I am frequently asked by readers for my stance on paying for domains with Pay Pal, or accepting payment for domains through Pay Pal. I think it is always best to learn from experience and as a domain investment firm we have a lot of experience buying and selling domain names.
Pay Pal is a service that holds next to *no liability* for the transactions that happen through it. Sales involving "Intangible" items, i.e. a domain name are bought and sold at the risk of both parties. The number of scams – particularly with domain names that happen through Pay Pal is incredible. Pay Pal is most likely the single-largest source of fraudulent domain transactions.
There is some good news, you can take a few simple steps to vastly improve your chances of not getting scammed in a Pay Pal transaction. I’ll make my disclaimer here: I always suggest domains be bought and sold using an escrow service like Escrow.com, however, should you decide to use Pay Pal this advice will prevent scams about 90% of the time.
For buyers paying with Pay Pal. Always pay with a credit card – never pay with cash or with money from your bank account. Remember, should you pay and never receive the domain, Pay Pal will have little they can do. If you pay with your bank account or cash Pay Pal is the only authority you are dealing with. Once you involve your credit card company – you are dealing with someone else’s money. Think of this as bringing in the big guns. Credit card companies don’t like losing money and they will fight to get their money back from scammers and online thieves.
If you don’t receive your domain and have already paid, always try to get a refund from the seller first. If this does not work then contact your credit card company – they are the only company with your best interests in mind since it is their money you are talking about!
For sellers paying with Pay Pal. Beware charge-back schemes. Just as using a credit card is a protection for domain buyers it can also be used as a tool for domain thieves to steal your domain. If you follow one simple rule then you are guaranteed success. Transfer the money you receive to your bank account and wait for it to make it into the account. Once the money hits your account a charge-back will be impossible since the money is no longer in your Pay Pal account.
You should contact Pay Pal and let them know that you have been part of what you believe to be a charge-back scheme. Pay Pal can then work with the credit card company to refute the claim. Either way, the money is in your bank account – so you have been paid, as expected for the domain.
Below is a recent example from DNForum about a Pay Pal scam currently in action as we speak:
By following these simple tips you can begin a practice of safely buying your domains through Pay Pal. I always suggest that you use an Escrow service for higher-value domains however for smaller sales Pay Pal can help to make an efficient transaction. Just remember to be very careful whenever doing business online. If something seems fishy…it probably is. By taking precautions you can prevent yourself from being the victim of a scam.
Don’t forget to read my book if you haven’t yet – learn how to flip domains and profit!