Because they can pull funds from your account and it'll be a hassle to get it back if not authorized. If you must, you tie it to a burner deposit account you can immediately sweep into our out of at your discretion. Sending funds? Sweep just enough in from another account. Receiving funds? Sweep out as soon as the funds land via ACH.
In most of Europe there is an "undo" button in online banking next to such debits to get the money back no questions asked (for a few weeks after the transaction), as per regulations. US banking should copy this maybe.
Yes I temporarily lost £350 via paypal and eBay. I sent some amateur radio equipment to someone via UPS tracked fully insured. Was signed and delivered. The buyer decided to return it immediately (suspicious) but I had no choice. I received the item back and it had a different serial number. The buyer had stolen a working radio and replaced it with a broken one. I contacted eBay and they told me to work it out with the buyer and they couldn't do anything. The buyer did not respond and opened a case against paypal. I provided evidence to paypal and paypal sided with the buyer because as far as they cared, both deliveries were signed for. Then because I didn't have any money in paypal they took it out of my account instead. The bank allowed this and it caused an unauthorised overdraft that cost me another £30. I closed that bank account and removed it from paypal immediately.
The buyer listed the radio I had sent him immediately on eBay for way above a reasonable price. I took screenshots and made a police report. Didn't hear anything back in a week. Considered small claims but I'd have to potentially travel to the claimant's area which is a good 3h drive each way at the time.
So the buyer/reseller was in Ipswich which is 15 miles or so from my brother-in-law so he went round there and recovered it for me. My brother-in-law is an ex army (Gulf War vet) 6'5" bouncer. The guy did not argue with him. He was told he could come and collect the broken one at his cost from Bristol. He never did.
I now run a mule account on ebay managed payments and do not accept paypal for anything and do not send anything until cash is cleared from the mule account into my main account.
Edit: also worth pointing out that ebay do not allow sellers to leave negative feedback for buyers so you can't even rate or report the buyer publicly. If you leave any comments in a positive feedback other than sucking dick, they will remove the feedback.
Sort-of happened to me. Someone sent me a large amount of money unsolicited. (5 figures.) This wasn't a scam, just a very dumb woman who can't remember her teenage son's email address even though I've haf the address longer than he's been alive. I logged-in and canceled the erroneous transfer to return her funds to her, but unbeknownst to me a small automatic charge for a domain name had gone through since I received the money. Ordinarily I keep $0 in my Paypal account and Paypal automatically deducts the funds from my bank account. But apparently when reversing a transaction instead of covering any shortfall from my bank automatically, they charged me a $100 insufficient funds fee and THEN deducted the fee + shortfall from my account. Absolutely infuriating.
That thing where recurring payments subtract from your PayPal balance before the assigned payment method is, as you put it, absolutely infuriating. It put me off of PayPal so hard.
This happened to me. An eBay buyer lied that the item I sold was never delivered. eBay sided in their favor, I was scammed by the buyer. My PayPal account went negative and bank account was debited of a few thousand dollars while a freshman in college. I hate PayPal.
Meanwhile, I've had a package marked as delivered that never actually showed up. eBay wouldn't help me. USPS wouldn't help me without info from the seller. Seller never gave me the correct info that I requested, nor followed up with USPS.
Seems random who gets screwed in these situations.
Honestly it boggles my mind that USPS can just mark something delivered with no actual evidence of delivery (signature, photograph etc.) and it's just taken as fact.
If you'd have played dirty and initiated a refund, then sent a box of nothing back, you'd have won in the end. All eBay cares about is delivery receipts. Not saying you should actually do that, but OTOH an experienced eBay seller knows how it will play out so if they could be convinced you were about to do it (without, you know, giving them evidence to send to eBay), it might light a fire under them to contact USPS and trace the delivery.
Happened to me in 2007, they took 750 GBP from my back account. I complained, it was never explained what happened. They paid the money back to me over a period of about 4 months. It was utterly ridiculous.
I vaguely recall this happening to a guy who scammed someone then got charge-backed after withdrawing from Paypal, he somehow got the bank to reverse his transaction to Paypal and kept the funds. I think this is why Paypal stop you from withdrawing/spending your incoming payment for a few weeks in some cases.
