Upheld: Unfair refusal of buyer protection claims; retrospective removal of buyer protection eligibility complaint against PayPal UK Ltd

Decision detail

Summary

Mr H purchased items from overseas sellers through PayPal but received nothing. He raised multiple buyer protection claims, some of which PayPal refunded. PayPal then discovered Mr H held multiple PayPal accounts in breach of its terms, permanently limited his account, and retrospectively removed his buyer protection eligibility, refusing to refund remaining claims. The ombudsman upheld Mr H's complaint, finding that while PayPal was entitled to limit the account, it was unfair to retrospectively invalidate buyer protection claims made before the limitation when the account was in good standing at the time. The ombudsman rejected PayPal's collusion allegations and ordered PayPal to refund the outstanding buyer protection claims on the account complained about.

The Ombudsman's reasoning

Although PayPal's terms permit removal of buyer protection even retrospectively, the ombudsman considered whether this was applied fairly in the specific circumstances. The ombudsman found that Mr H's account was not limited when he made the payments or raised the claims, so retrospectively deciding the account was not in good order was unfair. While Mr H breached the terms by holding multiple accounts, this did not invalidate legitimate buyer protection claims for purchases made before the account limitation. The ombudsman rejected PayPal's collusion theory, finding the pattern of quick withdrawals was consistent with fraudulent sellers acting independently. The ombudsman concluded PayPal should have considered the claims on their merits rather than refusing them based on the breach.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website