Totally agree and hence now avoid PayPal at all costs.

It seems they have this policy as it is cheaper to deal with an unhappy seller who has little/no protection legal or otherwise (especially if they have used thier PayPal balance for payment) and who will generally not chase them through the court system (in which case PayPal will argue it is a case between the buyer and seller, not PayPal and the seller), than an unhappy buyer who often has the backing of thier credit card company (or bank) to fight chargebacks on thier behalf and in most cases win.

As a vendor/retailer, especially if you have your own ecommerce store or sell high value items, be VERY wary of PayPal and only ever complete transactions if all buyer details match and protections are in place (buyers are verified and items sent only to card billing address).

Posted something similar a while back, http://news.ycombinator.com/item?id=361361, and it is sad to see little has changed.

Ditto. I just put up a variation on this response at the blog itself:

This is a great response and encapsulates many of the issues I have with PayPal. I would add to it that enough people have been burned by PayPal to give it a lousy reputation; you can't write a post about the company without people chiming in with horror stories. My family's business -- see www.seliger.com -- is the kind of company Paypal would presumably want to use their service, but after I had a bad experience with them, I never would.

The first comment on http://news.ycombinator.com/item?id=626518 Hacker News answers, "Because they appear, from many people's perspectives, to be nothing but scam artists?" With this kind of reputation, why _would_ people use Paypal.

The way this VC's own blog hints at how he may have overlooked PayPay's historically bad reputation. NoScript reports a total of FOURTEEN other websites embedding images, scripts and whatnot into his page; half of which are user trackers of some sort or another. In other words, this guy is socially promiscuous and hasn't had "his heart broken" yet with regards to being scammed or exploited online. (Or, if he has, he's not aware of it yet...)

i've been scammed and exploited online. it's one of the hazards of being online. i run all these scripts because i want to try out a lot of new things. i am adding and taking off stuff all the time.

I read somewhere that before acquisition, they were losing something like $1m/day in fraud? Wasn't it in founders at work?

That level of fraud and cases like the one you highlight seems like a really big problem that isn't easily solved.

Max Levchin in Cringely's interview series said calmly that they burned through $100 million TO (not incidental) solve the problem. Anyone who wants the same level of fraud protection is looking at a cost of $100 million. However, I think the credit card companies have shrunk down that barrier to entry by making their own anti-fraud systems.

If the guy refused delivery, wouldn't the motherboard have been returned to you?

The motherboard was returned to me. That's why I refunded him his money.

But then, after he refused delivery, he claimed I'd never even sent the motherboard, and filed a claim with Paypal -- despite the fact that I had a tracking number, proof of it getting to his location, and then online indication that "recipient refused delivery" or whatever it said (don't recall exactly -- this was five years ago).

After that, he never responded to my emails, and just disappeared completely. He was obviously in it to scam someone -- likely many people -- and it worked quite nicely. Quite clever, actually.

Wouldn't the solution be not to refund the money yourself, but take the Paypal route from the outset?

Knowing what I know now, that would make sense. Hindsight is always 20/20, and I was more trusting then than I am now -- which still doesn't explain why Paypal gave him money from my account when they could have clearly seen (and in fact I faxed to them multiple times, and emailed them dozens of times) that I'd already refunded the guy the money for the motherboard he said he no longer wanted. If I knew I was going to get scammed, of course I would've approached it much differently.

Yet another reason to be cautious when using PayPal: http://news.ycombinator.com/item?id=611346

I have heard one entrepreneur who runs 'company x' say that the day I hear about the site 'companyxsucks.com' I've made it!