Last year I managed to buy something from a fake website.
I have since learned that these sites operate for a couple of weeks then vanish. Anyway, Paypal was their only form of accepted payment. After the 2 weeks delivery time had expired I tried to contact them but the email was returned. I contacted Paypal hoping the buyer guarantee would protect me. The fraudsters produced Fedex tracking information almost immediately. The tracking info showed "Delivered to Leicester UK" but no address. I contacted Fedex and they refused to accept there was any fraudulent activity and refused to help me. Eventually Paypal closed the dispute and told me I will have to claim a chargeback via my bank.
The trouble is Paypal's "buyer guarantee" promises much the same to the buyer as the "seller guarantee" promises to the seller. Paypal only had to look at the account history of the suspected rogue seller to gauge the amount of flagged complaints, but I guess if the money is coming in they don't question it.
I had to wait for what is legally known as the "deadlock" (or final letter) from Paypal, clarifying that their escalated complaint procedure had come to their final decision (on the criminals behalf) before the Financial Ombudsman would accept it. Sure enough, shortly afterwards I received a "loyalty gift" from Paypal, coincidentally it was the same as the amount I had disputed, and Paypal's reputation remained un-tarnished by the Financial Ombudsman. Additionally the bank then gave me the chargeback, so I got double (you should try this).
Paypal could do more to protect people from organised crime, by working with the authorities, and freezing the accounts of suspecting gangs, but if anything they seem to facilitate the criminals.
It's laughable when people say Paypal is "the safe way to shop".
I also reported the fake website AND Paypal to the National Crime Agency.
