Are Paypal beyond legal recourse as they are offshore?

[rcx690]

In May I had a serious issue with Paypal. Please don't get caught up on the case details as that's not my question, but to give you a little background, £13'000 was taken from my account in unauthorised transactions by a merchant with whom I had a recurring payment agreement. The agreement was for payment to be taken once a month, but the merchant charged my account once every two seconds for an entire night. Paypal said that these transactions, by the definitions of their T&Cs, were not fraudulent as there was a recurring agreement in place with the merchant. Paypal refused to put the transactions in dispute status. Things got worse, because my bank blocked most of the payments which were attemptedly taken by direct debit. When Paypal realised that the payments were blocked by the bank they put my Paypal account into a negative balance as they had already given the merchant the money. They then instructed their debt collection department to pursue me for the money.

After three weeks and weeks of calls and discussions with the Police the merchant gave back the money. Paypal said that they had followed their rules and offered a highly offensive £100 in compensation. By this time I had lost a week in phone calls with Paypal, the Police, my bank, trying to block and reissue my cards as Paypal were attempting to charge other cards that they had on record to recover the money from me.

The ombudsman is still looking at my case but not sure what they will do now that the money has been returned. I was hoping that Paypal at least acknowledge their "buyer protection" doesn't always protect, pay some compensation for failing to protect me and for the distress.

Now for the main question. I looked at opening a case via MCOL to claim some nominal amount for inconvinience & distress, but it turns out that Paypal are registered off shore in Luxembourg. The Paypal escalations department told me I would need to go through the Luxembourg courts which is of course completely unfeasible. Is this right?

[MIKE770]

Re: Are Paypal beyond legal recourse as they are offshore?

paypal 3rd party I beleive it has been said - wonder if correct how one stands????

- - - Updated - - -

PayPal Buyer and Seller Protection | PayPal UK

https://www.paypal.com/uk/webapps/mpp/paypal-safety-and-security

[des8]

Re: Are Paypal beyond legal recourse as they are offshore?

If you are intent on suing Paypal for compensation (and I wonder if it is worth the effort as they offered £100 already and awards for distress etc are woefully small) you may consider using the
European Small Claims Procedure.
Details are available here: http://eur-lex.europa.eu/legal-conte...ISERV%3Al16028
And a further description in sec 6 here: http://ec.europa.eu/civiljustice/pub...taliers_en.pdf

[wales01man]

Re: Are Paypal beyond legal recourse as they are offshore?

Can I respectfully ask what the OP wants from Paypal in compo?

[rcx690]

Re: Are Paypal beyond legal recourse as they are offshore?

The European Small Claims is good to know. Though really you're just confirming that they are off shore. Who knows what could be claimed in Luxembourg.

[des8]

Re: Are Paypal beyond legal recourse as they are offshore?

You can claim up to 2000 Euros using the ESC, a process which does not involve lawyers.
For Luxembourg are no court costs, although following judgement there may be costs to implement the decision for the successful party.

I read this as meaning you could start a claim for up to £1700 using the ESC process without risk........ what else do you want to claim?

[R0b]

Re: Are Paypal beyond legal recourse as they are offshore?

If you read the PayPal user agreement it says the non-exclusive jurisdiction meaning that you don't have to issue in Luxembourg and can issue in England or Wales or Scotland. The agreement is covered by English law so it would make sense to issue any proceedings in England.

You've said you want to claim a nominal amount but if they've offered you £100 already I would say that is just about a nominal amount. I don't think you've mentioned in your post whether or not they are still pursuing you for the outstanding balance, it would be helpful to know that (presumably they are not?).

It would also not be wise to look at issuing proceedings whilst the Ombudsman is reviewing your case, the court could take a dim view of that. Distress and inconvenience alone would not be a sufficient cause of action to bring a claim against PayPal but there may be a claim for negligence or harassment which would be up to the court to decide.

[MIKE770]

Re: Are Paypal beyond legal recourse as they are offshore?

normalamount most companies max at

[rcx690]

Re: Are Paypal beyond legal recourse as they are offshore?

Hi

I won't do anything until the Ombudsman comes back to me and this all needs some thought anyway.

R0b How do you start a claim in England against a company that is abroad though?

My gripes with Paypal on this case were:

I lost a week off work dealing with the problem. It's hard to explain why it took so long. Among other things, there was so many transactions, every two seconds that my banks system started truncating it's records. It then tooks over a dozen phone calls and weeks of waiting to find someone at my bank who could get deep enough into the system to get an untruncated statement so I could reconcile my account. And fighting the police who initially said that this is a civil matter and initially refused to get involved.

They advertise Buyer Protection but then told me these transactions wouldn't be covered. To me they were fraudulent because I didn't authorise them. Paypal kept correcting me every time I used the word fraudulent. They are not fraudulent they kept telling me. I said "but I hadn't authorised the transactions". Paypal said that the fact that the payment was supposed to only be taken once a month was an agreement between me and the merchant. The agreement between me and Paypal is that I've agreed that Paypal can take £12 from my account each time the merchant requests it.

The "instant payments" thing, where the money is taken by direct debit seems to be a big part of the problem. Because Paypal didn't know if the direct debit clears, they just gave the money to the merchant and when my bank declined the payment they came back and asked me to repay them the money. The debt collection person was very hard about this, didn't care about my case, said that the case has been closed not in my favour and I need to repay the money.

I asked Paypal what would have happened if the payment wasn't for £12 but for £120. Or if I hadn't checked my emails at 5am and seen and stopped the payments, or was on holiday, and the merchant took £500'000. I asked if I would have been made bankrupt and my family would loose our house. Paypals response was that they would have "imposed sanctions" against the merchant, such as freezing his account and not letting him open another Paypal account.

I then proposed to Paypal that there must be laws that protect consumers or that a court woudl say that their buyer protection is inadequate. Paypal then explained to me, now these aren't their exact words, but this is how I understand it, that they are a kind of agent. That they offer to take the money from me, and pass it to the merchant. Therefore they are not like Worldpay or the other normal payment gateways, and thus they don't need to offer any buyer protection but do so voluntarily. I told them that to a lay person they look just like a payment gateway and how is anyone to know? They answered that it's very clear in their terms and conditions.

For now just waiting to see what the ombudsman says. I'm keen to ask the ombudsman whether they could have done anything if the merchant hadn't returned the money.

[des8]

Re: Are Paypal beyond legal recourse as they are offshore?

Paypal (UK) ltd registered offices :
5 New Street Square
London
EC4A 3TW

Info from:
https://beta.companieshouse.gov.uk/company/05468033