A Channel 4 I-Team investigation found what potential victims of scammers described as a loophole in the payment system of the popular online payment method PayPal.

Don Geddes experienced it when he began to sell his Ford Mustangs online.

Geddes immediately got a response, with the buyer offering to pay the full asking price and insisting that they use PayPal.

“It does sound good. And then I thought, this is too easy,” Geddes said.

Todd Wrubel had the same experience when he got online to sell his 1985 BMW and was contacted by a buyer offering full price.

“They wanted to use PayPal only. And I said I prefer if you wired it. Everything is on email. The minute you ask, can we talk? It gets very sketchy,” Wrubel said.

Here’s how the crime works: the crooks offer to pay full price through PayPal, the money is added to the seller’s account, and the scammers say they’re unable to meet in person and instead hire someone to pick up the car and title.

Then, the crooks dispute the sale on PayPal and file a complaint.

Paypal’s own website reads when a complaint is filed, “Once a buyer initiates the dispute resolution process, we'll hold the transaction's money until the dispute is resolved."

With the money now on hold or taken out of the seller’s account, the scammer is long gone.

“So they have the car, the title and the money,” Geddes said. “It's a fault with PayPal, I think. That they don't have any resolution system for it.”

“I think it is a flaw, but I also think it's in terms and conditions in mouse type bottom, and you're not reading it,” Wrubel said.

A spokesman for PayPal sent the following statement:

This is a well-known scam and we encourage buyers and sellers to seek and review all payment options for vehicle purchases, including services outside of PayPal as the company does not offer Buyer Protection coverage for these types of transactions.

If the buyer files a not as described claim or a non-receipt claim with PayPal, the claim would be closed in favor of the seller as we do not offer Buyer Protection. In situations where buyers reach out to PayPal to discuss what options they have to be refunded, the company advises the buyer to seek recourse outside of PayPal's processes.

If the buyer files a not as described claim with their financial institution, the seller would not be covered by Seller Protection. If the buyer files a claim with their financial institution for unauthorized or non-receipt, in order to qualify for Seller Protection, certain criteria must be met. These requirements can be found here: https://www.paypal.com/spp.

A requirement for Seller Protection is online proof of delivery, and with such a large item, it can be difficult or cost prohibitive to contact a business to perform such a service.

Purchasing and/or selling a vehicle can be a difficult experience. While PayPal strives to facilitate easy and safe payments across the globe, and often is a service of choice for individuals and merchant transactions, there are occasional circumstances that have drawbacks. Accordingly, we advise customers to review all payment options when performing these types of transactions and remain vigilant against potential scams.

PayPal does have a seller protection program that is free but it only applies to certain circumstances. Click here to read more.

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