PayPal is available in over 200 countries and has over 300 million active accounts. It is by far one of the biggest companies in the online money management industry. Founded in 1998, it has made sending, receiving, and paying for goods faster and more convenient.
But anything that deals with money can eventually cause you some financial hardships. In other words, there is a chance that you could go into debt with PayPal.
This is easily done when you use your PayPal to pay for goods as you can drive it into the negative, just like you can a bank account. When this happens in a bank, sometimes that leads to collections agencies attempting to collect the debts.
PayPal uses a wide range of debt collection companies, whether they pass it over to them or sell the debt to them.
But there’s more to understand than just who they use, so we’re going to give you a quick guide on how to handle potential debts that can arise from your PayPal account.
Does PayPal Do Debt Collection?
PayPal is a business, and they need users to be able to pay their debts. So yes, you can go into debt with PayPal.
Just like a bank account, the company gives you an account, and when you spend more than is in that account, they then begin covering the negative balance. A couple of reasons that you may find you have debt in your PayPal account are:
- You don’t have enough funds in the bank account attached to your PayPal
- Someone files a dispute or claim against your account
- Chargebacks from credit card or bank companies
What Are PayPal Collections?
When PayPal sends you to a debt collection agency, it can be any number of them. Because the company is a global company, it depends on the country that the debts come from.
Typically they’re going to send you to a debt collector that specializes in recovering the funds because they are a business and want to ensure they get their money back.
These companies will either be given the debt account or purchase them to collect the money. The other thing to keep in mind is that not only will PayPal potentially sell your debt or pass your debt along to debt collectors, but they also report to as well.
So you, just like your bank account and other financial matters, must keep track of your account so that this doesn’t happen.
What Happens If You Don’t Pay PayPal Credit?
So what happens if you are not careful with your PayPal account or even your PayPal credit? PayPal Credit is kind of like a short-term loan. You can opt-in for this and receive 0% interest for the first four months.
Once this is done, though, that rate goes up to 17.9% APR, and for every late payment, you are charged a certain fee. So it’s very easy when utilizing PayPal credit to wind up owing some money.
If you do wind up going into debt with PayPal in this manner, typically, they give you 90 days to pay back that debt.
If you don’t within those 90 days, you will then receive a letter or a call notifying you that they’ve begun the debt collection process. Once the process has gone to this point, a debt collection agency will then take over.
How Does It Work?
To drive the point home, we’re going to take a look at the process that a debt collection agency may use. Here’s a step-by-step process of the collections process:
- PayPal notifies you that you are currently in debt and that the debt collection process has begun
- You will then receive communication from the debt collection agency that PayPal has opted to utilize in your case
- From there, you will get regular written notices and phone calls making you aware of the dead itself
- If the debt remains, it could potentially lead to legal ramifications
Will PayPal Credit Sue You?
Legal ramifications are a very real possibility when it comes to any type of debt collection. Typically these companies want their money, and so after trying to get it from you, the next step is logically to take it to the courts.
PayPal credit itself is not going to sue you. However, the debt collection agency could potentially take you to court to get your money back.
Final Thoughts on What Collection Agency Does PayPal Use
PayPal though not a traditional financial institution, is a financial institution. This means that they expect you to be able to pay for things that you use them to purchase.
If you do go into debt with them, just like any other business, they’re going to need to take steps to get their money back. This could potentially lead to them reaching out to any number of collection agencies to get the process started.