Paypal sent funds to incorrect recipient

[garcianc]

This past weekend I sent money to a relative using the send to phone number feature in Paypal. Somehow, Paypal sent the funds to the wrong person - we suspect that this person might have had an old profile in Paypal under the same phone number, a number that T-mobile then recycled and gave to my relative. However, that is just a theory because Paypal has not really told us how this happened.

The only way we discovered Paypal's error was when I saw the transaction status and the name of the person who received the payment. By then, according to Paypal, there was nothing we could do to reverse the transaction other than contacting the erroneous recipient and asking for our money back. My relative did just that and the person refused to return the funds. We then proceeded to inform the person that we will file police charges for theft, which we are in the process of doing. Because of the amount of money, the state's bureau of investigation will also be involved.

In order to avoid this whole mess, I even contacted Paypal one last time last night to file a dispute via the resolution center and that was denied. To be fair, Paypal did tell us that this type of transaction is not disputable.  So, I wish it had not come to this but, in a few hours we will be filing felony theft charges and seeking an arrest warrant against the person who erroneously received the funds from Paypal.

I am posting this here for two reasons:

1. To alert other members that the "send to phone number" feature in Paypal is apparently not secure or broken. Unlike other financial institutions, Paypal apparently uses its own (sometimes outdated) profiles to tie a phone number to a person. The funds do not "go to a phone number" via a text with instructions, etc., they appear to go to whoever Paypal's records say had that number last.

2. To make others and Paypal aware of the consequences of an erroneous transaction. In almost every state it is illegal to knowingly appropriate money that is not intended for you, even when received in error (i.e. erroneous deposit in a bank account, etc.).  As a consequence, one of Paypal's customers may be going to jail today because of an error that Paypal committed.

[kernowlass]

@garcianc 

If you sent it using the friends / family option then you sent a 'gift' of money to someone however mistakenly so any legal action against the recipient probably will fail.

[Steener82]

This scenario happened to me this evening, Christmas of all days.  I have contacted the recycled phone number recipient, but have not received a response. 

I will be contacting my bank in the AM however, I would appreciate any positive feed back from the PayPal community in finding a solution to being refunded.

[Cetkat]

If it's the correct phone number, try to get the recipient to have it associated with their account. I once sent money to someone who had recently updated their email address on their account. The system tried to send it to an email that was no longer associated with any account. It took a couple of weeks for it to bounce back to my account as undeliverable. If you sent it from your bank, you could try to do a stop payment. Unfortunately, simply reversing the transaction will only reverse the funds sent to PayPal. I've had my PayPal account go negative once for that reason. I'd do a transaction dispute if the system lets you. Other than that, you could call PayPal support and ask for a supervisor. They have more system access & may be able to do something. Best of luck. The situation really sucks.

[garcianc · Accepted solution]

This follow-up is to close the loop on this topic to report how the issue was resolved.

My bank has refunded me the funds that were transferred from my bank account to Paypal.

This post constitutes and documents the resolution to this issue.