Consumer complaint received 2025-06-17 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:
COMPLAINT SUMMARY PayPal failed to stop a fraudulent {$2500.00} transaction despite immediate notification while the transaction was still pending, and is now attempting to collect this amount from me after my bank reversed the fraud. I have screenshot evidence proving the transaction was pending when I called. 
WHAT HAPPENED XX/XX/XXXX - Virtual Kidnapping Fraud : XXXX XXXX : Received call from spoofed number ( appeared as my wife 's phone ) Criminals claimed to have kidnapped my wife XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX sent {$2500.00} via PayPal Immediately realized fraud and called PayPal while transaction showed " PENDING '' PayPal refused to stop the pending ACH, told me to " contact your bank '' Current Situation : XXXX XXXX reversed the fraudulent ACH transaction PayPal claims I owe them {$2500.00} They refuse to absorb the loss from their failure to act KEY EVIDENCE : SCREENSHOT OF PENDING STATUS I have screenshots clearly showing the transaction was in " PENDING '' status when I called PayPal. This proves : 1. The transaction had not cleared 2. PayPal had the technical ability to stop it 3. They chose not to protect a fraud victim 4. Their claim of inability was false or deceptive VIOLATIONS OF CONSUMER PROTECTION 1. Unfair Practice Refusing to stop a pending fraudulent transaction Claiming technical inability that doesn't exist Attempting to collect debts arising from reported fraud 2. Deceptive Practice Misleading consumers about transaction cancellation capabilities Advertising security features while refusing to use them False statements about ACH transaction processes 3. Abusive Practice Taking advantage of a crime victim in distress Using superior knowledge to mislead about options Debt collection attempts against fraud victims REGULATORY CONTEXT As of XX/XX/XXXX, PayPal falls under enhanced CFPB oversight for digital payment platforms. This case demonstrates why such oversight is necessary - payment platforms must not be allowed to : Enable fraud through inaction Mislead consumers about their rights Profit from their security failures SPECIFIC HARM Financial Harm : {$2500.00} loss to criminals ( preventable ) Potential credit damage from PayPal 's collection attempts Time and resources fighting unjust debt Emotional Harm : Revictimization by financial institution Stress from debt collection threats Loss of trust in financial systems REQUESTED RELIEF I request the CFPB : 1. Order PayPal to immediately cease all collection efforts related to this fraud 2. Investigate PayPal 's policies on stopping pending fraudulent transactions 3. Require PayPal to reimburse consumers when they fail to act on immediate fraud reports 4. Mandate clear disclosures about transaction cancellation capabilities 5. Impose penalties for deceptive practices regarding fraud protection ATTEMPTS TO RESOLVE Contacted PayPal customer service multiple times Submitted formal dispute through PayPal Resolution Center Sent complaint to PayPal executive escalation PayPal refused all requests for relief SUPPORTING DOCUMENTATION Attached/Available : 1. Screenshot showing " PENDING '' transaction status during my call to PayPal 2. Call logs proving immediate notification 3. PayPal 's denial communications 4. IC3 complaint reference number WHY CFPB ACTION IS CRITICAL Virtual kidnapping scams exploit human psychology through fear. When payment platforms like PayPal refuse to stop pending fraudulent transactions despite immediate notification, they become complicit in enabling these crimes. No fraud protection system is meaningful if companies won't use available tools to stop crime in progress. 
The screenshot evidence proves PayPal could have prevented this loss but chose not to. They should not be permitted to collect debts arising from their own security failures. 
CONCLUSION I am requesting CFPB intervention because : PayPal had the ability to stop this fraud but refused They are attempting to make me pay for their failure This practice harms all consumers who face sophisticated fraud Without regulatory action, this will continue happening to others Thank you for investigating this matter. I am available to provide any additional information needed.

Company response to consumer: Closed with explanation