5 Risks of Using PayPal (Explained)

For most of the past couple of decades, PayPal has remained the top name in the online receipts and payments market. The platform has accumulated over 346 million users by 2020, a number which many believe will grow in the future.

There are many features that the platform offers its users. These features have been one of the main reasons for its success.

In terms of competition, various platforms offer the same services like PayPal. However, most of these competitors do not come close to the quality and features of PayPal.

PayPal also has many subsidiaries through which it provides users with similar services or uses them to expand its current services and markets.

Overall, PayPal is a safe platform for users to make transactions online. However, there are also some risks associated with using the platform.

Some of these risks relate specifically to PayPal. Some others apply to all the platforms that are on the internet or offer similar services. While these risks do not make the platform unusable, users must be aware of them when using the platform.

Five risks of using PayPal

The top five risks associated with using PayPal are as given below.

1) Chargebacks

One of the risks that using PayPal for businesses brings is the risk of chargebacks. PayPal allows its users, specifically buyers, to dispute any payments they have made to sellers and make a chargeback.

It also allows buyers to receive their money back if the seller does not deliver the promised product or service. However, PayPal does give the seller a chance to provide evidence if they have completed their end of the deal.

However, the process focuses on compensating buyers rather than sellers. It can provide buyers with the chance to make fake chargebacks and end up receiving both their money and the product from the seller.

This case especially applies to buyers who purchase digital products, where they can’t return the product to the seller.

2) Phishing attempts

Another risk associated with using PayPal is phishing attempts that users must face. Phishing is the process of leading users to a fake PayPal website in order to obtain their credentials.

They are common to all internet platforms that have a login system. For example, they can apply to any social media platform or online marketplace. However, the chances of phishing attempts are significantly higher for PayPal users as there is money involved in their accounts.

While the platform does have security measures to tackle such attempts, these attempts can also occur outside it, for example, through email. In such circumstances, PayPal cannot do anything.

3) Fraud

Fraudsters and fraudulent activity are common on PayPal. While a majority of the platform consists of users that utilize the platform for their needs, some other users use it to scam others.

Fraud is also prevalent on almost all platforms that involve users’ money. However, due to the high number of users on PayPal, fraudsters try to target these users more.

Frauds can come in many forms and shapes. Usually, these include scammers trying to lure PayPal users into paying them without delivering a product or service in exchange.

Similarly, it may also consist of scammers receiving products but still registering a complaint with PayPal, in which case the platform returns their money.

4) Unauthorized transactions

Most platforms allow users to transact with them through PayPal. For regular transactions with users, these platforms let them store their account information, so they don’t have to fill the information for every transaction.

However, if users don’t use trusted platforms, they may end up getting charged for unauthorized amounts in their accounts, which can be problematic.

This problem isn’t new, though. Many users have complained about random unauthorized transactions on the platform.

The source of most of these transactions come from platforms where users had stored their information. For most of these cases, PayPal can’t help users either as they may not have enough evidence to show for it.

5) Frozen account

PayPal has control over all the accounts of users on the platform. It allows the platform to take care of any issues that users face and solve them on time. However, PayPal may also freeze these accounts or withhold balances from them.

Most of the time, the platform doesn’t even provide users with a warning beforehand. For individuals or businesses that rely on PayPal for regular transactions, it may create an issue.


Similarly, PayPal may also fully disable or block users from using the platform. Most of the times, PayPal does this due to its anti-fraud or security features.

Similarly, once the platform freeze or blocks accounts, there is limited support available to users, which makes it even more difficult for them to recover their accounts or balances.


PayPal is the world’s largest online platform for payments and receipts. The company has been on top for two decades without any worthy competition.

While the platform is mostly safe for users, there are also some risks associated with using it. Given above are the top five risks of using PayPal that users need to know.