 £13'000 of unauthorised transactions made, bank declined them, Paypal chased me
I've had a very concerning incident with Paypal.
I had a recurring payment set up with a merchant for £12 to keep a SIM acrd topped up. The merchants system went wrong and charged me 1100 times every few seconds for the entire night.
The payments were attemptedly taken by Paypal via direct debit. My bank refused the payments. I immediately reported the issue to Paypal and the merchant. The merchant promised to refund the payments so Paypal closed the issue.
A week later, when Paypal realised that the payments had been refused, they applied a negative balance to my Paypal account. Their debt collection department then tried to get me to pay off the balance. I told them the negative balance was due to unauthorised payments, they didn't care.
During many following phone calls, it transpired that:
1. Paypal did not consider the payments to be unauthorised as there was a recurring payment agreement with the merchant.
2. Even if I did dispute the transactions and win, I would only get the money back if Paypal could recover the money from the merchant.
3. If the bank declines a payment, Paypal put a negative balance on the consumers account and try to recover it by debt collection.
This really worries me. I thought that I would, as a last resort, have the protection of my bank, i.e. chargeback, section-75, or direct debit guarantee. So it looks like if my bank deems the transaction unauthorised and returns the money to me, Paypal can still issue proceedings to recover the money, forcing me to abide by their terms, which seem to favour them first and foremost. It also seems that Paypal doesn't have to follow the strict rules that banks have to follow, presumably because Paypal call themselves a "money sending services" rather than a payment gateway, they seem to be exempt from providing the consumer protection that regular banks need to provide.
My issue has been resolved, the merchant did return the money. But I lost probably three days due to phone calls, reporting the issue to the Police, having to block all my cards and accounts because Paypal kept pounding multiple accounts and cards to try to get the money. The sheer number of transactions caused my banks system not to cope and caused discrepencies on my account which are yet to be resolved.
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