May PayPal incoming ACH transfers to your bank be reversed?

[Modee]

Once money is ACHed into your PayPals PayPal may not reverse the funds out absent a claim of fraud.

So first of all, let's define our terminology. A REVERSAL, is when an ACH is sent in (and actually settles in your account) and then reversed. This is very rare, and again, PayPal may justify it only if they claim fraud. PayPal's definition of what is fraud is unfortunately quite broad. You will need tech support on this issue for further clarification.

And then, there are plain old ACH WITHDRAWALS that PayPal may initiate, such as, for example, to pay your Ebay fees, or recover a negative balance on your PayPal account.

So let's say, that as soon as the funds land you remove them anyway, and at some point PayPal, either to recover a negative balance in your PayPal account or collect Ebay fees, tries to withdraw funds from your bank account, or due to a claim of fraud, tries to reverse a previous ACH deposit.

Well, if the funds are not there, unless you are really strong with your bank and they don't mind extending you overdraft credit, in most cases nothing will happen at all and the withdrawal will not happen.

But in the case of a REVERSAL, the bank may be forced to create a negative balance on your account, which would, yes, create issues with them, because it would leave them holding the bag (and leave you owing your bank, which is worse than owing PayPal). And a reversal may be initiated even if the bank account at issue is no longer linked to your PayPal.

So, it all depends on how PayPal plays the game: withdrawal, well, if no funds, no foul on you at the bank. Reversal, not good - you could be left with a negative bank account. Keep in mind too - where fraud is involved, a reversal can FOLLOW your funds from bank to bank so long as the different accounts are under your dominion. EXAMPLE: PayPal ACHs $3000. to your Bank Account A, a personal account in the name of Individual A. Later, PayPal claims fraud and initiates a REVERSAL of the ACH. In the meantime, the funds from Bank Account A have been transferred, by say, check, to Bank Account B, a corporate account with Individual A as signatory, and further transferred to Bank Account C, a different corporate account also with Individual A as signatory.

PayPal will be able to, believe it or not, follow the funds all the way to Bank Account C and take the funds, IF they claim fraud and initiate a REVERSAL of the ACH. Believe me, this can happen (and HAS happened to a client of mine). So, don't ever think that your funds are safe if any sort of "fraud" is involved, and the funds remain in any bank account that can be traced back to the origin.

So, where reversals are concerned, PayPal is pretty ruthless with chasing the funds.

[3firelegs]

PP withdrawal to be rescinded

PP wanted the ACH deposit back... that's what happening to me now. PP sent my bank an affidavit, saying the PP account owner's name and the bank account owner's name are different!!!!
horrible.!!

[Modee]

Yes this happens, but rarely.

PayPal is calling it a REVERSAL obviously.

What bank is involved? Personal/premier or Business PayPal? Personal or corporate bank account?

[xmr1]

I found this post while searching google to help me with an issue I'm facing. When PayPal needs to claim fraud for an ACH reversal, does fraud on any end of the seller-paypal-buyer chain qualify?

I have a situation where I sold digital products to someone over PayPal and I later learned that this person uses multiple PayPal accounts to claim unauthorized use and dispute the payments.

I was able to transfer the money from PayPal to my bank via ACH today (still waiting for it to clear), but do I have any hope of stopping them from just reversing that transfer when the guy files his disputes?

edit: Just read about tech support being needed for further info. Unfortunately I wouldn't be able to pay unless it resolves in my favor and I'm in quite a rush to get this straight. Thanks anyway, the initial post was very helpful.

[Modee]

If you get into trouble, hire me for tech support, but otherwise, the facts are as outlined above. There is nothing you can do right now to change the outcome. That is not to say that the ACH will be reversed, but whether it will or not is now somewhat out of your hands.

There are measures you could have taken prior though, and to some extent the way you respond to the disputes will affect the outcome. Again, you'll need tech support to discuss this in greater detail, because some facts may not be posted in public where PayPal would just view them and take future countermeasures. Thanks.