Please explicitly disallow the "PayPal - send money to a friend or family member" payment method in case of all domain transactions here on NamePros

[Charybdis]

Here is what happened, a seller mentioned in the sales thread that they accept PayPal as a payment method.

We had negotiated the sale but then this seller wanted me to pay by "PayPal - send money to a friend or family member" payment method. I declined this request, since it would be against the PayPal User Agreement. Here is the link: https://www.paypal.com/us/webapps/mpp/ua/useragreement-full?locale.x=en_US#fees-for-sending-money

"You must not send money as a personal transaction (often referred to as using the “send money to a friend or family member” feature in your PayPal account) when you are paying for goods or services." - according to the PayPal User Agreement.

A seller simply cannot force me to break the PayPal User Agreement just save a few bucks on the transaction fees. Buying a domain name from a NamePros member is "paying for goods or services". It can never be a transaction between friends or family members, but it is a business transaction. So I think there is not a single instance when the "PayPal - send money to a friend or family member" payment method would be justified.

And here comes the problem, because I declined the seller's request to pay by "PayPal - send money to a friend or family member" and I told them that I can only pay by a "normal" PayPal transaction, they wanted me to pay extra to cover their PayPal transaction fees. But that is against the NamePros rules: https://www.namepros.com/threads/official-rules-of-namepros.848752/

"6.1.7. Sellers are responsible for paying all transaction fees except those the buyer could have avoided or the buyer chooses to pay. Sellers should take fees into consideration when choosing sale prices and starting bids. "

So this kind of misunderstanding can be avoided by disallowing this "PayPal - send money to a friend or family member" payment method in the NamePros rules. Because looks like sometimes if a seller mentioned in the sales thread that they accept PayPal, what they really mean is that they expect the buyers to pay by "PayPal - send money to a friend or family member", but that is against the PayPal User Agreement, but unfortunately not every seller reads the full PayPal User Agreement so they don't know this.

So in short my suggestion is to include this in the NamePros rules:

It is prohibited to force a buyer to use the "PayPal - send money to a friend or family member" payment method.

 

[Paul]

From the perspective of someone who has to deal with fraud on a daily basis, I'm strongly in favor of this change. I think we'd need community consensus, though, and the moderators would need to weigh in.

 

[Charybdis]

From the perspective of someone who has to deal with fraud on a daily basis

Yes and I even forgot to mention that the PayPal Purchase Protection is not valid when using the "send money to a friend or family member" payment method: https://www.paypal.com/us/webapps/mpp/paypal-safety-and-security

If you scroll down on that page you can read:

"What’s not covered with PayPal Purchase Protection

[...]
Send Money transactions to friends or family"

So I think there is not a single case when two NamePros members should use this "send money to a friend or family member" PayPal payment method, it is against the PayPal User Agreement and the PayPal Purchase Protection is not valid. So a seller should never force a buyer to use this payment method.

 

[LoveCatchyDomains]

Thanks for the posting. It makes good sense to have sellers and buyers abide by the PayPal terms of agreement. Hopefully, the clarification will be added to the NamePros guidelines, as you suggest.

 

[mitch007]

And, of course, let's understand that all "regular miscellaneous" purchases starting this tax year 2022 through Paypal and maybe other vendors (that are not "friends and family" transactions) will be part of your $600 minimum to receive a 1099 form for you to report it on your taxes . For many of us that's a heck alot of $1-20 dollar transactions that must be accounted for.

"Friends and family" transactions have been a useful tool for small transactions.
Oh well, I guess it will become a thing of the past

,

 

[Bean]

You are absolutely right, sellers should factor in PayPal fees when accepting that method of payment, it is not acceptable that they expect/force buyers to either pay the fees or send as friends and family.
However, I don't think it's a good idea to disallow completely 'the send money to a friend or family' option.
While domain selling/buying is indeed a business, NamePros is also a place of gathering for the domaining community and over time it may happen that you get to know certain people better and maybe even make new friends. I think the friends and family option is perfectly fine if both parties are in agreement and the buyer doesn't feel pressured into having to use that option.
Personally, as a seller, I always expect PayPal fees to be deducted from the final sale price no matter how small the transaction is. Sometimes, the buyer will send me the money through the friends and family option but that's entirely up to them and I never make a big deal out of it because I would be just as happy to receive the money minus the fees.
On the other hand, as the buyer, I sometimes will calculate and add the PayPal fees on top of the final sale price without being requested to so.

 

[Charybdis]

While domain selling/buying is indeed a business, NamePros is also a place of gathering for the domaining community and over time it may happen that you get to know certain people better and maybe even make new friends. I think the friends and family option is perfectly fine if both parties are in agreement and the buyer doesn't feel pressured into having to use that option.

But it's still against the PayPal User Agreement. It doesn't matter if the other party is your friend or family member. Even if you sell a domain to your friend or family member, that will be a business transaction.

The User Agreement is clear: "You must not send money as a personal transaction (often referred to as using the “send money to a friend or family member” feature in your PayPal account) when you are paying for goods or services."

A domain transaction is paying for goods or services. Even if you sell that domain to your friend or family member. If they pay for it, then it is paying for goods or services. You cannot use the "friends and family" option. I think if you sell a domain name for money, you are never allowed to use the "friends and family" option.

That's why it should be prohibited in the NamePros rules, so that it will be clear that sellers cannot force buyers to use the "friends and family" option.

 

[LoveCatchyDomains]

That's why it should be prohibited in the NamePros rules, so that it will be clear that sellers cannot force buyers to use the "friends and family" option.

Is there a grace period here, though. Another posting here on Namepros cited an email indicating a November 15th deadline. Paypal Updates
The PayPal website appears to already have incorporated the policy you mentioned. The question is that, at least for the current transactions up until November 15th, can they be done with the Friends and Family as a grace period.

 

[Charybdis]

Is there a grace period here, though. Another posting here on Namepros cited an email indicating a November 15th deadline. Paypal Updates
The PayPal website appears to already have incorporated the policy you mentioned. The question is that, at least for the current transactions up until November 15th, can they be done with the Friends and Family as a grace period.

No, the policy I mentioned is an older policy. It is not a new thing that you cannot use friend and family when paying for goods and services.

 

[LoveCatchyDomains]

No, the policy I mentioned is an older policy. It is not a new thing that you cannot use friend and family when paying for goods and services.

Thanks for clarifying that. Clearly that's going to be a challenge now for those on Namepros trying to sell the domains at the very low prices. The Paypal minimum fees could wipe out most of the profit, when using their required business transaction.
Nonetheless, that is the regulatory requirement, and needs to be respected, even if it might be painful to profits. Hopefully, sellers potentially impacted by this will find alternative payment methods that work better at this point.

 

[lock]

Careful when doing bulk deals as one domain issue can cause all money to go to buyer and they steal 99% and they are here praying on you.

 

[MasterOfMyDomains]

Its all fun and games lock. Paypal losing millions with f&f surprised they didnt trade their hush puppies for Dayton steel toed boots long ago like few other companies should.
I can pay the few dollars to send properly, clearly stating the domain. Kind of like the drunk driver, keeps doing it for years then one day long skinny arms law are there waiting and your popped.

 

[LoveCatchyDomains]

Its all fun and games lock. Paypal losing millions with f&f surprised they didnt trade their hush puppies for Dayton steel toed boots long ago like few other companies should.

Actually, the issue may be that the IRS requires the reporting, and they do now have many more staff to help enforce it.
The IRS is no-nonsense about such matters, and PayPal is required to comply.

 

[Name Trader]

I think this is a great solution, instead of allowing them to ask for Family & Friends. I've even asked the mods sometimes for me to pay Regular Paypal rather than Family & Friends. This ALWAYS used to allowed. But a couple have been disallowed recently. Please don't ask my which ones? I don't keep track of these things.

I agree wholehearted that PayPal Family & Friends should be specifically disallowed. For the reasons @Charybdis & @LoveCatchyDomains has stated. I think these people asking for Family & Friends are asking because they can. Which they should be specifically barred from doing, by a specific rule disallowing it.

 

[LoveCatchyDomains]

I agree wholehearted that PayPal Family & Friends should be specifically disallowed.

Yes, and not that anyone here isn't sympathetic to the desire for maximizing profit on the domains. Please note that my comments are more focused on the U.S. customers.
I had two friends in the U.S. who got in trouble with the tax folks because of Paypal and unreported income. The cost of not complying with the rules, I sensed, ended up being much higher. If you are running a business in the U.S., and deducting business expenses on your taxes, it makes all the more sense using the Paypal Business transaction. In other countries, their definition of business and taxation issues may be different.

Granted, if the domain sales are only done occasionally as part of a hobby, with lower-cost sales, it's understandable not wanting to pay the business transaction fees in that instance. And, I would say that some of company's charges for Canadian customers do appear to be a bit high. I wish they would change that.

 

[Kenny]

I also agree it should be addressed by the Admin / Mods and discontinued.
Bottom line, it is illegal according to PP TOS.

What I usually do if it becomes an issue is, if < $100 I'll send a couple extra bucks. And if its > $100 I'll just add the 2 or 3 % (whatever it is now)
Smooth & Easy, thats the way uh huh, uh huh I like it.

I understand some peoples' margins are thin, but if you cant absorb 3% ion the resale, then the domain probably isnt worth the trouble anyway.

JMO. Your milage may vary.

Peace,
Kenny

 

[LoveCatchyDomains]

What I usually do if it becomes an issue is, if < $100 I'll send a couple extra bucks. And if its > $100 I'll just add the 2 or 3 % (whatever it is now)

So, as a buyer, you have been willing to do this to keep the peace? That's great!

 

[Echo Mod Team]

Agreed with @Paul

It's in this moderator team's opinion that Paypal Friends & Family is just that, for friends and family and not for commercial business transactions (Goods and services). By using friends and family for commercial business transactions it (in a way) bypasses/avoids taxation that would normally be applied to a goods and services transaction.

This teams vote is to include PayPal friends and Family in the following rule to prohibit the potential Tax abuse: 6.1.7. Sellers are responsible for paying all transaction fees except those the buyer could have avoided or the buyer chooses to pay. Sellers should take fees into consideration when choosing sale prices and starting bids. Multiple sale prices and multiple starting bids may be set based on specific criteria. Learn why. Rule 6.1.13 applies.

Until such time, members that do not wish to participate in friends and family payment methods should avoid any sales listings stipulating it as a payment method and should report any instances in a direct message where a seller tries to force them to pay via that method when it wasn't transparently disclosed in the listing.

 

[biggie]

This teams vote is to include PayPal friends and Family in the following rule to prohibit the potential Tax abuse:

Hi

if people don't file their taxes, accordingly,
how or why, is it NP's business whether they abuse it or not?

what's the purpose, when PP has their own policy?

and it doesn't matter whether you got money via FF or not
because they report total amount received anyway.

if you don't trust the seller, then don't do the deal

imo...

 

[Echo Mod Team]

Hi

if people don't file their taxes, accordingly,
how or why, is it NP's business whether they abuse it or not?

what's the purpose, when PP has their own policy?

and it doesn't matter whether you got money via FF or not
because they report total amount received anyway.

if you don't trust the seller, then don't do the deal

imo...

Hello,

Great question.

The short answer is: In this team's opinion, by allowing it, it promotes the premise of tax evasion, which a professional community and marketplace should probably avoid anyways.

There's plenty of documentation online where whole countries have been banned by Paypal for the same premise mentioned above.

There's no need to promote or encourage such activity in a professional, law-abiding setting.

We are just one vote, which @Paul and other members appear to also agree with, for their own reason(s).

 

[Alfa Mod Team]

I also agree to not allow PayPal F & F anymore in order to avoid any future issues.

 

[biggie]

it promotes the premise of tax evasion

Hi

unless you have evidence, that NP members have or are evading filing or paying taxable amounts due from any sales conducted on this platform, according to their individual filing status and earnings....
then the premise is a fallacy.

to me, it's a negative connotation about the population of this platform
when you're basically saying that NP members will evade paying taxes, if they can find a way to do so.

imo...

 

[Echo Mod Team]

Hi

unless you have evidence, that NP members have or are evading filing or paying taxable amounts due from any sales conducted on this platform, according to their individual filing status and earnings....
then the premise is a fallacy.

to me, it's a negative connotation about the population of this platform
when you're basically saying that NP members will evade paying taxes, if they can find a way to do so.

imo...

Hello,

I can certainly understand your opinion and point of view, however, it doesn't change that Paypal themselves have strict policy against it for the exact "Potential" reasons referenced in our previous replies and other members replies.

I would like to think that if it wasn't a serious matter (As you're suggesting), that whole countries wouldn't have been banned from using their service for abusing the feature the policy is meant to prevent.

There may certainly be more weight in their decision on the amount of people bypassing their internal fee structure, unethically, however, the consensus so far, for members, moderators and staff members (in this thread topic) appear to be a majority against allowing the use of PP F&F.

At the moment, the rule has not been updated to reflect the majority of responses in this topic.

Let's continue to see what other members think about it to get better idea.

 

[LoveCatchyDomains]

Hi

unless you have evidence, that NP members have or are evading filing or paying taxable amounts due from any sales conducted on this platform, according to their individual filing status and earnings....
then the premise is a fallacy.

My impression here is that the moderators are supporting the proper use of Paypal, even if the position is not a popular one. Would it make sense for them to have to prove anything? They are simply being respectful of the regulatory requirements of the daily business transactions that happen on NamePros. For many folks, perhaps that is just one big "yuk!"

Admittedly, the subject is a challenging one, because there are so many auctions that have had a $1 minimum bid to start. Now, with the new policy, the transaction fees using PayPal makes this type of minimum financially questionable. Perhaps this could help in the long run, as more domains listed for auction or sale in the future may be of even better quality. The higher minimum bids would be presented to overcome the costs of sale.

Nobody wants to see the "little guy" hurt because of a big corporation's or a country's tax regulatory policies. In this case, it could actually turn out to be beneficial in the long run for the auction and sales section.

 

[Future Sensors]

Curious to know @Daniel Owens opinion on this.