by Rabbi Yair Hoffman for the Sfas Tamim Foundation
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In late 1998, Peter Thiel and Max Levchin founded a company called, “PayPal.” (It was originally called Confinity). Venture capital funding allowed it to combine with eBay transaction partnerships, and PayPal quickly shot up to 1 million users after just 15 months. With Paypal, people can send money to others electronically – through their email addresses. There are, however, two ways of sending money on PayPal: Friends&Family (F&F) and Goods&Services (G&S).
F&F is intended for paying a friend back for dinner, for example, or giving a relative money. There’s typically no fee involved, but it also drops protections for any issues that may come up, such as refunds or scams.
G&S is intended for purchases, and money sent this way is subject to PayPal fees which are currently 2.99% of the transaction. With G&S, if what you bought was not as described or if it was damaged upon arrival or it never got to the buyer – refunds are much easier.
PayPal makes its own money in two ways. The first is the fees they charge to a payment’s recipients. Though most transactions are free for the average user, many merchants pay that fee on transactions which is the G&S method. PayPal also collects interest on money left in PayPal accounts. All the money held in PayPal accounts is placed into one or more interest-earning bank accounts. Account holders do not receive any of the interest gained on the money while it sits in a PayPal account.
Is it permitted for a business to take payment for goods and services through F&F, even though it is not what they intend? Can F&F or the term “friend” be defined as any person that you trust?
The question was posed to Rav Yisroel Dovid Harfenes, one of the leading Poskim in the United States. [Each person, however, should make his or own inquiries to both Paypal and also to one’s own Rav or Posaik]. Rav Harfenes responded that one must ask PayPal if they truly do not care if a business uses F&F instead of G&S. If they do care then it will be a problem. When the question was posed to PayPal, however, they did not respond.
When Rav Harfenes was told this, he responded that it would seem from their lack of a response that it does not matter to them, and therefore, there would be no prohibition in utilizing the F&F method.
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It’s irrelevant, because PayPal no longer allows businesses to use “friends and family” anymore.
Because before anyone can make use of the fact that “they did not respond”, it is necessary to know exactly who these “they” are so as not to be conflated with any other “they” with a similar name.
Makes sense that they don’t care, their loss of fees is offset by the money they don’t have to refund.
Someone enlighten me please. Why would this be an issue of gezel akum? if anything it would seem more of a taos akum which would be mutar (even if you caused it directly) in circumstances were there is no chillul hashem. There is an inyan chssidus to make a kiddush hashem and return items to a gentile even by taos akum, but i don’t see how kiddush hashem would apply to this case.
If the issue here is chilul hashem with the buyer, then how does the fact that paypal is indifferent solve this. The buyer doesn’t know whether paypal cares or not, the buyer simply sees that you are doing something wrong. More insight is needed here.
Paypal absolutely cares and will shut down an account that uses F&F when they should be using G&S if it happens multiple times.
The Torah warns us to “Keep far from a false matter.” The last I remember, a Jewish mogul owned pay-pal. If it went public, it has other Jewish owners; but who says we can steal from (or deceive, which is “mind-stealing”) the Gentiles?