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Why I won’t use PayPal without a credit card

A few months back, I purchased a server on eBay. I contacted the seller multiple times asking for shipment status, and after receiving tracking numbers that were obviously false, after about a month I opened a dispute with PayPal. That finally prompted the seller to ship the server; however, it was missing two hard drives and two heat sinks that were supposed to be included. At that point, I re-opened the PayPal dispute, but only requested $189.96 (the value of the missing components) instead of the full amount.

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A few weeks later, PayPal notified me that they had decided in my favor, but were unable to recover the funds from the seller. The exact wording was:

We have decided in your favor, however, we were unable to recover any funds from the seller’s account. As stated in the PayPal User Agreement, recovery of funds associated with a Buyer Complaint cannot be guaranteed.

Please know that we will make our best effort to recover the funds in question if they become available in the seller’s account in the future and will take appropriate action against the seller. Such action may include issuing a warning, a temporary restriction, or terminating the account. Keep in mind that PayPal uses a number of factors to determine when to take action, including member complaints. Due to privacy laws, we cannot discuss the details of any action taken. We hope you understand our policy and that it assures you that you are safe using PayPal.

In any case, if I had payed with an “Instant Payment” (ie, from my checking account), or with a PayPal balance, I would have been out of luck — PayPal wasn’t going to give me my money back, even though it was covered by their “Protection Policy.” Fortunately, I always charge my purchases on PayPal to an American Express card. I was able to contact American Express, and process a chargeback through them. Since American Express is a charge card, once I opened the dispute, they immediately made a provisional credit to the account, which would be reversed if the chargeback was decided in the seller’s favor. Since the chargeback was eventually decided in my favor, that money was mine to keep. If I had made this purchase with a debit card instead of a credit card, I would have likely been out the money until the bank decided in my favor. If I had paid with a direct transfer from my checking account, I may have still recovered my funds, but it would have certainly been longer before I had use of the money again.

I hope that this helps some of my fellow internet shoppers avoid losing money in the future! I should also note that I’ve had nothing but luck with American Express — their customer service for dealing with disputes is by far the best I have dealt with. I also like the fact that it’s a charge card instead of a credit card — I don’t have the option to go further into debt with it. ;)

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