’t need to read the fine print. There are loopholes in PayPal’s protection.

Now that you know the deal, use PayPal forewarned! Or not at all. It’s up to you.

About Tom White

Tom is a US Navy Veteran, owns an Insurance Agency and is currently an IT Manager for a Virginia Distributor. He has been published in American Thinker, currently writes for the Richmond Examiner as well as Virginia Right! Blog. Tom lives in Hanover County, Va and is involved in politics at every level and is a Recovering Republican who has finally had enough of the War on Conservatives in progress with the Leadership of the GOP on a National Level.

One Response to “PayPal Warning: Your Online Purchases May Not Be Protected When Using PayPal”

  1. Thanks for that post, Tom. Most of the purchases I do via PayPal is software ones, so this info is quite important. Have to spread the message.


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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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