Is PayPal Safe to Use?

By Lora Keleher , last updated October 12, 2011

People unfamiliar with PayPal often wonder whether or not it’s safe to use. For the most part, PayPal is as safe as any other online method used to make financial transactions. The company implements a number of security measures to protect users account information and transaction data, but it’s also up to consumers to follow certain safety precautions when making transactions online.


Transactions made through PayPal are encrypted, which means that the information is scrambled to a point where it’s unreadable and nearly indecipherable. Thus, someone can’t intercept the transaction and obtain your personal information.

Sites that accept PayPal as a payment method also have the option to program PayPal encryption into their payment button. High volume sites are required to do this, and many smaller sites choose to take this step as well. You’ll know if a site encrypts their PayPal feature, because they’ll display a certificate.

Purchase Protection

PayPal offers purchase protection to dispute chargers in a number of different scenarios. You can submit a dispute if you order an item and it never arrives, or it arrives but is not the item that was advertised. This applies mainly to purchases from auction sites such as eBay. You can also submit a dispute if you were charged for a transaction that you didn’t make.

Password Protection

When you set up an account through PayPal, you create a username and password. PayPal requires that passwords meet certain security requirements, making them difficult to guess or decipher. You can help to safeguard your information by never sharing your password and changing it every few months.

Avoiding Phishing schemes

Phishing schemes are a crime specific to the Internet. In this scenario, someone sends you a fraudulent email or message pretending to represent PayPal asking for your personal information. In an elaborate version of this scheme, phishers will send you an email that links to a fake PayPal website. When you attempt to login, you’ll have given them your account information. To keep yourself safe, never give out any sensitive account information via email and always login to PayPal by directly typing the site address into your browser or clicking on a bookmarked link to the site.

Monitoring Your Account

As with credit cards, it’s a smart idea to monitor your account on a regular basis to check for any unusual activity. This way, if you ever encounter a problematic charge, you can immediately dispute it and have your account frozen to prevent further activity. Additionally, if you have a smartphone, PayPal has created an app that notifies you every time a transaction has been processed, so nothing will ever slip by you.

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