Please be aware that this is our story, but this is happening to tens of thousands of people, not just in Texas but all over the world.
On September 14, I opened an account with PayPal. At that time it was for the purpose of transferring money to people or business programs I wanted to get into on the Internet.
Somewhere around Oct. 15, an Internet friend suggested that people were having trouble funding their egold accounts and that it might be a business I might think about. As a semi-retired businessman, because of a heart condition, I researched this and found that many of the people needing their gold accounts funded had PayPal accounts also.
Subsequently I opened an egold account and funded it with a thousand dollars. I started advertising on my web page that I could help people change their dollars into gold. Business started to move slowly until people realized that I made fast transactions through PayPal and was honest. My reputation grew rapidly, and soon I was doing $200,000.00 a month in transactions with PayPal alone.
Somewhere around Christmas I got a chargeback notice saying that I was in receipt of potentially fraudulent funds. PayPal asked for certain information in regard to the account named, which I provided. When I called, they said it was under investigation. As time went on, day by day, these transactions kept coming in, to the tune of over $20,000.00 worth of so-called fraudulent funds, "stolen credit cards." My calls to PayPal only resulted in being passed from one clerk to another with no results.
When I finally got to middle management personnel, all I received was a canned speech but no help. PayPal accepted the credit cards and in return sent me a confirmation email stating "you've got cash." The money was in their accounts, and three to six weeks later PayPal is saying the accounts were no good. I checked some accounts and found this to be wrong. These people proved that PayPal had debited their accounts and had their money.
In late January they gave me another support number to call, saying I had a "red carpet" account so that I could speak with management people. A week later they froze my account. This did not allow me to make any transactions but allowed people to make deposits into my account, which I requested be stopped until our problem was resolved. They refused to do this and took other people's money to satisfy the negative balance in my account. I requested this by email and phone on February 5. My account became positive and they opened it.
I started transferring gold into my customers' accounts again, trying to catch up, and then they "locked" my account. As of today they have me $20,000.00 out of pocket and a negative balance of somewhere in the $9,000.00 range.
Now they are emailing my customers saying they should file fraud charges against me. They are also telling them that they have had many complaints against my account and basically that I am the crook. My customers are behind me and now send me money in other ways. I have proof of this. See the attachment.
My point is that PayPal is not what they say they are. As a supposed financial institution, the only thing they are concerned with is getting accounts, which adds up to transaction fees, regardless of whether the accounts are legitimate or not. I now see that their policies are strictly set up to protect themselves, not their legitimate customers. Their security is at best nonexistent.
1. I did not accept the accounts. THEY DID.
2. I did not have access to their bank accounts or credit cards. THEY DID.
3. I kept my commitment to my customers. THEY DIDN'T.
4. I researched what accounts I could and proved them wrong. THEY DIDN'T.
We went to arbitration on the 21st and 22nd of January, and the decision is due at the latest on the 4th of April. As I sit here today, I am asking myself, "Was it worth it?" Well, yes and no. Yes, because for most of my 60 years I have believed that when you feel you are in the right, you fight for a principle, as most of you have.
We do not know whether we won our case yet, but I do now know that principles come at a high price. The agony that Hanna and I have gone through in the past 14 months is priceless. We have over 95k in credit card debt, 14k of which went to the American Arbitration Association (in a court it would have cost less than 1k) and over 4k to travel to San Francisco. Legal fees have exceeded 100k, and I still owe my attorneys over 30k.
A year and a half ago we were trying to prepare to retire. Thanks to PayPal, we are now looking at possibly losing our home as well as everything else we have worked for all our lives.
PayPal has filed a protective order on the case. I guess they do not want you to be able to make a judgment for yourselves. Ignorance of their ways is power. If a court finds me in violation of this ridiculous order, then so be it. At least I will go to jail knowing I have done my best to warn my fellow Americans of the possible pitfalls of doing business with them.
I have come to the realization that Peter, Max, Reid and the staff of PayPal can leave you feeling as if a bomb has leveled you. By the way, when Peter Thiel was supposed to testify at my hearing, he did not have the guts to show up.
Well, the verdict is in. PayPal forced us into arbitration and we lost. We did get $5,000.00 taken off the $18,976.29 under the seller protection program, which means we only owe PayPal $13,976.29, $784.97 in interest, $312,213.50 in attorney fees and $26,703.91 in paralegal fees. So much for doing business with them. In the near future we will publish the entire contents of the case so that if anyone is interested, they can judge for themselves.
We were forced into arbitration. We were trying to settle our differences and had refused their one-sided offers, which mainly included that we not reveal anything that happened. This would have prevented us from telling others our experiences and how to prevent it from happening to them.
What we found yesterday was that they needed to have 3 lawyers and two paralegals to prove their case. Their case, according to their primary lawyer, was "a simple contract dispute." After we found out they had started proceedings against us, we were forced to seek legal counsel, and we hired an attorney in Texas. Because the arbitration was in California, we needed one there also. This simple contract dispute resulted in tens of thousands of pages of documents.
Their contention was simple: if you used a credit card to send someone money and they sent it to someone else who sent it to another, all through their accounts, we were responsible to pay PayPal back. Also, if PayPal took a credit card that failed the address verification check, which happened twice on one account, we were responsible. Now answer this one: one of our customers sent 3 separate transactions, all with the same credit card. The first transaction was reversed, but the others were not.
Basically, whatever happens, PayPal is not responsible. They operate outside of banking regulations and do not protect anyone but themselves. We believe this is against consumer law because as a merchant they have a responsibility to their customers.
The arbitration process is, to say the least, a violation of a person's right to a fair and impartial trial. The arbitrator in our case was a well-known San Francisco corporate lawyer. Because we did not have a lawyer at the time, we had no choice. To our dismay, after returning from arbitration in San Francisco, we found on the Internet where a corporate lawyer from New York wrote that arbitration favors the big corporations 95% of the time.
California Civil Code section 1748.7, which was entered into law in 1989, prohibits processing a credit card charge through a retailer's account if that retailer did not furnish or agree to furnish the goods or services that are the subject of the charge. The arbitrator chose to ignore this when it was noted in the final brief filed by our attorneys.
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