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Whitney Tilsons e-mail to investors going over that Paypal Holdings Inc (NASDAQ: PYPL) is scamming uers with payments sent to pal.
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PayPal Is Scamming Its Customers
I cant believe Im composing once again about being scammed by payments giant PayPal (PYPL) …
As I first composed 2 years back on December 2, 2019, PayPal offers 2 ways to send out money: to “loved ones,” for which there is no cost, and for “goods and services,” for which there is a significant fee.
If somebody is taking part in a business deal and wants PayPals “purchaser security,” then maybe it makes good sense to pay the cost, however otherwise, it does not.
Thats bad for PayPals bottom line, so, to pad it, the business engages in blatant hoax and deceptiveness– and, worse yet, when the customer realizes their error, PayPal refuses to rectify the scenario.
Heres what just took place to me …
Over the weekend, my good friend Charlie and I shared a rental car, hotel space, and so on, at the Worlds Toughest Mudder. To make the accounting simpler, I spent for everything and e-mailed him his share of the costs on Monday: $488. He right away paid me through PayPal.
But when I checked my account, I discovered that the company had charged me a charge of $21.91, equal to a usurious 4.49% of the total.
Having actually made this error myself two years ago, I understood what had taken place: Charlie had inadvertently clicked payment for “goods and services.” Its simple to see how this occurred. When you look at the screenshot that he sent me, its the default alternative, and nowhere does it reveal that costs will be charged, much less the amount:
This lack of disclosure is misleading and outrageous.
Wait, it gets even worse …
When I went to reverse the transaction deal Charlie could resend me the money cash a feeCharge I couldnt could not discover way to do so on the app or website. So, I sent this message to PayPals customer assistance center:
Instead of quickly fixing this concern, a representative sent me this reply, requiring me to call the next day:
When I called the other day and finally got across a client support representative (after getting the run-around for 10 minutes in their automated system), she stated all I had to do was refund Charlie.
What she didnt inform me, however (more deception), is that PayPal would keep the fee, per its site: “If you refund a deal, well maintain the fees you paid as set out on our Fees page.”
When I pointed this out and asked for a refund of the charge, she told me she couldnt do that. Im particular that this is a carefully orchestrated plan to increase the number of people paying costs needlessly.
An ethical and honest business would have a screen that pops up after a customer chooses the payment type validating the deal, which plainly says something like:
You are sending $488 to Whitney Tilson. Due to the fact that this is for services and items, we will charge a cost of 4.49% or $21.91, so the recipient will get $466.09.
In addition, there would be a simple and fast method to cancel an incorrect deal within, say, 24 hours (just like Congress required the airlines to do).
Of course, PayPal does not do this due to the fact that it needs to be making an absolute fortune by tricking unwary consumers in this method.
PayPal is substantial, so if its deceptive and deceptive process that deceived Charlie results in charging unneeded fees on even a little portion of its transactions, the company could be gathering huge cash.
$ 580 Million Of Pure Excess Profit
In my e-mail two years back, I did some back-of-the-envelope mathematics to estimate that this deception might result in “$ 580 million of pure excess revenue for PayPal, equal to 22% of the businesss trailing 12-month operating income of $2.6 billion.” Those numbers are nearly definitely much greater today …
Why am I making such a huge stink about a tiny amount of cash? Since, on concept, I dislike being scammed. In addition, I know if its occurred to me twice in 2 years, then its surely occurring every day to many other individuals who might not remain in as good of a position as I am to accentuate whats going on.
I plan to send this e-mail to PayPals senior executives and board, as well as the pertinent regulators. Ill let you know if and when I hear anything …
Have you been scammed by PayPal or another public company?
The very best way to get business to stop doing things like this is to call them out openly!
P.S. Despite my criticisms, I dont advise shorting PayPals stock. Its a remarkably terrific business, and its stock has doubled considering that I last composed about it two years ago. That said, if I owned the stock, I d be looking hard at this problem and trying to approximate how much of PayPals profits could suddenly disappear.
Updated on Nov 17, 2021, 1:15 pm
He right away paid me through PayPal.
I plan to send this email to PayPals senior executives and board, as well as the relevant regulators. Ill let you understand if and when I hear anything …
Have you been scammed by PayPal or another public companyBusiness P.S. Despite my criticisms, I do not suggest shorting PayPals stock. That stated, if I owned the stock, I d be looking hard at this problem and attempting to approximate how much of PayPals profits might unexpectedly go away.