Expert: Marvinator - 6/6/2004

Question
1st off hello Marvinator,

I am new to ebay and auction sites. I am looking into buying and selling on eBay, and had some questions to ask you.
I have been looking into opening an account for some time now but never did yet because I was a bit scared about identity theft on ebay, I heard so many horror stories, about ebay and paypal, well am ready now to open and account and had some questions and concerns.
1) On ebay and paypal is it better to use a Debit card instead of a actual credit card, and just have the debit card link to a seperate account just for ebay? my concern on this is that I heard of paypal freezing accounts if something goes wrong, even if you have outstanding record with them. I am a little scared giving them my actual credit card number and have them screw up my credit or something.

2) Does ebay or paypal deduct the fees owed to them right from your credit or debit card without your permission (automatically) or do they bill you? and you have the option of payment? and when to pay them

3)as for ebay and paypal is it better to use a "true blue ISP" account for email ex: comcast,aol,verizon etc. or is a free email account ok like hotmail or yahoo? and can you change your email account name or bank account info if it should change in the future on ebay or paypal?

4) How does ebay or Paypal have the rights to just "freeze" your account if there is a problem do they give you warnings, and when and if they freeze the account are they freezing your bank account from you having access to it? I heard this horror story on paypalsucks.com....


I hope you can answer some or all of my questions I know there are alot of them I just want to start selling and buying from ebay but have heard so many crazy stories that scare the heck outta me especially for paypal...

Thanks for the help !
~MJ


Answer
This is quite a group of questions!  I'll do my best to take them a section at a time.  

1) Paypal cannot screw with your credit.  They can freeze the card you have on file, and keep you from being able to use it for a short time, but they cannot affect your overall credit rating.  

It works like this.  When you, as a seller, have a problem with a buyer, Paypal has been known in the past to freeze the account of the seller when the buyer posts a request for a refund.  This is rare, but it does happen. The best way to prevent this is to be a good seller.  Don't sell questionable items, don't overstate the condition of an item, always track every shipment and try to know your buyers.  

As for which to use, Card or Bank Account, the answer is two fold.   First is to not use anything connected to your personal bank account and second is not to become Verified with Paypal.  Now, this alone makes me a radical with Paypal, but here's the skinny:  Paypal wants you to be verified so that at the same time, you give them permission to take money OUT of your account.  This means that if you use a bank account and have a buyer request a refund, the money will come right out of your checking account.  Not a good idea if your mortgage payment is coming out at the same time. The same is true for a credit card. If at all possible, stay unverified.

If a buyer requests a refund and you are not verified, the only funds frozen will be your paypal account funds. You won't be able to make a withdrawal until the problem is corrected, but this keeps your credit cards and bank account unaffected.  In addition, it's always good to make withdrawals on a regular schedule, every 2-3 days.  This keeps your balance low and if frozen, less assets are affected during the freeze.  It's easy to explain this to prospective buyers and gives you just one more layer in financial protection.  (Again, this is a personal opinion!)

2)  Ebay NEVER does anything without your permission.  If you place a credit card on file with them, you ARE giving your permission for them to charge your fees to that credit card.  They will make a charge on a monthly basis and will also email you the total every month, before the charge goes through.  Yes, you have an option.  You can place an account on file, or pay through a check.  It takes a long time to get the check processed, and during this time, your Ebay account can become inactive waiting for payment, but I do know a lot of sellers that prefer this method.  They sell as a hobby and don't mind the downtime while waiting for the payment to be credited. Other sellers make a large payment, givine their ebay account a large credit against future listings.  When the credit begins to get too low, they make another payment.   

3) With either Paypal or Ebay it's always better to use a 'True blue' ISP rather than a free account.  Ebay has changed it's policies of late but you will still find that a "true blue" will work better for you overall.  In addition, when dealing with buyers, they get a better sense of honesty and permanence from "johnsmith@aol.com" than "peskypete@hotmail.com" or even "aj2357@nowhere.com".  Obviously if you're using a more established ISP, you appear more established, too.   

4) First off, stop reading only the BAD news about Paypal.  This is one of the worst problems of the internet. People only read the BAD things - because that's all you can find.  When someone has a problem with Paypal, because they didn't protect themselves, they blame Paypal's policies instead of looking at the true basis for the problem - themselves.  Look at it from the positive side.  The story you read on Paypalsucks.com is ONE story.  In an average day, Paypal deals with MILLIONS upon MILLIONS of other people who have NO problems. They aren't going to go out and put up a website called "Paypalisgreat.com" but they had a great experience.  I personally have been a member of Paypal since it's inception with not a SINGLE problem.  What does this tell you?  What it should tell you is that it's good to be cautious, but it's silly to base your entire relationship with a website on ONE PERSON.

Now, you also say that you've heard "so many crazy stories" - well, most of them are just that...'crazy'. If someone were to take the time to actually discuss the entire experience with these people, they'd find out that these so called "victims" didn't protect themselves, didn't follow through, tried to get 'something for nothing', bid on a 'too good to be true' item, or just plain didn't read the TOS.  When in doubt, ask a lot of questions.  You've already learned a great lesson, and that is "When in doubt, ask someone ELSE."  Never rely on a biased viewpoint to sell you either way.  

Lastly, When you sign up for a Paypal account, or an Ebay account or for any account on any website, you click a little box which says you agree to the "Terms of Service" (aka: TOS).  If you don't take the time to read and UNDERSTAND the Terms of Service, you've only yourself to blame.  Paypal's TOS is quite clear on what they will do to protect both sellers and buyers.  Read everything you can, and always Always ALWAYS A*L*W*A*Y*S read the Terms of Service.  

What I'm trying to do here is to give you a down to earth understanding of the problems of doing business on the internet.  Just as there are a lot of stories out there about the problems, there are also a lot of disreputable people trying to get your money - or your products.  If you are careful, you won't fall prey to them. It's good to read these stories, but not for the fear they create. It's good to find out what has happened to others so that you can ask yourself how to prevent that happening to you in the future.

Example:  A seller is asked if the buyer can pay via Western Union - a very reputable service.  But the buyer is nervous.  They suggest that they will give the Seller PART of the Western Union number to prove they have sent the money, and upon receipt of the product, they will give them the rest so that they can go get their money.  They explain that this is an inexpensive way of using Western Union as an escrow account. What the seller doesn't know, and what they cannot prove is that the Western Union number is bogus.  There is no way Western Union will even talk to you with PART of a number. They cannot look up pending payments with only part of a number.  So, the seller, believeing he's got money waiting, sends the item and is scammed.  What should they have done?  

"If it smells like a fish...."  Anytime someone asks you to do somethign different from the regular accepted rules or your own SOP (Standard Operating Procedures), you know there's a problem. This is why rules are made.  In an effort to be a 'good guy' the seller tries to work with the 'poor nervous buyer' and in reality is being scammed by a heartless criminal.  Protect yourself by learning about the scams out there and learning what to do when the buyer/seller asks you to do something out of the ordinary and also: learn how to say no politely and professionally.  

I hope this has helped.