European Banks Stop €10 Billion in Suspicious PayPal Debits

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According to the German Savings Banks Finance Group (DSGV), European financial institutions blocked a wave of suspicious unauthorized direct debits from PayPal accounts on August 25. 

The BBC quotes the DSGV as saying there were “incidents involving unauthorized direct debits initiated by PayPal against various credit institutions” and that PayPal had “assured” the problem was now resolved.

The German newspaper Süddeutsche Zeitung says banks suspended payments totaling around €10 billion ($11.7 billion). PayPal’s anti-fraud filtering system is believed to have failed to flag the suspicious debits, which were sent directly to lenders.

Ordinarily, PayPal would block these suspicious debits before they are sent to the lender. Banks then had to block millions of debits from PayPal to prevent harm, which caused significant disruption in Germany in particular, but also across Europe.

Transactions to and from the platform have now resumed normal operations, but shares in PayPal fell 1.9% yesterday in response to the revelations. Relevant regulators have also been informed.

While the unauthorized debits were blocked, the case highlights the vast scale of suspicious and often fraudulent activity that financial institutions and payment platforms face. It also underscores the importance of having rigorous safeguards in place to protect customers from fraud and prevent other forms of illicit activity.