PayPal Is Not My Pal

by ComputerBob

November 1, 2006

Last Updated November 9, 2007

I hate PayPal. To me, it's like a huge octopus that wants to needlessly get its slimy tentacles into every area of my personal finances. That's why I had cancelled my original PayPal account several years ago. So when my former web host insisted on sending me a PayPal payment for the affiliate commissions that I had earned, instead of the paper check that I had requested, I had to decide whether or not it would be worth it to sign up for a new PayPal account in order to get that money. If I knew then what I know now, I would've just let that $50 sit in some cobweb-filled PayPal closet forever, instead of opening a PayPal account to try to get it.

The problem, as I see it, is that PayPal tells you that you can buy things with the money that's in your PayPal account, but it doesn't tell you all of the hoops that it's going to make you jump through before it will let you spend any of your money. When I signed up for a PayPal account a couple of days ago, PayPal told me that, for security reasons, it needed my credit card account information. Once I gave PayPal my credit card information, it opened an account for me and told me that there was a $50 credit waiting for me to receive. I clicked on a few things, and my account received that $50 credit from my former web host. I immediately went to the PayPal screen that showed me a list of ways that I could spend that $50. I told PayPal that I wanted to transfer it to my account at my new web host. After I filled out a few screens of information and told it to transfer the entire $50, PayPal told me that I needed to login again. After I logged in again, PayPal told me that I couldn't transfer the $50, because, even though I had $50 credit in my account, my current spending limit was set to $0.00. It offered to raise my spending limit, but only if I told it my bank account information. So I told it my bank account information. Then it said that I would also have to either tell PayPal the online login information for my bank account, or go through a 3-4 day process, to prove that my bank account was actually mine. I didn't want PayPal to have my bank account's username and password, and I didn't want to go through a 3-4 day process either, so I chose not to do either one. At that point, I suddenly had a sinking feeling that I had already given PayPal way more information about my financial accounts than I felt comfortable giving it. And yet, PayPal was telling me that it still wanted more.

I wish PayPal had been honest with me at the beginning of the long process, when I first told it that I wanted to transfer my $50 to my new web host. If PayPal had given me a list of all the secure financial information that it was going to require me to give it before it would allow me to spend my own money, I would've just cancelled my new PayPal account and walked away from the $50 that I had earned. Instead, every time I told PayPal everything that it said it needed to know, it just asked for more and more and more of my personal financial information, without ever telling me how much more information it was going to require. On top of that, I see absolutely no reason why PayPal needed any of my credit card or bank account information — remember, I wasn't asking PayPal to give me a credit card or to let me make $1,000 purchases — all I wanted to do was spend my own money that was already sitting in my PayPal account.

In the end, I discovered through trial-and-error that, after I had given PayPal my credit card information and my bank account information, it would allow me to request an electronic transfer of my $50 directly into my bank account, even though I hadn't given it my bank account's login information or gone through the 3-4 day process to prove that my bank account was actually mine. So that's what I did. According to PayPal, that electronic transfer will take 3-4 business days. That's odd, since electronic transfers happen almost instantaneously. Maybe PayPal saves money by using really, really slow electrons for their transfers. Anyway, I plan to close my PayPal account the minute I can confirm that its $50 has finally transferred to my bank account. Maybe I should also close my credit card account and bank account, just to be safe. The whole PayPal experience left me feeling dirty, exploited, and insecure. You can bet I'll do everything I can to never have to deal with PayPal again.

UPDATE - November 6, 2006: I'm very happy to report that the money electronically transferred to my bank account over the weekend, and I have closed my PayPal account.

UPDATE - November 9, 2007: I am not affiliated with it in any way, and I can't vouch for any of its stories, but one of PayPal's competitors has a whole collection of user-submitted PayPal horror stories.