PayPal is a joke when it comes to addressing fraud, it's completely hit or miss on both sides. My younger brother got scammed out of like $100 trying to order a chair from a furniture website that turned out to be some guy in China scamming people. The "online store" only accepts Paypal and when checking out, instead of the usual PayPal process is directs you to a page that's already completely filled out to send the correct amount as a personal friends and family transaction. He realized something was up literally minutes after completing the transaction when he saw that the email confirmation listed a random Chinese email address and saw it sent as a friends and family transaction and immediately called PayPal support and they basically told him to get bent and refused to reverse the transaction, because they don't offer any guarantees or protection on personal transactions, completely refusing to address the fact that this guy is scamming people using their platform.

He had to do a chargeback with his credit card company and got his money back that way, but of course PayPal banned his account in response.

At least going by your retelling, I'll say PayPal was right to refuse reversal.

Mindlessly clicking through OK buttons is end-user negligence, not fraud. Your brother presumably had multiple opportunities to notice something was not okay before completely signing off on it. It's tantamount to signing a contract without so much as even glancing through the terms, then turning around saying you never meant to sign it.

Fraud protection does not absolve someone from being a responsible adult.

Some arbitrary policy they happen to have about personal transfers doesn't absolve them of the responsibility of policing their platform to ensure it's not being utilized by scammers, and shutting them down when they find them, or when they are EXPLICITLY REPORTED TO THEM. That's what I was referring to when I said they're a joke about addressing fraud. The website is still up, it still directs you to the same form to send money to the same exact account. I highly doubt my brother was the first person to call them and complain about this person, but their account is still active and apparently in good standing. What a fucking joke. It would take them literally 5 minutes of investigation to go to the website, see how it presents itself as a retail store, and to go through the checkout process that eventually leads to a page for a personal transfer, which is clearly not correct, and no goods are ever delivered, and clearly it's entirely meant to fraudulently separate non-savvy buyers from their money. But they clearly have zero interest in doing any of that, since they still get to collect their percentage on every transaction sent to him, they couldn't care less.

This seems like textbook fraud to me. It doesn't matter if there are hints here and there, if the "merchant" is directing you through a flow that will direct funds somewhere other than you intend (or other than they claim), it's fraud.

See: https://www.law.cornell.edu/uscode/text/18/1341

Fraud detection is difficult when there's no uniformity in experience.

PayPal's "redirect the user through our services" flows provide more uniformity than some random site with a hosted-- or even baked-into-the-shopping-cart-- credit card form-- but I wouldn't say it's uniform enough that people would be able to reliably identify something outside the norm.

Just think of currency-- could you spot a decent quality counterfeit? Particularly if you're dealing with a more edge-case design that you don't encounter every day (say, a Series 1934 $50 note)?

TBF, is there any way to do fraud protection on personal transfers ? Imagine you sent 100 bucks to your cousin and 10 min later requested your bank to get your money back because you sent it to the wrong cousin.

I hate to say this, but there will always be loopholes as long as scamming js lucrative enough.

>TBF, is there any way to do fraud protection on personal transfers ? Imagine you sent 100 bucks to your cousin and 10 min later requested your bank to get your money back because you sent it to the wrong cousin.

When it's easily verifiable that actual fraud has taken place I would say yes. It would've taken them literally 5 minutes of their time to investigate by going to the website, seeing it presents itself as a retail furniture store, and to go through the checkout process and seeing that it ends up at a form for a personal transfer, and that no goods ever end up being delivered, all of which clearly indicate the transaction is 100% intended to be fraudulent by the supposed seller.

Playing PayPal'd advocate, that's a lot similar to home made "give me money to finish this personal project" and you're expecting a faceless service to go spend 5 min on one of the hundreds of thousands of claims they receive every day. Including of course the ones where you actually sent the money to your friend who already spent it out of PayPal, and PayPal has to front the money for your chargeback.

Fraud management is hard. Most actors in the domain are also jerks, but that's orthogonal to it being hard I think.

Lower fees matter most for low-margin businesses. If your business has 5% margins, then taking your payment processing fees from 3% to 1% is transformative for your profits.

The reality is that most low-margin B2C businesses are brick and mortar service-based businesses, such as restaurants. And, therein lies the problem for Paypal and for crypto payments: The low-margin businesses that care about CC fees are not early-adopters of payment networks. Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider.

Yes. There is a huge divide between online and offline.

For online your choice is to poney up the fee or not get paid at all. You’ll also probably target a wider audience and region restricted payment networks become less viable.

Offline credit cards processing currently has super low fees, but it’s also a field where there is already way more competition than VISA/Mastercard, in particular there will be national card networks, and prepaid NFC that rise up as an alternative.

> Restaurants can't conceivably introduce a non-traditional payment network as their exclusive provider.

In my experience they do. They always have cash as the fallback, so they can pick and choose more freely than other businesses (think of all the restaurants that won’t accept anything other than cash)

Yeah, but the danger is that cash-only businesses will have smaller check sizes, and at the end of the day that probably translates to less in alcohol sales. So, if sales decreases because of unfavorable payment methods (such as cash), then it's the high-margin item (alcohol) that probably gets affected most.

If we’re pondering about how to run a restaurant, I think that’s a complicated and nuanced discussion that will have different ins and out depending on what restaurant, where, serving who.

For instance a lot of lunch focused restaurants won’t serve much alcohol if at all. High volume low check size restaurants also abound. Do we also call cafes “restaurant” if they serve hot food at the table ? etc.

A tourism oriented restaurant will go so far as to accept American Express and swallow the fees, while a local restaurant can refuse anything other than cash and the local prepaid card, it really varies a lot.

PS: we might be missing context on if we’re only taking USA, as the article is about that, or on more global range, which I think is more interesting on the Visa/Mastercad discussion.