Upheld: Account administration errors complaint against PayPal UK Ltd

Decision detail

Summary

Mr Y complained that PayPal overcharged his credit card by £10 when making a £13.77 purchase, expecting only £3.77 to be charged to his card with the remainder from his PayPal balance. A £10 pending transaction appeared on his credit card, which he believed was an actual charge. PayPal explained the £10 was a temporary hold for card validation that expired within days, and transaction records confirmed the purchase was correctly split (£3.77 to credit card, £10 from PayPal balance). After Mr Y returned the items, the refund was properly processed and PayPal provided £20 in total goodwill credits. The Ombudsman upheld the complaint and ordered PayPal to pay the additional £10 goodwill credit already offered, finding this fair compensation for the confusion caused.

The Ombudsman's reasoning

The Ombudsman found that PayPal did not actually charge the £10 to the credit card; the pending transaction was a temporary hold for card validation that expired within days, which is standard practice. PayPal's transaction records showed the purchase was correctly split between the credit card (£3.77) and PayPal balance (£10). The refund was properly processed and Mr Y received the £10 refund plus an initial £10 goodwill credit. While the Ombudsman acknowledged the confusion caused by the pending transaction, the additional £10 goodwill credit offered by PayPal was deemed fair compensation, and no further award was warranted as PayPal's failings were not significant enough.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website