Is a PayPal Transaction Insured?
PayPal is one of the most popular merchant services on the Internet---it had 78 million users in 2009. Although PayPal handles billions in transactions, PayPal is not a bank. But it does offer protection for most of its transactions.
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FDIC
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Funds that PayPal touches as they pass through a PayPal transaction are held in a bank. Therefore, PayPal funds are covered under Federal Deposit Insurance Corporation (FDIC) insurance that also applies to a traditional bank account, except for PayPal's interest-bearing, money market accounts.
Types
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For transactions between users, PayPal offers protection for both the seller and buyer, according to PayPal's user agreement.
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Protection for Sellers
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PayPal offers to refund money to sellers when the buyer claims that he did not receive the item or the person who made payment had no authorization to use the PayPal account. In order to get this protection, the seller will need documentation to prove that he sent the item and verification of the buyer's info.
Protection for Buyers
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Buyers who want refunds can only get one if they did not receive the item or received a damaged product. However, PayPal only offers this protection to eBay users as of 2010.
Tips
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Buyers can tell if PayPal insures their transactions on eBay by looking for the buyer protection symbol. Also, any user who feels her transaction was fraudulent should contact PayPal as soon as possible.
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References
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- Photo Credit Image by Flickr.com, courtesy of Casey Serin
