Be wary of pitfalls when using Web payment system PayPal

I have been using PayPal, the online payment system, for more than seven years. In the industry you hear all kinds of horror stories about every Web site, but my personal experience with PayPal has been rather calm.

Though I am not a terribly active eBay seller, I do use PayPal to sell signed copies of my new book, so I am using the Web site quite a bit to accept payments and print mailing labels.

Recently I did sell a PlayStation game console that developed some issues; mainly I placed it on eBay "as-is" for someone to use for parts or to repair.

Someone with zero feedback bought it and promptly paid with PayPal. I gave him good feedback on eBay and shipped the device.

I forgot about it for a few weeks until I sold a book and had to go into PayPal's site to print the mailing label. I noted on my list of transactions that my account had been debited and the PlayStation buyer now had a "reversal" near his name.

Turns out he had received my console and reversed the charge, something I didn't even know was possible. So he had the money and the console and positive feedback on eBay. A pretty good scam, I thought.

This will be easy to reverse. So I called PayPal. They told me the issue was my fault because I didn't respond to three e-mails they sent me. I checked my inbox and didn't find any e-mails ... PayPal then told me to appeal. "I am sure they will rule in your favor," the clerk told me.

I appealed and in 24 hours received a form letter that the issue was my fault and I was out both the money and the equipment.

This dance of annoyance went on for days and could fill a couple of columns, but I want to share with you what I have ultimately learned.

First of all, e-mails from PayPal are among the most "phished" in the world, meaning many "fake" ones come to your mailbox hoping you will log in to fake PayPal sites and give away your info. Windows Mail, the new mail program in Windows Vista, does a great job in filtering out what it thinks are "phishing" e-mails ... trouble is it also filtered out these real e-mails from PayPal. So I never got mine, as I get hundreds of spam mails a day to that folder.

Michael Oldenburg, a PayPal spokesman, told me that the vast majority of users on the site are happy with how PayPal works and many of those are focused on fraud prevention. When disputes are filed, he said, "they are usually worked out amicably during that process."