Customer tells bank they didn't authorize PayPal payment. PayPal refunds money.

[Quilter]

In February, well into news about Covid, I had someone want one of my weeks advertised on Redweek. In March, the customer says they have pre-existing heart condition that will prohibit them from traveling. I offered 65% refund or future reservations. Customer declined both and on our last phone call said they were going to pursue a refund through the credit card they used to make payment through PayPal because it had trip insurance.

All my other customers took either the 65% refund or a new reservation.

We got letter from a collection agency in August (ACI) saying they were collecting for PayPal. DH called agency and said we never had any prior communication from PayPal investigating the dispute. Agency sent us another letter last week saying they are in receipt of our dispute and enclosed a copy of the first letter. I talked to collection agency today and said I have complete documentation for transaction. The reservation remained confirmed for the date of arrival. I talked to the resort on the day the reservation began and confirmed the room was available for the renter. The room went unoccupied. Rep from agency said customer told her bank she never authorized payment from PayPal.

I have email from renter saying she accepted the terms of our contract which laid out the first payment was due on that day and the final payment was due after receipt of confirmation.

So was PayPal within their fine print to refund monies without checking with us about the customer's claim? It's my understanding from reading the fine print that PayPal doesn't guarantee real estate and I make sure to tell my rental customers that. But it seems the customer didn't dispute it being real estate but told the lie that they didn't authorize payment.

DH says that may be bank fraud.

Now I'm thinking of letting Redweek know this customer had a reservation but told PayPal they didn't authorize payment.

Any feedback from others is appreciated.

 

[Sloane S]

A rental transaction is not a real estate purchase.

 

[Quilter]

I forgot to mention that we closed this PayPal account before the dispute. Therefore the collection agent is saying we need to reimburse PayPal for the refund.

 

[DeniseM]

If the payment is made with a credit card, the CC can automatically take the money back, without PayPal's authorization.

 

[dioxide45]

You could always pay the collection then take the renter to court to recover the rental rate. Did you have a signed contract?

 

[dioxide45]

The fact that the PayPal account was closed perhaps led PayPal not to contact you and also perhaps to beleive that it could have been fraudulent.

 

[Quilter]

If the payment is made with a credit card, the CC can automatically take the money back, without PayPal's authorization.

Whenever I’ve had a credit card dispute the CC does an investigation.

So I understand, any customer can use the week and then say they didn’t authorize the payment and get the money back?

Or in this case, rent, then be a “no show” and say they didn’t authorize payment?

 

[Quilter]

You could always pay the collection then take the renter to court to recover the rental rate. Did you have a signed contract?

The collection agency suggested this.

I have an email reply to my contract saying she accepted the terms of the agreement. Then she paid within the steps laid out in the contract. That equals a signature.

 

[DeniseM]

It sounds like the card holder told her bank that the charge was fraudulent, and apparently, they believed her. I have had fraudulent charges on my credit card before, and my bank reversed the charges on the spot, and didn't ask me for any documentation, because I'm a long-term customer. I do know that the credit card can pull the money back from PayPal without Paypal's consent - they can just reverse the payment. Closing the account may have muddied the waters a bit, but the outcome may have been the same.

 

[Quilter]

The fact that the PayPal account was closed perhaps led PayPal not to contact you and also perhaps to beleive that it could have been fraudulent.

PayPal had my email and address. They gave it to the collection agency. They could have tried contacting me. I closed the account because one of the customers who accepted the 65% was a pain. I didn't trust her. This customer was always civil even though she delayed returning emails and calls when I was trying give her a solution.

When we recovered payment for a purchase with Viking Cruise line we went through Chase Sapphire Reserve since they were the ones carrying the trip insurance. We had to provide documentation that fell within the trip insurance parameters.

 

[Quilter]

I think i will try calling PayPal tomorrow.

has anyone had conversations with PayPal customer service?

 

[Quilter]

It sounds like the card holder told her bank that the charge was fraudulent, and apparently, they believed her. I have had fraudulent charges on my credit card before, and my bank reversed the charges on the spot, and didn't ask me for any documentation, because I'm a long-term customer. I do know that the credit card can pull the money back from PayPal without Paypal's consent - they can just reverse the payment. Closing the account may have muddied the waters a bit, but the outcome may have been the same.

I’m not sure she actually used a credit card. We talked about adding 3% to the payment if she decided to use one. The amount PayPal is trying to recover includes this 3%.

I remember a credit card dispute where we weren’t sure what it was. I think it was a list of mystery charges. The way I remember it was the amount temporarily credited until the cc company could investigate. In the end some of the charges were put back on our card. I have to ask DH but I doubt his memory is going to be much better than mine .

 

[DeniseM]

Your first post said:

Customer declined both and on our last phone call said they were going to pursue a refund through the credit card they used to make payment through PayPal because it had trip insurance.

 

[Quilter]

Your first post said:

Yes. I didn’t have any qualms with this.

Credit card companies charge annual fees. My Chase Sapphire Reserve has a high annual fee. For that fee i get benefits. Trip insurance is one of them.

When we recovered what we paid Viking that money would have come from the insurance company hired by Chase, not Viking.

In the case I’m working on I suspect the insurance on renters credit card denied reimbursement. She may have paid half directly through bank account and half with cc, I’m not sure. Her next step was to appeal to bank and deny authorization of payment.

Who knows, maybe she contacted PayPal and was told denying authorization would get her a refund.

At least that’s what the collection agency is using as the reason PayPal returned the funds.

 

[DeniseM]

Well, I'm sorry that you have to go through this. It's a hard time rent timeshares.

 

[dioxide45]

I’m not sure she actually used a credit card. We talked about adding 3% to the payment if she decided to use one. The amount PayPal is trying to recover includes this 3%.

Isn't there a fee anytime it is not a friends and family transaction? So if she said she was paying a business, the fee would have been applicable.

 

[CPNY]

Take Venmo next time.

 

[dioxide45]

Take Venmo next time.

Or Zelle.

 

[montygz]

I forgot to mention that we closed this PayPal account before the dispute. Therefore the collection agent is saying we need to reimburse PayPal for the refund.

I don't know for sure, but by closing your PayPal account you became a former customer and they could no longer work with to resolve the issue. Thus, PayPal dumped the debt to a collection agency. Why would they do this? It's probably an automated process with these giant companies.

Closing your account looks suspicious. Sellers closing their PayPal account has been used many times to defraud buyers.

Because of the closure, your "customer" may have been able to get a buyer protection refund.

As for the collection agency, I wouldn't pay them. I'll bet they would take the 65% your renter declined!

 

[dioxide45]

I think this shows that closing an account does not protect you from a chargeback or dispute.

 

[Quilter]

Isn't there a fee anytime it is not a friends and family transaction? So if she said she was paying a business, the fee would have been applicable.

It was a Friends and Family transaction. Timeshare rentals are not a tangible item so there’s no protections offered by PayPal by using their business portal.

However, I did find this regarding “Unauthorized Payments”:

“How do I report an unauthorized transaction or account activity?



If you notice a transaction that you didn’t authorize, let us know right away in the Resolution Center. Some charges may appear unfamiliar but are legitimate and authorized, learn more.

Before filing a case, make sure the suspicious activity wasn't from a family member using your account or from a recurring payment, such as a subscription.

1. Go to the Resolution Center.
2. Click Report a Problem.
3. Select the transaction you want to report and click Continue.
4. Select "I want to report unauthorized activity."
5. Follow the steps to report the transaction.

After you provide more information, we prompt you to change your password and security questions to help protect you from further unauthorized activity.

What's Next?

Once you have filed an unauthorized transaction dispute, we'll investigate the transaction. You'll receive an email within 10 days.”

Notice it says they would investigate? There was no investigation. The transaction was in February. The first we heard anything was a letter from collection agency in August.

Saying it was unauthorized activity was an outright lie. Nothing else.

 

[Quilter]

Take Venmo next time.

Venmo is a division of PayPal. I haven’t looked at fine print to see how they may act the same way.

 

[Quilter]

I think this shows that closing an account does not protect you from a chargeback or dispute.

I would have responded to a dispute if PayPal had contacted me. I have complete documentation she authorized the transaction and that I diligently tried to work out a solution.

 

[CPNY]

Venmo is a division of PayPal. I haven’t looked at fine print to see how they may act the same way.

Venmo makes you dispute with the person. No involvement by Venmo for disputes

 

[hcarman]

In February, well into news about Covid, I had someone want one of my weeks advertised on Redweek. In March, the customer says they have pre-existing heart condition that will prohibit them from traveling. I offered 65% refund or future reservations. Customer declined both and on our last phone call said they were going to pursue a refund through the credit card they used to make payment through PayPal because it had trip insurance.

All my other customers took either the 65% refund or a new reservation.

We got letter from a collection agency in August (ACI) saying they were collecting for PayPal. DH called agency and said we never had any prior communication from PayPal investigating the dispute. Agency sent us another letter last week saying they are in receipt of our dispute and enclosed a copy of the first letter. I talked to collection agency today and said I have complete documentation for transaction. The reservation remained confirmed for the date of arrival. I talked to the resort on the day the reservation began and confirmed the room was available for the renter. The room went unoccupied. Rep from agency said customer told her bank she never authorized payment from PayPal.

I have email from renter saying she accepted the terms of our contract which laid out the first payment was due on that day and the final payment was due after receipt of confirmation.

So was PayPal within their fine print to refund monies without checking with us about the customer's claim? It's my understanding from reading the fine print that PayPal doesn't guarantee real estate and I make sure to tell my rental customers that. But it seems the customer didn't dispute it being real estate but told the lie that they didn't authorize payment.

DH says that may be bank fraud.

Now I'm thinking of letting Redweek know this customer had a reservation but told PayPal they didn't authorize payment.

Any feedback from others is appreciated.

I think you should let Redweek know. Maybe they will block this scammer in the future, if anything.