This article was published on June 1, 2010

Could PayPal Changes Affect Your Protection From Scammers?


Could PayPal Changes Affect Your Protection From Scammers?

Paypal has recently updated its terms and conditions for customers based in the UK, with the changes coming into force from today. One of the changes appears to remove buyer protection for purchases via classifieds websites such as Gumtree or Craigslist – a move which could expose users to scammers.

Under the previous terms and conditions, buyers using classified websites (other than eBay classifieds) were entitled to buyer protection:

13.4 What items are not covered by PayPal’s Protection for buyers

PayPal’s protection for buyers only applies to payments for certain tangible, physical goods. Payments for: (…) eBay classified advertisements, items prohibited under our Acceptable Use Policy or licences and other access to digital content are not eligible under PayPal’s protections for buyers.

However, article 13.3 a) of the new agreement states that:

PayPal Buyer Protection only applies to PayPal payments for certain tangible, physical goods that can be posted. Payments for the following are not eligible for re-imbursement under PayPal Buyer Protection:
(…)

  • classified advertisements/eBay classified type listings

The new exclusion covers not only the eBay classifieds but also “classified advertisements”, thus implying that buyers using Paypal to make purchases over Gumtree or Craigslist are not protected.

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The change may be interpreted under two conflicting lights. On the one hand, it reduces the protection of buyers and the appeal of Paypal as a means of payment on classified websites.

On the other hand, as anyone who has tried to sell anything over Gumtree in the last year or so can vouch for, scammers have abused the current buyer protection system to recall payments made to unsuspecting sellers who had shipped the goods to an address not registered in the buyer’s Paypal account. Even today, one has only to check Gumtree’s official blog to see the users comments on this issue.

The scam works due to a difference in the protection level offered by Paypal to buyers and sellers. The buyer is always protected, whereas the seller will only be covered if he sends the goods to the buyer’s registered address.

Paypal was reached for comment by The Next Web and has stated through a spokesman that it is not changing its policy on classified transactions. According to the spokesman these were never covered and the changes amount simply to language clarification. If that is the case then the question must be: How are people being scammed over Gumtree if buyers are not protected? The author’s own experience and the users comments on the Gumtree blog beg to differ from Paypal’s response.

[Image Credit: Howard Lake]

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