The dodgy PayPal trick that left Melbourne Gumtree user with a surprise $2,250 debt

Melbourne University student Jamie considers himself pretty tech savvy and knows an online scam when he sees one.

“I’ve sold plenty of things on eBay before, and I think I know what a scam looks like,” he told Yahoo News Australia.

But no matter how internet savvy you are, Jamie (who didn’t want his true identity revealed in this story) is proof that it’s not hard to end up with a shock debt.

Earlier this year he sold his Apple laptop on Gumtree and the experience seemed pretty typical.

“Some guy messaged me, seemed really normal, we were going back and forth a little bit over the price,” he recalled.

The buyer told Jamie he was purchasing it for his son and later arranged for a young man to visit Jamie’s place to collect the laptop.

“He was pretty quick to pay me via PayPal gift, as I later learned there is no seller protection there.”

Jesse and the man went back and forth for a while to arrange the laptop pick up. Source: Getty Images/Supplied

That turned out to be a crucial mistake. The buyer sent the agreed amount of $2250 using the friend option, which avoids fees for the seller.

Jamie took the money out of his PayPal account and deposited into his Commbank account. But about a month later he received an e-mail from PayPal telling him the $2,250 payment had been disputed.

He immediately called the person he sold the laptop to, but the number had been disconnected.

Armed with multiple messages from the other Gumtree user - which have been seen by Yahoo News Australia - that seemingly proved the authenticity of the sale, he hoped it would get worked out.

“I seemed pretty optimistic that I wasn’t in the wrong,” he said.

After a couple months PayPal came back and said the issue hadn’t been resolved in his favour - and then the debt collectors began calling.

Jamie says debt collectors have been calling him incessantly despite him explaining the situation and telling the agency he was disputing the charge.

How to avoid getting burned by online scammers

Initially when Jamie complained, PayPal sent him to Gumtree, and while the Gumtree people were helpful, they simply directed him to file an ACCORN report -an online portal where all victims of digital scams, fraud and theft are directed to make note of their case.

Jamie also filed a proper police report and says he will go to the ombudsman or an independent small claims tribunal to avoid paying the debt.

Judging by PayPal forums online, Jamie isn’t the only one to get caught out by this underhanded trick. In a post in February asking for advice, one person complained of the same thing.

“They received their product (literally a direct handoff) and now they've opened a dispute against me to get their money back so that they can have these items for free,” they wrote.

After about two months of dealing with PayPal and its debt collectors, Jamie turned to social media site Reddit to ask advice.

“Oh dear. This is why you should NEVER accept payment as a 'gift' through paypal,” one person said.

“This is very common with PayPal - they always take the buyer’s side, even in the face of overwhelming evidence. This is because the credit card company will simply reverse the transaction based on the buyer’s claim, and PayPal will be out of pocket,” added another.

The payment happened through PayPal but not within GumTree's website. Source: Getty/Supplied

“Gumtree specifically has a lot of these lurkers more so than other sites I use. They're easy to spot, just ask for bank transfer or cash next time if they're hesitant and only pushing PayPal then you know something's up,” said a third user.

Jamie is now locked out of his PayPal account, hampering his ability to buy and sell items online.

Paypal overturns decision on sale

After being contacted by Yahoo News Australia, PayPal says it will overturn the decision and scrap the debt notice.

The company said the buyer made the payment outside of Gumtree’s online payment portal, which allowed him to later dispute the charge successfully.

“If a seller accepts payment outside of the Gumtree platform, for example via a PayPal Friends and Family money transfer, the transaction will not be eligible for the same protections,” a PayPal spokesperson told Yahoo News.

“This is important because it limits the cover we can extend to sellers when disputes arise, such as chargebacks.

“A buyer may dispute the transaction with their own bank and request a payment reversal ... PayPal is required to follow the bank’s instructions and cannot govern the outcome of a chargeback investigation.”

Meanwhile Gumtree urges users to be vigilant about suspicious activity from buyers or sellers.

“While the majority of our community members have a positive experience, sometimes bad seeds do target our users. We work closely with law enforcement to assist with their investigations,” a spokesperson told Yahoo News.

“For added peace of mind when buying or selling any item, we recommend you meet in a public place and take a friend of family member with you.”

After months of frustration, Jamie will now have his debt cleared but his story is a timely reminder to make sure to double check you are using the proper channels, with consumer protection, when buying and selling items online.

Do you have a story tip? Email: newsroomau@yahoonews.com.

You can also follow us on Facebook, download the Yahoo News app from iTunes or Google Play and stay up to date with the latest news with Yahoo’s daily newsletter. Sign up here.