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May 2011


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PayPal Raises Fees and Fines Across the Board

San Jose, California -- eBay, parent company of Paypal Inc., is taking advantage of its monopoly position by raising fees and fines for those doing business with PayPal. eBay has been harshly criticized over the last few years for raising fees for those buying and selling using their popular online auction service. eBay is now tightening the screws on its PayPal customers by forcing them to pay higher fees and fines for Terms of Service violations, currency transaction fees, use of PayPal's virtual credit card terminal, the use of PayPal's Payment Pro service, foreign transaction fees associated with the use of the PayPal ATM/Debit Card, promotional financing fee increases and higher fees for PayPal Personal Account holders that receive funds for in country and out of country transactions.

Since PayPal has complete control over your money while it is in their pooled bank accounts, PayPal has raised the fines for certain Terms of Service violations. Previously, users who PayPal thought violated their Terms of Service Agreement were fined $500. PayPal would debit the amount from user accounts with no appeals. That amount has now been raised to $2,500 per violation. Users who have been wrongly accused of violating the Terms of Service Agreement will find §2,500 debited from their PayPal balance for each violation. Should the user not have the funds to cover the total fines, PayPal will be allowed to debit the amount from the user's credit card or checking account. According to PayPal's User Agreement, should they not be able to recover the funds from the violators, PayPal will send the user's information to collection agencies. PayPal has been condemned by thousands of customers who were wrongfully accused of violations and found out their money had disappeared into PayPal's coffers with no opportunity for appeal.

Explaining the increased fees and fines, PayPal said, " We are a business that serves a new and exciting market. As that market changes, our business evolves." Following that explanation PayPal announced the following increases effective immediately:

Beginning August 23, 2007, section 10.5 of the PayPal User Agreement is being amended to allow PayPal to hold your funds for up to 180 days and fine you up to $2,500 (increased from $500) for violations of the Acceptable Use Policy.

The pricing for Virtual Terminal will be increased to 3.1% + .030 per transaction. A new Authorization Fee will be added. The Authorization fee is .030 and will be charged for every successful authorization that is not captured. PayPal will now have the discretion to increase your Transaction Fees by adding Additional Fees. In order for PayPal to add Additional Fees, PayPal will provide you with 30 days' prior notice of the fee increase. If you do not agree to the Additional Fees, you may terminate your usage of the PayPal Pro and/or Virtual Terminal Services. Additional Fees may apply as follows: (A) if you fail to comply with the terms and conditions for the Usage of Express Checkout, you may be subject to an Additional Fee resulting in a 1% increase to your Transaction Fees; and (B) if PayPal determines that your account presents a disproportionately high number of customer complaints, reversals, chargebacks, claims, fees, fines, penalties or other liability, you may be subject to an Additional Fee resulting in an up to 5% increase to your Transaction Fees.

Beginning June 7, 2007, if you make a purchase on a non-U.S. eBay website (such as or, your PayPal Buyer Protection or eBay Standard Purchase Protection coverage will be based on the protection coverage offered on that non-U.S. eBay website. The PayPal Buyer Protection coverage for purchases made on (U.S. website) will remain unchanged.

The Fees section in the PayPal user agreement will be amended to include the following fee: 1% Foreign Transaction Fee for cross border PayPal ATM/Debit Card payments or cash withdrawals, or Virtual Debit Card payments. This fee will apply even if the transaction does not require PayPal to make a currency conversion.

The fees eBay sellers are charged for Promotional Financing (in addition to standard PayPal transaction fees) will be increased as follows:

Promotional Financing Offer Used Additional PayPal Seller Fee if paid on or after February 28, 2007
No Payments or interest if paid within 3 months 0.90%
No interest if paid within 6 months (payments required) 1.75%
No interest if paid within 12 months (payments required) 5.00%
12 months fixed payment with 12.9% APR 1.25%
24 months fixed payment with 12.9% APR 2.75%

Promotional Financing is financing on special terms that qualified eBay sellers can offer for items they are selling to customers who have PayPal Buyer Credit or PayPal Plus Credit Card.

Personal account holders may receive up to 5 credit card, debit card or Buyer Credit funded payments per 12 month period without having to upgrade to a Premier or Business account. Personal account holders who receive a card or Buyer Credit funded payment will be charged a fee of 4.9% + $0.30 USD for domestic payments and 5.9% + $0.30 USD for cross border payments.

Signature based cash withdrawals from a bank using PayPal Debit Card will be subject to a $3.00 USD fee in addition to any fee assessed by the bank. In addition, cash withdrawals will not qualify for the PayPal Preferred Rewards program.

PayPal will no longer be offering the Money Back Guarantee program.

PayPal's Buyer Complaint Process will be amended so that if a buyer makes a claim under the terms of eBay's Standard Purchase Protection Program for a payment made in Euros, the maximum payment will now be €230.00 EUR, with the eBay processing cost being €25.00 EUR.

PayPal's shoddy and criminal business practices have been taking a toll on its customer base. It is estimated that of the 143 million customer accounts it has, more than half of those accounts are limited, frozen or inactive. To make up for the loss of business, PayPal has resorted to freezing more customer funds and charging higher fees and fines to current customers in good standing.

Verified now, but what about next time?

PayPal's New "Advanced Risk Predictors" Software To Cause More Account Limitations, Freezings, and Invasions of Privacy

Boston, Massachusetts -- On June 13, 2007, PayPal announced yet another innovation into its ongoing battle with fraud.

Paypal Inc., still struggling with a software system and customer service system which arbitrarily freezes users accounts and transactions for no apparent reason, unveiled their "Advanced Risk Predictors" program on the last day of eBay's Boston Developers Conference.

Paypal Chief Technical Officer, Scott Thompson, said "Fraud has slowed the growth of ecommerce." He failed to mention that perhaps a factor in the slowed growth of ecommerce was the millions of Paypal user accounts his company has limited -- along with the tens of millions of dollars associated with those accounts that cannot be used to propel ecommerce forward. Continuing, Thompson said Paypal will use the 9 years worth of unique information it has on its customers -- past and present --to help merchants make more informed decisions about which transactions they should accept and which not to accept. Personal information of all eBay customers -- past and present -- will be used as well. Mr. Thompson calls this "deep historical information." In other words, PayPal is going to take your personal information and use it to determine if other people with similar traits pose a probable risk or not.

While Paypal has said it will begin testing the service in August 2007, it has failed to address the numerous negative impacts this system will have overall. Such concerns include the fact that PayPal's current fraud detection system arbitrarily and liberally freezes and limits user accounts for no apparent reason. The new "Advanced Risk Predictors" software, to fully rollout in 2008, promises more of the same.

Not only will PayPal have the ability to freeze or limit account based on calculated probability a transaction is risky or fraud is apparent, sellers will have the ability to accept payments or not based on PayPal's recommendations. And those recommendations are only based on what a computer says.

What this amounts to -- along with PayPal's current tactics -- is employing sanctions on well meaning customers and sellers before any crime has even occurred. The logical process of completing a transaction first and then dealing with issues once a complaint is lodged will no longer be the norm. Being verified by PayPal will mean nothing. Buyers and sellers will have to scratch their heads and hope transactions go through on a case-by-case basis.

User Beware: Paypal Plays Psychic

San Jose, California -- Buyer and seller beware. Paypal is in the process of implementing a new program whereby it will determine which transactions are risky or fraudulent -- before the transaction is even completed. Those transactions that are deemed suspicious or suspected fraudulent will not be completed. Instead, Paypal will inform both parties who will then have to provide additional information before the transaction could continue.

PayPal is launching "Payment Review" later this summer in order to "reduce fraudulent transactions." PayPal intends to identify those transactions it believes may pose a risk. PayPal will keep those transactions pending while an investigation is conducted. Those who are familiar with PayPal's current investigative times and languid customer service should shudder at the prospect.

Once PayPal eventually completes the transaction, PayPal claims sellers will be 100% protected on those transactions. All other transactions not recommended by PayPal will be covered under the current seller protection policy. PayPal claims that the new procedure will have a positive effect in reducing chargeback issues for sellers (and for PayPal).

Mr. Jeffrey Clementz, Director of Product Marketing at PayPal, said it will be optional for sellers to go ahead and fulfill pending transactions. Those transactions, however, would not be covered under the Payment Review protection guidelines.

It is not clear how PayPal will offer 100% seller protection under the new program. If PayPal deems a transaction to be risky or fraudulent, investigates and then finds the transaction valid, the seller would be covered according to PayPal. However, a popular Paypal scam is for buyers to use credit cards to purchase something, receive the item, and then file a complaint with PayPal for non delivery or a product not-as-described. In the end, the buyer ends up with his or her money back and the item. How will PayPal protect the seller in this instance as well as other instances?

PayPal released this statement on their website recently about the new change:

Beginning August 23, 2007, PayPal will introduce Payment Review. Payment Review means that PayPal will review certain potentially high-risk transactions. If a payment is subject to Payment Review, PayPal will place a hold on the payment and provide notice to the seller to delay shipping the item. PayPal will conduct a review and either clear or reverse the payment. If the payment is cleared, PayPal will provide notice to the seller to ship the item. Otherwise, PayPal will reverse the payment and the funds will be returned to the buyer. All payments that clear Payment Review will be marked Seller Protection Policy eligible. PayPal will provide notices to you by email and/or in the Transaction History tab of your PayPal account.


PayPal and The Ku Klux Klan

Harrison, Arkansas -- PayPal knowingly did business with the Ku Klux Klan. Everybody's heard of the Ku Klux Klan. Bring up the very name and passions begin to run high. The KKK has a history that dates back to 1867. Founded by Confederate General Nathan Bedford Forrest in Pulaski, Tennessee, the KKK was established to fight the "Yankee" Reconstruction policies of President Andrew Jackson -- and to intimidate blacks into not exercising their new found freedoms. By today's standards, the Ku Klux Klan of the 19th and early 20th centuries would have qualified as a terror organization.

After a virtual extinction in terms of numbers and political influence after the late 1960's, a new KKK appeared. This new, remodeled, repackaged Ku Klux Klan was brought back out of the closet by David Duke in the 1980's. Duke's organization was dubbed the Knights of the Ku Klux Klan. This "new" KKK stressed debate over physical violence and love for white people verse hate towards others. Despite the new age marketing, the KKK could not shake off its past.

Today, there are two major Ku Klux Klan organizations operating in the United States. While membership numbers can only be speculated, they are significant enough to be noticed. Also worth nothing are the number of persons who are not KKK members, but sympathize with their goals of an all white, European America.

So what does all this have to do with PayPal?

While the Ku Klux Klan claims to be pro White, the KKK is also pro Green. Even the Ku Klux Klan needs to be able to receive and make donations, sell products and services, meet payroll and administer their organization's finances. PayPal claimed to be everybody's "pal," so the KKK thought PayPal could be their "pal" too.

In fact, PayPal was the Ku Klux Klan's pal from June 2005 to December 2005. spoke with Pastor Travis Pierce of the Ku Klux Klan, LLC. Mr. Pierce is the Ku Klux Klan's Membership Director and Public Relations Spokesman. While commenting on PayPal's services, he said, "We found the service valuable and helpful." PayPal knew it was doing business with the Ku Klux Klan right from the start.

Mr. Pierce provided documentation showing that the Ku Klux Klan signed up for a Business/Premier Account using the email address Even though the KKK found PayPal to be "valuable and helpful," things started to go down hill after the KKK began collecting significant amounts of money and then transferring their money to their bank account.

Mr. Pierce told that, "It was a real hustle having to call in and beg them [PayPal] to transfer our funds into the corporate account. They wanted us to make purchases through PayPal so they could earn on both ends." The KKK explained to PayPal that they needed their money for administration only and did not need the option of making purchases using their PayPal balance.

In December 2005, PayPal limited and closed the Ku Klux Klan's PayPal account because they were not making enough money with them. "We called to find out what could be wrong, it took several days before one of their representatives informed us our service was canceled due to the fact that our PayPal activities did not generate enough revenue for them and the fact that our website mentions race on it." Mr. Pierce went on to explain that PayPal knew it was doing business with the Ku Klux Klan and PayPal knew that the KKK has a strong focus on race. PayPal then hung up on the Ku Klux Klan.

Throughout December 2005, the KKK continued to make phone calls to PayPal. "Every call I made I got an underling who had and could obtain no information, no one could or would make a decision, or put me in touch with anyone who could. The wagons were circled and we were froze out," a calm Travis Pierce explained.

Going back to the heydays of their PayPal activities, the Ku Klux Klan provided further documentation proving that they encountered no problems with PayPal during the set up of their account, during the process of verifying all their personal and corporate information and during the five month stretch that the Ku Klux Klan used PayPal to receive funds from around the world.

Screw-PayPal attempted to obtain comment from PayPal Press Relations on this subject. A PayPal spokesperson who would not not give out her name after we identified ourselves, refused to comment on this story.

PayPal did business with the Ku Klux Klan and closed their account not because they did not want to be associated with a known racist organization, but because PayPal could not make enough money off of them.

PayPal not on Time's list!

Time Magazine Snubs eBay's PayPal

San Jose, California -- Time Magazine released its list of the 25 Best Websites to use. In introducing the list, Time Magazine said, "From Amazon and Google to Craisglist and Wikipedia, here are the sites that we keep bookmarked year after year." PayPal was no where on that list. Time Magazine sang the praises of such websites as,,,, and

Even Ebay made the list of Time's 25 best. Here is what Time said about eBay: "The online auction powerhouse sells one car every minute on eBay Motors; at StubHub, which eBay acquired in February, you can buy tickets for baseball games, Broadway shows, concerts and other events. And the charity auctions at eBay Giving Works have helped buyers and sellers raise $100 million for more than 10,000 nonprofit organizations since the program started in November 2003. Also, check out the eBay Wiki to read about -- or chime in on -- all things eBay." While most of eBay's services are impossible to use without PayPal, eBay's PayPal is left out.

PayPal markets itself as a revolutionary payment system changing the online world. Google is doing the same thing and made Time Magazine's list as one of the top 25 websites. The complaints against PayPal and its service apparently out weighed the hyped 143 million user accounts they say they have.

By including eBay, and not mentioning PayPal anywhere, Time Magazine is acknowledging what millions already know: PayPal is not your pal and PayPal is not a website that "we cannot live without."

So while Time Magazine sings the praises of such sites as,,, and, Time has nothing good to say about PayPal.

And following the old adage of, "If you don't have anything good to say, then don't say anything at all," Time Magazine showed some class and did just that. They had nothing good to say about PayPal so chose to say nothing at all.


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