Why You Should Not Use PayPal To Accept Credit Card Payments
Merchant Accounts versus PayPal Accounts
Let's start off by clarifying that PayPal is NOT an acquiring bank nor a true merchant processor. It will NOT setup your online or retail business with an actual merchant account but only a PayPal account.
There is a Very Big Difference.
Why You Should Not Use PayPal To Accept Credit Card Payments
When your business works direct with an actual acquiring bank and payment processor, your money or "funds" are fully protected by Federal Banking Regulations. Your funds are directly deposited into your personal or business bank account within an agreed upon time frame, normally 24-48 hours after batching out.
With PayPal, your money is deposited into a PayPal Account, which PayPal Fully Controls.
PayPal is NOT an actual bank so they are not obligated to follow federal banking regulations. The reason these regulations are important is that they protect your business from issues like having your bank account froze for 6 months with no explanation given... (Just imagine if banks were actually permitted to do that to their customers!)
Why You Should Not Use PayPal To Accept Credit Card Payments
Because PayPal is not regulated in the same way as a real Merchant Account, PayPal accounts can be frozen for almost any reason and without warning. The account can usually receive money while it is frozen, but the account holder cannot withdrawal any money. Once an account is frozen, the funds are often held by PayPal for months on end with Absolutely No Recourse for the merchant.
Merchants finding themselves on the wrong end of a frozen PayPal account, will still have to find some way to pay their obligations and fill orders for the weeks and months ahead while their account is restricted. A domino effect occurs when a merchant's account is frozen, leaving them with No Means To Fill Orders or Pay Bills. Those orders are then disputed by customers, creating more chargebacks and the illusion of fraudulent activity on the part of you the merchant. "Welcome to the PayPal Nightmare."
How Does PayPal Make Money With My Money?
Currently there are roughly over 100,000 outstanding complaints at PayPal according to the San Francisco Chronicle. These disputes many times last for months leaving merchants angry, frustrated and sometimes out of business. You may be wondering what happens to the millions of dollars being tied up in these frozen accounts. Here is a short clip from an article recently in the San Francisco Chronicle that gives us some good insight:
U.S. District Judge Jeremy Fogel of San Jose refused to dismiss a lawsuit that seeks class-action status on behalf of thousands of PayPal customers nationwide. A common allegation is that the company brushes off or stalls customer grievances for months and meanwhile freezes the customer's account and pockets the interest (So that's how they make their money!). No wonder they freeze so many accounts!
Hopefully this article has shown you enough reasons to seek out the many benefits and protections that a true Merchant Account can offer to your business. Merchants have enough to stress about in trying to stay afloat in today's tough economy, having their money wrongfully frozen should not be one of them. Do yourself the service of setting up an actual merchant account for your business, and give yourself the peace of mind you deserve.
Debt Dispute and next course of action?
I received a letter from a debt collection agency a month ago. I disputed the debt and this what I wrote using a template from MS Word. I omitted the names and address and dates but you get the general idea. It was also returned receipt
—–
To Whom It May Concern:
This letter is being sent to you in response to a notice I received on [date]. Be advised that this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested.
This is NOT a request for “verification” or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your offices provide me with competent evidence that I have any legal obligation to pay you.
I humbly request your Debt Collection agency to provide me with the following information in order to validate this debt:
- Show me what do I owe this money for; and what purchases did I make or what Services did I receive?
- Show me the details and calculations of how you calculated that amount.
- Provide me with letters or proof that I agreed to pay what you say I owe.
- Provide me with verification or judgment of any debts owed.
- Identify to me the Original Creditor from whom I made the purchase.
- Prove that the Statute of Limitations has not expired on this debt
- Show me that you are licensed to collect this debt in my State
- Show me your Debt Collection Rights License #
- Show me that you are authorized to collect this debt on behalf of the Original Creditor.
- Give me a complete transaction and payment history from the Original Creditor.
- Show me what the original amount was when this Debt was assigned to your Debt Collection Agency. **
- Show me any fees and interest charges that have been added on to this debt. **
- Show me how you determined and arrived at these fees. **
- Give me a copy of the original signed loan or credit card application with the Original Creditor.
** These debt validation requests are Law under the following Court Case:
Fields v. Wilber Law Firm, Donald L. Wilber and Kenneth Wilber, USCA-02-C-0072, 7th Circuit Court, Sept 2004
At this time I will also inform you that if your offices have reported invalidated information to any of the 3 major Credit Bureau’s (Equifax, Experian or TransUnion) this action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following:
- Fair Credit Reporting Act
- Fair Debt Collection Practices Act
- Defamation of Character
If your offices are able to provide me with all the proper documentation as requested in the following Declaration, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist.
Also during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel for suit. This includes any listing any information to a credit reporting repository that could be inaccurate or invalidated or verifying an account as accurate when in fact there is no provided proof that it is.
If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.
I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. If your offices attempt telephone communication with me, including but not limited to computer generated calls and calls or correspondence sent to or with any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter by USPS.
It would be advisable that you assure that your records are in order before I am forced to take legal action. This is an attempt to correct your records; any information obtained shall be used for that purpose.
Best Regards,
[Your Name]
—–
Now they sent me just a letter with nothing else and here it is verbatim. No verification or anything I listed is given.
Now here is their response. They sent nothing else or anything else I requested. Just this letter and it is verbatim and personal info is omitted
—–
A recent investigation has revealed that you are gainfully employed
You accounts remains unpaid. It is our policy to ensure collection using every means available to our client under the law. WE WILL NOT MAKE YOU THE EXCEPTION.
Our further action will be determined by your response to this letter. This communication is from a debt collector. This is a attempt to collect a debt. Any information will be used for that purpose.
Sincerely,
******
*********
What should be my next course of action and what should i respond to them with?
what is actual Credit?
I need help understanding credit. Are my answers correct?
1.Which of the following cards require full repayment when you receive the monthly
statement?
1) Debit/Check card
2) Charge card
3) Credit card
4) Cash card
5) None of the above
answer:5
2.In almost all cases, lenders will charge you for the use of credit (borrowed money). What factors affect the final cost?
1) The interest rate/APR
2) The amount of down payment, if any
3) The length of time you take to repay
4) Additional charges, such as late payment, over-the-limit and annual fees
5) All of the above
answer: 5
3.You purchase $50 worth of clothes using your credit card. When you receive the credit card bill, you immediately pay the entire amount. The credit card company does not charge interest if the bill is paid in full within 30 days. There is no annual fee for the credit card. For this purchase, what is your credit cost?
1) $50
2) 18% APR
3) $0
4) None of the above
answer: 3
4.If you think your credit file contains incorrect information, you can 1) Ask the credit reporting agency for a copy of your credit file
2) Add your own explanation to certain information in your file that you disagree with
3) Have the incorrect information deleted from your credit file
4) A and C only
5) A, B, and C
answer: 4
5.By federal law, known as the Fair Credit Reporting Act (FCRA), Equifax can only release all or part of a credit file if there are “permissible purposes.” Which of the following “permissible purposes” allows Equifax to release a copy of your credit file?
1) A request from a consumer for his or her own credit file
2) A prospective employer conducting a background check
3) An insurance company wishing to underwrite an insurance application
4) All of the above
answer:2
6.Generally speaking, the longer the term of a loan, the higher the cost of credit.
1) True
2) False
answer: 1
7.Installment loans are usually paid
1) in fixed payments every month until the loan is repaid
2) in variable monthly payments which you, the borrower, can establish
3) in variable monthly payments which are established by the lender
4) in one lump sum at the end of a specified period of time
answer: 3
Send them a second letter telling them that they have not properly validated the debt as requested in your original letter and as required by the FDCPA.
Tell them that you consider this issue closed.
Good Luck
yes my dear. some are correct and some are incorrect. where we can shoppe with credit where we pay the amount with in the 30days
Financing a motorcycle with a 672 score, chances of being approved?
Ok so I applied for this loan once 6 months ago at my CU and was denied (it was for 6500 dollars), the lady was really nice to me and told me how to fix my credit and chances of getting approved.
So now I’m going to wait another month and am going to apply with the following ( I have not had any credit inquiries since this application)
The score they pulled was TransUnion, mine is currently 672, my Experian is 708, Equifax I’m not sure.
I make just under 1500 dollars per month before taxes (at the time of that application I was not at this job, i was working one that only made 600 a month before taxes, I have now been back at this job for 3 months, Had been here for 2 years prior), currently have 800 dollars remaining in credit card debt, which translates into 2.5 Percent, Debt To Income Ratio.
I am applying for a 5500 dollar loan for a Used Sportbike CBR600RR, with a down payment of 500 dollars.
I know it’s better to put a bigger down payment, so spare me
My credit is also 1.5 years history now, with no negative hits. All paid on time.
What do you guys think my chances are of getting approved?
What’s killing you is not your credit score… it’s your income.
Motorcycle loans are harder to come by because lenders see them as “recreational”, not “essential” like car loans (i.e., you
NEED a car to perform daily task, get to work, etc… whereas you would not NEED a bike, get it?). They are usually going to turn down someone young like yourself with little work history and probably no prior vehicle loans.
**EDIT** — Lia’s answer is spam, don’t click on that link.
Dell Credit Card: Does “Error” = Declined?
I want to buy a Dell notebook and I wanted to finance this using a Dell credit card. I applied for one on the website yesterday and was told that there had been an error and that I should try again later, use a different payment method, or contact a representative. I decided to try again later. I tried today and got the same “error” message.
Have I been rejected for the card and they’re just trying to be polite in some way or is it really, truly an error?
I wasn’t sure what number to call for Dell to ask them, so I thought maybe someone else would know. I just checked my credit report from Equifax and I have no black marks. I always make payments by the deadlines on cards I do have so as far as I know, I have good credit. The only thing that might negatively affect the application is that I am a 19 year old student (but I don’t have any educational loans).
I use Firefox so I’m not sure if that would have anything to do with it if it is an actual error, but I don’t trust IE…
IS there a way to find out which credit bureau a creditor uses to approve or deny your application?
I am 19 and have an account on Experian that is not mine, I am currently disputing it however its charge off and has that score at like a 537. I have okay credit with transunion and equifax (690 and 671) and I have been told that creditors subscribe to a credit bureau and use it every time they receive an application to approve or deny. When I call and ask they say ” we use all three” which is not true b/c when i get the denial letter it lists which credit bureau they checked.
I am NOT going to apply for too many cards and have heard the American Express ONE is pretty easy to get. I have added a security freeze to my experian file so if anyone tries to use that bureau, they will be rejected ( as they would deny me if they seen the charge off). I just want to know if there is anyway to find out which bureau a creditor uses BEFORE applying for their card?
Generally speaking a credit request will either be accepted or declined with a message reflecting the acceptance or rejection.
An error message such as the one you got reflects a problem with the infrastructure that is being used to make the request and doesn’t necessarily mean that the credit is being denied.
The Dell.com site has contact links at the bottom of the page if you want to speak with someone from Dell to get this cleared up.
There really is no way for the general public to know.
The lenders that I use to secure auto loans I know which bureaus they look at because I have to know.
Most lenders pull differ ant bureaus based on Zip codes.
Of the 15-lenders I use not one of them pulls all three.