PayPal told customer her death breached its rules
bbc.com
bbc.com
She had a PayPal credit card or some other form of revolving account with PayPal (the letter references to "PayPal Credit" agreement) with a balance of just over £3,000.
Dead people can't legally hold credit cards so she "breached" her credit card agreement by dying - that is, an action on her part made the agreement no longer valid. This caused PayPal to close the revolving credit line and the balance to be due in full.
As I understand it her estate would be legally required to pay the balance if it had the funds to do so. (99.9% sure - correct me if I'm wrong)
The letter was sent informing her of the above.
So seems like the letter was "technically correct" (the best kind of correct!) but horribly insensitive to the point of basically being straight up cruel. The other mistake is it should have been addressed to the executor of her estate instead of her personally.
EDIT: Here's the UK version of "PayPal Credit": https://www.paypal.com/uk/webapps/mpp/paypal-virtual-credit Looks like it's a revolving account without a physical card.
What? It's literally what the letter they sent to the dead customer says.
> PayPal told customer her death breached its rules
> You are breach in [rule] because ... you are deceased
The letter is absolutely terrible, horribly insensitive, cruel, and should have never been sent.
However, like I said, it seems "technically correct" with the information we are given.
No it is not technically correct.
Death is not a breach of contract in UK law. It causes the contract to end.
Any assets left after debt has been settled by the estate can be inherited. If the estate has more debt than assets then the estate is effectively bankrupted but it would normally be handled by the Probate Court (the court that handles cases of death estates amongst other things) rather than the Court of Chancery (Bankruptcy court). In days of yore both the Probate Court and the Court of Chancery were a part of the Court of Equity (in effect a court of common law) and so the Probate Court had very similar powers to the Court of Chancery and hence the Probate Court would handle a bankrupted estate rather than turning it over to the Court of Chancery.
EDIT: added explanatory clause
What matters to the heirs of the estate is whether there is an inheritance or not. That happens after debts are settled and contracts terminated.
It is relevant to the executor of the estate, who may not be an heir (and in many jurisdictions, is prohibited from being an heir).
Inheriting debt is virtually unheard of in most of the western world. The estate will pay off what it can, but the rest of the debt is simply wiped out.
The exceptions here are mortgages, which are attached to the house and therefore would transfer to whoever inherits the house, if they accept it. And in the US some states have some kind of exception which transfers medical debt to children in some circumstances, apparently, which strikes me as barbaric.
you've got a choice if you've got an inheritance. You either inherit everything that you're eligible to inherit (this includes any outstanding debts) or nothing.
At least that's my understanding of my local law, but I'm neither a lawyer nor did i ever inherit anything.
But that's effectively the same situation as in almost any other country. Debts are settled before you are eligible to inherit anything. If debts are more than the estate has, then you don't inherit anything.
Accepting an inheritance is pretty risky in Germany, if your parents weren't well off.
And PayPal's letter would make sense if its left for the inheritor to figure out. But that doesn't seem to be the case if I understood the sibling comment correctly? It's always interesting to learn stuff like that :)
We've got inheritance lawyers in Germany that can help people figure out wherever accepting a specific inheritance is a smart move... But that often isn't really worth it either.
But I still don't get it.
Option one is to get just your remaining inheritance after any debts are paid, with the court doing all the work. Option two is to get everything and then pay the debts yourself.
Option one is zero risk and you get everything you're entitled to. Why would anyone refuse the inheritance instead of taking this option?
Option two has some risk and some potential reward. I can understand not taking that option, but there's no reason at all to not take option 1.
They are saying that in Germany, the options are: accept both the assets and liabilities, or reject both.
Option two: you refuse the entire inheritance, get nothing but also don't get any debts.
> Either the court figues out if there is any inheritance and distributes everything left over after settling any debts...
This comparision was pretty off topic and probably shouln't have been posted in this context.
Part of the letter informed the dead person they would restrict her ability to use the service. One wonders how they intend to implement restrictions more effective than death!
"PayPal told customer her death breached its rules" is much much "clickable" than "PayPal sent insensitive letter to a dead customer." It makes it sound much more outrageous. That's why it's borderline clickbaity to me. Added to that it didn't define 15.4 (c) of the Paypal Credit agreement. Feel free to disagree, there's no absolutes here, only opinions.
https://en.wikipedia.org/wiki/Clickbait
>Clickbait is a website link designed to entice users to go to a certain web-page or video.[1] [2] ... Click-bait headlines typically aim to exploit the "curiosity gap", providing just enough information to make readers of news websites curious, but not enough to satisfy their curiosity without clicking through to the linked content.[3][4][5]
Though comments elsewhere in the thread suggest that American lenders don't have these scruples.
I'm sure it will be very fruitful to make such a demand.
https://www.paypal.com/uk/webapps/mpp/ua/legalhub-full?local...
My PayPal account is American, so I didn't try to login and read it.
EDIT: Yep, redirects me the the US credit card agreement when I login.
To say that it's a breach of agreement is inaccurate. You agree to repay those on death, so it would only be a breach of agreement if your estate attempts to avoid payment. For that reason, the letter definitely was insensitive as there's no reason to call her out for not fulfilling her agreement, unless maybe her estate is valueless and they are unable to collect?
1. paypal receives notice she's deceased, so they have to collect the remaining balance
2. the creditor must notify the client (hence the letter being addressed to her) of their account being closed, and that the full amount is due
3. the creditor must specify a reason for terminating the account, hence the "see section X of the agreement that says you have to be alive to hold an account", "...you are deceased"
No it doesn't.
This is the work of a second rate player on paypal's legal team. You do not address letters to dead people. You address letters to their estate or if you know who the individual is, the executor of the estate in respect of their estate.
You do not say someone breached a contract when in fact you're exercising a right to wind up the account triggered by death.
Either one of these errors is an annoying mistake. Both of them together is a fairly large fuck-up. Lawyers put a LOT of work into drafting the right tone into their correspondence.
Estates law isn't particularly esoteric, either, but most in-house counsel practice corporate law, primarily, so it's probably just a case of a few corporate guys going "It looks okay, I guess" when proofing the template and not firing off a quick call to their pal that works in estates to review the deceased creditor notice.
Considering that "you" needs to be notified when their account goes into default, does "you" automatically become "the estate"? Is "the estate" the one who "applied for this Account and agrees to this Agreement"? Can an estate agree to anything?
Is it possible a deceased person would be able to get off the hook for this kind of debt is the agreement isn't followed to the letter by the creditor?
[1] https://www.paypal.com/us/webapps/mpp/bmlterms#accountAgreem...
Maybe their target reader is people who fake their deaths?
Don't you mean, "figuratively"? Or are you implying that there is some dude at PayPal that is using this legal template as undergarments?
Indeed it’s not:
“Dead Facebook users will soon outnumber the living”
https://www.theloop.ca/dead-facebook-users-will-soon-outnumb...
I wonder what they consider "long term."
https://jacquesmattheij.com/deadbook-the-long-term-facebook/
"Corporations are people, my friend". Undead people, I'll add, who do not have an upper limit for age, and might as well be immortal.
When the appropriate legal response is: "NAME is deceased, here is the contact info the for executor of the estate".
If the executor of the estate runs out of funds from that estate, the company will usually just write off the debt or they might go to court to make sure, but then write off the debt. The inheritor never pays the debt of the deceased.
If the estate has debt but no assets (which is quite common given probate-avoiding estate planning tools like joint accounts and contract beneficiaries), then such payments are a straight up waste.
Unnecessarily paying off a decedent's debts may still be in line with the decedent's life philosophy and wishes, but one certainly shouldn't be goaded into doing so due to harassment from creditors at an already emotional and stressful time.
I'd recommend reading the Fair Debt Collection Practices Act.
https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-...
In Australia (if they show Tricky Business is at all realistic), Mercantile agents can't present you with a notice in front of other people and must serve you in person (similar to a legal summons in the US).
So there are _some_ regulations in place.
You may not have known that the car you are driving is not paid in full. Large assets can be repo'ed if the account that paid for them is in arrears. This is not necessarily going to happen right away, the estate may have accounted for this already, there are plenty of reasons why this contact is bogus, but it could also be possibly in your interest to follow up with payments in certain cases. (Fight me?)
You could give the car back to the estate (probably the right answer?), or argue that it was a gift, and the estate should pay for it, but I don't know if either of those arguments will actually get you anywhere / prevent the car from being repossessed. You might have documentation that it was a gift, but there's also a lien on the title. Your gift might have been smaller than a car, there's no title, and you might not have any documentation of the gift. (I'm not sure if it matters that you can prove it was meant to be a gift.)
It's probably not considered harassment or illegitimate on about the same basis that you can be newly considered responsible for your own debts that are "past the statute of limitations" that you have started payments on again, even if your last contact was some time after the statute of limitations had already expired.
At that point the debt collectors can continue contacting you, but the collection efforts must include language that explains the fact that you can't be sued for these debts. Well, what they don't explain is that by making a payment, you could be resetting the statute of limitations and newly assuming responsibility for the whole debt, with a brand new expiry date. (I am not a lawyer and this is not legal advice, but this is my understanding of why you "just don't answer those letters.")
You wouldn't have started making payments if you didn't feel that you ought to be responsible for the debt, "QED." Not saying it's fair or right, but there are cases where that's what the law assumes and approximately why it is so.
There are also a lot of things that collectors can do, that would easily be considered harassment if you simply asked them to stop (and then they persisted anyway). People don't always ask, or know that they should ask. Especially if they don't want to pay! (Whether or not responsible, it rightfully makes people go on the defensive to receive a contact from a bill collector.)
I'm getting downvoted but nobody is telling me if I've said something incorrect. That "disagree" button...
So it could be repossessed. (Through the estate, right?). Never mind it's probably much harder without a clear title. Nobody gets a pass to buy free stuff with their credit cards before they die. It's just harder to repo in many cases.
(Jewelery given to your children is also likely much easier to trace and repossess, than the example of a sandwich given to a random homeless friend.)
While they don't "get a pass", this is something that happens - credit-givers know this and the risk is baked into the price and amortized over the entire card-holding population. A lot of people have delinquent debt and some choose to declare bankruptcy.
How do you repossess an expensive luxury cruise, or a stay in Vegas? Some debt is just written off.
the ownership can be called into question if that card wasn't paid off before the person responsible died
On what legal basis?
If the estate does not have the money to pay the debt, the estate would be liquidated to cover as much as possible and the creditors get theirs before you get yours.
If there is documentation to support that they did this on purpose, with the intention of defrauding the card issuers so that you can have some kind of inheritance, then what will happen?
(I've never lived through this scenario but I have to imagine they'll have some recourse against you or the estate. I don't know everything about the law but I know enough to believe that the answer is not "you get to keep any ill-gotten spoils of the scheme, and simply get away with it.")
If the dead person owned a ring when they died then it's an asset that can't be passed on until after debts where paid. However, the estate can sell the ring which they still own for what it's currently worth without issue. They just can't give anyone assets until debts are paid.
This opens up something of a loophole where family can purchase items of a sentimental nature which are not actually worth much on the open market.
That seems like not much of a loophole, are you saying for tax purposes? Since the assessed value of a gift might be much higher than the actual purchase price at auction...?
The loophole seems to be that they can give the gift when their estate is insolvent, if any loophole exists. (Not saying you're wrong, or that this loophole is wrong.)
Or are you saying, it's a loophole because they couldn't normally get those precious things from the estate if it was insolvent, except that their value is mostly sentimental, so they can actually be purchased for a pittance at the inevitable estate auction?
This, the estate can't give things away so normally someone would need to payoff or assume debts to get such things. However, if the sentimental value is high on grandma's rocking chair, but it's actual value is low then family can still get it cheap even if it's not free.
For example, if your parent is past retirement age and has a sizeable nest-egg, which you've transferred into your own name with their permission, and then considered as yours, knowing that you are the executor and they are assets that are assigned to you in the will... call it a "trust" because your parent trusts you, maybe with Power of Attorney...
Well, this might be legal in and of itself (I don't know specifically), but maybe it's actually not legal if you failed to document it properly. There are limits to the amount that you can gift without paying taxes. Was it a gift, or is it a trust? It might matter for tax reasons, or estate settlement reasons, or both.
And one more reason that it would need to be carefully documented, even if you can legally do this is: say that your parent needs nursing care in their final days, and on paper they are flat broke. But actually this trust exists. Well, if it wasn't a crime before, to make the transfer in trust without proper documentation, it certainly becomes a crime now if they apply for medicare benefits to keep the nursing homes from "getting their hands on that money," that's medicare fraud and it's very serious.
That's also pretty far from the original topic, but it's not as far as it might seem. There can be cases where something would have flown under the radar even if it was illegal, but now there is an estate involved, and those things are going to come to light as a result.
If there is a major credit card debt and there are no assets in the estate that can pay for it, then it seems likely that there will be more questions after that. "Are there any hidden assets" can be one of those questions, and there's certainly a spectrum of answers that varies according to whether those assets might be in the form of a gifted sandwich / some jewelry / a car / a boat, etc. and whether those gifts were legitimate or fraudulent.
It will be very hard to get the assets back, but who knows... it might be pretty easy to nail someone with a fraud charge if it was fraud and they were sloppy.
Assuming you could talk a lender into taking the risk, I see no reason you couldn't get an unsecured loan for a car. Obviously, you could put up collateral to secure any sort of loan too.
What if I took out a payment plan to buy a sandwich, gave the sandwich to a homeless man, and then died without finishing all the payments? You say the homeless man should be obligated to give up the sandwich??
If the dealer has a lien against the title of the car, then yes, you give back that car when the order to repossess is issued.
You think the lien is cleared because the debtor passed away? It doesn't work like that. The ownership of the car is based on a transfer of title, and though you may be driving the car, possession is "only 9/10" of the law. If the title is not in your name, then it is not your car. You're just driving it.
Such cases I'm fairly certain that it's actually the title that says who owns the car. If you gave a homeless man a sandwich, paid for with a credit card, and then you died owing money on that card, then yes, that man probably has clear title to keep the sandwich.
(But hypothetically if you do, and it was simply processed as a regular card transaction, would the credit card company potentially have any claim on the title?)
I did not know the difference between a secured and an unsecured loan and that explains a lot. Cases of fraud or bankruptcy are really what I'm mainly talking about.
In most cases where the actual estate is not in the red, the estate will pay the debt and nothing should get repo'ed. If there were a lot of gifts made and cash transferred shortly before the person died, and now the estate is broke, then someone from the creditors' side is likely to seek more information about it, and exercise clawback opportunities.
2) This took place in the UK. (She owed £3,200).
3) The notice was sent to her, not her family.
4) It seems like she had a credit card with PayPal that had a balance on it (reference to "PayPal Credit"). Doesn't payment to creditors come out of the estate? So it seems PayPal might be legitimately owed if the estate has money. Thus there were no social engineering tactics
They're not that either, but I think you meant rogue.
That's not a reasonable assumption in my view. Why should a widow(er) be prevented from opening their late spouse's mail, even if the executor is another person (say, their lawyer)? Should all mail be passed unopened?
This is also done in cases where the collection agency may be aware that there is a "no getting blood from a stone" scenario of an estate that will have zero value when it is wrapped up, so guilt trip techniques are employed against any reachable family members to attempt to get them to assume payments.
I can’t think of any of my assets that will go through the estate. Our house, cars, life insurance [1], retirement [2] etc. are all either jointly owned or my wife is the beneficiary
Debtors won’t be able to collect anything from “our estate”. Until we both pass.
[1] https://finance.zacks.com/can-life-insurance-proceeds-paid-b...
[2] https://www.thebalance.com/does-an-ira-or-401-k-be-used-to-p...
Additionally, periodically they purge entire business categories by locking accounts until you can prove you're not violating their terms of service du jour.
The complaints about Paypal are justified.