The big question is how safe is it to use paypal?
The answer is a qualified yes. PayPal has powerful fraud and consumer protections in place.
“In a recent PayPal transaction, I signed in from a location where I don’t usually do business,” says Robert Siciliano, CEO of IDTheftSecurity.com. “They required me to receive a phone call and respond to prompts. That was an extra layer of protection.” In the past, banks typically didn’t take those added measures, but some are now beginning to do so, he says.
See also “How to open Paypal account“
“PayPal covers consumers when they don’t receive an item or when the item is significantly different from what the merchant described,” says Wendy Roberts, head of technology education for PayPal. “PayPal customers are not liable for fraudulent charges to their PayPal accounts.”
However, there’s a downside to PayPal being the world’s most recognizable online payment system: It’s also the biggest target because it is often taken advantage of by phishers,” says John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League. Phishing is the practice of using fraud and/or malicious software to obtain customers’ usernames and passwords in order to gain access to their accounts.
Fortunately, if you use PayPal, you can maximize the security of your sensitive payment information by following a few simple steps:
1. Do not link your PayPal account to your bank account or debit card.
Why: Someone who gains fraudulent access to your PayPal account could clean out your bank account, too. This happened to Nicole Dunn, CEO of Dunn Pellier Media public relations, who purchased an item worth about $100. Soon after, her debit card was declined at a gas station, even though she had just deposited her paycheck. “It was one of those heart attack moments,” she says. “I looked at my bank account and it was overdrawn by $3,000.” PayPal refunded the money, but wound up crediting the wrong amount and then demanded a $450 repayment, Dunn says. The experience was enough of a hassle that she now avoids using PayPal.
2. Link your PayPal account to a credit card.
Why: PayPal will cover you if you purchase an item that doesn’t arrive or isn’t what you expected, and by using a credit card to fund PayPal purchases, you gain an extra layer of protection because you also can dispute the charge through your credit card company. Keep in mind that with credit card companies, you typically have up to 60 days from the purchase date to dispute charges for items you didn’t accept or weren’t delivered as agreed, while with PayPal you have 180 days.
Breyault recommends going straight to your credit card and to PayPal at the same time as soon as you discover a problem. “It never hurts to avail yourself of multiple dispute resolution opportunities,” he says.
Keep in mind that credit card protections carry the force of federal law. If you file a dispute with your credit card issuer, it will ask PayPal to prove that the transaction was legitimate. “If PayPal can’t prove it, it’s on the hook with the issuing bank,” Breyault says, adding that PayPal has an incentive to work with the card issuer in a way that it doesn’t with individual consumers.
3. Never click on links in emails from PayPal.
Why: They might not really be from PayPal. The most common theft technique involves stealing passwords by sending “spoof” emails that appear to come from PayPal, but link to dummy sites — complete with the PayPal logo — where users unwittingly type in their info. “Instead, go to your PayPal account yourself, log in and look there for any communications,” Siciliano says.
4. Watch your balance carefully.
Why: Thieves will typically begin draining an account with a series of small withdrawals — as little as $5 — hoping the user won’t notice. “I was going through some transactions, and there were some little odd ones, about $5 or $10 every two or three days,” says Anissa Wardell had never been. PayPal helped Wardell finish off her outstanding transactions and close the account, and also refunded the missing money. “The PayPal rep said that they usually take lower amounts, but then it will spiral into the hundreds,” she says.
PayPal covers consumers when they don’t receive an item, or when it is significantly different from what the merchant described.
5. Buy from verified merchants, and consider getting verified yourself.
Why: Practically anyone with an email address can open a PayPal account, but PayPal will verify users and merchants who provide additional information. While it does not guarantee that someone is legit, verification adds evidence of legitimacy. In the United States, you get verified by completing two of these three actions: linking PayPal to a bank account and confirming the account, providing your Social Security number or verifying your credit or debit card information.
While we advise against linking to a bank account, providing your SSN might be worse. “That makes me a little squeamish,” Breyault says of consumers being asked to provide their Social Security number. A thief can use your Social Security number to commit identity fraud against you, he said, adding that he’d rather a consumer link a bank account rather than provide that ultra-sensitive SSN.
If you decide to link to your bank account for PayPal verification, be vigilant about checking your account frequently, Breyault says. “Monitoring your account allows you to flag suspicious charges and take action,” he says.
Stay tuned to www.thefxchanger.com for more updates on using paypal and other money processing and exchange platforms.