How to Avoid PayPal eCheck Problems

Recently, a few Flippa sellers have been concerned about buyers using PayPal eChecks to pay for websites.

We wanted to let you know a bit more about the payment service, and show you how problems may arise so you can avoid it yourself.

What Are PayPal eChecks?

PayPal’s eCheck option allows its users to make payments direct from their bank accounts to other people’s PayPal accounts.

When someone pays you with an eCheck, the money doesn’t come off their credit card: it comes from a bank account they nominate.

The money’s paid into your PayPal account, but, like a normal check, it takes a few days to clear—up to 5 business days, according to the PayPal website.

So What’s the Problem?

A person who makes a payment with an eCheck can cancel that payment at any time before the money appears in your account.

That gives buyers a window of up to 5 working days to stop their payment to you.

As much as we’d hope otherwise, its conceivable that website sellers could end transferring their assets—domains, sites, and so on—to the buyer before the money has arrived in their PayPal account.

Once they have control of the assets, the seller could cancel the eCheck, leaving the seller without their property—or payment for it.

Don’t get caught

The simplest way to avoid eCheck scams is not to use this service.

Flippa offers payment by PayPal, credit card, and escrow. These payment methods are automatic—there’s no real time lag in which the buyer can recant.

With eChecks, that window has already proven to be a fatal flaw for some sellers.

When we spoke to PayPal, the customer service rep told us there was no way that a personal user could decline an eCheck payment on their PayPal account for items sold through Flippa (we’ve since noticed that it seems some Paypal accounts can be configured to not accept eChecks – more below).

There are steps you can take to avoid being scammed via eCheck, though:

  1. Try to Configure PayPal to block eCheck payments: Profile –> My selling tools (in left nav) –> Block Payments (in “Getting paid and managing my risk” –> Block eChecks. As above, this option only seems to be available to some accounts.
  2. Be clear about the payment methods you’ll agree to within your Flippa listing. If you won’t accept payment through certain methods, say so.
  3. Clarify and agree on the payment method with the buyer. Make that payment method a condition of the sale.
  4. Be clear that you will not transfer any assets to the buyer until their payment has cleared and the money’s in your account—whatever payment method you agree on.

We recommend that website buyers and sellers on Flippa use escrow services — one of the safest payment methods around. Also, we pass on the affiliate payments we receive from escrow.com to you as a discount, so you get the service for less.

Have you had any trouble using eChecks at Flippa, or elsewhere online? Tell us what happened in the comments.

  • https://flippa.com/users/410535 SmokinBull

    I have not had any trouble with echecks, because I don’t transfer unless the money has cleared in my account, but I have had problems with fraud payments to my paypal, and the worst part about it is, you get paid, and start spending the money on your paypal, or transfer to your bank, and then paypal limits your account and opens disputes for EVERY payment you sent, using them funds. That is what people also need to pay attention to. I have decided I am not going to accept Paypal directly no more. I will use 2Checkout, which they do fraud checks and hold the money to make sure it clears. So in the end, the user can pay via credit card and paypal through 2Checkout, and I think that seems to be more secure. I also do not accept any bids from people who just signed up to Flippa and bid on my auction. That raises a red flag and normally wont accept them.

  • http://www.electroniccigaretteonline.org/electronic-cigarettes-coupon-codes Matt

    I’m not selling anything with pending eChecks. The user better add a credit/check card for instant processing. We eChecks, the person can cancel anytime. I don’t like paypal for transactions anyways

  • https://flippa.com/users/349336 justbar221

    Thank you for the info, i updated my PayPal account to block any payment made by e-check through PayPal.

  • https://flippa.com/users/120147 lostartist

    I’ve received legit e-check payments in the past. Just make sure that you wait for the e-check to clear before you transfer the website to the buyer.

  • https://flippa.com/users/420093 A.OBrien

    Not once did I receive an eCheck that went through, every single one bounced.

    Fortunately I did not transfer anything and just waited. After 5 days the eChecks tend to bounce.
    It’s just very time consuming. It takes a minimum of 3 days for your auction to end. Then 5 days to wait for the eCheck to bounce then another 3 days for the Flippa dispute to finalize and then another 3 days for the new auction to end. 14 days lost with each bounced eCheck.

    I told Flippa Support about this 2 months ago on how to block it in PayPal. I’m glad Flippa finally turned it into an article and has been featured in the latest newsletter.
    Thank you.

  • Michael B

    PayPal is a good payment service. I process hundreds of transactions and thousands of dollars through it every month. Yes, if a buyer initiates a dispute (which does happen, because they sometimes are a bit absent minded) PayPal debits your account for up to 75 days. This is the worst part of PayPal, but I’ve always gotten the money back, after a bit of a hassle. It’s still a valuable, useful and cost-effective service. “The simplest way to avoid eCheck scams” is to wait until the money clears.

  • https://flippa.com/users/412604 fena3000

    Thank you for the information. It is good to know these details.

  • https://flippa.com/users/469162 cede546

    Hi Andrew, In this article you recommend people to use Escrow.com services when they sale or buy a website from flippa.com. When I googled “escrow.com scam” I came accross a lot of sites warning people of the so many escrow.com frauds.

    One of them is on this forum called “Escrow-Fraud.com Forums” (http://forum.escrow-fraud.com/viewtopic.php?t=1671). This is scaring. Can you please let us know if there is an alternative and safer way of buying/selling websites on flippa.com? I am sure that I am not the only one concerned about this problem. Thank you in anticipation.

    • http://Flippa.com Ophelie

      Hi cede546,

      The forum post you link to is from January 2009, so already almost three years old. It also outlines a very important point: when using an escrow service, whether Escrow.com or otherwise, it’s important for buyers to stay within the escrow system and not conduct outside transactions by transferring money outside escrow. In this case, the buyer was asked to send money via MoneyGram, which isn’t a payment method recognised by Escrow.com. The buyer was smart to double-check, and we would advise that anyone transferring large sums of money do the same.

      We have found that Escrow.com is the best way to transfer funds, as it protects both buyers and sellers, but Flippa users are welcome to use any other escrow or payment service they choose.

  • IR-Hosting

    last month some one named: Bryan Gonzalez – purchased two dedicated server from us and he paid for one month 198$ through e-check, we delivered the service after the e-check got cleared.
    and after using the delivered items for one month (which he paid for) he file a claim (after two months) and PayPal return all the money back to him.

    we complain but apparently they do not care.

  • http://auctionessistance.com/ebay-account-sale/ Auction Essistance

    We had some clients who were paid via PayPal for items they had sold. They shipped it out, added insurance, delivery confirmation, the whole deal. Weeks later, they get a message saying their payment is being disputed for item not received when the buyer clearly signed for it and accepted it.

    Client submitted as much proof as possible, but PayPal wouldn’t side with them and settled with the buyer. Our client is out of $300 and their item. Horrendous service PayPal does to sellers.

  • volvith

    Please tell me there is any way to cancel an echeque because i don’t want to wait 6 goddamn days.