If you have a PayPal account, read this.

Paypal has two modes of payment – a one-time payment and a subscription or pre-approved payment. Sneaky merchants might charge you for a subscription when you might be under the impression this is a one-time payment. They can keep charging you till you cancel.

How to find out if you are in fact a victim to this ‘scam’? Here’s how:

  1. Log in to your PayPal Account
  2. Click on Profile
  3. Go to My preapproved payments

You should be able to see a list of services you’ve subscribed to.

Be better informed and don’t be a victim of scams – legal or otherwise.

For more cool tips, consider subscribing to MoneyCone. No spam, I promise!

5 thoughts on “If you have a PayPal account, read this.

  1. If you have a PayPal account, read this. http://bte.tc/cQhU #RTW

  2. Yes this is something most people are not aware of. Make sure that you don’t subscribe if you are only doing a one time payment.

  3. James O. Whitlock says:

    I think that the most dangerous aspect of the PayPal preapproved payment facility is that, unlike all other approaches to claiming charges against your PayPal account, PayPal does not seek verification and authentication from the account holder before accepting the preapproved payment assertion from the merchant. I only just discovered this and the headline I would write is “Unapproved Preauthorizations for PayPal Charges – A Gaping Hole in PayPal Security” or “PayPal Accepts Merchant’s Word of Preauthorized Payments Without Customer Confirmation or Notification”, both of which accurately describe what I’m finding. I’m also finding the same poor customer service at PayPal (no email addresses, no incident numbers, just a Web form for walled-in communications that cannot be shared with those concerned, like the merchants involved) that others report, in spite of astonishingly good customer service from some of the larger merchants who also want to know why they’ve been given pre-approved payment authorizations when they claim they don’t ask for them.

    Until this point, I would have recommended PayPal to anyone, hands down, over any credit card I’ve ever used, especially if one uses the PayPal security dongle — I’ve never seen such good security for online transactions. But for this issue?? Good grief! My grandma could purchase a pillow from Macy’s only to find that Macy’s has been given (without permission from or notification to grandma) authorization to make unspecified future charges against her account. Her only defense appears to be checking the obscure “My preapproved payments” page at PayPal every day to make sure that merchants have not taken advantage of the hole — although she certainly could contest any charges that were actually made with that mechanism. Nonetheless, until we get this sorted out and until there’s better notification and verification (Did you really want to authorize Merchant-X to make future charges without your explicit authorization? If so, please login to PayPal now, with your security dongle, and confirm that.) I can no longer recommend PayPal to normal non-techie people, and certainly not to grandmothers.

    I think we need to kick up a HUGE public fuss about this until we get sensible and responsible corrective action from PayPal. If anyone else would like to join me in making this issue more visible, please contact me at jowhitlock AT gmail (you know what that should look like) and maybe we can band together on this and make enough noise to bring the PayPal folks out of their walled private garden.

    In my normal life, I’m a 40 year veteran of IT development, starting with OS and hardware development just after vacuum tubes but before integrated circuits. For the last 35+ years I’ve been AD of computing services for central computing at a large public research university, having built network engineering, microcomputer maintenance and a few other groups. In my entire career, I don’t think I’ve ever seen such a poor business practice coupled with such poor customer service from such an otherwise astonishingly good company. I sincerely hope we can “fix” this problem so I can go back to unhesitatingly recommending PayPal and their otherwise exceptionally good security.

    Does anyone have any good ideas for how we can accelerate the elevation of this matter into greater visibility in the blogosphere? I’m too old to know those methods but that seems to be the path to getting corporate attention these days.

    In the meantime, keep your grandma away from PayPal, even if you managed to teach her how to use a security dongle since it won’t help with this hole.

    Thanks & Best — Jim Whitlock

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