PayPal Negative balance and debt collection agency

[mrskippy21]

Hi all, would really appreciate any advice on my issue'

2 years ago I sold a watch on Reddit for roughly £6000. I requested the buyer to send via goods/service payment (have messages to prove) but they sent it via friends and family. I didn't think much of it at the time, but fast forward 2 months later they filed a charge back through their bank.

Long story short

I discovered this was a known scam on the subreddit and a few victims had already been stung.

I spoke to PayPal and provided all of the appropriate evidence including paperwork from investigations conducted by US police force into the scam (as there were over 50+ victims all targeted for watches through Reddit/PayPal) but they mentioned they submitted all of this to the bank to fight the chargeback and the bank still sided with their customer and hence they had me on the hook for the amount.

They sent the amount to collections (Moorcroft) who were contacting me looking to pursue the full amount.

I got advice to go to the Ombudsman and they took 1.5 years to get to the cade (haven't heard from Moorcroft since as they mentioned they put it on pause as I went to the Ombudsman. The Ombudsman sided with PayPal stating since I accepted the friends/family payment I didn't fall under their TOS to be protected by them.

The strange thing here was that I kept in touch with the only other UK victim of the scam as the rest were US based and he also went to the Ombudsman who decided in his favour and got PayPal to cancel the debt. I mentioned this to the Ombudsman who gave me a default answer stating that all cases are individual etc and would not look into it any further (this is despite the fact the case was almost identical meaning a watch sale via friends and family through PayPal and a chargeback from the US).

PayPal offered me £500 towards closing the complaint but stated it does not show they accept liability. Following the US victims it seems for the most part they complained to their equivalent regulators and had PayPal either cancel their debt or let it remain on their account but mention they will not pursue it.

I'm not sure where to take it from here or if it is worth fighting any longer and just accept the fact I've been scammed and will have to pay PayPal, although reading these forums it seems it may be worth ignoring it as PayPal do not take it to court?

I'm considering going to the European Ombudsman but not sure if that would work as I've already gone to the UK one.

Any help or advice would be appreciated

[dx100uk]

was this before brexit and is your debt toward paypal EU?

i bet it is and quite honestly ignore them.

theres nowtt hey can do.

dx

just also remember, DCA's are NOT BAILIFFS!! they have ZERO legal powers

dx

 

[mrskippy21]

The transaction took place in October 21 and the chargeback in Dec 21 - so I guess that's after Brexit? 

How can I check who the 'debt' is towards? The Moorcroft email states: "We act on behalf of PAYPAL" 

 

Edited January 1 by dx100uk
unnecessary previous post quote removed

[dx100uk]

the creditor should be listed on your credit file.

but as you've already read, PP doesnt do court

and even if they sell the debt to a powerless DCA/Debt buyer, once they know the background they'll drop it like a brick.

dx

 

[mrskippy21]

I've looked onto Experian, it doesn't seem to be listed there.

Moorcroft contacted me roughly 1.5 years ago before it went to the Ombudsman.

Does this mean they've purchased it or just acting on behalf? 

PayPal offered me £500 to drop/resolve the complaint, should I accept it even if I don't have plans to pay? 

I understand from reading the previous threads on the matter, but they all seemed to be smaller 'debts' relative to mine, would I not be chased by PayPal since it's £6k for them?

 

[dx100uk]

moorcroft dont buy debts.

if it does get sold on then you'll get a notice of assignment.

id accept the offer though id not let them pay it off your balance...

you say ombudsman refused?

or do you mean an adjudicator?

and are you out of pocket?

dx

[mrskippy21]

Do you mean accept their offer of reducing it by £500 and then not paying off the balance? (For now atleast)?

Yes, so both the investigator and ombudsman decided against me citing the payment was accepted as F&F.

However, the other UK victim also accepted a PayPal payment via F&F and was charged back yet the investigator/adjudicator (didn't go to ombudsman for him) sided with him. I also used the response the investigator sent to PayPal for him with the same arguments, yet no luck.

He spoke to his investigator about my case and the investigator mentioned that he'd like to review my case as he wants the decisions coming out of the office to be consistent, but once I emailed him he gave me the response that since my case has been reviewed by the ombudsman there is nothing formally he can do.

Now the ombudsman emailed me a few days ago giving me a deadline of the 4th to accept or reject their decision. Accepting it makes it legally binding on myself and PayPal, but since they ruled against me, what point is there in even responding?

Thankfully, I'm not out of pocket as I withdrew once I received the payment 2 years ago.

Also is it likely for them to sell this on?

And then if it does get sold on, I'm guessing the new owner will then take me to court if I don't pay? 

[jk2054]

whats your DRN please?

 

[dx100uk]

18 minutes ago, mrskippy21 said:

Also is it likely for them to sell this on?

And then if it does get sold on, I'm guessing the new owner will then take me to court if I don't pay? 

ans

56 minutes ago, dx100uk said:

even if they sell the debt to a powerless DCA/Debt buyer, once they know the background they'll drop it like a brick.

................

the FOS only has adjudicators, then any appeal should be made to the ombudsman themselves. they have no investigators

so your answer is a wee bit confusing. you must escalate to the ombudsman directly yourself.

if you are not out of pocket, AND any offer simply goes off of the amount of debt they claim you owe them, i'd not bother.

dx

 

[dx100uk]

14 hours ago, jk2054 said:

whats your DRN please?

??

[jk2054]

the FOS will give him a DRN and I'd like it, not sure why you feel the need to question my post its for the OP not you.

[dx100uk]

i didnt know what a DRN was...

silly me.

dx

 

[jk2054]

oh - its the FOS decision number which you can look up the case from.

i dont know why they call it DRN nor do i know if it stands for anything.

[dx100uk]

Decision Reference Number..

i should have known that ive read 100's....

[mrskippy21]

I see, but their actual job title in the email is 'Investigator'. I guess they are the adjudicator as they first made a decision and I was not happy with it and then it got reviewed by the Ombudsman and I got a letter with their findings and after that they said there is nothing more their service can do once it's reviewed by the Ombudsman.

Thank you for your advice. I'm trying hard to look on the forums for an example where debt is sold and then pursued to courts, the only example I found is with a credit agreement with PayPal credit which this isn't - am I correct in thinking there is no precedence as of yet for a negative balance?

14 hours ago, jk2054 said:

whats your DRN please?

I don't think I have one yet as it's not been published, just a complaint reference.

Is there any particular information you are looking for from the decision? 

Edited January 2 by dx100uk
unnecessary previous post quote removed

[jk2054]

Good Morning,

The FOS has investigators and ombudsman. They aren't adjudicators.

If you wouldn't mind can you post up a redacted copy of the ombudsman's outcome. They should also have given you the opportunity to submit further information.

Could you let me know the deadline on this for submitting futher evidence,

Thanks

 

 

[mrskippy21]

Good Morning, please see the Ombudsman findings below.

They did ask me for more evidence and then it did get reviewed again and this one they say is final.

The complaint
Mr P is unhappy that following a chargeback filed against him his account with PayPal (Europe) Sarl et Cie SCA (‘PayPal’) has been left with a negative balance.

What happened
Mr P says that he sold a watch via an online forum to a buyer in the US. The buyer and Mr P exchanged messages and the buyer then paid £5,995.88 via PayPal for the watch on 27 November 2021. Once he received the funds Mr P shipped the watch. In December 2021 the owner of the card used to make the transaction raised a chargeback with their card issuer saying the transaction wasn’t authorised.

PayPal contacted Mr P to gather information to dispute the chargeback, but ultimately the card issuer decided in the card owner’s favour and the payment was reversed, and a processing fee of £14 was also applied to Mr P’s account. As Mr P had removed the funds for the watch, this left his PayPal account with a negative balance.

PayPal noted that the card issuer decides the outcome of a chargeback claim, but that if a seller is protected under its seller protection scheme it would not normally hold the seller responsible. But as the payment was sent as a personal payment, seller protection doesn’t apply. PayPal also confirmed that it had initiated an internal review and limited the buyer’s account.

Mr P was unhappy with PayPal’s response. He said he is being held responsible for a debt that was incurred as a result of a scam and that the same individual has raised other disputes, but PayPal hasn’t taken action.

Our investigation so far
When the complaint came to this service PayPal made a goodwill offer of a £500 credit to create a better customer experience. The offer was made without any admission of liability. The investigator who considered this complaint didn’t recommend that it be upheld. She said it was the cardholder’s bank that authorised the chargeback – not PayPal.

When the dispute was raised PayPal asked Mr P to provide evidence to dispute it and then forwarded this evidence as it should have. Ultimately the decision didn’t go in Mr P’s favour, but PayPal wasn’t responsible for this decision. And PayPal acted reasonably and in accordance with its terms and conditions in not applying seller protection, as Mr P accepted the payment as a personal payment making it ineligible for this protection. Overall, the investigator felt that PayPal’s goodwill offer was more than reasonable.

Final decision
Mr P didn’t agree with the investigator’s findings. In summary, he said: - He is an innocent party who sent the item in good faith and in the belief the buyer was the genuine cardholder.

- Normally if a person receives a payment that has been made mistakenly and for example hands over goods in reliance on that payment common law gives a defence to a claim for restitution of the payment.

- Under the Payment Services Regulations 2017 in certain circumstances the paying bank is responsible for unauthorised transactions. So in a case like this it is reasonable to think the loss should be borne by the payee bank that made the
mistake.

- PayPal didn’t act correctly in the way it defended the dispute. As the payment was made on a friends and family basis the buyer had essentially used PayPal as a money transfer service which would make PayPal the merchant in the transaction
rather than him. Mr P says this means the chargeback claim against him shouldn’t have been successful.

- PayPal had a list of victims scammed by the same buyer so if it had provided this as part of its response to the dispute it would likely have been successfully defended.

- PayPal hasn’t handled complaints from others consistently and neither has this service.

What I’ve decided – and why
I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint.

My role is to consider the individual circumstances of Mr P’s case, so I won’t comment in this decision on what PayPal or this service have done in any other case. I won’t consider wider issues like the use of PayPal accounts by fraudsters or the actions of the payee bank.

I appreciate that Mr P has lost funds in what he describes as a scam and am sorry to hear of his loss. But that doesn’t mean PayPal are responsible and should reimburse him. My role is to consider whether PayPal acted fairly and reasonably and in accordance with its user agreement.

Whilst I understand Mr P’s strength of feeling, I consider the offer made by PayPal exceeds any award I would make and will explain why.

The cardholder contacted their own bank to raise the chargeback claim. In situations like this the buyer’s bank contacts PayPal’s bank and asks whether it wishes to defend the chargeback. PayPal’s bank will ask PayPal as the payment processor to send it any evidence to use as a defence, and it will then send this onto the cardholder’s bank. PayPal’s role is to provide evidence from its customer (Mr P) so it can put forward a defence. I’m satisfied PayPal did this and that PayPal provided the evidence supplied by Mr P.

PayPal didn’t authorise the chargeback of funds, the buyer’s bank did. As the claim was upheld in the buyer’s favour by the bank, I’m satisfied PayPal can’t be held responsible. I also note that PayPal’s user agreement covers the situation Mr P finds himself in in the ‘Reversals’ section:

“If you receive a payment in your account and a reversal takes place, you owe us the full amount of the payment and our losses arising from processing the payment (including any Chargeback fee…”.

The agreement goes on to say that a reversal can happen when there is a claim for unauthorised or incorrect payments made to a customer’s account and specifically mentions chargeback as an example.

I’ve gone on to consider whether Mr P was covered by PayPal’s seller protection policy. I’m satisfied that Mr P hasn’t met the requirements set out in PayPal’s user agreement to be eligible for seller protection. The agreement says that the payment must be marked as eligible, and the goods must be shipped to the recipient’s address on the transaction details
page in the sender’s account (amongst other things). This isn’t what happened here.

The payment was personal, and PayPal’s terms are clear that seller protection doesn’t apply: Ineligible items and transactions  Personal payments including a payment sent using PayPal’s friend and family
functionality.

I’m satisfied that Mr P was aware of the difference between goods and services and personal payments as a few months before the sale of the watch he received a goods and services payment. The payment was subject to a hold by PayPal and Mr P was asked to provide shipping details. Mr P refunded the buyer and later accepted a payment from the same person as a personal payment.

The fees that apply to goods and services payments are in place so that protection can be provided but no such fees were paid, and Mr P didn’t follow the correct process. Overall, I’m satisfied PayPal treated Mr P fairly in applying the terms of its user agreement and don’t consider it is responsible for his loss.

If Mr P now wishes to accept PayPal’s offer, he should contact PayPal directly. As PayPal has already made the offer, I consider it ought to stand by that offer – which was made as a gesture of goodwill in any event.

My final decision
For the reasons stated, I do not uphold this complaint.
Under the rules of the Financial Ombudsman Service, I’m required to ask Mr P to accept or reject my decision before 4 January 2024.

Also thinking back now, this part:

The payment was personal, and PayPal’s terms are clear that seller protection doesn’t apply:
Ineligible items and transactions
 Personal payments including a payment sent using PayPal’s friend and family
functionality.

Very much seems like it's for the person sending, surely for the person sending PayPal should chase them since they made the F&F payment and they are not protected and they decided to circumvent their system and go through a chargeback - I didn't mention this then, not sure if it would have made a difference.
 

Edited January 2 by dx100uk
unnecessary previous post quote removed

[jk2054]

ok so 

 

you can accept £500 and they'll chase for rest

 

or you can reject and they'll chase for rest

 

 

just be wary if you accept you lose some protection if paypal sue you - but this won't happen fmr

[mrskippy21]

This is what PayPal said to me in their last email:

"Although your complaint has not been upheld by the ombudsman, we would still like to offer you £500.00 GBP as a goodwill gesture.

If you wish to accept this credit in full and final settlement of your complaint, please respond to this email confirming your acceptance. Upon receipt of your email, a credit will be applied to your PayPal balance within 3-5 business days."

By accepting, does this mean I have no further recourse if I accept as it is a "final settlement". Then again, what other recourse do I have - I'm not sure if it's worth pursuing legally or to take it to the european ombudsman?

My main gripe is the inconsistency in both how PayPal handled UK/US chargebacks from this scam ring and also the Ombudsman upholding the complaint for my fellow UK scam victim. 

Edited January 2 by dx100uk
unnecessary previous post quote removed

[dx100uk]

15 hours ago, mrskippy21 said:

How can I check who the 'debt' is towards? The Moorcroft email states: "We act on behalf of PAYPAL" 

 

1 hour ago, mrskippy21 said:

PayPal (Europe) Sarl et Cie SCA (‘PayPal’)

no one will go near a court room door esp with the evidence and the FOS decision where it states PP EU.

just type... no need to keep hitting quote

dx

 

 

[mrskippy21]

with regards to the FOS decision I need to reply by the 4th saying if I accept or decline their decision, I'm assuming since they did not uphold the complaint I could just not respond or decline it (makes no difference)?

in terms of next steps, is it okay if I respond to PP saying I accept their offer of reducing the liability by £500 but that this does not solve the complaint?
 

[dx100uk]

it makes no odds what you do.

dx

 

[mrskippy21]

is that because of what you mentioned earlier that:

no one will go near a court room door esp with the evidence and the FOS decision where it states PP EU.

apologies, it's my first time ever having an issue of this sort and I am incredibly nervous as I can't understand why they wouldn't pursue this with me or sell it to someone who might. Based on what you mentioned it does not seem attractive enough for a company to even buy this from them for the cheap in the hope of getting the judgement in their favour? Why is that?

Additionally from searching the forums the below is the advice I picked up from your responses to others:

Ignore until/unless you ever get a letter of claim from a UK debt buyer after you have received their Notice of Appropriation that they have bought the debt from PP EU

Is this the best course of action?
 

[dx100uk]

Notice of Assignment....

you need to get reading up here 100's of like threads to answer further questions now

we dont nursemaid.

[mrskippy21]

thanks, I will get reading. Will update this post if anything changes