PayPal Overcharged Me
My wife was recently approached about buying some Little Caesars Pizza Kits for a family friend’s fundraising sale. We decided to purchase some crazy bread from them and I chose to PayPal her the money. I decided to pay her with a credit card, even with the fee, to work on some minimum spend I needed to get done. It turns out PayPal overcharged me and I wonder if this is a widespread issue.
Details On The Billing
The package of crazy bread cost $18. PayPal said the credit card fee would be 82 cents. My Paypal balance was sitting at $14.02. It was left over from my Kindle Fire sales and I had not gotten around to transferring it to my bank yet.
I decided not to transfer the $14.02 before sending the money. This is usually done before making a purchase to ensure no PayPal funds are used. I do this before all eBay purchases but I thought that was more of an eBay rule then it was a PayPal rule. Paypal had recently changed their policy when paying for shipping so I thought this would be more in line with that.
I honestly don’t remember being notified that they would use my PayPal balance first when making the payment. They could have warned me and I just missed it. I assumed, since I chose credit card payment and agreed to the fee, that they would leave my PayPal balance alone.
Later in the day I was looking at my credit card transactions online and noticed the charge on the card was for only $4.80. I immediately realized that they had used my PayPal balance first but thought “no big deal”. I went to PayPal to look at the details just to confirm my assumptions and that is when I realized they had over billed me.
Proof of the Over-Billing
When I had originally picked credit card payment I was told that the fee was 82 cents. I was surprised when I looked at the detailed billing info and noticed I was still billed 82 cents in fees. Even though only $3.98 was technically billed to the credit card before the fee, not the full $18.
Just to ensure I wasn’t going crazy I set up a test payment for $18 to see what it is supposed to bill using a credit card.
As you can see the fee is the same – 82 cents. I then did a test payment for $3.98, which is the amount that was left over after using my $14.02 PayPal balance.
As you can see the fee should have been changed to 42 cents since my PayPal balance covered the first $14.02 of the bill. Paypal overcharged me by 40 cents.
Now 40 cents is not a big deal in any way but it is surprising that PayPal, a technology based payment company, would have what seems to be a system glitch like this. PayPal does over 5 million transactions per day and how many of them have this glitch? 40 cents is not a lot of money but if you do it a couple million times per year that can add up pretty quickly. And what if I had made a larger purchase with a bigger PayPal balance? The overcharge amount would have been much higher.
I guess the lesson learned is to transfer all of your money out of your PayPal account before making any transaction with them. Hopefully PayPal is alerted to this issue and makes the proper corrections. I would not be surprised to see a class action lawsuit sometime in the future if this is as wide spread as I think it may be.
Has this ever happened to you? Let us know in the comments!