PayPal knowingly making money by helping Chinese scammers

8 Mar 2020 | Ecommerce

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PayPal knowingly making money by helping Chinese scammers 1

There’s a new kind of scam being operated by Chinese companies. It’s designed to make the PayPal “Buyer Protection” worthless. But PayPal don’t seem to care.

How the scam works

The scammers advertise their products on Facebook. The goods look great, are well-priced, and are offered with free shipping. The only payment method they take is PayPal, but the vendor offers “100% money back” and, hey, you’re also covered by the PayPal Buyer Protection, right? Nothing to lose. What’s not to like?

But what arrives is a pale imitation of what you were promised. Shoddy goods nothing like the description and not fit for purpose. All very disappointing, so it’s time to contact the seller to get your “100% money back”. If they bother to reply, they’ll first try putting you through the Labours of Hercules in an attempt to make you give up. So many pointless tasks – send them photographs of the product, write an essay on reasons for your dissatisfaction, slay the nine-headed Hydra, fight off suggestions of credit instead of refund (because you really want to buy more tat from these merchants), and so it goes on.

Eventually, if you persist in demanding your money back, you get to the clincher. They insist that you first return the goods via  tracked delivery service at your own cost … to China. And there was you thinking they were based in the US or UK like the advertising implied.

This trick kills your chances of getting your money back stone dead for two reasons:

(1) The cost of a tracked shipment will far exceed what you paid in total for the goods. Only a fool is going to shell out more than they paid for the goods in the faint hope of getting a refund on the original outlay.

(2) This is the really clever bit – you cannot get PayPal to refund you because their “PayPal Buyer Protection” is worthless in these circumstances. When PayPal say this:

PayPal knowingly making money by helping Chinese scammers 2

… what they hide in small print is “only if you return the goods at your own expense via a tracked delivery service“. Trying to get your money back under PayPal Buyer Protection is like banging your head against a brick wall. No matter how many times you patiently explain the nature of the scam, PayPal responds by rote: “you haven’t returned the goods so no refund”. They will refuse to escalate the matter to a level where staff are capable and authorised to go beyond copy-and-paste response. Presumably, that is because they will have no excuse once they can’t hide behind the “no return, no refund” line.

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The scammers usually run short-duration, high-volume advertising campaigns on Facebook so  as to generate lots of orders before anybody receives any product. That ensures no negative feedback is available if a wary potential customer does some research before ordering. 

Of course, PayPal is well aware that these scams are in widespread operation and that they work by purposely exploiting the limitations of PayPal’s own terms and conditions. But it seems that PayPal doesn’t care about its own customers being out of pocket or about the damage to its own reputation. After all, they are taking commission on every one of these sales.

This dilution of trustworthiness for consumers is one of the many reasons why we now recommend to clients that they steer clear of PayPal and go instead with better and more modern payment processors such as Stripe.

PayPal’s own customer forum is full of complaints about the Chinese scam. They can’t claim they don’t know about it.

How can buyers get refunds?

The first thing to say is that you will be wasting your time with the PayPal Disputes process.  It’s a very rigid, largely automated, system. You’ll have to spend time providing all the information, but won’t get any refund unless you spend more than the purchase price on returning the goods to China. Feel free to knock yourself out messaging PayPal to ask them to apply commonsense. But you’ll be dealing with low-paid staff from developing countries with neither the authority nor the mindset to go off-script.  Here’s one person’s description of their experience:

I put a lot of time and effort into sending PayPal detailed explanations of the scam, precise information on how the goods supplied differed from what had been promised, evidence showing that lots of other people were having the exact same experience, copies of correspondence with the supplier, and quotations showing how the cost of return shipping would be twice the original purchase price.

Each time, I got a boilerplate response from a PayPal drone ignoring my evidence and the obvious facts of the case but claiming that they ‘completely understand’ and ‘It is my pleasure to assist you. Thank you for choosing PayPal’. They would always refuse to escalate the case for review by somebody with more time/latitude/interest.

But it got worse! Early in the process, they ‘found in my favor’ and set a deadline for receipt of my proof of return postage (despite my having been clear that this was not going to happen for all the obvious reasons). One of their subsequent messages advised me to submit any further evidence or comments via the Dispute system. When I did that, their poxy automated Dispute system treated that as my notification of return postage which, as it contained no tracking number (!), triggered a reversal of their original decision in my favour. Even though I still had another week to provide the return evidence, they u-turned, rejected the case, and closed it. Because I had done exactly what they told me to do! No amount of further messaging could get them to acknowledge that this was a process flaw. It looks like PayPal’s customer service processes have been designed by the Borg. ‘Resistance is futile. We are the PayPal’.

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