Let me begin by saying, overall, I have had a positive experience with Paypal- it is convenient, fast, and easy to use; customer service isn’t too difficult to get a hold of, and most of the representatives are very helpful. I have had two negative experiences however, and both were connected to the use of credit cards.

Using a Credit Card to Make a Paypal Purchase

When you make a payment through paypal, there are several places that the funds come from. If you have a balance in your Paypal account, that will automatically be used first. If you don’t want to use that, make sure that you transfer those funds to your bank account before making a payment. The next option automatically used by Paypal is to have the money transferred from your bank account via an instant transfer. If you want to use your credit card (on file with your paypal account) you have to jump through a couple extra hoops by clicking on “additional funding options”. Then you get the following message from Paypal:

FUNDING CONFIRMATION

No finance charges or bills to pay
This payment is covered up to $1000 with Paypal Buyer Protection
You are 100% protected against unauthorized payments sent through your paypal account
We keep your bank account details private
Do you still want to make this payment with a credit card?

The implication is that you shouldn’t use a credit card because you get so much protection from Paypal. Unfortunately, this is not always the case. Last month I used Paypal to make an eBay purchase from a highly rated eBay seller through their eBay store. I made a Paypal payment using my credit card to make the purchase. The item came quickly and as described but it turned out that I needed a different model of the item. The seller said I could return the item and then reorder the next size and apply the refund to the cost. This time I used my Paypal balance to pay the difference in cost. Because of the size difference, the item had to be special ordered and I was told it would be 3 weeks before it would be shipped. During those 3 weeks something must have happened to the seller because they stopped communicating and suddenly they were getting a lot of negative feedback from buyers not receiving their purchases. My item never arrived and I never got any response from the seller. Fortunately, I did have all my paperwork showing my original purchase, the receipt of the return by the seller, their email instructing me about the replacement item, etc. I contacted Paypal with all of this information and was informed that because it was 45 days past the transaction, they couldn’t refund any of my money despite the fact that the seller was in the red. I contacted my credit card company regarding the original purchase and after providing them with the identical information, I was refunded the payment that I made through Paypal using the credit card. Unfortunately, the payment that I made using my Paypal balance was completely lost. From then on I have ALWAYS used the credit card option to make a Paypal purchase. I feel this is the only way that I am truly protected. I suggest you do the same. Your credit card company give you the utmost protection on your purchases even months down the line. Of course not all sellers accept credit card payments.

Accepting Credit Card Payments Through Paypal

In order to accept credit card payments through Paypal, you must have an upgraded paypal account. People buying your items can then use their credit cards through Paypal. Many buyers prefer this and it can even attract them to your listings. However, once you have an upgraded Paypal account you are charged a percentage on EVERY Paypal payment you receive. It does not matter whether the person who pays you is using their Paypal balance, their credit card or their bank account- the same percentage is deducted off of every payment you receive. This even includes payments from your grandmother who is just sending you money for your birthday.

Over a four months ago I sold an item on e-bay. The buyer received the item and was very happy with it; the buyer left positive feedback and went on to win a couple more of my auctions during the month after. They even contacted me for assistance with another eBay matter at a later point. Then, 94 days after the original auction, the buyer contacted me to say that the item purchased from me was “significantly not as described” and demanded a full refund. Needless to say I was confused and surprised. I contacted the buyer to find out more about the problem and received very nasty responses. I looked at the person’s buying history and noticed that since they bought the item from me, they had gone on to buy 2 similar items for a much lesser price. I concluded that they were suffering buyer’s remorse and looking for their money back. Because I was sure that the item was as described, I declined the return. Because the buyer could do nothing through eBay or Paypal (since it was more than 45 days since the purchase was made), the buyer filed a dispute through their credit card company (just as I did above). The credit card contacted Paypal who then contacted me. The first thing Paypal needed to do was decide whether or not to back my case. I followed all of the required steps including a 15 page documentation verifying the authenticity of the item in dispute. Paypal then notified me that they would be disputing on my behalf as they could not find error on my part. I spoke with several different Paypal representatives during this time. Each one informed me that I should not have to refund the purchase. I was VERY disappointed weeks later when I was informed by Paypal that the buyer’s credit card company determined that I had to make the refund. The buyer had returned the item directly to Paypal and on top of everything else, I had to pay Paypal to ship the item back to me and pay a dispute resolution fee. When I called to question the outcome I was told “this is a cost of doing business. In most cases the credit card company will get the money back as long as the buyer has returned the item. There isn’t much we can do about it, even if you are in the right as it appeared you were in this case.” The credit card company will get the money from Paypal no matter what as they will always side with the buyer.

1. Do not follow e-mail addresses that are included in the text section of postings. If the seller claims that is the only way to contact them, abandon ship and go no further. Send all the questions you have ONLY via the Ebay mail link (Ask Seller A Question). When you do send a message, ask about payment methods and shipping and such, not just about the item itself. If you don’t like the options the seller gives for payment method, tell him what you would be willing to do. If he is real, he may try to accommodate you because he has the item and he wants to sell it.

2. Short duration sales are very suspicious. There may be a few good reasons to sell quick and cheap, but there are a million bad ones. Scammers want to quickly hook their marks and then disappear into the ether. They do not want their postings to languish for for all to see.

3. Be wary of “private” auctions which do not disclose the names of the bidders. This warning is no longer valid because eBay themselves are now shielding some of this information. Probably a good thing on their part.

4. American laws do not apply anywhere but in America. The bad guys know that. So use great care, if you must proceed at all. Especially do not deal with anyone who is “temporarily” out of the country.

5. If the sale is supposedly in the United States, make sure the bid amount is in American dollars. Non-American currency values are printed in italics on Ebay, so they are easy to spot. It doesn’t make much sense for a guy in Texas to convert your bid to Euros, does it?

6. What is the return policy, and how much do they charge for shipping? Don’t be impressed by money-back guarentees and dirt-cheap shipping. If it is a scam, they aren’t going to give your money back and they aren’t going to ship anything.

7. Look at the seller’s feedback. Carefully! Don’t just look at an impressively large number and call it good. There is a ton of useful information here if you take the time to really investigate. If it is a stolen account, they are somebody else’s points anyway. But you can learn a lot:

A. Has he bought or sold anything recently, and what was it? Accounts that have no recent activity are much more likely to be stolen accounts.

B. Is this auction consistent with items bought and sold in the past? If a buyer of $5 trinkets is suddenly selling a $4000 drum set, take note. It may be valid, but it is suspicious.

C. Is the item location the same for this sale as for his last sales? Does the location actually exist, or is it some fictional locale?

D. Are his accepted payment methods the same as his last sales? If he accepted PayPal before, why is he insisting on a wire transfer or cashier’s check now?

E. The seller’s positive feedback points for purchased items are not very useful to you as a buyer, so don’t over-value them.

8. What else is the seller posting for sale at the time? Follow the link for Seller’s Other Items. If they have a large number of unrelated big-ticket items currently for sale (musical instruments, computers, cameras, bicycles…) that is very suspicious.

9. Look at the photos. Are they just stock pictures from the company web site or are they apparently authentic photos of the item? Scammers can get pictures of anything from the web, including from other Ebay auctions. If you have seen the exact same photo in other auctions, be suspicious. Also, look at the backgrounds in the photos. Does it look like they just took their digital camera into a store and started clicking away?

10. Talk to the seller! How? Place as low a bid as possible on the item. Bidding gives you the right to view the seller’s contact information. Go to this link, and paste in the seller’s name and the item number. Ebay will e-mail his contact information to you

If the phone number does not work, that is a major red flag. Use a phone number web-site or directory assistance to verify that the person’s name, location and phone number make sense. Don’t be afraid to ask very specific questions about the product and sale.

11. Is the item in the correct category? Another device scammers with use to hide their skulduggery is to post items in obscure places. Instead of searching the entire eBay universe for your item, specify your category.

GOOD NEWS ABOUT PAYPAL! They doubled their maximum loss coverage to $2000.00 as of January, 2007.

12. Payment method is a very big deal. C.O.D. is great if they will go with it. Escrow.com is good (though a little pricy), and the only escrow Ebay recommends. Some criminals set up bogus sites that sound and look like Escrow.com, but do not be fooled. DO NOT use any other escrow site. PayPal is good too, up to a point, but the sale does not qualify for their $2000 protection unless it specifies that on the posting. In that case, the best you can hope for is the $200 coverage extended by Ebay (minus a $25 service fee).

The whole official PayPal safety spiel is here:

If you use PayPal, use your credit card rather than your own bank account. Many credit card issuers will refund money stolen from you. It is not fail-safe, but it is another layer of protection. Never use Western Union for these transactions. Western Union’s own web site will tell you that. Wire transfers and any kind of check is a one-way ticket to fraud.

13. Some second-chance offers are scam attempts, so be careful. If there is a hot-link on the page, take a look at the URL it points to when you roll your cursor over it. (The URL is usually displayed at the bottom of your web browser) There are fake eBAY and PayPal sites that attempt to steal your login information. If the URL does not start with “https://” it is not a secure site. Do NOT log in there!

14. Finally, do not wait until the last hour of the sale to get interested in it. If it is something you want, there is some homework for you to do. Give yourself the time to evaluate things and give the seller time to respond to your questions. Do not burn bridges, but do not allow yourself to be burned.

You are doing business with total strangers here, and don’t forget it. Most people are decent and honest, but some aren’t, and they can really mess up your day.

Ebay is a great way for your skills in the world of work to be improved. It will support life lessons including communicating with individuals to sell merchandise and to establish a sense of how to approach people with a plan. Plus, ebay is perfect as a second job. You can easily use your extra income to indulge yourself once in a while or pay off any debt you have. Besides learning and the fun produced from this business, you will also be able to make a profit. Additionally, I’m sure that you have odd things around the house that are not being used can be made into money. For example, old phones could be sold for compensation or an unused camera. This is free money as it’s not being used and if you are not planning on using it anytime soon, why not sell? I’ve already seen what is necessary to make a profit on ebay and believe me there really is no downside. You can find out anything you want to know about ebay to reassure yourself on any questions you have.

What is needed?

An account on paypal will be extremely necessary in becoming an ebayer, regardless if you want to be the occasional seller or a power-user. Wikipedia writes, “PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. It serves as an electronic alternative to traditional paper methods such as cheques and money orders. PayPal performs payment processing for online vendors and auction sites such as ebay. On October 3, 2002 PayPal became a wholly owned subsidiary of eBay.”
I also feel that you should create another checking account for the sole purpose of ebay. In this account, you should deposit assets in small amounts just for ebay which is then linked to Paypal and furthermore used to make your purchases on ebay. The reason this is necessary is so you can control the amount of money in your Paypal account and not accidentally purchase more then you have. Perfect to keep you out of any debt you could incur from ebay. Plus, it also adds another layer of security to an already bolstered defense. The defense is bolstered because Paypal already offers buyer protection so if you don’t receive an item or you believe the item is Significantly Not as Described by the seller, you will be reimbursed.

How

To Actually make money, you will need to selling things. Duh. What you don’t know is that to make money, you don’t actually have to own the item prior to deciding to sell it. You can buy something for X on ebay and Sell for Y when Y>X. What about ABC? That example can be hard to understand but really it’s simple. If you can sell an item for more than you purchased it for, you are making money. So look around, do you see fluctuating prices for something? Find it cheap, buy it and then sell later. Also look into things that are broken. You can usually get these items very cheep and after getting it fixed, you can make your money back. Please though, make sure people will actually buy the item. The worst thing is buying a camera lets say, getting it fixed, and no one buying it. So you are out money and time, plus, now you have an additional camera on your hands. Check to make sure there are people buying the item before you buy one. Remember, you don’t have to buy and then sell in the same week. Hold the item for a while until the market is good and than sell the item then. Also, don’t be afraid to take a loose. It’s better than holding on to a lot of items you don’t want. Plus, you can get some good feedback which will help you down the road.