Consumer complaint received 2025-08-04 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Fraud or scam — 
Company: Paypal Holdings, Inc
State: NY

Complaint narrative:
PayPal is facilitating fraud through its current dispute system. 

Case ID : XXXX On XXXX XXXX XXXX XXXX XXXX XXXX XXXX, I received an unsolicited payment of {$220.00}. The person had the transaction labeled as XXXX, which in English translates to purchases. The item bought was listed as bags. I do want to clarify that I have a personal PayPal account, I am not a merchant, I have not solicited any sales, transactions, or purchases, and I do not know the buyer. The money that was sent had a fee of {$9.00} due to being sent internationally from XXXX, and the money is in a pending state due to the fact the buyer filed a fraudulent dispute, and it being the first time I'd received money from anyone on PayPal. 43 minutes later, the buyer files the fraudulent dispute saying, Urgent, the seller is fraudulent. Once the transfer is made, it no longer responds. It's a scam. Please cancel the transfer. And the transaction shows they never received the item. The buyer then reaches out to me requesting, pressuring might I add, that I refund them the pending deposit. Not, even a full 24 hours later, I escalate the situation to PayPal support through the app.

XXXX XXXX XXXX XXXX XXXX XXXX, I escalated the issue saying, I received a payment marked as goods and services, but I am not a seller, and I have no items or services to provide. I am not sure why the payment was sent this way, and I'm concerned

that it may have been a mistake or a scam. PayPal then sends me an automated message in terms of coming to a resolution for the issue. The claim requires a response within 10 days of escalating, but the only options available were to, 1. close the case by fully refunding, 2. send an offer by partially refunding, or 3. submit an evidence by providing the fulfillment info or refund info. I was then told by a family friend to not refund the money because that was a part of the scam, and to call PayPal support directly to resolve the issue.

Apparently, the scam works by having the buyer, a.k.a. the scammer, send money to someone's PayPal account. The money sits as pending, meaning the person it was sent to doesn't have access to it. The scammer files a claim saying the item was never received, or the merchant canceled the transaction. PayPal asks the seller, a.k.a. the victim, to refund it, even though technically they never had it in the first place, so it comes out of the seller 's bank account or balance, and if it is refunded from the consumer and the scammer files a chargeback with their bank account or card issuer, PayPal then charges the consumer, a.k.a. the victim for it, creating a double loss and sometimes even a negative balance. I did reach out to PayPal on XXXX XXXX XXXX, around
XXXX XXXX XXXX XXXX, but I honestly didn't receive any help. When I spoke with the representative and explained how I received these unsolicited funds, they told me that I would have to take the liability for the situation and refund the buyer their money back. I then explained the ongoing scam that is happening right now, and they still refused to reverse the charge on their end. I then requested to speak with the supervisor. I spoke with the supervisor by the name of XXXX XXXX basically told me the same thing that the call representative told me. He also refused to assist with reversing the payment from the false claim, and told me to refund the pending deposit. I asked XXXX, logically speaking, how do I refund something that I don't have, because the money only shows as pending and my PayPal balance is at {$0.00}. XXXX tried to assure me that all I would have to do would be to refund the pending deposit back, while simultaneously avoiding the questions about where the refunded money was actually coming from. PayPal knows the scam exists, and they're actively refusing to intervene. 

I am being targeted by a known scam in which someone sends money to a personal PayPal account, then falsely files a dispute claiming the item was never received or that the purchase was canceled. The payment was on hold from the moment that it hit my account, so I never actually received the money. I am now being told to refund funds that I never accessed, never spent, and never agreed to receive in exchange for any product or service. I am not a seller. There was no transaction between me and this buyer. There was no agreement for goods, services, or fulfillment of any kind. This is predatory loophole abuse, and PayPal is not only allowing it, but pressuring me to pay out of pocket to cover a fraudulent claim.

Company response to consumer: Closed with non-monetary relief