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Most Common Problems
Any time personal information is transferred online, there is a risk, no matter how secure the site is. PayPal is no exception to this rule. Yet, the most common security problem isn't PayPal's doing. Anyone who knows your PayPal email address has the ability to hack your account.
If you use a password that is meaningful to you and is fairly easy to guess, you are putting your account at risk. Once someone knows your login information, there is little PayPal can do to block the person until you report fraudulent activity. Once in your account, hackers also have access to credit cards and bank account information listed in your account.
The second most common security problem is phishing emails. PayPal does send the occasional email, especially if there have been upgrades or site changes. The key is to remember that PayPal will never ask for your account information in an email. They will also never ask you to login directly from the email itself. Many phishing emails look like the real thing, and most even have the PayPal logo. When in doubt, contact PayPal directly from the main PayPal website. Also, never log on anywhere except the main site.
With all account information for all users being stored on PayPal's servers, it is possible for PayPal to suffer simple data theft. This means someone could hack any server and steal the personal information they want. PayPal takes extreme measures to prevent this security problem, but accounts have been hacked this way in the past.
One final PayPal issue is accounts being mixed up. System glitches do occur, no matter how up-to-date a system is. From hardware failure to an update gone wrong, your PayPal account could be mixed up with someone else's. This means when you login, you will see all the account details for someone else and vice versa. Though you hope you can trust the other individual to wait until the problem is resolved, the truth is, someone else could take advantage of the new finances at their disposal.
Image Credits: PayPal Logo / PayPal.com
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Mining an Information Goldmine
Since PayPal requests that you link a credit card or bank account for verification, your account is a veritable information goldmine. This automatically makes PayPal a target for greedy hackers. Unlike many financial sites, PayPal stores it all and allows anyone with the correct user name and password combination to access the information. Once it's been found, you risk your entire identity being stolen.
This makes using a secure password even more important. PayPal enforces certain password policies, such as requiring a combination of upper and lower case letters along with at least one numeral. The more you mix these three components, the harder it is for someone to hack your specific account.
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What PayPal Is Doing
You are not the only one responsible for keeping your account secure. After all, you can only do so much. PayPal takes steps to ensure all accounts are kept as secure as possible. This includes placing a hold on your account if they suspect suspicious activity. Once you go through a few checks, which can be frustrating and time consuming, your account is reinstated. This typically involves verifying addresses, phone numbers and other personal information. Despite the annoyance, it is better to be safe than find out later that your bank account has been drained.
Report suspicious activity immediately to have PayPal investigate it. They will place a hold on your account until the problem has been solved. If funds have already been transferred out of your account, these will be replaced once the investigation is complete. Any unauthorized purchases from your account will be refunded to you if they are reported within 60 days.
Though PayPal security problems do exist, they are rare. The majority are due to a third party finding out your password versus any real security threat from the site itself. Be cautious, be proactive and you'll be much more secure.
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PayPal: What To Do When You Think Something Is Amiss, at https://cms.paypal.com/cgi-bin/marketingweb?cmd=_render-content&content_ID=security/suspicious_activity
PayPal: What You Need To Know To Stay Protected And Secure, at https://cms.paypal.com/cgi-bin/marketingweb?cmd=_render-content&content_ID=security/online_security_center