Defining a Domain Name - Screwed by Paypal- Legal Ramifications

[ZandyMan]

Hey guys,

I preface this by saying:

1. This post is a little lengthy...but I want to share my experience so others can benefit from it;

2. That a final determination has not been made yet by Paypal, but things are not looking good and;

3. If this issue has been addressed ad nauseam before...I apologize!

Two days ago I listed two LLL.orgs for sale because I wanted funds to invest in a very quality name. I was PMed by a user here on NP who agreed to pay my asking price.

Shortly thereafter I received an email from Paypal indicating that user had sent me a payment. I then logged onto Paypal to confirm. It said the payment transaction was complete and the funds were in my account.

I then immediately (because I am a good domainer and don't like to keep people waiting :D ) went to GoDaddy and pushed the names.

About 10-15 minutes after I initiated the push, I received another email from Paypal indicating that they were putting the funds on hold due to a suspected unauthorized payment....meaning they thought someone hacked into a legitimate account and made the payment.

I immediately sent 2 PMs to the buyer (and later 2 emails) which to this point have not been replied to. The names at GoDaddy were eventually successfully transferred to the new owner and I was told by their "undo" department that I would need to have a court order or UDRP decision to have the names moved back.

I called Paypal to see what the time frame would be on resolving this issue. They said 5-7 business days. My next question was, should they determine it was a fraudulent payment, would I be covered under their policy. This is where it gets interesting.

Paypal said that domain names are considered "intangible" property and thus not subject to seller protection. Besides the fact that I relied on Paypal's assertion that the funds were successfully transferred...I am highly skeptical of this determination.

My question to you fellow domainers...is do you consider domain names "intangible" property? Have any of you had similar experiences? I feel this issue is ripe for litigation and would love to hear some thoughts.

Anyways, that is my story. Live and learn. I will not be using PayPal in the future. Thanks for reading.

- Alexander

 

[jdenwar]

Frankly saying I have 3 paypal account with over 1000 transaction and i never had any problems with them.

Hope you get your money or domain back.. Thanks for sharing..

Good Luck!!

 

[Ms Domainer]

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Unfortunately, Paypal is correct, and that is their policy; domains are considered "intangible" property, and, therefore, are not covered.

As a seller, I stopped using Paypal and ebay years ago, even for tangible goods--too much of a hassle.

Tell us who the namepros member is so that we can avoid him or her.

Hope it works out for you and that GoDaddy will do the right thing and help you sort this out.


*

 

[ZandyMan]

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Unfortunately, Paypal is correct, and that is their policy; domains are considered "intangible" property, and, therefore, are not covered.

As a seller, I stopped using Paypal and ebay years ago, even for tangible goods--too much of a hassle.

Tell us who the namepros member is so that we can avoid him or her.

Hope it works out for you and that GoDaddy will do the right thing and help you sort this out.


*

The I reported the incident to NamePros and the user's account has been suspended. I guess my overall point though, is that just because Paypal has declared domain names intangible property...doesn't mean that is the final answer on the subject. Has this ever been declared by a court or some other authoritative body?

 

[NameCharger]

I think the only pseudo-protection you get selling a domain name through Paypal is to make it into a tangible good "package" - create a basic 1 page lander for the domain, burn it to CD, then mail the CD to Buyer's Verified address.

 

[MJ]

Domains are "intangible", and although paypal can hold funds for any reason they wish and claim it was a hacked account or some randomness, there are still steps and actions you can take.

You mentioned the buyer was from namepros. Did he/she have a good trader rating? Example, if they have like a 50 trader rating at 100% perhaps something is going on with their bank or some other random error. If this is the case, I doubt they are trying to screw you over.

Another common thing that happens, is say "Bob" bought your LLL.org's. He had funds in his paypal account from "Jim" who bought some domains from "Joe". Joe was a scammer, which bought names from Jim, and Jim bought names from Bob, and Bob bought your LLL.org's. Paypal suddenly realizes Joe was a scammer, and freezes EVERYONE's funds that is linked to this money. This could indeed be hundreds of paypal accounts. Thanks to paypal's system, this is how that works. How wonderful.

Now, if this person is new to namepros and maybe has a trader rating of 2, maybe he was indeed out to scam you.

You mentioned that you emailed them, this is good.. but it has been maybe 1 day since the emails? They might not check email each day. (just playing devils advocate here).

I would get their address from a whois and other various methods.. any information you can find on the person. Do they live in the US? You can file legal action against them in their home city. Depending on where they live, how far away they are, and what price you negotiated on, it might be worth driving down to their town and filing a claim in the small claims office. I have heard instances where a scammer was in the same town as the buyer and it was an easy fix

Also depending on where they are and how savey their police department is (good luck with this one) you might want to print out all your evidence and send a packet to the police force. (or email them - again even better luck with that). Although this is a very long shot, it might be worth it... if it really was a hacked paypal account, they could indite him on even more charges than just taking your domain names.

If he is outside your country, well.. there is not much you can do... at least legally, in the legal since.

Really sorry about your loss, and keep us posted.

 

[ZandyMan]

Domains are "intangible", and although paypal can hold funds for any reason they wish and claim it was a hacked account or some randomness, there are still steps and actions you can take.

You mentioned the buyer was from namepros. Did he/she have a good trader rating? Example, if they have like a 50 trader rating at 100% perhaps something is going on with their bank or some other random error. If this is the case, I doubt they are trying to screw you over.

He had 2 posts and no iTrader feedback. This should have been a warning sign. However, people have to start trading sometime...so I gave the benefit of the doubt (though never again).

Another common thing that happens, is say "Bob" bought your LLL.org's. He had funds in his paypal account from "Jim" who bought some domains from "Joe". Joe was a scammer, which bought names from Jim, and Jim bought names from Bob, and Bob bought your LLL.org's. Paypal suddenly realizes Joe was a scammer, and freezes EVERYONE's funds that is linked to this money. This could indeed be hundreds of paypal accounts. Thanks to paypal's system, this is how that works. How wonderful.

I see your point; and yes, generally Paypal's security is good for buyers and sellers. However, if this happened to me, it can happen to anyone. Paypal sent me an email and confirmed on it's website that I had received a completed payment. I relied on that. I would gladly agree to an hour delay, or something like that, to confirm the payment instead of Paypal asserting it is legitimate right away...and then changing their mind after the fact.

You mentioned that you emailed them, this is good.. but it has been maybe 1 day since the emails? They might not check email each day. (just playing devils advocate here).

I also sent them PMs when it showed they were logged onto NP.

I would get their address from a whois and other various methods.. any information you can find on the person. Do they live in the US? You can file legal action against them in their home city. Depending on where they live, how far away they are, and what price you negotiated on, it might be worth driving down to their town and filing a claim in the small claims office. I have heard instances where a scammer was in the same town as the buyer and it was an easy fix

The buyers whois info is listed, including a phone number. I have called 4 times and no answer. Pending Paypal's final analysis I very well may consider legal action.

Really sorry about your loss, and keep us posted.

Thanks. I chalk this up to life experience. I really appreciate your post.

 

[DubDubDubDot]

Post his whois here.

 

[labrocca]

Besides the fact that I relied on Paypal's assertion that the funds were successfully transferred...I am highly skeptical of this determination.

You relying on them was the first mistake. You should have been well aware of their policy beforehand. And you'll almost surely lose the funds. What needs to be done is some diligence with investigating the reputation of who you are dealing with.

If you get a bad check from someone in exchange for a car and deposit it do you blame the bank? No...you have to use the justice system and you shouldn't have given the keys to the car till you are sure payment was secured.

Paypal payments for domains are NOT secured. Use either an escrow service, a different processor, different payment method, or just simple deal with creditable people.

 

[ZandyMan]

What needs to be done is some diligence with investigating the reputation of who you are dealing with.

You couldn't be more correct.

If you get a bad check from someone in exchange for a car and deposit it do you blame the bank? No...you have to use the justice system and you shouldn't have given the keys to the car till you are sure payment was secured.

Ok, but what if I cash the check and the bank says the funds have successfully been transferred to my account? Then after the fact decides there was an issue.

Paypal payments for domains are NOT secured. Use either an escrow service, a different processor, different payment method, or just simple deal with creditable people.

Again, I have learned my lesson.

 

[NameCharger]

Ok, but what if I cash the check and the bank says the funds have successfully been transferred to my account? Then after the fact decides there was an issue.

Simple answer, don't make yourself that vulnerable. With Buyer, go to the bank where the funds will be drawn from, get a cashier's check (making sure you are besides the Buyer at the teller's window when the cashier check is issued), go straight to your bank and deposit it into your account & then transfer title.

 

[labrocca]

Ok, but what if I cash the check and the bank says the funds have successfully been transferred to my account? Then after the fact decides there was an issue.

Go ask your bank...they'll tell you how they will remove the funds out of your account even if you "cashed" the check already. Even if it throws you into a negative balance. Banks are also just payment processors and WHO you deal with needs to be known. If you must you can request a bank to "verify" a check to ensure it's a legit check. At some point you know the payment is legit but OP said within 15 minutes of payment he was screwed. Seems he didn't do his homework and just trusted the buyer as well as paypal.

People assume that paypal is reliable and they are responsible for securing the payment. THEY ARE NOT. Paypal only provides a method for internet payments. You can and 100% should read their protection policy. I have used it as a seller for tangible goods with 100% success even when there was a chargeback. You just have to follow their policy. Don't make assumptions about the security of paypal and it's reliability for online transactions. Any google search for paypal fraud, scam, chargeback would produce hundreds of similar stories of people blaming paypal.

 

[Dave_Z]

Has this ever been declared by a court or some other authoritative body?

Well, a few U.S courts have determined domains to be "creatures of contract"
if that helps. Heh.

 

[Domagon]

I think the only pseudo-protection you get selling a domain name through Paypal is to make it into a tangible good "package" - create a basic 1 page lander for the domain, burn it to CD, then mail the CD to Buyer's Verified address.

Yep ... to have any protection, which is more limited for off-eBay sales, under PayPal's Seller Protection Policy (SPP), the message "Partially Eligible" or "Fully Eligible" must be shown on the Ship To: page, then one must mail the item (ie. a CD with domain info as you suggested) to that address shown on the Ship To: page, and use Delivery Confirmation (Signature Confirmation for $250+) that can be viewed on-line.

From what I recall, SPP for off-eBay sales will cover item not received claims, but it may not cover fraudulent payments / chargebacks.

With all that said, it's possible for a seller, with much persistance, to win a dispute regarding an intangible item, but typically only if the buyer is truly legit (not a hacked acct), acknowledges purchasing the item from the seller, and paid from PayPal balance...

Very rarely do all those things come together - often in PayPal domain sales gone bad, the buyer is using a hacked account and/or denies buying the item and/or funded the purchase with a credit card.

IMHO, the OP's best hope is GoDaddy's undo department - there are some folks here who've had good success dealing with them - hopefully they can assist the OP in getting the domains back.

Ron

 

[ZandyMan]

An update:

Paypal has said they have officially heard back from the owner of the Paypal account who claims it was indeed an unauthorized transaction.

However, the Whois information for both names is listed as a gentleman in Tennesse. An address and phone number are list; but more importantly.....an email address is listed. And it is the same email as the Paypal account.

This leads me to two possible conclusions.
1. The scammer has hacked into the accounts of this person at both Paypal and GoDaddy or;
2. This person does in fact own the Paypal account...made the payment...and then after the fact says it was unauthorized.

I have submitted copies of the new Whois info for both names to Paypal showing the email addresses are the same.

 

[labrocca]

Scammer might also be smart enough to enter fake whois. If his paypal is compromised then it's almost definite so is his email. People will pretend to be the other party for as long as possible. Do you think a scammer is going to put his real whois info? He may have the godaddy, email, and paypal accounts of this person.

Or it can be as you suspect and this person for Tennesse is really a scammer. Can you call him? That's usually the only way to really know. You can't hack a phone number.

 

[jberryhill]

1. The scammer has hacked into the accounts of this person at both Paypal and GoDaddy or;

There are more possibilities, but your #1 is most likely closer to accurate than your #2.

The whois information may be "real" in the sense that it may be an actual person's name, address, etc., but is probably not the person who stole the domain name.

 

[bobbie]

I recently had a similar experience with Paypal for a domain name and the site. I went to the resolution center and uploaded all of the correspondence and the bid on sitepoint ... the buyers email correspondence ... everything and within 2 hours of uploading that, Paypal resolved the matter and gave me access to my funds for the transaction.