I got scammed...

[lordsaber608]

Hi! I am a longtime user of PayPal and I have a negative balance on my account of -$359.86 as the result of a scam. I was the seller and the buyer bought Bitcoin from me in many small transactions in exchange for PayPal. Then, the buyer opened disputes on every single one of the transactions, and PayPal added a $20 charge on top of each of the disputed amounts. I have screenshots and proof that the buyer scammed me, is there anything I can do to correct the situation without me having to pay the negative balance of my account back?

[sharpiemarker · Accepted solution]

@lordsaber608 

Always check your business model against PayPal seller protection and PayPal Acceptable Use Policy to see if it is compatible.

The buyer or funding source account owner filed disputes with their financial institution, not with PayPal which in turn opened a bank reversal or credit/debut card chargeback dispute case on your PayPal account because of $20 chargeback fee. These cases are different from regular PayPal disputes in that the financial institution makes the ruling, not PayPal and the dispute is against PayPal's merchant or payment processing account and our PayPal accounts are sub accounts so PayPal holds us liable.

Realize that who you sold to may not be who actually paid (where the money came from as financial information can be stolen or used without permission) and these exchanging of currency transactions can draw these types of fraud. If you want to continue this kind of risky business model, you'll have to set aside some self-insurance funds to cover bank reversals/credit card chargebacks. Per customer, consider how many times has this happened to you? And contemplate if it is worth it to set aside a reasonable percentage of each transaction to cover situations like this in exchange for access to millions of users.

If your transaction does not meet the basic and additional requirements of seller protection, PayPal will not cover your loss should the financial institution find in favor of their customer and so you will be held liable for the disputed amounts.

[lordsaber608]

This is all well and good, but reading some of the threads here makes me think PayPal doesn't care to protect Sellers over Buyers, when both parties keep them in business. Very upset with the way these cases have been handled.