Consumer complaint received 2026-05-11 00:00:00
Product: Debt collection — Other debt
Issue: Attempts to collect debt not owed — Debt was result of identity theft
Company: Paypal Holdings, Inc
State: TX

Complaint narrative:
COMPLAINT AGAINST : PayPal , Inc . ACCOUNT TYPE : PayPal personal account ( linked to XXXX checking account ) ISSUE TYPE : Unauthorized electronic fund transfers/ Regulation XXXX violation / Wrongful debt collection -- - I. WHAT HAPPENED In XX/XX/XXXX, my PayPal account was accessed by an unauthorized party. The attacker used my linked XXXX checking account to initiate XXXX unauthorized XXXX transfers totaling {$500.00} XXXX transfers of {$100.00} each on XX/XX/XXXX, and XXXX transfers of {$100.00} each on XX/XX/XXXX. These transactions are documented in my XXXX XXXX statement ( Exhibit A ). The stolen funds were immediately used within my PayPal account to purchase XXXX ( XXXX ) and PayPal XXXX XXXX XXXX ) cryptocurrency without my knowledge or consent. I did not initiate, authorize, or benefit from any of these transactions. I reported the fraud promptly to both XXXX and PayPal. XXXX. MY BANK MADE ME WHOLE COMPLETELY On XX/XX/XXXX, XXXX issued XXXX XXXX chargebacks XXXX of {$100.00} and XXXX of {$100.00} totaling exactly {$500.00}. This is documented in my XXXX bank statement ( Exhibit B ). My checking account was fully restored, dollar for dollar, to its pre-fraud balance. Under Regulation XXXX, this chargeback obligation belonged to XXXX, and they fulfilled it completely and immediately. XXXX. PAYPAL THEN SENT ME AN ADDITIONAL {$400.00} WHICH I RETURNED On XX/XX/XXXX, PayPal separately transferred {$400.00} to my XXXX XXXX account XXXX transfers ( {$100.00}, {$100.00}, {$100.00}, {$100.00} ), documented in my XXXX bank statement ( Exhibit C ) and corresponding to the refund activity visible in my PayPal transaction history ( Exhibit D ). Since XXXX had already made me whole the day before, this {$400.00} was an overpayment. I identified it as such and returned approximately {$400.00} to PayPal. I acted in complete good faith. IV. PAYPAL VIOLATED REGULATION On XX/XX/XXXX the same day the last unauthorized transfers occurred I filed XXXX XXXX XXXX PayPal for unauthorized transactions. PayPal 's own case documentation confirms the dispute was received and states it was expected to be resolved by XX/XX/XXXX. Under the Electronic Fund Transfer Act ( EFTA ) and Regulation E ( 12 C.F.R. 1005.11 ), PayPal as a financial institution offering electronic fund transfer services was required to : Complete its investigation within 10 business days of receiving the dispute ; Either resolve the dispute in my favor or provisionally credit my account while investigation continued ; Notify me in writing of the results. PayPal did none of these things. XX/XX/XXXX passed with no resolution and no communication of any kind. I called PayPal on approximately XX/XX/XXXX. I spoke with a representative named XXXX, who confirmed that XXXX separate disputes had been filed against my account by my bank and stated in her own words that something was " definitely wrong with the numbers. '' She opened Escalation Reference ID XXXX, identifying it as a matter for a designated department empowered to correct the negative balance if it was PayPal 's error, and committed to a follow-up within XXXX hours. No follow-up was ever received. On XX/XX/XXXX, I followed up through PayPal 's messaging system. XXXX XXXX confirmed in writing that the escalation was real, that it was " still under review, '' and that the matter had been escalated by a prior agent. She then suggested I sell the cryptocurrency in my account to offset the negative balance cryptocurrency that was purchased fraudulently, using my stolen funds, by an unauthorized party before closing the conversation. I have a screenshot of this exchange ( Exhibit XXXX ). No further communication was ever received from PayPal. Instead, the balance was referred to a third-party collection agency. V. THE {$490.00} IS NOT A LEGITIMATE DEBT PayPal XXXX claim that I owe {$490.00} is the direct result of PayPal XXXX own failure to properly reconcile its simultaneous chargeback recovery from XXXX and its refund disbursements to me. My PayPal transaction history ( Exhibits D and XXXX ) shows that PayPal refunded most but not all of the fraudulent XXXX purchases : XXXX PYUSD purchases of {$100.00} each ( XXXX XXXX ) : refunded {$280.00} XXXX purchase converted to {$290.00} PYUSD ( XXXX XXXX ) : refunded but at only {$180.00}, a {$97.00} shortfall that is PayPal 's internal pricing discrepancy {$100.00} XXXX purchase, XXXX XXXX ( XXXX XXXX ) : refunded {$100.00} XXXX purchase, XXXX XXXX ( XXXX XXXX ) : NOT refunded this purchase appears in PayPal 's own transaction history without the " Refunded '' designation that appears on every other fraudulent transaction ( Exhibit E ) The unrefunded {$100.00} XXXX purchase combined with the {$97.00} refund shortfall on the converted XXXX accounts for approximately {$190.00} of the claimed negative balance. The remaining discrepancy reflects PayPal 's failure to correctly account for the chargebacks it received from XXXX against the refunds it simultaneously issued to me. PayPal 's own agents acknowledged twice on XX/XX/XXXX ( XXXX ) and XX/XX/XXXX ( XXXX ) that the numbers were wrong and that the matter required internal correction. That correction was never made. The unrefunded XXXX, now worth approximately {$73.00} ( down from {$100.00} at purchase ), remains in my PayPal account to this day an asset I never purchased, purchased with my stolen funds, which PayPal has made no attempt to reclaim through its own dispute process. I am not responsible for PayPal 's internal accounting errors. I did not authorize any of the underlying transactions. I acted in good faith by promptly reporting the fraud, cooperating with both institutions, and returning the portion of PayPal 's payment I identified as overpayment. VI. PAYPAL SENT THIS TO COLLECTIONS WITHOUT NOTIFYING ME PayPal referred the {$490.00} balance to a collection agency without : Notifying me that XXXX XXXX XXXX XXXX closed ; Notifying me that Escalation XXXX had been closed ; Providing any written determination of either matter ; Giving me any opportunity to respond before collections contact began. I received a collections letter and fearing damage to my credit paid {$490.00} on XX/XX/XXXX under protest, solely to prevent a collections entry from appearing on my credit report. This payment does not constitute acknowledgment that the debt was valid. It was a coerced payment made to avoid credit damage on a disputed balance that resulted from fraud and PayPal 's own accounting failures. XXXX. WHAT I AM ASKING THE CFPB TO DO I ask that the CFPB compel PayPal to : XXXX. Refund {$490.00} in full the amount I paid under protest on XX/XX/XXXX. XXXX. Provide written confirmation that my PayPal account carries a XXXX balance with no further collection activity related to this incident. XXXX. Confirm in writing that no negative credit bureau reporting has been or will be made in connection with this matter, and retract any such reporting already made. XXXX. Provide a written accounting of how Dispute XXXX and Escalation XXXX were closed without consumer notification, written determination, or resolution. XXXX. Explain why PayPal failed to meet its Regulation XXXX obligations to investigate within XXXX business days and issue a provisional credit. XXXX. EXHIBITS ATTACHED Exhibit A XXXX bank statement : XXXX unauthorized PayPal transfers ( XXXX XXXX, XXXX ), total {$500.00} Exhibit B XXXX bank statement : XXXX XXXX Adjust credits ( XXXX XXXX, XXXX ), total {$500.00} Exhibit C XXXX bank statement : XXXX PayPal transfers received ( XXXX XXXX, XXXX ), total {$400.00} Exhibit D PayPal transaction history : XXXX XXXX, XXXX refund activity Exhibit XXXX PayPal transaction history : XXXX XXXX, XXXX fraudulent purchases ; XXXX XXXX purchase ( XXXX XXXX, {$100.00} ) has no " Refunded '' designation Exhibit F PayPal Messaging screenshot : XXXX XXXX, XXXX, agent XXXX confirming escalation XXXX still under review ; conversation subsequently closed with no resolution Exhibit G Collections notice Exhibit H Payment confirmation, {$490.00}, XX/XX/XXXX XXXX. SUMMARY I am a fraud victim who did everything right. I reported the unauthorized access immediately. My bank made me whole. I returned money I identified as overpayment. I called PayPal multiple times. I documented every conversation. PayPal 's own agents acknowledged the error on XXXX separate occasions and promised resolution that never came. Instead of correcting an internal accounting mistake XXXX its own representatives admitted existed PayPal sent a disputed, invalid balance to collections and forced me to pay {$490.00} to protect my credit. I am filing this complaint because PayPal has demonstrated across XXXX months of inaction that it will not correct this error without regulatory compulsion.

Company response to consumer: Closed with monetary relief