PayPal & Buying Silver Bullion
Here's another way using PayPal can be dangerous: Using the PayPal service to buy your silver bullion bars, silver bullion coins, or pre-1965 silver coins. Investing or collecting anything that's made of silver (like silver bars or coins) has always been popular. It's even more popular today because the price of silver has literally gone through the roof. If you bought silver in 2003, for example, you would have paid under $4.70 per ounce of silver. Today, we've seen silver prices hit over $47.00 per ounce! Back in 2003, you could buy a 100 ounce silver bar for $420.00. Today? Well today, you could sell that same 100 oz. silver bar for $4,200! And where there is money, there are scammers! One of the easiest ways for scammers to separate a fool and his or her money is to have you pay for that silver using the PayPal service.
Here's a great example of how this silver bullion, silver coin scam works: Let's take a legitimate silver website like http://www.silverbullionbuy.com -- at this website, they have tons of information on buying and selling silver, as well as great deals on silver bars and silver coins. But they don't take PayPal. Why? On the buyer side, a scammer can use PayPal to pay a company like silverbullionbuy.com. After they ship the scammers their silver, the scammers can then keep the silver and initiate a PayPal dispute. Because PayPal is terrified of chargebacks (according to PayPal's SEC filings, they must keep their chargeback rate below a certain percent or risk losing the ability to process credit card transactions), they will almost always side with the buyers. That means PayPal will debit silverbullionbuy.com's PayPal account for the amount of the transaction, return the money to the scammer's account, and the scammers get to keep the silver bars or silver coins. The seller loses EVERYTHING with PayPal involved!
How does this silver bullion or silver coin scam work from the seller's side? If your silver bullion dealer is the scammer, they can use PayPal to their advantage, too! Here's how:
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First, the silver bullion or silver coin scammer will take advantage of your belief that paying with PayPal is "safe." You'll be thinking that since this silver seller accepts PayPal, it must be safe to buy from this seller. That would be your first mistake. Why? Because PayPal's own Terms of Service Agreement allows scammers to get off scott free!
You buy silver bars or silver coins from a scammer. You pay using PayPal. The scammer then withdraws the money from his or her PayPal account. By the time you discover you've been scammed, the money is long gone. If you take a look at PayPal's User's Agreement, it tells you that you are not covered for your losses. The only way you'd get your money back is based on one thing: PayPal's ability to get the money from the scammer's PayPal account. In other words, PayPal WILL cover your losses if the money can be recovered from the scammer's PayPal account. If PayPal cannot recover the money, you get nothing.
Meanwhile, PayPal will send you a nice email telling you that they have ruled in your favor, BUT they will not cover your loss. PayPal will also tell you that IF they are able to recover the money from the scammer's PayPal account, they will do so. This never happens.
By this time, the scammer has already packed up shop and opened another PayPal account -- ready to work the same scam again and again.
The best way to avoid this scam as a buyer? Always pay with your credit card. With a credit card, you can always initiate a chargeback directly with your credit card issuer. In almost all cases, your credit card company will reimburse you for your loss.