Posted on 06/20/2004 1:01:39 PM PDT by LuLuLuLu
When I signed up with PayPal about five years ago, just after they were formed, they listed prominently that they were backed by and operating under (IF I recall correctly) a German bank that was registered and insured in the US. They even offered to allow deposits to their accounts and would pay interest on those accounts. Apparently that has changed and I was unaware of the change. Here is the definitive lowdown on the question per CNET NEWS:
FEDS: PAYPAL NOT A BANK
by Troy Wolvertonupdate - Federal regulators' position that PayPal is not a bank boosts the company's contention that it shouldn't be regulated as one, but officials caution that theirs isn't the final word in the matter.
In an advisory letter sent last month to PayPal concerning its use of customers' funds, the Federal Deposit Insurance Corporation said it does not consider the company to be a bank or savings association because it does not accept deposits as defined by federal law, which requires institutions to have a banking charter. PayPal doesn't have a charter, thus it is not a bank, the FDIC said.
"PayPal does not physically handle or hold funds placed into the PayPal service," the FDIC said in its letter.
PayPal representatives said the FDIC opinion should help the company stave off attempts by state and federal officials to regulate its business.
"As long as we continue doing what we are doing today, we won't be subject to Federal banking laws," said PayPal Chief Executive Peter Thiel.
But an FDIC official said state officials may still conclude that the company is acting as an unauthorized bank.
"It's really a state issue," said the FDIC official. "I've been on the phone with several state regulators. I've indicated that federal law is not going to help them. They are going to have to come to their own determination under state law" about whether PayPal is acting as a bank.
PayPal has come under increasing scrutiny from states such as New York and California, which have raised questions about whether the Palo Alto, Calif.-based company is operating an illegal banking service.
State regulators have also begun to question whether PayPal is operating an unauthorized money transmitting service. Last month, Louisiana asked PayPal to cease offering its service to state residents until it secured a license from the state to transmit money. PayPal is in the process of applying for such a license, Thiel said.
PayPal acknowledged that the FDIC opinion is not binding on state regulators, but argued that it could have a positive effect.
The opinion "could be considered relevant by some state authorities in their review of whether PayPal is engaged in the business of banking under state law. Notwithstanding the opinion, PayPal will continue its applications for state money services licenses where appropriate," the company said in a statement.
The FDIC's decision on PayPal's banking status came as part of an advisory opinion on balances left in PayPal customer accounts.
As of this quarter, PayPal began depositing customer balances into FDIC-insured bank accounts. The company had asked for an opinion from the FDIC on whether it could pass the insurance protection on to its customers. In its advisory letter, the FDIC said the insurance protections--up to $100,000 per customer per bank--would extend to PayPal customers, even when PayPal deposited the funds for them, PayPal said.
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So my statement that PayPal is a Bank is wrong... however, funds deposited ARE insured up to $100,000 per individual account. This insurance does NOT provide protection in the event of PayPal's insolvency.
Dear Sir or Madam,Do you have a Paypal account and want to earn a SIGNIFICANT amount of money by doing practically NOTHING? If you do, then this is your opportunity to start a business relationship with an international graphics supply company "Mentor Graphics Corporation".
Mentor Graphics Corporation is NOT a marketing company; there is NOTHING to buy and NOTHING to sign up for, and most importantly, NO WORK is required on your part in order to collect large quantities of cash within a 1-24 hours of receiving this message.
Our company located in Europe (United Kingdom). We have many clients who work with us and buy our products. We need YOU because we have many branches in USA and Europe. Right now we need people who have verified PayPal accounts.
Our company gives you first time an opportunity to earn 15 % from all translations that will go trough your account in paypal. After next transactions you will receive 20% as a Gold member. After receiving money on your PayPal account, you will have to send 85% to our manager to Europe through Western Union.
Here are the requirements:
1. You must have verified PayPal account.
2. You have to tell us your full name, real telephone number, your e-mail registered in PayPal and when you're ready to work with our company just send an e-mail to "Money-Laundry-R-Us@aol.com" (Note, this is a fictitious email address- Swordmaker)This is your chance to try yourself in your new money making program. You will see the result in 24 hours after sending your information to our email "Money-Laundry-R-Us@aol.com" (Note, see note in last paragraph - Swordmaker)
About Mentor Graphics
Mentor Graphics Corporation is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics and semiconductor companies. Established in 1981, Mentor Graphics reported revenues over the last 12 months of more than $600 million and employs approximately 3,100 people worldwide.
Mentor Graphics Corporation offers a variety of services when it comes to website design. Our highly experienced staff can create anything from a simple website used for advertising to a highly technical website with a store or catalog to be updated regularly, or even your own chat room. We are especially strong in database interfacing using Cold Fusion and iHTML.
Roger Arpino
Mentor Graphics Corporation,
Executive Officer
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Note that Mentor Graphics IS a legitimate business but it is not head-quartered in the UK. The last two paragraphs seem to have been lifted from the company's website. As the fictitious email address I used to replace the address provided shows, I think this is a money laundering scheme. Somehow I doubt a publicly traded corporation with its own website would be using an AOL.COM address.
Classic scam... appeals to the greed in the mark. One always has to ask "Why do they need ME???" and "Why would a legal company need to pay me 15% to 20% to handle their own money???"
Do you mean that they insist on having access to whatever bank account number you give them (be it your main account or a separate small account) or are they satisfied to simply verify identity without you allowing them access to any of your bank accounts?
How? All you get is a receipt from the USPS showing a date and a money amount. I haven't run into any who claimed a loss but others have, and report that a few buyers won't accept a copy of the slip and keep harrassing them.
I hang on to the slips "just in case" but have never had a problem either way after 800+ transactions. Despite that, I clearly state that without insurance, shipping is at buyer's risk. I see that many sellers are doing the same now.
One thing I do though is keep up the communication - many don't. I let the buyer/seller know when I've received/sent the payment and when I send/receive the item. Makes for cleaner transactions.
They verify your bank acount by transferring a small amount of money into, having you identify that numerical amount and then move it back out.
This assures them that the information you have provided is true, because the transfer worked and the bank account is valid (and you would have had to provide accurate identification to the bank to have said account). This is verification.
You can become verified by other means, this generally means faxing your drivers license and social security card to them and sometimes electric or phone bills with your name and physical address. I have heard of sellers doing this to avoid giving them an account number and having to do it repeatedly because the faxes were "lost".
I find giving them the bank account number to be both easier and safer than having faxes of my ID floating around unguarded.
I would rather the bank remain in sole posession of my personal data, than give it to an internet entity. Use a proxy account that you do not keep money in.
My post office also prints the destination zip code on the receipt. I understand that not all post offices do this. Between the date, zip code and postage cost, that's three pieces of information to corroborate you made the shipment you said you made. Especially if you e-mailed the person on the date you shipped to inform them of shipment (which I always do). Anyway, the one time I ran into trouble with a lost, uninsured package, the customer accepted the receipt as adequate proof of shipment, and left me alone.
You could also require Delivery Confirmation (which you can do with Media Mail, too) as part of your S&H charges. I tend to do that with more expensive items. Sometimes I'll even spring for the 55 cents myself, if it wasn't included. I figure it's my only protection as a seller to prove that I upheld my end of the transaction.
I agree that if someone declines insurance, the seller is absolved of all responsibility once the package is placed in the mail. But I do believe that ethically, the seller should be required to prove he did in fact put it in the mail. That's only fair to the customer, and it's something I expect of anyone I make a purchase from.
You may feel the seller is absolved, but consumer law is written differently, especially when CC are the payment source, which is most mail order and internet sales.
If you ordered an item from a big retailer, LL Bean or similar and they charged your card and the item never arrived or was damaged, would you expect replacement or refund? Even though they have proof of shipment?
If you accept credit card payments you will have to provide proof of delivery (not shipping) or you can expect to lose every chargeback based on non delivery.
As for damaged items, CC companies will allow the buyer to show proof of return (tracking number or receipt of mailing) and refund their money without regard to whether they bought optional insurance or not. On the back of every credit card statement is a dispute/chargeback form to make it even easier.
Insurance protects the seller agains loss, not the buyer (because the CC companies are on their side). So on breakable or expensive items, do yourself the favor of requiring insurance, don't make it optional. Upic is an excellent alternative to expensive postal insurance, btw.
What if I don't accept CC payments? (Which I don't.)
Then you are in the clear, cause they would have to take you to small claims to recover, no one would bother over small sums.
OTH, your growth potential is limited by your payment methods. PayPal limits you to $1000 a month for the personal non CC accepting accounts.
And winning PayPal chargebacks (non credit card) are dicey, basically PayPal will honor the buyers request for a refund in all circumstances if they show proof of return of the goods, regardless of your TOS.
You can of course accept only MO's and cash, but that really limits the pool of buyers who will be willing to bid on your items.
The point is to do honest and intelligent business risk assesment. Insurance covers the seller against loss, not the buyer, because consumer law favors the buyer.
If you are doing any real volume you will eventually suffer loss. So risk assess each item offered for sale and require insurance on those that have high risk for breakage and pack like it will be handled by Neanderthals.
And buy cost effective insurance like Upic, not postal insurance.
Well, not completely but I've gotten my not sold items down to less than a third of the total items listed. In the past few weeks I've become totally OBSESSED with eBay book selling. Actually the selling is the easiest part. More difficult is getting the right books. 99.5% of the books out there won't sell for more than a couple of dollars. The trick is finding the .5% of the books that will get some decent prices. I spent ALL DAY today looking for books but found only one worth about $50. Sunday I had better luck. I found a LIMITED EDITION (only 1000 copies) of "Jewish Women In America" Encyclopedia. Brand new. Amazon lists it for $250 up so perhaps I'll have some luck.
Anyway, up to a few minutes ago when I came onto the FR, I was totally involved with hunting down books since about 8 AM this morning. Then in the evening I listed some books. Sometimes I feel like the Terminator hunting down Sarah Connor, only in my case it is books. The OBSESSION with those books has taken me over.
I don't use reserve anymore. I use a LOW starting price. Somehow I like the thrill of putting my balls on the line.
"Before bidding on my items, you must genuflect before me, grovel with great humility, and then crawl on your stomach and kiss my royal butt. Then you must worship me as a major deity before I even begin to consider accepting your bid."
I know the Cookbook Lady. I don't know her name but I run into her almost daily since she hits the same spots as me. Fortunately we get along since she is into Cookbooks and I'm not so we aren't really competing. Anyway she does good with those cookbooks on eBay. I just can't get into it. I just don't click with cookbooks. However, I am like a MADMAN when I am near the types of books I desire.
What do you think an autographed copy of Margaret Sanger's auto-biography would fetch?
I bought that one years ago for 50 cents when I was a teenager. At the time I didn't know who Margaret Sanger was. All I knew was that I had in my hands a very good condition, first edition (1936 if I recall correctly)hardcover book, with it's dustjacket, and was personally autographed by the author herself.
But I'm afraid to let it go on eBay for fear that it would go for too little. A guy like you would snap it up from me for a mere couple of bucks, and then turn around and sell it for a couple thousand dollars.
Go to abebooks.com and put in that info in its search engine. Then you can find out what booksellers around the world are selling that book for. Then, using that info, you can set a reserve price on eBay. If it doesn't hit the reserve price then you don't have to let it go cheap.
I watch your auctions and am always totally amazed at the books that you do get to sell. I am not worthy.
What knowledge you must have to know what is worth something!
The story about how I got this book (for a buck) earlier today is quite funny but don't have the time right now to recount the story. Maybe tomorrow.
I rest my case and I'll check it out. LOL!
When you have an extra minute or two could I get you to tell me if these are worth listing?
The Diary of a Bachelor- By Billy Bachelor Published 1910
The Business Man's Encyclopedia Volume One, Eighth Revised Edition- Published 1912, Copyright 1915
Victor Bell's Popular Essays on the care of the Teeth and Mouth, Second Edition 1900
Physical Culture Simplified By Anthony Barker A safe and rapid way to health and strength- 1902 1st Edition I think. It is an illustrated body building book.
All are hardcover.
Skip 119. I went to abebooks.
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