Consumer complaint received 2025-12-23 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Unauthorized transactions or other transaction problem — 
Company: Paypal Holdings, Inc
State: CA

Complaint narrative:
FORMAL COMPLAINT IMPROPER ASSIGNMENT OF NEGATIVE BALANCE Complainant : XXXX XXXX Company : PayPal , Inc . 

Issue Type : Improper assignment of negative balance following unilateral refund Amount at Issue : {$100.00} Transaction Amount : {$4000.00} Product Type : Custom goods ( high-value ) Complaint Summary I am submitting this formal complaint regarding PayPals decision to assign a negative balance to my account following a refund that PayPal issued unilaterally, despite the underlying transaction being incomplete and the buyer failing to meet required payment terms. 
I am not seeking recovery of the refunded amount from the buyer. My concern is PayPal holding me financially responsible for a refund decision that contradicts the transaction structure and my disclosed terms. 

Transaction Details The buyer agreed to purchase a custom item valued at {$4000.00}. 
The buyer paid {$100.00} as a clearly disclosed, non-refundable deposit. 

The invoice and sales policy explicitly stated : The deposit was non-refundable Full payment was required prior to shipment The buyer did not complete payment of the remaining balance. 
Because payment was not completed, no shipment obligation was triggered, and no item was sent. 

PayPal Dispute Handling The buyer filed disputes for the {$100.00} deposit. PayPal refunded the deposit on the basis that the item was not sent. 
PayPal later confirmed in writing that the order was not completed, yet still proceeded with the refund and informed me that the refunded amount would be assigned to my account as a negative balance if sufficient funds were not available. 

This creates a contradiction : PayPal acknowledges the transaction was incomplete. Shipment was contractually contingent on full payment. No shipment obligation existed. Yet the refund is being treated as seller liability. 

Primary Issue My complaint is not about reversing the buyers refund. The issue is that PayPal is assigning the cost of that refund to my account as a negative balance, despite : The buyer failing to fulfill payment terms required to complete the sale The refund being issued by PayPal against disclosed non-refundable deposit terms The transaction never reaching a completed or shippable state Assigning this refund to my account effectively penalizes me for an incomplete transaction and forces me to absorb a loss resulting from PayPals unilateral decision, not from seller error or non-performance. 

Harm and Concern This practice raises serious concerns for sellers of custom goods, as it : Converts incomplete transactions into seller liability Overrides disclosed deposit terms Assigns negative balances without seller agreement or fault Undermines the purpose of deposits in custom transactions Requested Resolution I respectfully request : Removal of the {$100.00} negative balance from my PayPal account Written confirmation that I am not obligated to repay the refunded amount Clarification of PayPals policy regarding : Assignment of negative balances Seller liability for refunds issued on incomplete transactions Treatment of non-refundable deposits for custom goods Supporting Documentation I can provide all relevant documentation, including : Invoice showing the full transaction amount Non-refundable deposit policy Payment terms requiring full payment prior to shipment Dispute correspondence confirming PayPals position Submitted in good faith for formal and regulatory review.

Company response to consumer: Closed with explanation