How Paypal Violates your Credit Rights

Services for Real Estate Pros with Credit Score Boost - USA Credit Solutions

Found this article about how the Government knowingly allows Paypal to operate in violation of hundreds of laws.  Paypal did not respond to the article because they have included all paypal users from 2006 to 2016 in a settlement, without their permission, and unless the user (or paypal merchant) excludes themselves from the settlement, the court deems, that the paypal account holder will not be able to sue them or ever do any litigation and all current/pending litigation against Paypal.    


The most disturbing part of the article (used by permission), was that of it's account holders right to pursue means of credit.  Read it for yourself. 


10 Things Paypal needs to do before it succeeds or loses against it’s competitors.


Stripe, 2Checkout, Payoneer are just a few of new merchants doing business and Paypal is behind the times. As Paypal emerges from Ebay, it must first address some key issues.

When we interviewed consumers and businesses who have used the Paypal service, they all have many things as the common denominator that caused them to leave Paypal behind.

We investigated over 10,000 problems and complaints against Paypal and have listed them in the top 10 problems they need to fix.

  1.            Fix their customer service: The number one reason consumers and businesses from small to large are leaving Paypal is customer service.  Customer service for Paypal is dominated by it’s own world, separate from the world of first class customer service.  Paypal thought that a tier level support system, hiding it’s dispute department, it’s Brand Risk Mangement, AUP (Acceptable Use Policy) Department, Executive escalation behind one of the most secure fortresses in the world.  These are just a few of the multiple departments hiding behind the guise of customer service.  Customer service has no authority to let the Paypal user talk with directly any of it’s back office people.  This is unlike any bank in the entire world.  Banks all across the globe allow it’s members (customers) to talk with departments and not hide.  Paypal hides behind the wall of email correspondence, but the customer has no say, or is able to dispute any of their decisions. Paypal’s decision on the customers money or business is controlled by their own “Hitler driven” as some have suggested communist decision making.  Paypal makes it’s decisions based on their interpretation of what the customer’s complaint or issue is. Whether this is a dispute as a consumer, or a dispute as a business or a AUP policy interpretation.  Some interpretations we have investigated are clearly made up myth’s and are not based on any concreate evidence or explanation from it’s consumer. Things like a Ebay purchase that was made and the item is defective, Ebay does not have a guarantee on the sale. Ebay in return directs the consumer to Paypal. Paypal can either without any supported evidence, make the decision in the favor of the consumer or the business.  Once a decision is reached, and many times without any feedback from the consumer or business, it is final and can never be disputed again. This is much unlike any FDIC protected bank or world bank.   The user always has a say and can also engage the government to help in a unsatisfactory dispute.


  1.            Abide by the laws of the land wherever they do business, in the United States, Europe or any other Country.


Account limitations are the second reason consumers and businesses leave the service. This is another form of communism which Paypal proudly controls. In fact Paypal’s own CEO  Daniel Schulman seem to be “above the law” concerning the reasons behind the limitations or any other problems a paypal customer has. Again the consumer or business has no recourse, except legal but once that is threated, Paypal will confiscate all funds on the account.  See Zepeda, et al. v. PayPal, Inc and Fernando, et al. v. PayPal, Inc. If the Court approves the Settlement, and after objections and appeals are resolved, PayPal will obligated to implement or maintain certain business practices. Plaintiffs in this case allege, among other things, that PayPal improperly handled disputed transactions on PayPal accounts and improperly placed holds, reserves or limitations on accounts or closed or suspended accounts. Plaintiffs also allege that PayPal failed to provide them with annual error-resolution notices and monthly account statements allegedly required under the Electronic Fund Transfer Act.  Paypal denies any wrongdoing and to deceive it’s members, they include all paypal customers in the suit, and state this “If you are a Claims Class Member, unless you exclude yourself, you are staying in the Claims Class, and that means that you can’t sue, continue to sue, or be part of any other lawsuit about the legal issues

released in the Settlement Agreement. It also means that all of the Court’s orders will apply to you and legally bind you.”

Major violations of world wide governing laws.  We found over 300 US laws and 50 European laws that Paypal violates. Whether it is a law to protect a consumer, or a law to protect a business, Paypal is among the biggest violator of laws.  And unlike Eron, Tyko, AIG, and many other major corruption cases, Paypal is “above the law.”  Many of the cases we investigated, are untouched by governments, except one case that is being investigated by the FTC at this moment.  One of the biggest laws that Paypal violates is the FCRA (Fair Credit Reporting Act), this is the case the Federal Government is investigating.  The FCRA has over 120 laws and everyone of them has been violated by Paypal.  To explain, the FCRA protects consumers from seeking credit or repairing their credit. It also protects businesses to be able to offer these services.  Paypal in it’s own AUP, clearly states in their email to a consumer who has used paypal to purchase a line of credit or credit repair, or a business offering those services  this : “Those factors include: - Charging fees prior to the completion of advertised services.

- Offering services that include adding a customer's name to an established loan or a line of credit with the intention of improving the customer's credit score. “

But their website AUP does not include these items.  When the consumer or business that was shut down contacted Paypal to intervene, they stolen from.   The other laws Paypal clearly violate are clearly stated (see .pdf download) “(i) involve certain credit repair, debt settlement services, credit transactions or insurance activities, or”

And these services also are protected under the FCRA, Title 15 of the USCS 1681 Act, and the US constitution.

When we contact Paypal through a current Paypal customer, the customer service representative quickly quoted  that paypal cannot allow anyone “who wants to improve their credit score or business to help them, or certain persons who have not so good credit” be a paypal customer.  Whether the credit scan Paypal used is valid, the user has no recourse to fight back.   The (CROA) Credit Repair Organization Act of 1996 prohibits a variety of false and misleading statements, as well as fraud by financial companies.  It and the FCRA also allow the customer to dispute and challenge inaccurate information contained on a credit report, something Paypal violates and will not allow a potential or active customer do.   We also found that the ECOA (Equal Credit Opportunity Act of 1974 prohibits discrimination in credit transactions on the basis of certain personals characteristics including “being a recipient of public assistance or exercising your rights under the CCPA (Consumer Credit Protection Act) all of these are enforced by the FTC (Federal Trade Commission).  

The Fair Credit Billing Act (1974) requires that a credit card company promptly credits your payments and corrects mistakes on your bill without damage to your credit score. It also lets you dispute credit card billing errors and withhold payment for damaged goods. See also Truth in Lending Act below.


The Fair Credit Reporting Act (1970) protects you against inaccurate or misleading information in credit files maintained by credit reporting agencies. It requires that you must be told what’s in your credit file and have the ability to correct any errors. The Risk-Based Pricing Rule implements section 615 (h) of the Fair Credit Reporting Act. It gives you the right to a free credit report annually, protected access and accurate reporting. This act gives you the right to have inaccuracies fixed in a timely manner as well as the right to sue and seek damages for violations.


The Consumer Credit Protection Act (1969) is an umbrella consumer protection law that includes the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, Credit Repair Organizations Act, and the Truth in Lending Act.


According to our email with the FTC (Federal Trade Commission)


Paypal may not discrimintate based on your credit status. They may not discriminate if you do not have a phone number. They not refuse to consider you based on your credit status. And you have the right to get credit to help your credit score improve, or get credit with a cosigner. Cannot prohibit you from disputing or repairing your credit. They must verify whether or not items on a credit report are accurate under the FCRA. And most importantly prevents them from circumventing the law. All of these are enforced by the FTC.


According to the FTC conduct that is not allowed

- Contacting after you have been a customer, and requested to validate a debt or improve your credit score


This is just the first part of the 120 violations of the law Paypal has violated. Paypal is liable for any of these violations, whether this be criminal, or civil. There are several class action lawsuits against paypal, including one that has over 22 million people who are in the process of joining.


What can you do? If you have been a victim of this abuse, you can contact :


BBB of California

California Attorney General

Nebraska Attorney General

and any other agencies to file a complaint against Paypal for violating your rights and also file a lawsuit , damages can be in excess of millions of dollars depending on the violation.


You can also boycott Paypal, or discontinue their service before they freeze your funds, and make your company inoperable.  Will Paypal be another Enron, Tyco, Worldbank,  AIG, that the FBI shuts down or another JP Morgan, and then what happens to your business or money ?


  1.            Paypal must fix their bad image.  Many consumers do not trust Paypal and will not do business with them, or any service using their payment processing.    Trust is a serious issue and if consumers do not trust Paypal, paypal must address this issue, not in a superbowl commercial that talks about what Paypal can do, but in commericals and advertisements that help change their image. If the image is based on something Paypal is doing, then they must change what they are doing wrong.
  2.            Stop suspicious activity lockouts.  Paypal will lock an account for 6 months or more if they detect suspicious activity.  A photo hobbyist who buys and sells cameras on Ebay was just one of the deemed suspicious activities that lockout the account. The customer had not recourse to dispute or unlock.  Paypal’s hidden offices act as a “supreme God” in these issues. What bank do you know that you cannot walk into the Vice President’s or Presidents or Managers office ? None!  But not Paypal, they are hidden behind a internet firewall and does not even have a brick and mortar location you can visit.
  3.            Protect Chargeback Fraud.  Paypal is known as the worlds biggest violator of this issue.  A person purchases something, receives it, and then later charges it back.  The business has no recourse to get the money back (also see #1).
  4.            Protect purchases.  Paypal offers virtually no recourse when a consumer purchases a defective, damaged or faulty product.  Many times Paypal in this case favors the paypal business and offers no way for the consumer to prove or get their money back.  Whether it is $20 or $2000 or more.
  5.            Fix their wrong delivery addresses.  This is the seventh biggest complaint by consumers, who use paypal, and provide a delivery address, but Paypal uses a wrong address. Paypal offers no refund for items delivered wrongly and not returned.
  6.            Give the refunds back to the business. This is the 8th biggest complaint against paypal that we investigated.  Paypal  will issue a refund from the user, but keep it and never give it back to the business or allow the business to try and recover the refund.
  7.            Quit being a small business killer.  This is another big of the top 10 out of thousands we investigated.  This just made number 9.  One of the complaints involving a person selling products that help people learn new languages. In five days he made over 30,000 and had reoccurring billing.  Paypal froze it even though the person had used Paypal for years.   That meant he had no way to refund a customer,  pay freelancers who helped in the language course or continue his business.  Customers who had signed up stated lawsuits against him. This is just one of the problems being investigated by the EU commission, who may shut down paypal from using their services in Europe and heavily fine them.
  8.            Fix their Paypal Credit problems.  This problem involves many complaints.  From Paypal pulling a credit report, giving a big credit line, damaging a credit score, and offering no way to fix this, to people who tried this and had a inaccuracy on their credit report (see #2) then being denied Paypal services, in which Paypal freezes the account.

The biggest problem of all of these thousands of complaints is how Paypal freezes the accounts, and makes millions off of interest by the amount of money they have frozen for 6 months to a year, and that interest they profit off of, does not go back to the customer.  Paypal claims, they have a right to this money because they (falsely or knowingly (fraudulently) locked out the account. 

You never here stories like this from banks or credit card companies.  Paypal will have to address these issue, if they are not seized by the Federal Government, fined, or banned form other countries before they will survive.

We have contacted Paypal before we are a getting ready to publish their story, but the only response we have gotten so far is that “Paypal cannot discuss the details of a specific account, or it’s policies and cannot help if we (the AP news organization) is not a current customer.”

We will keep you posted after this story goes viral and Paypal possibly responds. 


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Show All Comments
Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

Paypal has been a great company and I have used it for years, but they are not the most customer friendly and certainly not the greatest policies that they could have.  I have often wondered how a more customer friendly product has not come into the market and beat them yet.

Feb 13, 2016 12:53 AM #1
Edward Gomez
Credit Score Boost - USA Credit Solutions - Affton, MO
Credit Score Boost USA

Stripe, 2Checkout, Payoneer  are just a few of the competitors now and growing.  I think now the competition arises.  Payoneer is also partnered with Amazon, you can also use it to send payments to a prepaid debit card.  Stripe is very friendly and I think founded from ex paypal developers.  

Feb 13, 2016 12:59 AM #2
Edward Gomez
Credit Score Boost - USA Credit Solutions - Affton, MO
Credit Score Boost USA

Sorry everyone, in my copy and paste,  there was some indentation errors, and a spelling error MS Word id not pick up, and I overlooked.  I am usually more professional than that.  If you see something I miss, please point it out, I will be happy to correct.  

Feb 16, 2016 06:12 AM #3
Edward Gomez
Credit Score Boost - USA Credit Solutions - Affton, MO
Credit Score Boost USA

this is going viral on social media --- 


 ur illegal litigation w/out consent I campaign 2 boycott u, we have 2 million signatures worldwide.   Repost if u like

Feb 17, 2016 08:47 AM #4
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Edward Gomez Thank you for an easy read and informative post - we are now "following" you!

Apr 13, 2016 01:26 AM #5
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