Crimson Reflections

The other day I stumbled upon this petition posted by a page I follow on Facebook.

And at face value, it seems like a great thing. I mean, why should PayPal be supporting Milanoo? A company the BBB gives a grade of F to!

But what people who are signing this probably don’t realize is what PayPal verification is, or why it exists. First of all, to make a long story short, ebay was one of the initial investors in PayPal because they saw the potential for the service to be used for their auctions.  And in 2002, ebay bought PayPal and it is currently their major virtual payment processing window.

Now, when someone pays for an auction on ebay with a credit card, this cuts into ebay’s profits because they have to pay for the credit card processing fees. If someone pays with their bank account, it’s much cheaper for ebay. So it’s in ebay/PayPal’s best interest to prioritize bank payments over credit card ones.

Because PayPal allows anyone to sign up, and because PayPal manages returns and refunds, PayPal has a small problem. The easier they make it for new members to join, the easier it is for people to use PayPal to operate scams. So they want more info about the people who use the site, especially those who are moving large amounts of money (currently $10K USD, up from $2K USD) to mitigate their risks. But if they ask for too much info up front, people decide it’s too much of a hassle and don’t join. Out of this dilemma and the fact that bank transactions are cheaper, was born their verification system which both mitigates their risk and maximizes their profits.

So what is verification? In most countries it’s simply one of two things: A, connecting your PayPal to a valid bank account or B, opening a credit card with PayPal (see PayPal Verification FAQ). If you do either of those things successfully, PayPal has a relatively good idea of your name, country, and that you exist. It also knows that credit card customers’ credit score, which acts as an indication of the risk of doing business with that person. If someone connects a bank account, PayPal has a potential source of funding in the event that they process a return and you’ve already cleared out your PayPal account’s funds.

So, if you are shopping on ebay or buying from a small independent seller, this means that, probably the person is reasonably someone who exists. When you combine this with an ebay rating or reviews, it gives you a relative idea of how likely it is that you will actually get something mailed to you, and the person won’t just cut and run in under 45 days.

But that’s all. It doesn’t mean that the products the seller sends out are going to be as described. Or that the seller is the best seller ever. It doesn’t mean that the seller doesn’t use shady tactics to get out of issuing refunds. All it means is that this is someone who doesn’t currently have a lifetime ban from paypal AND that they can reasonably prove they are a human being.

Here is what PayPal says if you use their verification checker tool to look up Milanoo:

It’s important to note that everywhere PayPal mentions verification, they toss in this disclaimer that it has nothing to do with them endorsing the seller, and that it’s no indication of how trustworthy a business is. It’s on their Verification Checker page, it’s on their Verification FAQ page.

You know what PayPal doesn’t actually have on their site though? A verification badge image. But I do. Right above this. See, I went to google and searched for paypal verified, saved the image, and uploaded it to my blog. I could put it on an ebay listing. I could put it on a website. I can literally put this anywhere I want. Nothing is stopping anyone from saving one of these guys, putting it on their site, and claiming to be PayPal verified. It means literally nothing beyond the fact that the person knows how to save and upload an image.

And actually, if you go to PayPal’s Logos and Badges page their message is all about PayPal being safe and secure because PayPal is going to fix it if there is a problem. These yellow badges aren’t part of their current media package at all. Were they in the past? probably. There are a lot of variations on it, which is common for things like social media icons and other similar payment processing company badges, but they all are similar enough they it’s pretty safe to assume that this was part of a media package at some point. But, it isn’t anymore. Most likely because it looks like it’s from the 1990s, and it doesn’t have significant meaning to buyers in a post-ebay age.

So bottom line? PayPal doesn’t offer a Verification Badge, It doesn’t mean what the petition claims it does, and PayPal specifically says that in multiple places.

So, today’s fashion advice is always, always read reviews before buying from a new place. And as a bonus, here’s some advice from the business world: never sign something if you haven’t read it, and never sign something you don’t understand.