AFSCME 3357-HOF'S BLOG

The Teflon(tm) finally starts to Peel off Paypal

As an attorney with UAW Legal Services, I have fielded a number of complaints by our clients against Paypal. Consumers sign up for the Paypal service to buffer the risk of internet auction sites only to find that Paypal lets them down time and time again.

In essence, Paypal is an escrow service that denies it's an escrow service. At least it denies the fiduciary responsibilities that generally come with being an escrow service.

Paypal performs some of the functions of a bank, yet it is not regulated as a bank.

The New York Attorney General's office just entered into a consent arrangement with Paypal over its dispute handling procedures. This promises to be a fast-evolving story over the next few months. The site below, auctionbytes.com seems to keep good track of Paypal and has numerous stories indexed.

What bugs me most about Paypal is that the company is in a fabulous niche. It could be a great company. Even though I have fielded numerous complaints, even I recognize that over 99% of the time, the transactions go through Paypal with no problems at all. Fundamentally, Paypal's management needs to recognize that when you are in a service business, you have to have a service attitude.

In the long run this scrutiny will force the company to improve its business practices. I have a hunch that a year from now Paypal will be a much better company to do business with. (Yes, I know I ended a sentence with a preposition. Deal with it.)



Online Payment Systems At a Glance