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:
- 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.
- 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.
- Clarify and agree on the payment method with the buyer. Make that payment method a condition of the sale.
- 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.