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  1. #1
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    Why does PayPal want an Social Security Number?

    What can PayPal find out about you if you give them your SSN and why do they want it?

  2. #2
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    Credit report?

  3. #3
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    Anything they want if someone wants to be malicious, but theres only a few ways to get info like that, and those are monitored heavily because of the potential for abuse.

  4. #4
    So they can report your PayPal income to the IRS.

    http://www.nytimes.com/2006/04/12/te...erland&emc=rss

    20% of 27 billion is a lot of money to overlook. With penalties for non reporting the government could match that 27 billion.

  5. #5
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    That's one of the many reasons I don't use paypal for my business. Imagine if your Pay Pal account is hacked. There goes your identity.
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  6. #6
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    Quote Originally Posted by WHC - Travis View Post
    That's one of the many reasons I don't use paypal for my business. Imagine if your Pay Pal account is hacked. There goes your identity.
    Have a credit card, a cell phone?
    There are various other business entities that require or say that they require your SS# that could also be hacked.

  7. #7
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    Quote Originally Posted by HH-Mike View Post
    Have a credit card, a cell phone?
    There are various other business entities that require or say that they require your SS# that could also be hacked.
    Yeah but none of them quite like Pay Pal because all a pay pal account requires is one password. It's like having the root password to someone's server... there's no safeguards in place.
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  8. #8
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    Quote Originally Posted by WHC - Travis View Post
    Yeah but none of them quite like Pay Pal because all a pay pal account requires is one password. It's like having the root password to someone's server... there's no safeguards in place.
    Looking at my paypal account I can not find the ss# displayed anywhere.
    I did run across Paypal's Security Key which look interesting. It does cost $5, but they send you this little device that generates a new 6digit number every 30 seconds.
    So email address, password & 6 digit number to log in.

  9. Firstly, your identity cannot be stolen simply if your PayPal account is compromised. Worse case scenario, the attacker would be able to wipe out your PayPal and any accounts linked to it, which although can definitely be a pain, it isn't something that can't be fixed with a few phone calls. PayPal will usually always be willing to help in these kinds of situations, and even if they aren't, your bank will almost undoubtedly be able to help recover any stolen funds.

    Regarding the OP's question, the main reason PayPal would be interested in having your SSN is for credit reporting purposes, for example if you somehow go into negative account balance, PayPal wants to be able to put delinquent account marks on your credit report, as well as turn that information over to their third party debt collection agencies. (Usually, I.C. Systems and/or NCO Financial)

    Since it's completely possible to verify your PayPal without providing a social security number, I'd advise against it, as PayPal is known to have some horror stories in regards to chargebacks against sellers, or unfairly siding with the buyer in the case of a dispute.

  10. #10
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    When you are getting a merchant account - you are somewhat borrowing money from the merchant account provider.

    Let's say you get a merchant account from Chris at CDGCommerce. You then start to "sell" real Gucci bags for $50. Wow - that's a deal, so people will be buying a lot from you. Now, this has gone on for a month, and you sold $50,000.

    Now you are gone - and the money is not in the bank. The customers will be calling their issuing bank to get their money back. And they will - possibly reason code 51. And guess who will be out all that money? Chris at CDG will.

    Having that SSN will help Chris track you down and get his money back.

    Of course, I am not saying you are doing this, etc but I am trying to give you a good example on why merchant account providers and Internet Payment Service Providers want your social security number.

  11. #11
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    Thanks Offshore and Corey, those were good explanations. I was able to get varified without giving the SSN to PP. But it is good to know how this stuff works. I have always tried hard to be in compliance with various regulations and laws. There is so much fraud going on that even when you are an honest seller, the payment service providers have a tendency to view everyone as a risk. But I guess if I were in their shoes, I would too.

  12. #12
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    Glad I could help Ron and glad that it all worked out for you. Good luck with everything!

  13. #13
    Quote Originally Posted by Ron View Post
    What can PayPal find out about you if you give them your SSN and why do they want it?
    The reason why they ask for Social Security number is because of the Patriot Act.

    Many of our merchants questioned the same thing, and it's the government that requires it.
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  14. #14
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    Just keep in mind that merchant account providers and PayPal have been asking for SSNs long before the Patriot Act was ever enacted. Asking for SSN is a way for a lot of credit providers to help idenfity an individual.

    The SSN is being abused by some companies asking for it (and using it in some IDs). The number was created to help track people in the Social Security program not for some of the purposes that it is being used for today.

  15. #15
    Sure. Aside from Patriot Act, for instance, merchant companies use the SS# to pull credit to see if there are any open BKs and to see overall standing of the merchant.
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  16. #16
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    Quote Originally Posted by Bobby CynergyData View Post
    The reason why they ask for Social Security number is because of the Patriot Act.

    Many of our merchants questioned the same thing, and it's the government that requires it.
    Patriot act do not state that they must collect SSN
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  17. #17
    Quote Originally Posted by u4t2t View Post
    Patriot act do not state that they must collect SSN
    It's part of screening process when you deal with financial institutions. Your social automatically runs through their system and is required by the government.

    I have been working for financial institutions before 9/11 and that's not how it was before.

    When you apply for a mortgage same thing happens.
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  18. #18
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    SSN is not required by the government, required is that they must verify their clients, but it does not say what they must collect, if SSN would be must then non US persons could not open accounts in US
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  19. #19
    Quote Originally Posted by u4t2t View Post
    SSN is not required by the government, required is that they must verify their clients, but it does not say what they must collect, if SSN would be must then non US persons could not open accounts in US
    I'm just telling you how it is and what is required to open a merchant account / bank account / apply for mortgage. And it is factual data.

    And I do not know about non US clients because we are in USA.
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  20. #20
    and here's your answer to foreign customers directly from the government:

    "(2) requiring foreign nationals to apply for and obtain, before opening an account with a domestic financial institution, an identification number which would function similarly to a Social Security number or tax identification number; and
    (3) establishing a system for domestic financial institutions and agencies to review information maintained by relevant Government agencies for purposes of verifying the identities of foreign nationals seeking to open accounts at those institutions and agencies. "

    http://epic.org/privacy/terrorism/hr3162.html
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  21. #21
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    The Patriot Act just added more work to some individuals / companies. However, it has only been around a few years and organizations were collecting the SSN long before it was ever enacted.

  22. #22
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    Any Web site that asks for an SSN or SIN should be avoided. Cannot think of any reason why a "Web site" would be asking for it. Also leads to confusion because then people get Phishing eMails to provide their SSN or SIN either in an eMail or at the bogus Phishing Web site.

    Keep it simple, just say NO!

    And BTW, PayPal has never, ever asked for an SSN or SIN, to my knowledge and experience of 7 years doing business with them.
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  23. #23
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    A SSN is used for a lot of United States companies to "track" us Americans. This way, if you skip out on a bill, they can notate this on your credit report.

    The SSN was created for a different purpose than it is used today but when you open a savings account, you need to give them your SSN, so any can be reported to the United States goverment and then they can tax you on this income. (No, not bitter at all considering we have to pay $70,000 this year).

    If you do not sign up for Paypal's interest bearing account - you do not need to give Paypal your SSN.

    But a "web site" will ask for a SSN if you are an American and you might need to be "tracked" for earning income or skipping out on a credit card payment.

    99.5% of all credit cards will ask Americans for the SSN. This will help them bring up a credit report to see how much credit you deserve, if any.

  24. #24
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    Just to clarify, I'm not saying you never give your SSN or SIN out, just never give it out on a Web site. If it is really required then make a phone call instead.
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  25. #25
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    Well you dont have to give them your SSN, right? Like I had a business account before and just made another and I have yet to put in my ssn on my new account. They dont require it...

  26. #26
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    When i tried to open a 2nd business acct with paypal. I had to do it to lift a restriction and fully verify PayPal, and PP told me it was required.

  27. #27
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    They want it first to report the income to the United States government (the government likes their share). But the number is used for a lot more reports as well as mentioned before - the Patriot Act, your credit report, etc.

  28. #28
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    So how does it benfit us giving them our ssn? They dont require it for my account. I have a verified business account. My $500 withdrawal limit is also lifted so what reason should I give them my ssn if I have everything I am looking for out of my paypal account.

  29. #29
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    If PayPal does not require you to give them a SSN, then you have no reason to give it to them. As stated above, there are numerous reasons for PayPal to ask for your SSN. And as long as you are on PayPal's website (and not a phishing website) it is OK to enter your SSN.

    And then consider Google - most citizens of the United States gave Google their SSN when they signed up for an adwords account. And then a couple of weeks ago (if those people earned a certain amount), they received a W2 (or 1099). This W2 is then used when you do your Federal Income Tax. It is reportable / taxable income. The United States government wants their share (unfortunately) - we would like a plaque on a tank or maybe a missile or something ($70,000 alone should have at least bought a few hammers).

    I have to disagree of course about not entering the SSN on a website. If the government deemed it inappropriate for a website to ask for a SSN, they would somehow make it a law and the companies based in the United States would then need to comply.

    But for now hostatree it seems you don't need to worry about.

  30. #30

    Question

    The problem with not giving paypal your SSN is that you're limited to a $500 monthly withdrawal limit. In order to lift the limit, you have to submit your SSN.

    This is a real problem for me because I have a large balance and will never be able to withdraw everything unless I make some very large purchases. Does giving your SSN mean that Uncle Sam will get access to all your transactions?

  31. #31
    It is done so that your income can be reported to the IRS. After next year refusal to give your SSN will either get the account shut down or have taxes automatically withheld. And it won't just be PayPal, it will affect all merchant accounts in the US.

    Chris Dodd snuck the provision into the housing bill last year.

    http://www.contrarianprofits.com/art...sing-bill/4158

  32. #32
    Quote Originally Posted by page-zone View Post
    It is done so that your income can be reported to the IRS. After next year refusal to give your SSN will either get the account shut down or have taxes automatically withheld. And it won't just be PayPal, it will affect all merchant accounts in the US.

    Chris Dodd snuck the provision into the housing bill last year.

    .../articles/how-your-online-business-will-be-affected-by-the-housing-bill/4158
    Wow no kidding huh! Pretty disgusting! So when I resell my $400 lawn mower for $100, I'll have gotten taxed not only on the original $400 purchase but also on the $100 I dumped it for??

  33. #33
    The law states that it will only affect sales of over 20,000 per year, or 200 transactions, whichever is first.

    I wouldn't trust Paypal not to report it all though. Mainly because they don't know in advance if you will meet the threshold by the end of the year.

  34. #34

    Unhappy why Paypal doesn't accept Tax ID Number ID if Patritic Act does !

    I am seller on eBay and over 2 years since I use my paypal account and collected more than $ 100 cashback within 6 months because I used my card for almost everything, one day I notice a fraudulent transaction and I reported (were stupid 25 dollars now I regret) they canceled my card, and now I can not get a new one for not having SSN and IRS ITIN is not accepted. I really would like to take legal action on this as it is unfair, I have a good record with paypal since 2005 the detail does not seem right, now I am suffering with limited transfers and checks shipments slow. We must find a way to get accepted ITIN in the paypal account debit.. Somebody told me talk to paypal legal department about this issue.

  35. #35
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    Quote Originally Posted by page-zone View Post
    It is done so that your income can be reported to the IRS. After next year refusal to give your SSN will either get the account shut down or have taxes automatically withheld. And it won't just be PayPal, it will affect all merchant accounts in the US.

    Chris Dodd snuck the provision into the housing bill last year.

    http://www.contrarianprofits.com/art...sing-bill/4158
    So this could effect web hosting companies too! Hosting plans are already really low, if you use paypal you pay a fee, and if you are just starting up and have no idea about taxes it seems like it could really run you over down the road.

    I hope I'm wrong about that!

  36. #36

    Angry

    Quote Originally Posted by Ron View Post
    What can PayPal find out about you if you give them your SSN and why do they want it?
    huh? -

    I had to sign up to talk on here...

    I didnt give paypal my SSN. It automatically knows my SSN by linking my bank acct-debit card. Go through the initial sign up process and you will see there's no request for SSN info. I guess- I tried to lift the $500 limit and it asks me for the last 4 digits of my SSN. Thats SCARY- I am leaving paypal - ebay cuz they got my SSN !

    Paypal should be SUED - for violations regarding SSNs !!! -
    Last edited by jakewarcat; 03-01-2010 at 10:35 AM.

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