Ask HN: A check from PayPal to me was stolen and cashed. What can I do?
PayPal issued the check on June 9th. On July 1st, I informed them that it still hasn't arrived, and that I needed to wait a minimum of 14 business days.
On July 5th, the check was fraudulently cashed by an unknown third party. However, we don't learn that until nearly a month later, because:
On July 9th, I contact them again. This time, they offer to stop payment on the check, to which I agree immediately. I am told to expect an email within 3-5 business days and that the rep will "personally" follow up. None of that ever happens.
On August 3rd, I contact them yet again and am finally told that the check has already been cashed. After some back and forth where they repeatedly insist that I check with my "friends and family" about the missing check, I am even provided with a copy of the canceled check (which does not even purport to have my signature on it -- only "pay to the order of <thief>" and the thief's signature). They try to wash their hands of the whole thing, but I insist that they merely inform their bank (Wells Fargo) about the fraud. I am told I need to fill out a so-called "Fraudulent Endorsement Claim Form," and that I will hear back about it in "less than 28 hours."
On August 5th, 48 hours later, I ask them about this form and am told "nothing to worry" (this phrase appears twice in the single message), they are working on it. On August 13th, I contact them again, and am now being told there is nothing more they will do, and that I need to contact the receiving bank (Capital One -- an entity I have no relationship with whatsoever). I reiterate that no, they need to inform their sending bank about the fraud; they just keep insisting that I should somehow "contact" Capital One, and refusing to budge on contacting Wells Fargo themselves.
To summarize, from my point of view, PayPal's negligence and incompetence has:
1) Allowed the theft to take place in the first place, by doing nothing when I reported the missing check 4 days before it was fraudulently cashed;
2) Subsequently allowed the theft to go undetected and unreported for a month, by both failing to notice that the check was already cashed when I inquired about it just 4 days after the fraud, and by failing -- despite emphatic promises to do so -- to follow up on this inquiry;
3) Even now continued to impede any investigation or resolution by refusing to take the most basic step of reporting the fraud to their sending bank, for two weeks and counting.
Does the hn hivemind have any clue what I can do next? I am at a loss. I have done two things so far: reported the mail theft to the US Postal Inspection Service via their web site, and reported the maddening details of PayPal's behavior to my state's Attorney General's office. I have not heard back (except for the automatic acknowledgements) from either one.
Although the theft and fraud in and of themselves are not PayPal's fault, am I crazy to think that I may be able to recover the funds directly from PayPal in light of the above, e.g. via small claims court?
56 comments
[ 3.1 ms ] story [ 117 ms ] thread1) The check was addressed to my USPS PO Box -- the kind inside an actual post office. It seems extremely unlikely that a random person could have accessed it; more likely, it was misdelivered to another PO Box customer at the same office.
2) The check appears to have been cashed via Capital One's mobile app -- "for mobile deposit only" is written in the endorsement field, along with the thief's name and signature (but not mine, not even a forged one).
Putting these two together, it seems not unlikely that the thief could have been easily found, if PayPal were not actively obstructing even the most basic steps toward an investigation.
They may also be inclined to help you to help dodge responsibility for misdirected mail.
Nevertheless I will try to talk to someone at the post office about it. I had covid all last week, so didn't want to do it then.
I also had a similar incident where I received a wrong shipment object from eBay and promptly returned it on same day. The seller issued a refund in a nonexistent PayPal account(I owned that e-mail too but PayPal never sent any notifications).
After 5 months of helpless back-n-forth trying to explain what happened(I didn't receive a refund yet), eBay simply decided that my account is fraudulent and I contact PayPal of whereabout of refund. Paypal told me, I can't be supported without sharing when and from which account the refund was issued and also blocked my PayPal account as suspicious behavior.
After 5 months of frustration, I decided to involve my lawyer and he just told me to write a new email to eBay and CC PayPal about whole incident and how if not action taken they'll expect a notice from my lawyer in 14 days.
Within 2hours of that e-mail, eBay sends me the most polite email with "heartfelt apologies" and shared the info about the refund details and PayPal suddenly offers me a nice email about how to claim the refund from nonexistent account. So suddenly my eBay and PayPal accounts are no longer blocked and a nice PayPal agent moves the refund to my account immediately and reassures me that they reported the incident "for investigation" so such inconvenience doesn't happen to anyone.
Sorry for the long rant, but these bigCo support are real cesspool of lazy support people who are too busy just copy lasting scripted responses and screwing insecure people. Sometimes you need to bring them to court.
<thief's signature>
MOBILE DEPOSIT ONLY
PAY TO THE ORDER OF
<thief's name>
You really should have done that immediately upon hearing it was cashed, definitely upon receiving the check images. Time is not on your side AIUI, and it's already such a small sum.
Fucking paypal.
I will try to report it to the local police as well, I suppose. I will stop by later today.
[1] Immediately, meaning immediately upon learning of the fraud, which, thanks to PayPal's negligence and incompetence, was about 4 weeks after the fraud actually occurred.
It demonstrates a willingness on your part to expose yourself to local law enforcement.
Having not done that, it implies you're possibly in on the fraud, and just shaking a money tree opportunistically to see if you can double your money. PayPal doesn't know you're not the person who cashed the check using a fake identity, or co-conspirator.
Involving the police doesn't guarantee a better outcome, but it improves the odds in my experience.
You really should have contacted them the moment you were informed of the fraud IMHO.
He also stated PayPal sent him the checks.
> After some back and forth (...) I am even provided with a copy of the canceled check
It sounded like PayPal provided the images to him.
But that didn't happen, so it's PayPal who's been defrauded and separately from that they still owe the funds to the account holder.
But IANAL also. Being USPS there are probably special laws about it.
Ethereum would probably be the worst choice of any major crypto, though. Still better than PayPal, of course, but even mostly obsolete Bitcoin would be preferable to Ethereum.
I said Ethereum, not ETH/ether. Ethereum is a blockchain where you could transact many tokens including stablecoins.
Unfortunately, it works fine in the browser -- if it didn't, I'd be $270 richer right now!
Checks are negotiable instruments governed by UCC Article 3, which has been adopted in all or nearly all states in the US. The drawer of a check, in this case Paypal, is normally liable for when an impostor presents the check or when their employees forge indorsements in the name of the payee. The thinking is that the drawer is best positioned to protect against that kind of fraud.
Depending on your state, you can probably take them to small claims court over this on the theory of a fraudulently indorsed instrument. You might also have a claim for breach of contract for failure to return the balance on the account, although you'd need to show how their failure to give you your money breaches a contract or statute, and that might be hard to do without a lawyer. The claim for fraudulent indorsement of the check is probably cleaner and less fact intensive.
Small claims is really accessible to non-lawyers, and PayPal probably won't even show up. You could get a default judgment and then, if you really wanted to, execute that judgment against their bank, which you can probably see from the copy of the cancelled check.
Again, none of this is legal advice! It's going to be time consuming and maybe not worth $270 but if you have the time and will, I'd say go for it.
It would be interesting to find out more about this. Somehow I thought you had to have some other account (checking, credit card) linked to your Paypal balance to even get started.
If you had it to do over, would you have tried some other way to get access to the money (such as transferring it to a friend's account, or using to to pay for something, etc)? This question is just a practical one; I agree that after paying $1.50 for an advertised service, your result should have been better.
Yes, in retrospect I should have sent the money to a friend and asked for a Zelle payment in return.
Verification will fail not only with VOIP numbers but prepaid plans including Metro.
That was a requirement for years
When I tried to attach a bank account, they wouldn't let me: they required a phone number to proceed, but refused to accept mine.
Also noteworthy for anyone else reading this, there are two ways to add a bank account: directly, by providing the routing and account numbers, and then confirming two small deposits, OR, the "easy way" where you log into your bank and allow API access.
If you choose the second option, read the fine print very carefully: they state that they will have access not only to transfer funds, but also e.g. see your full transaction history for the past 12 months.
Regardless, I tried both methods of adding the account, and they both failed with the same mobile phone number issue.
You had to have a bank account then to open it :)
Conversely, I’ve read other HN stories where big players will react to small claims court.
There's more to this part of the story:
roommate?
Ex?
Family member?
Or your mail gets stolen frequently. You've taken measures to prevent mail theft. Oh, you haven't...
In my crappy country the last time we used checks was like the early 2000s maybe, and then you had to put the recipient's bank account details on the check. So it's not possible for a 3rd party to cash it. And if it gets lost, no biggie, invalidate the original check number with your bank, and issue a new one.
2/ You can either write that $270 to school fees for using PayPal, or you can go to small claims and lose your mind during the process. I vote for the former.
In this situation, however, the sender is flat out refusing to take the simple step of informing their bank -- most recently about an hour ago.