PayPal Fraud: New Policy Will Help
In June, PayPal.com amended its acceptable use policy to state:
Prohibited Activities. You may not use the PayPal service for activities that:
“4. involve the sales of products or services identified by government agencies to have a high likelihood of being fraudulent”
This provides PayPal with a lot of discretion because both the U.S. Federal Trade Commission (FTC) and state attorneys general are constantly identifying products and services that have a high likelihood of being fraudulent and deceptive online business opportunities.
If you see an unethical Internet marketer selling a bogus info product online and using PayPal for payment, a quick note to PayPal about it that refers to the new acceptable use policy should be enough to get an investigation started at a minimum and probably get the account closed if the product is similar to something a government agency has already nailed for fraud.
About the Author
With an advanced international law degree from Georgetown University and more than 15 years of real world legal experience, Attorney Mike Young is President of the Internet Ethics Council and creator of Website Legal Forms Generator software. He helps entrepreneurs protect and grow their businesses online.
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Hey Mike,
Is there a significant amount of users selling fraudulent products using paypal?
If so that sounds quite disturbing.
Rezbi,
Probably the biggest fraud category for PayPal is counterfeit goods sold on eBay. In the info product marketing arena, you’re more likely to find it an issue where the seller is based outside of the United States in a country where they’ve been unable to set up a merchant account for accepting credit cards for purchases made in countries like the U.S. and Canada. I’ve seen it on some sites based in South Africa, Eastern Europe, Communist China, and India. Typically, it involves ripping off someone else’s product and selling pirated copies (in many instances, without even changing the sales copy).
For U.S. based sites, you’ll see it with fake alternative medicines, weight loss diets, stay-at-home work opportunities, fake government grants, mortgage/debt refinancings, and get-rich-quick scams.
Best wishes,
-Mike
That brings me to another question – do the internet laws which govern what US citizens do also apply to citizens of other countries in their own countries?
And, if so, how can they be enforced?
Rezbi,
The U.S. government has been applying its Internet laws beyond its borders by treaties and other agreements. In most cases, the violation of the U.S. law occurs when it involves a transaction within the U.S. even though one of the parties is outside of the U.S. For example, a British citizen violated U.S. spam laws. He lived in Australia and had never visited the U.S. However, under a trade agreement between the Australian and U.S. governments, the spammer was extradited to the United States. Last I checked, he was serving a five-year prison sentence in a federal prison.
Best wishes,
-Mike
Do you know if the reverse applies?
The reason I ask is I know I personally get a lot of spam from the US, and I live in the UK.
Rezbi,
For now, it is going to vary by country/region. You’d want to see if there are any U.K./E.U. agreements/treaties with the U.S. that apply.
In addition to seeing a qualified Internet solicitor, consider checking out EuroCAUSE and SPAM ABUSE NET.
Best wishes,
-Mike
I’ve purchased a counterfeit phone on Ebay.I asked the seller politely for a full refund including paid return postage.He threatened to sue me(he didnt say it directly)”he said,I will have the agency compensate me for my loss” if I left negative feedback and he said that it is a crime to post false statements on public sites.Also stating I am a threat to his business and he sells only authentic phones.I know for sure that the phone i received is a fake phone.What should I do?
If paid for through PayPal, check out the “Filing Disputes and Claims” section at PayPal. If paid for using a credit card, contact your credit card company about disputing payment. Note that both PayPal and credit card companies have deadlines for disputing charges. Also, use eBay’s “Resolution Center.” If a counterfeit phone, consider contacting the Internet Crime Complaint Center (IC3) too. For specific legal advice (to fully protect your legal rights), consult your Internet attorney immediately.
He said that if I post false information on a public website such as negative feedback, it is a crime and he can sue me to receive compensation for his loss.Is that true?Paypal requires documentation on the companies letterhead to prove that the item is a counterfeit from an unbiased third party.I’m in an area where I cannot get ahold of this information.Is there some way I can get it from a retailer online?
In many countries, posting false information is a civil issue…not a criminal one. And, of course, false means false. As for letterhead, contact the manufacturer of the real phone that has been counterfeited. They should want to help because counterfeits cost them money too. As for specific steps, once again, please contact your Internet attorney. Sadly, this cannot be a forum for free legal advice because your unique circumstances will determine your legal rights and responsibilities.
Okay,thank you for your time.