How to commit fraud on a large scale using PayPal and get away with it.
The following incident is presented here to highlight the shortcomings not only with the world’s largest online payment system, but also with the police and the general malaise that is all too common in this world we live in. The names of the people and businesses mentioned in this article have been changed to protect their privacy, but this really happened.
A trade show promoter in Dusseldorf, Germany, was staging a LocoConnect trade show, which was email promoted in the Fall of 2013 as being a trade show to promote European local commerce, to be held in Amsterdam on January 28, 2014. It seemed like a good idea for me to attend this show to promote my businesses in the European marketplace. I had no idea what I was setting myself up for, and the professional looking website tricked me into not second guessing the authenticity of this trade show.
The LocoConnect website and social media links are as follows:
http://lococonnect.com / http://lococonnct.de
http://twitter.com/lococonnect
The scam involves collecting trade show registration monies for a non existent trade show, and I was stuck with wasted hotel and airline tickets and trade show registration fees that the promoter was very slow to refund. I suspect that I got my money back as I made a lot of noise. Others may have been less fortunate.
This matter needs to be presented so other unsuspecting people are not defrauded and inconvenienced in this fashion, and I shall now explain in detail what transpired.
I paid the promoter 231.38 Euros on November 8, 2013, plus 300 Euros on November 14, 2013, for registration fees for this show. These payments to the promoter were made by PayPal.
And I also paid 136.46 Euros for my KLM ticket between Frankfurt and Amsterdam, plus 140.26 Euros for the IBIS hotel at Amsterdam for this tradeshow, both of which were non-refundable purchases.
Three weeks before the scheduled date of the show, on January 9, 2014, I received an email from the promoter explaining he had to change the trade show to a different location to be held at a future date in Dusseldorf instead of Amsterdam. This was after I had purchased my non refundable air and hotel tickets. I immediately asked that he refund my registration fees which were paid to him via PayPal, along with compensating me in full for the air ticket and hotel costs.
I have never heard of a major trade show being cancelled two weeks before the event, so I was suspicious. I contacted a number of other people who were shown on the LocoConnect website as being attendees, and one attendee informed me that the promoter had already postponed the event as it was supposed to happen in November, 2013.
So it seems like the promoter is following a pattern of setting up phantom trade shows, collecting registration fees from people like me who plan to attend from afar, then he postpones and postpones as he finds new people to pay him fees which he keeps, whilst not delivering a trade show. It seems to be a scam. Sadly I heard there was another attendee who had booked his non refundable air ticket from Singapore.
So I called PayPal’s customer service to follow up my dispute filings on both of the registration payments made to the promoter. PayPal advised me that their “insurance” and anti-fraud protection does not apply to trade show registration fees paid via their system. So there you have it folks. It is an iron-clad PayPal loop hole that allows anyone to commit fraud with complete impunity by collecting registration fees for bogus trade shows.
Sadly, you are completely on your own if you get scammed in this fashion. PayPal will do absolutely zero to help you in this regard. So even a large and allegedly reputable company like PayPal, cannot be trusted to protect the little guys and small business owners, who work hard for their money, honestly trying to build up their businesses, only to get scammed with such ease. My 15 year experience with PayPal is that they are wonderful at charging steep fees for payments, but without exception, if someone defrauds you, PayPal will never be there to help you. They have never helped me. Not once. I have lost money to fraudsters via PayPal only a handful of times in the past 15 years. So I am a lucky one, I think. You can take PayPal’s payment insurance, payment dispute, and consumer protection policies and wipe your back end with them.
Logic would dictate that any online payment system that encounters ongoing and organized fraudulent activities being facilitated by their services, would quickly and seriously stop such activity from happening. It is a reasonable expectation. Yet it completely gobsmacked me that PayPal’s position on this matter was a cast in stone “I’m very sorry Sir, but trade show registration fees are not something we can help you with.” It goes to show that a service that millions and millions of people use, is not necessarily the best or most scrupulous when it comes to defending the best interests of its smaller customers.
Anyhow, back to our story. The day after I received the email from Stavros Prodromou announcing that the January 28, 2014, Amsterdam show was cancelled, I decided to send emails to about a dozen of the potential attendees expressing my doubts and concerns. That very same day, miracle of miracles, the promoter called me to apologize and he did return the initial payment of 231.38 Euros. That was on January 13, 2014.
In the days that followed I kept asking him to refund the outstanding 300 Euros registration fee plus my lost air and hotel costs. In the last week of January, he asked me to send him a PayPal payment request on FEB 3-4 to settle the outstanding registration fees and non refundable expenses I incurred, which I sent to him on February 4.
Through February of 2014, I was calling the promoter every day, and he has avoided all of my phone calls. I suspect he paid me the 231.38 Euros on January 13 simply to keep me silent from contacting other “attendees” regarding this matter.
Given the unprofessional and dishonest conduct of the promoter, it behooves the German authorities to properly investigate this matter, as it leaves a very bad black mark on Germany’s reputation for trade shows. So I called the trade section of the German Consular offices in my home city, and the lady on the other end of the line advised me to file a complaint with the Dusseldorf police department, which I prepared and sent today. The German Consular office was not interested in helping me with this matter beyond referring me to the Police, and recommended that I contact a lawyer. Which is a nice way of saying “get lost.” At the end of the day, the police also advised me this was a civil matter and they could not assist. Nice response from rule abiding Germany. What a sham.
In conclusion, this is the perfect financial crime. It can be conducted across international borders, aided by the world’s largest online payment system .. PayPal, the Government offices of the country where the crime originates from (Germany) is not serious about preventing this criminal activity, and the perpetrator can easily thieve tens of thousands of dollars on an ongoing basis with the complicit help of officialdom at every level.
