Consumer complaint received 2025-10-30 00:00:00
Product: Prepaid card — General-purpose prepaid card
Issue: Problem with a purchase or transfer — Card company isn't resolving a dispute about a purchase or transfer
Company: Paypal Holdings, Inc
State: PA

Complaint narrative:
Subject : Formal Complaint PayPal , Inc . Violation of the Electronic Fund Transfer Act ( EFTA ) and Regulation E To : Consumer Financial Protection Bureau Attn : Office of Consumer Response XXXX. XXXXXXXX XXXX XXXX  XXXX DC XXXX Via : www.consumerfinance.gov/complaint Complainant : Name : XXXX XXXX XXXX Phone : XXXX Email : XXXX Respondent : Entity : PayPal , Inc . 
Address : XXXXXXXX XXXX XXXX XXXX XXXX XXXXXXXX, CA XXXX Issuer : XXXX XXXX XXXX XXXX. ( PayPal Debit XXXX Issuer ) To Whom It May Concern : This letter constitutes a formal legal complaint against PayPal , Inc. for repeated and willful violations of the Electronic Fund Transfer Act ( EFTA ), 15 U.S.C. 1693 et seq., and its implementing regulation, Regulation E ( 12 CFR Part 1005 ). PayPal failed to investigate, protect, and refund a series of clearly unauthorized electronic fund transfers totaling {$3500.00}, and subsequently engaged in retaliatory action by permanently limiting my account after I followed PayPals own procedures and fully complied with applicable law. These actions constitute unlawful practices that have caused me substantial financial, academic, and personal harm. 

XXXX. Summary of Events On XX/XX/year>, at approximately XXXX XXXX, I discovered that my Paypal account balance was unexpectedly low after receiving my school tuition refund of {$4500.00} the day prior. Upon further investigation, I found that my PayPal Debit XXXX ( issued by The XXXX XXXX  ) had been used XXXX times without authorization between the evening of XX/XX/XXXX and the morning of XX/XX/XXXX, totaling {$3500.00}. All of The charges were made to XXXX XXXX and XXXXXXXX XXXX XXXX XXXX XXXX XXXXXXXX during overnight hours, with several of the transactions occurring within the same minute, indicating automated or fraudulent activity. 
At XXXX XXXX, less than XXXX minutes after discovery, I contacted PayPal by telephone to report the unauthorized transactions. The representative confirmed the activity appeared suspicious and instructed me to obtain documentation from the merchant confirming that no account in my name existed. 

Over the next XXXX weeks, I made more than XXXX attempts by phone and email to obtain such documentation from XXXX. The merchant confirmed in writing : My email address is not registered to any XXXX account. 

My card number and personal information do not match any user or record. 
No transaction history exists associated with my details. 

All documentation was provided to PayPal multiple times, per PayPals instructions. 

XXXX. PayPals Gross Negligence, Mishandling and Breach of Statutory Obligations Despite my full compliance and timely reporting, PayPal failed to meet multiple obligations imposed by EFTA 1693f and 1693g and Regulation E, 12 CFR 1005.6 and 1005.11.

a ) Failure to investigate within required timeframes Under 12 CFR 1005.11 ( c ) ( 1 ), a financial institution must investigate any reported error ( including unauthorized electronic fund transfers ) promptly and resolve the matter within 10 business days of receiving notice. If additional time is needed, provisional credit must be provided. PayPal denied XXXX of XXXX disputes within XXXX dayswell before any meaningful investigation could have occurredconstituting a prima facie violation of 1005.11 ( c ). 

b ) Failure to provide provisional credit Per 12 CFR 1005.11 ( c ) ( 2 ) ( i ), if an institution can not conclude an investigation within 10 business days, it must provisionally credit the consumers account for the disputed amount ( including interest where applicable ) and provide written notice within two business days. PayPal issued no provisional credit, thereby depriving me of critical access to funds intended for tuition and education-related expenses, in violation of EFTA 1693f ( c ). 

c ) Failure to provide written explanation and access to evidence When a financial institution determines no error occurred, 1005.11 ( d ) ( 1 ) requires a written explanation of findings and a statement of the consumers right to request copies of documents relied upon. Despite multiple written and verbal requests, PayPal provided only a cursory denial ( We found these transactions were authorized ) and refused to produce any supporting documentation. This refusal constitutes a clear violation of 1005.11 ( d ) ( 1 ).

d ) Failure to limit consumer liability Under 12 CFR 1005.6 ( b ) ( 1 ), if the consumer notifies the institution within two business days of learning of unauthorized use, liability is limited to no more than {$50.00}. I reported the fraud within minutes of discovery, well within this statutory window. PayPals refusal to credit my account, combined with its denial of my dispute, unlawfully shifted full liability onto me in direct contravention of EFTA 1693g ( a ).

e ) Retaliatory account limitation Following my repeated attempts to obtain compliance and lawful resolution, PayPal permanently limited my account, citing abuse of the dispute process. This constitutes a retaliatory action designed to deter the exercise of rights protected under EFTA 1693m ( civil liability ) and violates the fundamental principle of good faith in consumer protection enforcement.

3. Systemic Failures and Gross Negligence PayPal ignored clear indicators of fraud, including 44 identical transactions executed in rapid succession overnight.

Its adjudication was inconsistentone charge may have been reversed, while 43 others with identical patterns were denied without explanation. 


PayPal disregarded documentation from the merchant confirming no account linkage, violating 1005.11 ( c ) ( 4 ) ( v ) - ( vi ), which mandates consideration of any relevant information within the institutions own records.

Requests for the documents used to reach denial were ignored, violating 1005.11 ( d ) ( 1 ).

The permanent limitation of my account following legitimate disputes constitutes retaliatory interference and demonstrates institutional negligence and bad faith. 



XXXX. Consequences and Harm Loss of {$3500.00} in unauthorized debits, representing tuition refund funds. 


Inability to purchase required educational materials, resulting in withdrawal from my academic program. 
Severe emotional distress, reputational harm, and disruption to personal and academic progress. 


Denial of access to essential financial tools and payment services due to retaliatory account termination. 



XXXX. Legal Authority Electronic Fund Transfer Act ( EFTA ), 15 U.S.C. 16931693r Regulation E, 12 CFR Part 1005 1005.6 Liability of consumer for unauthorized transfers 1005.10 Preauthorized transfers 1005.11 Procedures for resolving errors Consumer Financial Protection Bureau ( CFPB ) Official Interpretations of Regulation E 15 U.S.C. 1693m ( a ) Civil liability for noncompliance ( actual and statutory damages, attorneys fees, and costs ) 6. Nature of Violations Violation of 12 CFR 1005.11 ( c ) ( 1 ) Failure to conduct prompt investigation.

Violation of 12 CFR 1005.11 ( c ) ( 2 ) ( i ) Failure to issue provisional credit within 10 business days.

Violation of 12 CFR 1005.11 ( d ) ( 1 ) Failure to provide written findings and supporting documentation. 


Violation of 12 CFR 1005.6 ( b ) ( 1 ) Improper denial of consumer liability limitation ( {$50.00} cap ).

Retaliatory account limitation inconsistent with good-faith compliance under EFTA 1693m .

7. Timeline of Key Events XXXX XXXX XXXX : Unauthorized transactions occur ( XXXX charges totaling {$3500.00} ). 


XX/XX/year> ( XXXX PM ) : I report all transactions as unauthorized to PayPal. 


XXXX XXXX XXXX, 2025 : I make over XXXX attempts to obtain written verification from XXXX, which confirms no account exists in my name. 


XXXX XXXX XXXX : PayPal requests I submit evidence, which I do. 


XXXX XXXX XXXX : I resubmit all documents multiple times per PayPals requests. 


XX/XX/year> : PayPal denies XXXX of the XXXX disputes without explanation. 


XX/XX/year> : My appeal is rejected with a generic response and no documentation. 


XX/XX/year> : PayPal permanently limits my account for abuse of dispute process. 


XXXX. XXXX of Events including XXXX  Below is the complete, verified timeline of events summarizing my interactions with XXXX  and the related transactions for PayPals dispute investigation. This information has been relayed to Paypal numerous times by email, phone, and the uploading of documents through the Paypal message center. 
Paypal has chosen to ignore the information and has denied the claims and refused to refund my money despite XXXX giving written confirmation XXXX separate times that my email and identity are not tied to a XXXX account. Furthermore, they gave me written confirmation multiple times, by multiple employees, they don't have any record of these transactions. These written statements from XXXX satisfies the requests made by PAYPAL, confirming that my information is not linked to an account where the charges occurred. This is what Paypal instructed me to get from XXXX, and is the proof they needed to make the determination that the charges were unauthorized and issue the appropriate refund. The written confirmation from XXXX further proves that the charges made using my PayPal debit card were completely unauthorized, not associated with me nor linked to an account associated with me.. 
XX/XX/year> I discovered that my PayPal balance was unexpectedly low after receiving a tuition refund of {$4500.00} the day before. 


Upon review, I found XXXX unauthorized transactions from XXXX XXXX and XXXXXXXX XXXX XXXX XXXX XXXX XXXX, totaling {$3500.00}. 


I immediately contacted PayPal ( XXXX XXXX  ) and reported the transactions as unauthorized. 

XX/XX/year> Spoke with A PayPal Rep and was told to get something from XXXX that shows my name is not associated with an account where my debit card was used Request # : I contacted XXXX via phone to report the unauthorized use of my PayPal debit card, and asked for the information that Paypal requested Request number XXXX : I sent XXXX via email documents that i created to assist in the investigation XXXX issued Ticket # XXXX, acknowledging receipt of my request. ( Source : XXXX - We have received your request XXXX ) XX/XX/year> I sent a XXXX Request for XXXX and asked for them to take my attached information and check their system for the requested information. 
XXXX XXXX, ( XXXX ) responded to my outreach and confirmed that my email address is not registered to any accounts in their system. 
XXXX wrote : Dear XXXX Thank you for contacting XXXX Pennsylvania XXXX XXXX. 

Your email address is not registered to any accounts in our system. 
If you have an account with us and have access to the email address registered on it, please send us your query from it or make live contact with our support team via chat or phone. 

XX/XX/year> XXXX sent a follow-up request for verification documents, asking for : First XXXX and last XXXX digits of card Total amount of unauthorized transactions Supporting bank statements XX/XX/year> I responded to XXXX request ( via XXXX, XXXXXXXX XXXX  ), providing all requested documentation and a detailed explanation. 


I reiterated that PayPal required documentation showing the XXXX  account tied to these transactions is not in my name. 


I provided transaction details, totaling {$3500.00}, and clearly stated that these were unauthorized charges. 


Attachments included PayPal transaction records and screenshots showing each charge. 



XX/XX/year> XXXX ( XXXX ) replied, stating the matter was escalated to their operations team and asked for XXXX hours for review. 


I followed up that evening, noting no update or communication had been received. 



XX/XX/year> XXXX ( XXXX ) replied, claiming the review was still ongoing and asked for patience. 


I responded the same day, stating that my request was simple and could be completed in minutes, not weeks. 


I emphasized I was only asking XXXX  to confirm whether the account tied to these transactions was registered under my name or not, and warned I would escalate to regulators if not addressed by XX/XX/XXXX. 



XX/XX/year> After no further response, I followed up again (??? ). 


Later that day, XXXX ( XXXX ) responded, stating : We were not able to locate an account that matches the transactions provided with the card details previously shared. 



XXXX again requested the same documentation ( first XXXX / last XXXX digits, statement, and card images ) all of which had already been submitted. 



XX/XX/year> I replied, expressing frustration that XXXX kept requesting the same information, pointing out that I had already submitted all documents multiple times and that the matter was overdue. 


Later that day, another XXXX  representative ( XXXX ) repeated the same message as XXXX again stating no matching account was found and asking for the same materials again. 
We were not able to locate an account that matches the transactions provided with the card details previously shared. 




XX/XX/year> I again provided the requested information for a third time, including : PayPal XXXX XXXX ending in XXXX XXXXXXXX Issuing bank : XXXX XXXX transactions totaling {$3500.00} Despite this, Paypal has ignored this information and chose not to review it. 


XXXX. Requested Remedies Pursuant to XXXX XXXX ( civil liability for noncompliance ), I request that PayPal and any relevant oversight bodies take the following corrective actions : Reverse all denials and refund the full {$3500.00} in unauthorized charges. 


Provide {$25000.00} in punitive and compensatory damages for financial losses, educational disruption, and emotional distress. 


Issue a formal written acknowledgment and apology for procedural and investigative failures. 


Immediately lift the permanent account limitation and restore full access. 
Implement corrective measures to ensure : Timely investigations and provisional credits per 1005.11 ( c ).

Written explanations and disclosure of evidence per 1005.11 ( d ).

Prohibition of retaliatory account actions against consumers asserting protected rights.

Provide regulators with all internal records, including fraud-detection logs, denial rationales, investigator notes, and communications regarding this case.

10. Conclusion I have acted in full good faith, complied with all PayPal instructions, and fulfilled every requirement under EFTA and Regulation E, which includes the reporting of the unauthorized transactions immediately and promptly. I have followed every instruction given by paypal in the process and provided all requested evidence multiple times. The documentation proves these transactions were unauthorized and not tied to me in any way. PayPal representatives have confirmed that these are not authorized and assured me when providing these documentations it would satisfy the unlawful demands that paypal requested. By law, paypal has no right to demand that a consumer must contact a merchant in order to file a dispute over an unauthorized transaction. 
The evidence provided incontrovertibly establishes that these transactions were unauthorized and that PayPals handling of the matter constitutes multiple regulatory violations.

PayPals unlawful conduct and actions violate my rights multiple times, including its failure to investigate, denial of provisional credit, lack of written explanation, refusal to provide documentation, failure to limit consumer liability, and retaliatory account termination. These violate both the letter and spirit of federal consumer protection law and my rights as a consumer. 
Paypal chose to not address or acknowledge this gross negligence and mishandling of this case, and instead attempted to gaslight me with their retaliatory account termination, by claiming abuse of their dispute process hoping I would just go away and not pursue this any further. This is not only unacceptable but unlawful and has caused me significant financial and personal hardship. I am seeking immediate corrective action, a refund of my stolen funds, punitive damages and accountability for the repeated failures in this case. I respectfully request that PayPal and their gross negligence, be compelled to remedy these violations immediately and that appropriate enforcement and compliance actions be undertaken by relevant regulatory authorities. 
Thank you for your time and attention to this serious matter. 

Respectfully submitted, XXXX : XXXX XXXX XXXX Phone : XXXX Email : XXXX XXXX

Company response to consumer: Closed with explanation