Accidental withdrawal from wrong funding source

[TsufakTuna]

I've read multiple topics on this subject but none seem to answer my question directly.

On October 4th I purchased an eBay item and paid using PayPal, however at the time I did not realize that PayPal would automatically try to transfer funds from my bank account which is linked to my PayPal account.  I checked my bank account but it shows that no funds were withdrawn at the time. I immediately contacted the seller and asked her to cancel the payment so that I could repay her through my credit card. I rechecked my bank account and it shows that the credit card transaction had successfully went through.

Now paypal had sent me a series of emails in regards to the 'cancellation & refund'. The first email quoted " XXXXXX has issued a full refund for your payment. Temporary Hold Information : A Temporary hold has been placed on funds that were returned to your account because you used Instant Transfer to fund the original payment. The funds from this payment cannot be released until they have arrived from your bank account, which usually takes 3-4 business days."

Now because PayPal credit's the SELLER, and then attempts to charge the customer's accounts - essentially when the seller did the refund it should be refunded directly to PayPal.

However this seems it is not the case, and here is where the problem lies. You see my bank account in which was accidentally used in the first transaction has a balance of $0.00. Naturally, should any transfer of money attempt to be made this would result in a fail. But because PayPal has been "refunded by the seller" - the funds should retain back to PayPal.

Based on another email received from customer service I quote these lines "When your payment is cancelled or refunded, it does not mean that the bank transaction will be stopped. It will just prevent the funds to be credited to the seller's account and it will turn out as add funds deposit to your PayPal account. "

"When your bank completes the transaction, then the refund will be available to you." 

Now because the seller cancelled the original transaction, and none of the funds were withdrawn from my bank account - there is no money to actually refund to me. It is a ghost transaction, which the credited funds would be refunded to PayPal and not me.

My concerns are, because PayPal apparently has no way of cancelling debit transfers once it has been "authorized" and because PayPal generally makes two or more attempts to obtain it's (refunded) funds will - in essence - PayPal continue to try to draw funds from my bank account? My Bank account that is connected to PayPal has no funds in it, and I am not sure if I would be hit with NSF Fees since this is a newly opened bank account which is actually still in the process of being "opened" by my Bank.

The other concern is, my credit card which is linked to my PayPal is actually a Virtual Visa Debit - which is tied to another chequings account so that I can directly debit purchases online. Now lets assume that my Visa Debit - Chequings has no funds in it as well - will PayPal also try to bill the "secondary source" of funds and how many times will it try to do this?

In the community's opinion, what is the best recourse of action to take now? Tomorow I am visiting my Bank  to verify my newly opened bank account which is linked to PayPal. I am going to bring all of the emails and transaction papers which I have received by email.

• Should I close this newly opened bank account, and relink a new one?
• Should I request that my Bank auto-decline all outgoing PayPal transfers from this account?
• What steps should I take next to try to solve this issue?
  
  Thanks in advance for any help that anyone has to offer, and I would appreciate a non-automated response from a PayPal representative if they specialize in such instances.

[kernowlass]

 When you pay a seller it is never instant, paypal pays the seller for you and then starts the process of uploading your funds from your funding source.

If the seller refunds before that payment has completed then you have to wait till it clears through to paypal then the refund is credited to you.

This is because they do not "refund in advance" the same way they do when you pay for an item.

The seller does not have any "funds" to return to paypal as it is just a credit note until YOUR funds arrive. So if paypal credit the seller AND refund you then they have 2 payments out and still not received your original payment.   

[TsufakTuna]

You said " If the seller refunds before that payment has completed then you have to wait till it clears through to paypal then the refund is credited to you". I have no need for a refund since no funds were drawn on my behalf.

My Questions are simple ; when the seller's "cancellation" is verified will paypal's algorithm still try to send a billing to my bank account in question and if so how many times will they attempt to do this (trying to obtain funds from my account after the seller has successfully cancelled would essentially be double billing).

My problem is that each PayPal representative which I've spoken to said that bank transfer withdrawals cannot be stopped once they are "authorized". Which would essentially mean that even though the seller has successfully cancelled and verified the cancellation with PayPal - PayPal will STILL try to draw funds from my accounts. Is this statement true or false?

[kernowlass · Accepted solution]

The funds would have been withdrawn the instant you clicked to pay, even if you cancelled afterwards the funds would still be on their way to paypal.

If they have not "left yet" then they will do as you authorised a payment to paypal > seller.

The fact the seller cancelled/refunded does not mean those funds do a u-turn, it means that WHEN paypal get the funds YOU have authorised to leave your bank account and go to paypal then they will return them to you as the seller has indicated the transaction is not to go ahead.  

[Toronto-Yeller]

However, whjat should stop paypal from issuing a refund to the account they debited it in error as a correction, then sending it to the right account as requested?  Afterall  2 banks can do such and its not like you dont have a secure payment listed for instant payments.  So WTF?  Paypal suck that much?

I wont use them anymore.  I will mearlty get a merchant accountas a seller and to buy things i will use someone else.  Paypal has stunk since they sold it.

I suppose, you could despute the EFT @ your bank and they would send it back to credit paypal, then you can send it to another account.  ( this an be done) In the mean time they have already paid the seller  and its paypals liability hence debiting your Paypal account.  Thats what the backup funding souce is for.