These days, PayPal is one of the most popular, reliable and recognised methods of online payment with many of us owning a PayPal account for easy online transactions also for those who are self-employed and work from home. Whether we're doing business online or using PayPal to make purchases, it remains a top choice for fast, efficient and safe online transactions. That said, wouldn't it be great to have a higher balance in your PayPal account?
What is PayPal?
PayPal is an eBay owned company that allows for faster, safer online transactions. Millions of dollars’ worth of monetary transactions are performed in the Internet every day, making it easy for fraud to take place. With PayPal, users are guaranteed safety and security when sending money on the Internet.
Whether shopping, paying for purchases or even online gambling, users are afforded a wealth of options using this digital service. Users can shop at eBay and many other online stores, while those looking to make some more money can even use PayPal to play poker at 888poker, among other online casinos.
Thanks to the reliability of this service, people have found a simpler way to send money with having to share any personal information. As of 2018, PayPal boasts 237 million active, registered accounts in 202 markets around the world. Users are also able to send, receive and hold funds in 25 different currencies worldwide.
The PayPal Loophole
According to reports, a loophole in the PayPal service allows users to double the money in their account. This means that, while you have to have at least something in your account, it can be doubled, but it this legitimate and should we be doing this?
Back in 2014, a former hacker going by the name TinKode, real name Razvan Cernaianu, found a loophole in the PayPal service. TinKode, a former Romanian hacker, was arrested in 2012 for online attacks on NASA, the US Army, Oracle, the Pentagon and a host of other high-profile websites. He was promptly arrested and convicted, with a judge ordering him to pay $120,000 in damages and given a two-year suspended sentence.
Going back to the PayPal loophole, TinKode discovered a flaw in the system while making a PayPal transaction in 2010 after someone tried to scam him with a chargeback. A ‘chargeback', or reversal, takes place when a buyer requests to reverse a transaction that has already been cleared. This usually happens when the credit card owner's number is stolen and then used illegally.
When TinKode realised he was being scammed, he transferred all his money from his temporary account to his active PayPal account to avoid paying charges. However, when he checked back in to his account, he noticed that the balance was $50. The hacker detailed this the PayPal team, which proves that anyone can double your money in PayPal by using the right means.
How Does It Work?
Let’s start by saying that using this method is considered fraud and illegal. But basically, in order to pull this off, users need three PayPal accounts – one active account and two verified accounts using a Virtual Credit Card (VCC) and a Virtual Bank Account (VBA). In this way you use one as a legitimate buyer, one as a disposable seller and one as a mule. The second and third accounts will be linked to virtual credit cards, which are offered by some banks and credit card companies to actually prevent cases of fraud.
Firstly, there needs to be an amount in the first account, which is transferred to the second account and then to the third account as a ‘gift’. After 24 hours, fraudsters can use the chargeback feature to get the money back into the first account. And since the second account is a virtual one, there is no real money from which PayPal can trace or extract.
To be fair, Cernaianu did report the loophole to PayPal, who claimed it to be a problem stemming from its Protection Policy. Whether this is the case or not, it is unlikely that fraudsters can actually extort thousands of dollars out of PayPal, especially considering that online safety has improved a whole lot since 2014. However, this does prove that even the most secure and advanced systems can have bugs and flaws that should be taken into account.