PayPal WILL NOT refund for domain names

[circa1850]

In another post, I made mention of PayPal having a policy of not refunding money for the purchase of a domain name, should you get stiffed by the seller.

Perhaps all domainers are unaware of this issue and will be until the time comes when they resort to filing a claim after not receiving a domain name.

Unfortunately this was the case for me a little over a year ago.

I ended up, over a period of several days, purchasing many domain names from the same seller on ebay. The reputation was good, initially there was fast transfer and decent communication. All told, I ended up buying 27 domain names.

Over the course of time, things began to get very slow. Then no contact, no communication, no response. Meanwhile, all domain names had been paid via PayPal and all transfer requests and fees had been paid on my end.

After numerous attempts to contact the seller and being ignored at every turn, I filed a complaint within the alloted time frame for the domain names that had not been transferred.

Keep in mind that these were items (domains) purchase on eBay, items (domains) paid for with PayPal...an eBay owned and operated company. I figured I could not loose as I, and eBay as well as PayPal, had all the proof needed to show that this was a transaction that has gone sour. My proof, as I pointed out, the the seller still had not transferred the domain names and still had them in his accounts could be verified by conducting a WHOIS search. I provided PayPal's complaint department with a direct link to conduct a WHOIS search. Case closed.

Indeed, the case was closed...in two days.

Non-receipt - Case ID: PP-107-xxx-xxx

Oct. 8, 2005 PayPal Case closed
Oct. 8, 2005 PayPal Claim denied.
Oct. 8, 2005 PayPal Email sent to Buyer.
Oct. 6, 2005 PayPal Case in Review.

We have completed our investigation of this case. We have denied this claim and a refund will not be issued.

The result was that PayPal had found in favor of the seller.

I could not believe what I was reading.

I immediately emailed them back, explained and appealed again my position, and how could they come to such a conclusion in such a short period of time.

Their reasoning? Domain names are intangible goods.

Take a look at PayPal policies regarding this:

Q. Does PayPal Buyer Protection cover all eBay categories?

A. The item for sale must be a tangible product that can be sent by post.

PayPal's Buyer Complaint Policy does not apply all intangible goods, virtual products (for example: subscriptions and computer programs), services, and quasi-cash.

...

As well as this policy:

Q. What goods and services are not covered under the Buyer Complaint Policy?

A. PayPal is committed to ensure that all transactions are safe and secure. One way we do this is by providing specific terms and conditions that all members must comply with. PayPal's Buyer Complaint Policy does not apply to virtual or intangible products (like subscriptions and computer programs), services, quasi-cash and all non-tangible, non-physical goods.


In the response to my appeal, the rep at PayPal deemed my purchase of 19 domain names as intangible property and virtual goods therefore not eligible for refund. PayPal, I was told, would not re-open the investigation and the case was closed.

Even with all the proof they already had and the resources available for validating my claim, there essentially was no investigation necessary or conducted.

I eventually got the domain names about 140 days later through a process of contacting the sellers registrars' legal team and as well as the Internet Fraud Team of the United Kingdom. The seller, most likely from pressure of the registrar, relinquished the domain names to me.

This was quite a hassle and, needless to say, quite an eye opener.

I am sure that most domainers on this forum and other forums have a sense of trust with other members. Reputation is good. But, just like this forum, the seller I was dealing with had 100% feedback totalling in the 200's, if my memory is correct.

So be careful paying for any domain to anyone using PayPal. This may be a rare instance, you say, but only rare to you if you have not heard of this sort of thing happening.

 

[fonzie_007]

I don't think it hurts to threaten legal action, especially if you can prove you never received the domains. Once you get lawyers involved, my guess is that they will reopen the case and refund you (assuming you can prove you never received the domains).

 

[mjnels]

good post cicra.. sorry to hear about your problem, glad to know it got resolved.

a lot of people still do not know about this...

 

[fonzie_007]

On another note, just curious who the seller was?

 

[Keynes]

I don't think it hurts to threaten legal action, especially if you can prove you never received the domains. Once you get lawyers involved, my guess is that they will reopen the case and refund you (assuming you can prove you never received the domains).

I wouldn't recommend this, unless you're dealing with a very large figure (and, in that case, you should have used Escrow.) Attorneys are expensive, and are only justified in larger transactions. Paypal's policy on "intangible" goods is hard-written into their T&Cs and domainers know the risks from this policy -- Paypal is useful only for small domain transactions, or among known parties (sometimes with a contract also.) I would try to email the seller and resolve it that way, as Paypal disputes are often futile.

 

[circa1850]

On another note, just curious who the seller was?

Let's just say someone, obviously, from Great Britain. I would rather not disclose this for the sake of liability or slander. Plus, lets give him/her the benefit of the doubt...email issues, if that will do it.

 

[fonzie_007]

Let's just say someone, obviously, from Great Britain. I would rather not disclose this for the sake of liability or slander. Plus, lets give him/her the benefit of the doubt...email issues, if that will do it.

It would be a helpful public service message to others so that no one else can get screwed by this bloke.

 

[circa1850]

I don't think it hurts to threaten legal action, especially if you can prove you never received the domains. Once you get lawyers involved, my guess is that they will reopen the case and refund you (assuming you can prove you never received the domains).

Just to clarify, I did not threaten legal action but contacted the legal department of the registrar holding the domain names. Being that I am unversed in International Law, I chose to let those (registrars legal team) deal with it. So there are alternatives.

The main point that I want to make domainers aware of is PayPal will not refund you money on domain names as they are termed intangible property or virtual goods.

unless you're dealing with a very large figure (and, in that case, you should have used Escrow.)

Beyond a doubt the best and safest way to go. But my purchases were spread out over several days and even a couple of weeks perhaps and were paid for immediately. Yes, the sum total definitely added up but that never seemed to be a problem on the onset.

Paypal's policy on "intangible" goods is hard-written into their T&Cs and domainers know the risks from this policy

I am not sure domainers know the risks from this policy as I, nor anyone else that I am aware of, had ever dealt with such an issue as that. It's one of those, "well, it's stated in your user's agreement. Didn't you read it?" type of things. It only raises its ugly head to bite us in the ass when we least expect it.

I would try to email the seller and resolve it that way, as Paypal disputes are often futile.

All good and well, if the seller is responding to emails. In regards to paypal disputes, from my nearly 8 years on ebay and dealing with PayPal, I would say that I am 50/50 on winning & losing.

Over the years, they have become more strict with giving back the jack, so to speak. I have also found that it really depends on the thought process of the unknown person you are dealing with.

Obviously, I am batting .000 with the domain disputes and PayPal. That is the issue I really want to point out to everybody here. Your percentage will be likewise, that I can guarantee.

 

[Ronald Regging]

are you sure the guy didnt die or something? just seems a bit uncharacteristic of someone with 200+ feedback and a 100% rating But definitely, you never know when someones going to scam you or somehow leave you hanging. I found this out the hard way myself recently when I got scammed on a script, then found out it was an illegal copy after recieving a DMCA notice from the copyright holder. Luckily I managed to get everything straightened out with the company, but I'm still out that money. I bought it a few months back and as you say, it's considered intangible goods, so I'm not even going to bother. Just happy I didn't have to scrap my site.

 

[circa1850]

It would be a helpful public service message to others so that no one else can get screwed by this bloke.

Will you be my spokesperson for my public service messages for my legal fee fund raisers?

Whoa...everybody love the Fonze.

are you sure the guy didnt die or something? just seems a bit uncharacteristic of someone with 200+ feedback and a 100% rating

Naw, he didn't die. He got kind of freaked out and emailed me long after the fact and said he "thought they had all been transferred" knowing full well they had not. Yeah, right. And I thought Prince Charles is a smashing handsome ol' chap. Not only did the seller ignore every email I subsequently sent but also all the transfer requests and re-requests and re-initiations.

I think he really freaked out when he was caught off guard when he realized someone in the States can reach out and touch his bony head in the UK.

I also thought is was odd with the feedback numbers and rating. But, that is hardly the first and last time such numbers has screwed me over on ebay as both a seller and a buyer.

Disclaimer: No offense to my blokes in the UK. Have several good friends there and business associates. Hard pressed to come up with a good British analogy. Got plenty of good George Bush jokes.

Back to the real issue. If you purchase a domain name utilizing PayPal as a form of payment and the seller does not deliver the merchandise, too bad.

 

[Dave_Z]

Great story with numerous lessons, circa1850. Good of you to share it.

 

[shockie]

sorry to hear... best to do business in bits i guess...

caveat emptor!!!

 

[lpxxfaintxx]

Wow, 140 days. I'm glad you fought back. Must've been a real pain in the ass.

 

[domainer50]

Thats pretty weird. However most Torts will not protect against virtual products as well.

 

[circa1850]

Wow, 140 days. I'm glad you fought back. Must've been a real pain in the ass.

It twas, it twas.

Main point of the thread...be careful when using paypal to pay for domain names.

Considered "Virtual Property", therefore "Intangible Property". PayPal will not refund anything considered intangible property.

In this case, PayPal was a real pain in the ass. They acted like the transaction never happened.

I wonder if they consider stocks and bonds Intangible Property? Every domain name has a registry that shows proof of ownership.

 

[RickM]

Let's just say someone, obviously, from Great Britain. I would rather not disclose this for the sake of liability or slander. Plus, lets give him/her the benefit of the doubt...email issues, if that will do it.

How do you know the seller is from the UK?

 

[circa1850]

How do you know the seller is from the UK?

Obviously, with much investigating (on my own) and some key elements of the WHOIS database, and cross checking and cross referencing made it rather clear. Contacting the registrar, confirmation from many sources, following IP addresses, some previous emails from the seller (remember, this was 19 out of 27 domains over a period of time…initially there was good communication), and other sources.

I would not have wasted my time had this been a small amount of money. Nor would I have wasted the time of the authorities in the UK.

The WHOIS database can and is often manipulated to hide the owner and the owner's true information. It can be unreliable. But there are several key points in a WHOIS database that can not be forged and are 100% reliable.

On a side note...it does not matter where the scammer is from or where the scammer currently is. Usually simply contacting the scammer's registrar's legal team will get some attention.

Or, simply contact YOUR registrar's legal team. If I paid to have domain transferred and they are not being transferred, then get someone else involved.


Again, the key here is have ALL THE PROOF READY AND AT YOUR DISPOSAL as to not waste the time of these legal teams and investigators.

Giving them bits and pieces at a time will not help your effort. They will most likely lose interest or not even bother with it to begin with. The same is equally true when dealing with local, national, and international law enforcement agencies.

Let's face it...fraud is fraud. File the police reports, file with the national and international databases dealing with fraud (many are specific to internet fraud) but have all available information AT THE READY BEFORE contacting anyone for assistance. Having and providing to them the "complete package" adds credibility to your claim and saves them a trememdous amount of time.

Let’s not forget the subject of this thread…it is not about “how did I do this or that”. It is about PayPal’s failure to investigate let alone refund payment for domain names. Essentially, you are buying at your own risk. With that said, you are on your own. So you better get creative and do some digging on your own should this happen to you.

 

[aliengg]

Remember, if you use PayPal, pay with Visa or MasterCard, unless you trust the payee. This way, you can dispute with the issuing bank.
Discover and AMEX cards equal to cash according to the agreement between PayPal and Discover and AMEX.

 

[circa1850]

Remember, if you use PayPal, pay with Visa or MasterCard, unless you trust the payee. This way, you can dispute with the issuing bank.
Discover and AMEX cards equal to cash according to the agreement between PayPal and Discover and AMEX.

NOT SO FAST! Dig deep into PayPal's policies. THEY WIN! They (PayPal) have agreements with all the major issuers to which they, PayPal, hold them, the card issuers, responsible. Ultimately, that means if PayPal decides you do not have a claim (even after you have alerted your credit card company and stopped charges), they (PayPal) will hold your credit card issuer responsible. This means the credit card company will end up holding you responsible and even reversing their (the issuing credit card company) own decision!

I know this sounds complicated (and it is) but PayPal has nearly unlimited range.

I know someone who paid with Visa issued card for an item (a major major Visa issuer). When the item arrived, it was fake. The buyer filed a claim with PayPal. The buyer had to jump through hoops, get another expert's opinion, have that expert contact PayPal directly, send it back etc, etc.

Well guess what? The seller did not accept return delivery of the bogus merchandise. Therefore, there was no record of the merchandise having been returned. The seller won the claim!

Infuriated, my buddy contacted his CC issuer, told them what had happened. The CC issuer immediately issued a credit to his account.

Months, and I do means many months went by...perhaps 8-10, and all of a sudden this bogus merchandise reappears on my buddy's CC statement. He calls the CC issuer and they indeed did reinstate the merchadise purchase. PayPal re-billed his CC company! That is in their contract (PayPal and the CC company).

He was told by the CC company that there was nothing they could do. An independent investigation (politely meaning PayPal's own internal mess) concluded the my buddy did not have a claim.

One thing, one very rare thing, that the credit card rep company did provide my buddy was a name and a phone number of the person the CC company had been dealing with at PayPal.

My buddy called PayPal. The person on the other end was more or less caught off guard. But they discussed the entire matter (I was present during this conversation which was on speakerphone) and all these issues came to light. Essentially, they (PayPal) had final say over every aspect of the transaction, from start to finish and it is not finished until PayPal says its finished. This includes charge backs by credit card companies.

Oh, HELL YES! it's scarey. But that is the price of doing business with PayPal. How many credit card transactions do you thing they do every day? If you (meaning Visa, MC, Amex, etc) want to play on our turf, you'll play by our rules.

My buddy and the PayPal rep had a few heated exchanges. PayPal felt that the seller won due to the fact that he claimed he never got the merchandise returned plus no signed receipt of the merchandise. How did they (PayPal) know if the merchandise was ever returned to begin with? Even with a UPS piece of paper, there is no proof the merchandise was returned. Amazing. Just as there is no proof that the seller did not actually get the merchandise or the seller knew it was coming back and simply did not pick it up.

What happened is the PayPal rep saw my buddy's side of the story as being one possibility. PayPal ultimately agreed to do a 50/50 split with my buddy, taking into account that he may be telling the truth (or not) or the seller may be telling the truth (or not).

It was either take 50% or nothing. PayPal was going to win either way. And 50% is better than 0%.

I know all this sounds way too deep and complicated. Perhaps 99% of PayPal's global transactions go smoothly. But you have no idea how deep all this goes until you get caught up in one of these messes. Then it is you who has to do all the digging as PayPal and your credit card company leaves you on your own. Then you get to see just how deep it goes...it's a bottomless pit of crap!

The only reason I know about these issues is personal involvement (the domain name thing in the original post) and first hand accounts and witnessing the telephone conversation with PayPal. Sure, my buddy closed his account with the major credit card issuer that re-billed him and opened another account with another issuer. But Visa is Visa and they all operate on PayPal's rules...no matter who the issuing institution is.

If you want it to get real complicated, PayPal is in nearly every nation. They (PayPal) go by the host nation's rules.. I've only been discussing what the terms are in regards to US issued Credit Cards.

Next, class, we'll explore PayPal's role as a global purchashing entity and money exchanging enterprise and how they (PayPal) must rewrite their policies in order to do business in the host country.

Okay, I'll stop there...my head is spinning.

 

[DylanButler]

(Whole post)

Great post, incredible story and sorry for your friend! You really nailed it on the head with the turf metaphor. That's just how it has to be (IMHO)!