Consumer complaint received 2019-05-21
Product: Debt collection — I do not know
Issue: Attempts to collect debt not owed — Debt was result of identity theft
Company: Paypal Holdings, Inc (OR)

On XX/XX/XXXX I received a letter from a debt collector, XXXX XXXX. The letter was a notice of debt owed to PayPal for the amount of {$270.00}. I do have a Paypal account, but use it very infrequently, maybe once a year ... maybe once every two years. I did not recognize the sum and the letter was surprising. It looked like junk mail, I'm glad I opened it. 

I went online and checked my Paypal account. The account was normal, in good status, a XXXX balance, all payments in the history tab had cleared. I assumed at that point the XXXX XXXX letter was junk, a scam, etc. I was ready to toss this piece of mail, but did a online search for " Paypal XXXX XXXX '' and boom, a whole slew of hits popped up dated from XXXX to XXXX. Clearly this same scenario has been played time and time again for nearly a half decade ; and it continues today. 

At this point I called Paypal ( a one hour wait for every call and transfer ). The Paypal rep confirmed that my account was in good standing, saw no suspicious activity, and knew nothing of the collection letter or had any answers for me. 

I called the number on the XXXX XXXX letter. I talked with a XXXX rep. At first the  rep appeared to be helpful in solving this problem, but after a short time I felt I was being baited into saying " yes I have used Paypal before '' and " yes I do have a XXXX email account '' ; in this day in age it's like saying " yes, I breathe air ''. I said I felt uncomfortable with the call and was going to hang up and did. But before I hung up I did deny knowing anything about the debt or the Paypal account used to create it. What I did get out of the conversation is that my NAME and ADDRESS were used to create a Paypal account and the fraudulent Paypal account was linked to a XXXX account ( I don't  believe my credentials were used to start the email account ). I also got the impression a bank account that was not mine or in my name was used to link to the fraudulent Paypal account. 

XX/XX/XXXX I did find time to once again call Paypal to remove my name from the debt and get some answers. After a few transfers I was able to talk to one rep in the fraud department who was able to use on of the account numbers on the XXXX XXXX letter to pull up the fraudulent account information. The rep was able to confirm what I had learned from XXXX ; which was this : Paypal allowed : 1. A second Paypal account to be created in my name with the use of two pieces of information about me : my NAME and physical ADDRESS. 
2. A new XXXX and Bank account ( not in my NAME ) were linked to the fraudulent account. 
3. The fraudulent PayPal account was then used to make one or more transactions. Then the XXXX and Bank account were then closed. 

After some Q & A with the Paypal rep, I was told the fraudulent account and debt would be escalated in the fraud department for further investigation, but that I was clearly not a part of this scam. The rep assured me that the account and debt would be cleared with XXXX ; and this process could take 3-4 weeks. I would be notified via email when the issue was resolved. 

By XX/XX/XXXX I still had not received such an email or any other communication from Paypal. 

On XX/XX/XXXX I received a second letter from XXXX XXXX. The body of letter stated that XXXX had received my claim of Identity Theft and had forwarded it to the original creditor ( Paypal ). The creditor responded and indicated the Identity Theft claim was not valid. 

On XX/XX/XXXX I called XXXX XXXX. The rep confirmed that Paypal had denied the Identity Theft claim and the debt account was still open ( and XXXX is still attempting to collect the debt from me ). 

Later on XX/XX/XXXX I called Paypal again. After many hours of holding, transfers, and callbacks seeking a qualified rep who had the aptitude to understand the issue and trace down the fraudulent account, I was able to speak with someone who ( once again ) said they would escalated the account to the PayPal Collections department for another look. I did get a direct phone number for PayPal Collections ( not an easy feat ) so I will follow up with that number tomorrow. What I did find disturbing about today 's conversation with the Paypal rep, is that the fraudulent account was still active ... the rep froze it for the first time today. 

It's disturbing to me that this loophole in the Paypal system has been exploited for over a half-decade and Paypal is turning their clients who are in good standing over to debt collectors.