Man angry at bank, PayPal after he doesn't have enough money in account: Money Matters

Q: I think your suggestion to use a second bank account with minimal funding for Verizon auto-pay is not good advice, at least how it is written. I tried this back in the 2000s with PayPal. Back then I was doing some selling over eBay.  So, I needed a bank account linked to my PayPal account in order to get proceeds out. I used a secondary checking account that was minimally funded.  

One time while making a purchase on eBay, I didn’t switch the payment type to credit card.  (PayPal always defaulted to checking account withdrawal in order to discourage credit card usage.)  There wasn’t enough money in the account to cover the cost and I got hit with a NSF fee from my bank.  The next day PayPal retried the withdrawal and I got hit by another NSF fee. 

I called the bank and they told me that there was nothing they could do. They said that PayPal would likely keep retrying every day and I would get hit by a NSF fee each time.  I went ahead and added funds to cover the purchase and the bank refunded the NSF fees.  But the lesson was learned.  Use of a minimally funded secondary checking account had only provided the illusion of protection.  In reality, it only served to add additional fees to the problem.

That being said, using a secondary account with automatic charge to a debit card might actually be OK.  Because current laws protect consumers from onerous overdraft fees, I think a charge that a debit card couldn’t cover would decline with no cost to the consumer.  I don’t believe that there is similar protection for ACH transfers.  Therefore, I think your answer would have been better if it specified using the debit card option in conjunction with the minimally funded checking account.

M.K., Wickliffe

A: The secondary bank account solution is only as good as the person using the account. If you don’t have much money in your account — whether a primary account or secondary account — it’s not going to go well if you use the account for a purchase that exceeds your balance.
The upside of using a secondary account for third parties is you’re not exposing your primary account where your direct deposits go, where your major bills are paid from and that has the majority of your money. If there’s fraud or a mistake on a secondary account, the exposure is minimized.

I offer the advice. I can’t deposit the money for you.

Q: I know people have written to you about problems with PayPal and fraud. Something I use with PayPal, not sure it’s even new, is the two-step authentication. Now, when I make a purchase using PayPal, they send a code to my phone.  Unless I enter that texted code, the purchase will not go through.  Nothing is foolproof, but this method makes me feel more secure.   I thought you’d appreciate knowing.

T.H., Cleveland

A: Great suggestion. I forgot to mention this before. With two-factor authentication, someone would need your PayPal password and possession of your cell phone. With this two-layered approach, you have to enter your normal password and a code that changes every time you sign in. You receive the code through a text message or an app on your smartphone.

You do have to sign up for this through PayPal:

Q: I got one of these I-was-robbed-in-another-country-please-help emails this week. I’ve pasted it below. Do these still work? Are there people who actually get tricked into sending money to someone they don’t know, or even someone who they think they know?

“My family and I came down here to Manila,Philippines on a short holiday unfortunately we got mugged at the hotel park where we stayed, all cash, wallet, credit card and phones were taken away,but luckily for us we still have our passport back in our hotel room…We’ve been to the embassy and the Police here but they’re not helping issues at all and our flight is leaving in a couple hours time from now but we’re having problems settling our hotel bills.
“We’re very sorry if we are inconveniencing you, but we have only very few people to run to now. We will be indeed very grateful if we can get a quick loan of ($1,550 USD) from you. this will enable us sort our hotel bills and get our sorry self back home. We will appreciate whatever you can afford in assisting us with via money gram. We promise to refund it in full as soon as we return. let us know if you can be of any assistance. Please, let us know soonest. Thanks so much.”
Thank you,

F.T., North Olmsted

A: Apparently, they must work on a handful of people who either are naive enough to send money outright, or provide enough personal information to the con-artist to set themselves up for identity theft or harassment. It’s just like the fake IRS calls that demand payment via iTunes cards, the sweepstakes winner calls for contests we didn’t enter, the emails from someone pretending to be from our bank or credit card and we must click to verify information, the work-at-home scams  . . . the list goes on.

We all have to be hyper-vigilant about our own affairs and those of our kids and elderly loved ones. 

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