Consumer complaint received 2026-05-28 00:00:00
Product: Debt collection — Other debt
Issue: False statements or representation — Attempted to collect wrong amount
Company: Paypal Holdings, Inc
State: IL

Complaint narrative:
CFPB Complaint What is this complaint about? Checking or savings account / Problem with a transaction What type of problem are you having? Problem with a transaction / Unauthorized account instrument / Improper debt collection Describe what happened : I am filing this complaint against PayPal, with secondary involvement from XXXX XXXX, for holding me liable for a - {$400.00} balance to my PayPal account and incorrectly sending this amount to collections with XXXX XXXX XXXX XXXX. From a customer standpoint, this is a result of a lack of transparency, accountability and open communication, combined with a systemic error and mutual misunderstanding between the two financial institutions. I do not believe this was deliberate fraud on behalf of PayPal. On XX/XX/year>, my roommate sent me {$400.00} via PayPal. My balance went from {$0.00} to {$400.00}. That same day, I paid a {$7.00} fee to instantly transfer the {$400.00} to my XXXX checking account ending in XXXX, bringing my checking account balance to {$470.00}. This left my PayPal balance at {$0.00}. On XX/XX/XXXX, I received my paycheck direct deposit of {$1500.00} into the same XXXX account ( ending in XXXX ), yielding a checking account balance of {$2000.00}. On XX/XX/XXXX at XXXXXXXX XXXX Central Time, I repaid and sent {$400.00} to XXXX XXXX ( transaction ID : XXXX ). I selected my checking account ending XXXX as the payment source. I received an email confirmation and transaction ID number stating that the payment was made using my XXXX checking account. As far as I know, I received confirmation and I didn't think about it afterwards. I did not receive any declined transaction notification from my bank. The problem here is PayPal 's lack of transparency in the way it handles payments. I did not know that PayPal first fronts the money to the recipient and then tries to collect the funds from my bank account. I never authorized them to make payments on my behalf. If there was a problem pulling the funds from XXXX, then the transaction should have been declined, not paid for by PayPal. In addition to that, on XX/XX/XXXX, I spoke to a PayPal manager who introduced himself as XXXX. He sent me a screenshot of the transaction from PayPals system labeled as : Mobile Payment Sent ( Personal ) to XXXX XXXX - Instant Transfer CHASE Checking ( Confirmed ) XXXX Status : Completed Amount : XXXX USD Balance : XXXX USD Despite my confirmed sufficient funds ( {$2000.00} ), PayPal claims the XXXX withdrawal failed. I am now unemployed and feel like PayPal tried to charge a PayPal debit card I never opened to recover those funds. As far as I know, I only have one checking account ending in XXXX with one physical debit card ending in XXXX. I have no recollection of ever opening a PayPal debit card, nor have I ever used one. I did not open or authorize the opening of a " PayPal Balance account, '' which requires explicit user opt-in, application, and identity verification. Yet, PayPal claims they used a backup card ending in XXXX. I visited my XXXX XXXX branch, and they confirmed the debit card ending in XXXX does not exist in reference to my checking account. Only recently, on a recorded conference call, did XXXX admit it is a virtual card linked to my account that I was never informed about. A consumer can not authorize or manage a financial instrument they do not know exists. Furthermore, XXXX confirmed on that same call that no withdrawal attempt was ever made for this transaction. XXXXayPals confirmation email and their own manager 's screenshot state the payment was funded by my checking account ( XXXX ). Their internal notes now say the opposite. I acted in good faith, selected a valid funding source, and received confirmation. Everything that followed was a system failure between PayPal and XXXX. I should not bear the financial liability or the collection actions for their lack of open communication. I attempted to resolve this through the XXXX XXXX XXXX, but PayPal refused to address the specific contradictions, responding only with generic form letters. What would you like the company to do to fix the problem? Erase the - {$400.00} balance on my PayPal account, as it stems from a systemic error and an unverified virtual card. Immediately recall and close the collection account placed with XXXX XXXX XXXX XXXX, and ensure no negative reporting is made to my credit profile. Provide the application, opt-in records, and identity verification logs proving I manually activated a PayPal Balance account and authorized the digital card ending in XXXX. Acknowledge that this was a systemic error and a failure in transparency and open communication, rather than a standard negative balance caused by user action.

Company response to consumer: Closed with explanation