Ask HN: A check from PayPal to me was stolen and cashed. What can I do?
So, I had the misfortune of having money in my PayPal balance. Their broken website refuses to let me add a bank account for withdrawal, so I opted to receive a check by mail, and even paid a $1.50 for this service.
PayPal issued the check on June 9th. On July 1st, I informed them that it still hasn't arrived, and that I needed to wait a minimum of 14 business days.
On July 5th, the check was fraudulently cashed by an unknown third party. However, we don't learn that until nearly a month later, because:
On July 9th, I contact them again. This time, they offer to stop payment on the check, to which I agree immediately. I am told to expect an email within 3-5 business days and that the rep will "personally" follow up. None of that ever happens.
On August 3rd, I contact them yet again and am finally told that the check has already been cashed. After some back and forth where they repeatedly insist that I check with my "friends and family" about the missing check, I am even provided with a copy of the canceled check (which does not even purport to have my signature on it -- only "pay to the order of <thief>" and the thief's signature). They try to wash their hands of the whole thing, but I insist that they merely inform their bank (Wells Fargo) about the fraud. I am told I need to fill out a so-called "Fraudulent Endorsement Claim Form," and that I will hear back about it in "less than 28 hours."
On August 5th, 48 hours later, I ask them about this form and am told "nothing to worry" (this phrase appears twice in the single message), they are working on it. On August 13th, I contact them again, and am now being told there is nothing more they will do, and that I need to contact the receiving bank (Capital One -- an entity I have no relationship with whatsoever). I reiterate that no, they need to inform their sending bank about the fraud; they just keep insisting that I should somehow "contact" Capital One, and refusing to budge on contacting Wells Fargo themselves.
To summarize, from my point of view, PayPal's negligence and incompetence has:
1) Allowed the theft to take place in the first place, by doing nothing when I reported the missing check 4 days before it was fraudulently cashed;
2) Subsequently allowed the theft to go undetected and unreported for a month, by both failing to notice that the check was already cashed when I inquired about it just 4 days after the fraud, and by failing -- despite emphatic promises to do so -- to follow up on this inquiry;
3) Even now continued to impede any investigation or resolution by refusing to take the most basic step of reporting the fraud to their sending bank, for two weeks and counting.
Does the hn hivemind have any clue what I can do next? I am at a loss. I have done two things so far: reported the mail theft to the US Postal Inspection Service via their web site, and reported the maddening details of PayPal's behavior to my state's Attorney General's office. I have not heard back (except for the automatic acknowledgements) from either one.
Although the theft and fraud in and of themselves are not PayPal's fault, am I crazy to think that I may be able to recover the funds directly from PayPal in light of the above, e.g. via small claims court? None of this is legal advice, but I'm a student of negotiable instruments like checks and the history they have in our system of law and finance. Checks are negotiable instruments governed by UCC Article 3, which has been adopted in all or nearly all states in the US. The drawer of a check, in this case Paypal, is normally liable for when an impostor presents the check or when their employees forge indorsements in the name of the payee. The thinking is that the drawer is best positioned to protect against that kind of fraud. Depending on your state, you can probably take them to small claims court over this on the theory of a fraudulently indorsed instrument. You might also have a claim for breach of contract for failure to return the balance on the account, although you'd need to show how their failure to give you your money breaches a contract or statute, and that might be hard to do without a lawyer. The claim for fraudulent indorsement of the check is probably cleaner and less fact intensive. Small claims is really accessible to non-lawyers, and PayPal probably won't even show up. You could get a default judgment and then, if you really wanted to, execute that judgment against their bank, which you can probably see from the copy of the cancelled check. Again, none of this is legal advice! It's going to be time consuming and maybe not worth $270 but if you have the time and will, I'd say go for it. If you owed PayPal money they wouldn't accept that you wrote a check to them and someone else cashed it as sufficient payment. I don't "accept" it either, but I also don't know what I can do about it, hence my question. Small claims court. Forgot to note two other interesting facts: 1) The check was addressed to my USPS PO Box -- the kind inside an actual post office. It seems extremely unlikely that a random person could have accessed it; more likely, it was misdelivered to another PO Box customer at the same office. 2) The check appears to have been cashed via Capital One's mobile app -- "for mobile deposit only" is written in the endorsement field, along with the thief's name and signature (but not mine, not even a forged one). Putting these two together, it seems not unlikely that the thief could have been easily found, if PayPal were not actively obstructing even the most basic steps toward an investigation. If you have a name, go to the post office and tell them your story. They may help you, especially if the name is also a PO Box user, as it is a violation of postal law to open misdelivered mail, let alone cash a check fraudulently. They may also be inclined to help you to help dodge responsibility for misdirected mail. The name is not really legible, at least not to me: Here is the back of the check in question: https://i.imgur.com/ICBydCo.png Nevertheless I will try to talk to someone at the post office about it. I had covid all last week, so didn't want to do it then. >Their broken website refuses to let me add a bank account for withdrawal, It would be interesting to find out more about this. Somehow I thought you had to have some other account (checking, credit card) linked to your Paypal balance to even get started. If you had it to do over, would you have tried some other way to get access to the money (such as transferring it to a friend's account, or using to to pay for something, etc)? This question is just a practical one; I agree that after paying $1.50 for an advertised service, your result should have been better. I had only had credit cards linked to PayPal before, never a checking account. There is no option to transfer the balance to a credit card. When I tried adding a checking account it insisted I provide a mobile number, which I did, and it refused to accept, telling me to just "try a different number," lol. This is an actual cell phone number from a US carrier (Mint Mobile). Yes, in retrospect I should have sent the money to a friend and asked for a Zelle payment in return. What a lot of companies (pp included) don't tell you is that when they use a phone as verification many only allow them from the Big 4. Tmobile Verizon ATT Sprint. Verification will fail not only with VOIP numbers but prepaid plans including Metro. 1/ I find it personally shocking that it's still OK to use checks in 2023, and doubly shocking that it's possible for a random 3rd party to cash said check without any, as you say, checks and balances in place in order to verify the identity of the cashee, and to verify that they are indeed the intended recipient of the value of the check. If it's this easy to cash a check by a 3rd party, why don't we forgo all the pretense, and send each other regular cash by mail? What's the difference? In my crappy country the last time we used checks was like the early 2000s maybe, and then you had to put the recipient's bank account details on the check. So it's not possible for a 3rd party to cash it. And if it gets lost, no biggie, invalidate the original check number with your bank, and issue a new one. 2/ You can either write that $270 to school fees for using PayPal, or you can go to small claims and lose your mind during the process. I vote for the former. The difference between sending cash and a check is that when a check gets stolen, the sender can report that to their sending bank, which will contact the receiving bank, and sort it out. If it is reported and dealt with in a timely manner, this usually results in the funds transfer being reversed. In this situation, however, the sender is flat out refusing to take the simple step of informing their bank -- most recently about an hour ago. USA is using cheques a lot. I believe it is some kind of combination of regulatory capture which resulted in ancient and inflexible banking system. I think it's because the alternatives all suck. One is PayPal. Another is Venmo, which is owned by PayPal. Yet another is Zelle, which has its own problems I can rant about if you like. IANAL, but I don't think small claims court against PayPal would be end in a judgment against them. Though they might just cave and give you the money to avoid dealing with it. It seems to me that PayPal's responsibility ended when they delivered the check to the correct recipient, and that's what they paid for with the $1.50 fee. But that didn't happen, so it's PayPal who's been defrauded and separately from that they still owe the funds to the account holder. But IANAL also. Being USPS there are probably special laws about it. No, the payee on the front of the check is me. The endorsement field contains the following, handwritten: <thief's signature> MOBILE DEPOSIT ONLY PAY TO THE ORDER OF <thief's name> Well, if it's so clearly a case of check fraud and you have the images, at least report it to the police providing them the images, if you haven't already. You really should have done that immediately upon hearing it was cashed, definitely upon receiving the check images. Time is not on your side AIUI, and it's already such a small sum. Fucking paypal. My understanding is that the US Postal Inspection Service is the only police agency with jurisdiction over this. I did report it via their website immediately[1], which said that there would be a later opportunity to provide documentation if and when a criminal investigation were actually opened -- but that did not happen. I will try to report it to the local police as well, I suppose. I will stop by later today. [1] Immediately, meaning immediately upon learning of the fraud, which, thanks to PayPal's negligence and incompetence, was about 4 weeks after the fraud actually occurred. The thing is, many institutions won't take you seriously until the police are involved and there's at least a case number. It demonstrates a willingness on your part to expose yourself to local law enforcement. Having not done that, it implies you're possibly in on the fraud, and just shaking a money tree opportunistically to see if you can double your money. PayPal doesn't know you're not the person who cashed the check using a fake identity, or co-conspirator. Involving the police doesn't guarantee a better outcome, but it improves the odds in my experience. You really should have contacted them the moment you were informed of the fraud IMHO. The USPIS is police, and I did contact them immediately. They did not seem to take any interest, however. I disbelieve that capital one gave this dude someone else’s check images without any court order. There is absolutely no way they walked into a bank with and came out with the images. > I disbelieve that capital one gave this dude someone else’s check images without any court order. There is absolutely no way they walked into a bank with and came out with the images. It sounded like PayPal provided the images to him. Whoever writes the checks (PayPal in this case) can get images of the cashed checks easily. He also stated PayPal sent him the checks. > After some back and forth (...) I am even provided with a copy of the canceled check PayPal provided me with an electronic copy of the canceled check, as per my OP. I'd suggest you file a claim in small business court. It will get resolved very quickly. This is the best approach moving forward. I also had a similar incident where I received a wrong shipment object from eBay and promptly returned it on same day. The seller issued a refund in a nonexistent PayPal account(I owned that e-mail too but PayPal never sent any notifications). After 5 months of helpless back-n-forth trying to explain what happened(I didn't receive a refund yet), eBay simply decided that my account is fraudulent and I contact PayPal of whereabout of refund. Paypal told me, I can't be supported without sharing when and from which account the refund was issued and also blocked my PayPal account as suspicious behavior. After 5 months of frustration, I decided to involve my lawyer and he just told me to write a new email to eBay and CC PayPal about whole incident and how if not action taken they'll expect a notice from my lawyer in 14 days. Within 2hours of that e-mail, eBay sends me the most polite email with "heartfelt apologies" and shared the info about the refund details and PayPal suddenly offers me a nice email about how to claim the refund from nonexistent account. So suddenly my eBay and PayPal accounts are no longer blocked and a nice PayPal agent moves the refund to my account immediately and reassures me that they reported the incident "for investigation" so such inconvenience doesn't happen to anyone. Sorry for the long rant, but these bigCo support are real cesspool of lazy support people who are too busy just copy lasting scripted responses and screwing insecure people. Sometimes you need to bring them to court. Fuck yeah! "the check was fraudulently cashed by an unknown third party." There's more to this part of the story: roommate? Ex? Family member? Or your mail gets stolen frequently. You've taken measures to prevent mail theft. Oh, you haven't... The measures I have taken to prevent mail theft include renting an official USPS PO Box. That is where the check was mailed to. Nothing. Paypal is corrupt as hell and will gladly steal people's money without reason or chance to respond. How did you get a PayPal account in the first place without having a bank account attached? That was a requirement for years It's never been a requirement AFAIK. I've had this PayPal account for 20 years and have never attached a bank account, only credit cards. When I tried to attach a bank account, they wouldn't let me: they required a phone number to proceed, but refused to accept mine. Also noteworthy for anyone else reading this, there are two ways to add a bank account: directly, by providing the routing and account numbers, and then confirming two small deposits, OR, the "easy way" where you log into your bank and allow API access. If you choose the second option, read the fine print very carefully: they state that they will have access not only to transfer funds, but also e.g. see your full transaction history for the past 12 months. Regardless, I tried both methods of adding the account, and they both failed with the same mobile phone number issue. I've likewise had a PayPal account since before they IPOd (pretty sure I opened it in 99, but it might have been '00 - definitely pre-eBay acquisition) You had to have a bank account then to open it :) I mean, I have a bank account, of course, I just never wanted to give it to PayPal. Finally, after decades, I decided to semi-cave and open a new account just for them. Then they don't let me add it, because my phone number isn't good enough. The check becomes the only option, and then this happens. Try filing a CFPB complaint and maybe your state attorney general. Thanks, I had already filed with the AG (to no avail, at least so far) but didn't think of the CFPB, I will do that now. Slightly off-topic: has PayPal become unusable in the browser for anyone else? When using Firefox, no VPN, no ad blocking, I get some nondescript error that bounces me from the login screen. My IP must be on some list, but it is really annoying. I use Firefox on Linux with uBlock Origin, as well as Enhanced Tracking Protection. Unfortunately, it works fine in the browser -- if it didn't, I'd be $270 richer right now!
So it was pre-filled by PayPal as remitted to <thief>, and not you? And you have the image proof of this? > "pay to the order of <thief>"
