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What happens if you overdraw PayPal?

I haven't overdrawn my PP account.

But I've been reading threads about chargebacks, specifically in relation to a stolen card (the owner of the account discovers fraudulent activity and notifies PP), and wondering:

What happens if you withdraw all of your money and then a buyer opens a case with PP? Are there overdraft fees like a bank? Do they file collections in order to get it back?

Does that happen very often?

How long should you leave the $$ there to be safe?

51 Responses

I'm really glad you asked, I've been wondering this too!
Glad I'm not the only one ;)
I don't (and never have) kept any money in my paypal account. Whenever I make a transaction using Paypal they simply take the money from my bank account. As long as I keep money in my bank account I don't worry about Paypal. I withdraw the money from my paypal account immediately and deposit it in my bank account.
Your account sits in the negative until you add the funds to bring it positive again. And if you try to use it like to make a purchase they add the overdrawn amount to the transaction. I don't think there are extra fees, but after enough time has passed I imagine they might debit your linked CC or bank account.
I've never had a negative on my Paypal account. They draw from my bank account immediately.
They have always drawn it from my bank account immediately.
I've also never heard of a negative account on paypal, I'd be very surprised if that were possible.

If I don't have money in my paypal (for labels, for anything) they draw from my bank account (or cc if I specify that).
I've never overdrawn because I also have my account and business credit card tied to my bank account. I have a "Student" card for my nephew where I can email or transfer money to his account (debit card). On occasion his card has been overdrawn by a dollar when he's gone to dinner and the tip was processed after the fact. It clears up when I add money to his account.
Your Paypal account is usually attached to a credit card or a bank account. They will just draw the money out of there.

(unless you have a pp debit card. I don't know anyting about them)
Yes. Thank you :)
It hasn't happened to me but this is exactly what I would think would happen.
I have a Paypal debit card and it can only be used if you have a balance in your Paypal account. If there is not enough money the purchase will be declined at the point of sale.
thanks for the additional info Lisa.
I have my paypal linked to my checking account. I use my PP debit card for all of my business expenses, and I often use my paypal debit card knowing funds will be withdrawn from my checking account to cover a charge.
my paypal debit is tied to my bank account, I have set a limit for my backup funds though, so it can only pull up to $200 from my bank account.
They withdraw the difference directly from the bank account you connected to your PP.
Paypal will draw money from your attached bank account or credit card to cover the costs. If there isn't money available from those sources, they will put your account in the negative and continue to try and collect the money from those sources. If it stays in the negative, they will suspend your account.
I was told if you have something that comes through, some chargeback or charge, it goes and takes the money from your checking account, other credit account, whatever you had linked to Paypal.
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Inactive Etsy Member 12:13pm Sep 2, 2013 EDT
You have about 7 days to remedy the situation after that they withdraw it out of your bank account or your credit card they have on file. If you make it a habit then they may take more drastic measures
You can also set up your PP debit to automatically take funds from your bank account. You can say, not to allow over a certain amount too.
That was what I was thinking, Lisa. How can you overdraw your Paypal account? My account is funded with my cc and bank account, so I thought the money comes out of those automatically?
Yep, I hadn't thought of the linked account :)
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Inactive Etsy Member 12:14pm Sep 2, 2013 EDT
Sometimes you might have bought gas with your paypal card and you don't charged for the gas for a few days.
A Paypal card...?
PayPal has a debit card. You can get cashback on purchases made with it too. It's a great deal.
Oh, thanks, I never knew!

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