Paypal’s dubious practices flounder prepaid cards

As a result of some legal offences carried out by Paypal associates Younique Money (YUM) who manage the PP-prepaid cards in Spain, from February 6th 2015 all cardnolders found out that their balances had been frozen and were useless, without any guarantee of ever recovering their money. Despite the cards being issued under Paypal’s patronage, logotype and publicity, yet the USA based multinational has dodged the issue and, under excuse that YUM is ‘just an associate’, Paypal has ditched their customers and refused to back up or compensate the victims, leaving aside vouchsafing for the lost credits.
Everything begun when, on December 31st 2014, YUM unauthorizedly indebted with 15 € most of its Paypal-prepaid cards (an estimated of 150,000 plastics) as Web Service Commission Maintenance; an illicit and arbitrary charge, not justified by the contract nor other legal reason, which a great deal of the customers didn’t even notice until it became too late.
When the victims started complaining about this swindle-looking debit, both Paypal and YUM played the fools adducing a silly excuse: it had been a computing error, a practical all-rounder whose falsehood would be impossible to prove, despite the evil being evident, as both companies involved failed to explain how come, if a computing error had indebted in one go 100,000 cards with 15 €, they didn’t just as easily refund the money in one go once the error solved, but instead started carrying out random refunds only among the customers who had filed a claim. The intention of pocketing as much of their customers’ money as possible seemed undeniable.
However, something much bigger was going on underground: because of YUM’s illegal financial practices (later made public by the Authorities), on January 30th–right after those random refunds had started–the Paypal associate company was officially revoqued its licence as Electronic Money Dealer (EMD) by Spanish central bank Banco de España (BdE), and on February 6th, when they get to know the news, 4B Systems and Mastercard (the networks PP works with) discontinued authorizing transactions that involved the YUM-issued cards, which since have became useless pieces of plastic: the cardholders stopped being able to dispose of their frozen money in any way. With an estimated average of 400 € per card, we are talking of about sixty million euros irregularly held by Paypal’s partners.
After this debacle, Younique Money, a third rate and suspicious company owned by Javier Martínez Martínez (an individual charged with accusations involving several scams) has implemented a so-called protocol (basically a downladable pdf form) in order to enable its customers to recover their money, but this has raised the victims’ indignation since the ‘protocol’ rather seems devised in order to hamper the refunds as much as possible. On one hand, the mail inbox gets often full where the forms are to be sent, and bounces them back undelivered; on the other, YUM’s customers are requested to provide their bank account and ownership evidence thereof, but many of them can’t comply with this requirement because either don’t have such account or haven’t set up direct deposits. Besides, not needing bank account was advertised by Paypal as one of the prepaid card’s advantages; and last but not least, the form asks the just-YUM-swindled customers for all of the card’s details, including the CVV number, security code never to be revealed to anyone, and unneeded for a refund. Besides all this, logging into Paypal-prepaid website has been working on and off, making it hard for the cardholders to check on their remaining credit or get a transactions printout.
On top of that, YUM hasn’t so far taken the trouble of emailing their customers/victims with some personal explanation nor apology for the illicit 15€ debit asset of past NYE (funny Christmas tip) nor for the Paypal-prepaid cards’ wreckage. Nothing but a –rather mocking– notice in YUM’s website saying we’re very sorry and prompting the cardholders to comply with the ‘protocol’. And Paypal is not making things easier, either.
Since then, and despite many customers report having got a bank transfer for their remaining credit, most of them are still waiting for the 15 € commission refund. On February 23th Younique Money updates its website saying only 37,612 transfers remain to be done, quite an irrelevant piece of information if not accompanied by the total number of cards (we estimate around 150,000) and –most important– the number of filed claims. YUM also boasts having already dealt with 60% of their customers, which can only be a crooked inaccuracy, because no way four employees (all of YUM’s staff) can be done with 100,000 files in just two weeks, most of all when Paypal themselves declare an average ratio of 200 refunds are being wired daily.
On the other hand, it’s easy to understand that many of the victims won’t claim their credit because of several reasons: some don’t have a bank account and refuse to open one, while some refuse to enstrust Paypal-YUM with their card’s CVV or their scanned ID; some will probably think their frozen credit is not worth the trouble, and some others are helpless, ignorant people who can’t use a computer, or defenceless immigrants who won’t ever go to the police, etc. All of which seems to predict that victims by the thousands won’t ever get their money back, and Paypal partners will pocketing a great bunch of millions.
What has been Paypal’s role in all this? To begin with, it’s hard to believe that this corporation (actually owned by Ebay) was never acquainted with the dubious nature of YUM or the unlawful records of its actual owner, Javier Martínez Martínez; therefore, associating with such suspects instantly burdens Paypal with undeniable responsability for the YUM-issued cards. Second, endowing them with their logo and advertising them as Paypal cards (obviously nobody would have applied for an unknown YUM card) absolutely implies Paypal should vouchsafe for their product, from which they profit directly and indirectly, via publicity and the card-associated Paypal accounts. This is why it’s plain unacceptable that Paypal refused to offer to their customers the most immediate and simple, the less traumatic solution, which would have spared one hundred thousand victims’ pain, loss and frustration: all they had to do was to credit the cardholders’ Paypal accounts in the same amount they held in their wrecked Paypal-YUM cards. Therefore, there not being any apparent reason why both associates shouldn’t reach such an agreement, it’s reasonable to conclude that the big corporation knows that YUM has no funds to cope with its 150,000 creditors; and Paypal is not ready to lose one single euro because of this problem. Worse yet, right after 4B Systems and Mastercard stopped giving support to the plastics, Paypal hastened to unlink the cards from their customers’ Paypal account. And, well, they have already publicly declined all liability; and every customer who complaints to them is mercilessly forwarded to the–expensive and useless–YUM’s Customer service.
Such being the facts, one can’t but misbelieve what Paypal publishes in its website: we’re working with YUM on a solution for speeding up the refunds, because the fastest solution was in their hands and they refused to it. However you look at it Paypal are co-responsible with Younique Money for their customers’ losses. So, here we are with just another one scandal evidencing that Paypal is not a reliable company.
But there is more to this case than Paypal and YUM, the third player being Spain’s central bank Banco de España (BdE), having seemingly taken a regrettable part in the plot, since they couldn’t have failed to anticipate what would happen after revoking YUM’s EMD license (which they should’ve never granted): the cards would become useless and many holders would risk losing their credit. Yet, there is no news so far that BdE has taken any measures to safeguard the victim’s money. In any case, by keeping silent and not even warning the Paypal cardholders about the planned sanction, they have been deprived an opportunity for disposing of their credits before Younique’s falldown. Any responsible in BdE could have easily predict that the innocent card owners would be the only ones to pay for the damages and–quite ironically–also for the ridiculous 300,000 € additional fine imposed onto YUM, as it’s their money the offenders will pay the bill with.
Another collateral–but not negligible–consequence of BdE’s irresponsible move comes up when considering that, along with losing their EMD license, Younique also loses its status as financial company, and therefore the Paypal-prepaid cardholders are no longer under the stronger protection granted to such companies’ customers. It seems undeniable, then, that Banco de España has a good share in the responsability for the victims.
Believe it or not, we might be witnessing the beginning of an unprecedented crisis with regards to bank assets and ‘virtual patrimony’; we have just seen how they can disappear in a blink leaving no trace, no one to claim to, nowhere to complain, and even the authorities withholding. In any case, this news should not be overlooked by anyone: electronic money is NO money.