Consumer complaint received 2025-12-18 00:00:00
Product: Money transfer, virtual currency, or money service — Mobile or digital wallet
Issue: Unauthorized transactions or other transaction problem — 
Company: Paypal Holdings, Inc
State: WA

Complaint narrative:
CFPB Complaint ( PayPal Unauthorized Transaction / Account Takeover ) Company : PayPal , Inc . 
Product : Digital wallet / peer-to-peer payment service Issue : Unauthorized transaction / funds transfer dispute Amount : {$1900.00} Date of transaction : XX/XX/year> What happened? 
On XX/XX/year>, my PayPal account was compromised and used to send an unauthorized Friends and Family payment in the amount of {$1900.00} to an unknown recipient ( XXXX XXXX, XXXX ). 

At approximately XXXX XXXX, I received two PayPal text messages asking whether I recognized this transaction. I immediately responded NO, indicating that I did not authorize the payment and that it was suspicious activity. 

Despite this explicit fraud confirmation, the transaction proceeded. Minutes later, PayPal notified me of a security issue and required me to reset my password and PIN, confirming that PayPal itself detected unauthorized access to my account. 

The payment was initiated during this compromise window and was funded directly from my linked bank account via ACH. I did not authorize this transfer. 

I immediately : Secured my PayPal account Reported the transaction as unauthorized through PayPal Contacted my bank and blocked ACH withdrawals from PayPal Filed a report with the FBIs XXXX XXXX XXXX XXXX XXXX XXXX XXXX  What went wrong PayPal denied my unauthorized transaction claim and subsequent appeal, stating that the transaction was authorized because it was consistent with my transaction history or involved valid credentials. 

This reasoning is flawed. Credential use does not equal authorization when an account has been taken over. PayPals own security actions ( fraud alerts, forced password and PIN reset ) demonstrate that unauthorized access occurred. 


PayPal has provided no evidence that : I approved the transaction after the fraud alert The transaction was authorized following my explicit NO response The transfer complied with the protections afforded to consumers under unauthorized electronic funds transfer standards Additionally, PayPals customer support process is inaccessible and inconsistent, with contradictory case statuses shown in the XXXX XXXX and automated denial emails sent even after a chat agent confirmed escalation for manual review. 

Why I am submitting this to CFPB : PayPal has denied responsibility for an unauthorized transaction that occurred during a documented account compromise and is attempting to shift the financial loss to me without meaningful investigation or transparency. 
This complaint is being submitted because PayPals internal dispute and appeal processes have failed to provide adequate consumer protection, human review, or clear explanation. 

Supporting documentation available upon request PayPal fraud alert text messages XXXX XXXX screenshots showing contradictory case statuses Chat transcript confirming appeal escalation XXXX complaint confirmation Bank documentation showing ACH block

Company response to consumer: Closed with monetary relief