Consumer complaint received 2025-07-16 00:00:00
Product: Checking or savings account — Other banking product or service
Issue: Managing an account — Funds not handled or disbursed as instructed
Company: Paypal Holdings, Inc
State: FL

Complaint narrative:
Subject : Unauthorized Transaction PayPal Platform Compromise and Regulatory Non-Compliance under EFTA / Regulation E Summary of Complaint : In XX/XX/year>, my PayPal account was fraudulently accessed, and {$400.00} was stolen and transferred without my knowledge or authorization to an external account at XXXXXXXX XXXX XXXX XXXX. Despite clear evidence that my account was hacked by an external fraudulent party, XXXX has denied my fraud claim and refuses restitution, citing irrelevant IP address proximity as justification. 

This denial directly violates Regulation E, which places the burden of proof on PayPal to establish that disputed transactions were authorizedwhich they can not do in my case. Furthermore, PayPals security failures, including failure to notify me of critical account changes, directly contributed to this fraud event. 



Detailed Description of the Issue : 1. In XX/XX/year>, my PayPal account was fraudulently accessed by a third-party hacker. 
2. The perpetrator : Changed my registered email address without my knowledge or consent. 
Added an external bank account at XXXXXXXX XXXX XXXXXXXX XXXX without my authorization. 
Transferred {$400.00} out of my PayPal account to this external account. 
3. Throughout this breach, I received no alerts or notifications from PayPal regarding the email change, addition of a bank account, or withdrawal, which represents a fundamental failure in PayPals account security and fraud prevention protocols.

4. PayPal has denied my claim based solely on the fact that the fraudulent party used an IP address near my listed home address. This is an irrelevant and superficial argument, as IP addresses can be easily spoofed or proxied by bad actors. 
5. Critically, PayPal misclassified this case as a typical buyer-versus-seller dispute, explicitly stating that they were siding with the seller. This is a clear misrepresentation of the situation : this was not a purchase or commercial transaction, but rather a fraudulent account takeover and theft. By framing this fraud as a transactional dispute, PayPal improperly applied its buyer-seller resolution policies instead of treating the matter as a security breach and an unauthorized electronic fund transfer governed by Regulation E. 



Violation of Consumer Protection Regulations : Under the Electronic Fund Transfer Act ( EFTA ) and Regulation E, any transaction not authorized by the consumer is classified as an unauthorized electronic fund transfer.

Regulation E places the burden of proof on PayPal to demonstrate that I authorized the disputed transaction. 
PayPal can not meet this burden, as I did not authorize, initiate, or benefit from the fraudulent activity.

PayPals failure to alert me of critical account changes ( email and linked bank account ) further enabled the fraud, representing serious deficiencies in their fraud prevention systems.

Requested Resolution : 1. Immediate refund of the {$400.00} stolen from my account, as required under Regulation E and EFTA protections.

2. A formal reinvestigation and explanation of why PayPal failed to notify me of critical account changes.

3. Documentation of corrective measures to ensure PayPal addresses its fraud detection and consumer protection failures. 



Why CFPB Assistance Is Needed : PayPal has failed to fulfill its legal obligations under federal regulations governing unauthorized transactions. Its platforms security failures and improper application of dispute processes have resulted in direct financial harm to me, the victim. I request the CFPBs assistance in compelling PayPal to comply with Regulation E and restore my stolen funds. 



Company Involved : PayPal , Inc . 
XXXX XXXX XXXX XXXX XXXX XXXX, CA XXXX Complainant Information : XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXXXXXX

Company response to consumer: Closed with monetary relief