Not upheld: Account administration errors complaint against PayPal UK Ltd

Decision detail

Summary

Mr S complained that PayPal took money from him and failed to credit payments, resulting in unexplained negative balances on his account. The ombudsman examined detailed transaction records and found that negative balances occurred because Mr S made payments without sufficient funds in his PayPal account, which PayPal 'fronted' as a standard feature of having a linked card or bank account. PayPal then attempted to recover these amounts from Mr S's linked bank account, and when unsuccessful, the account went into negative balance. The ombudsman found no evidence of missing payments or unauthorized direct debits, and concluded that PayPal acted fairly within its terms and conditions. Although PayPal took slightly longer than 8 weeks to respond to complaints, this caused no material impact as Mr S's negative balance had already been cleared. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that PayPal's system allowing payments to be 'fronted' when a linked card or bank account is attached is a legitimate function of the PayPal account, not a mistake. All negative balances resulted from Mr S spending more money than was available in his PayPal account, with PayPal correctly attempting to recover these amounts. The ombudsman examined specific dates Mr S cited and found no evidence that PayPal took money or failed to credit legitimate payments. While PayPal's complaint response times were slightly delayed beyond 8 weeks, this caused no material impact to Mr S as his negative balance had already been cleared. The £90 payment PayPal made was a goodwill gesture rather than an admission of error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website