A long time ago, well about a year ago, I opened a new bank account to start a tshirt company. I only put in the required $50, sure it was really measily amount, but it's all I had until I could sell a website. After the 30 days goes buy (or 60 cant remember) I became a verified paypal user. Cool, now I could sell the design, and buy some of my screen printing stuff that was much needed. About a week later, I sold my design, drastically increasing my wimpy bank account. The next day I was thinking about ordering the stuff I needed. Good thing I didn't! Two days after selling the site, I get an email saying something about the person not getting their money. Because it was only PSDs, and some coding, it was considered a virtual product and I lost out on all the hard work and got no money in return. My question is, would I have went to jail if I bought those screen printing items (mostly shirts, paints, a basic station)? The company sends out their products the day they receives their orders, but if I would have had a claim, they wouldn't have their money and my products would be on the way to my house by then. It still scares me what COULD have happened to me if I would have decided to purchase the items that day.
I doubt that jail would be the outcome. You would have received a bounced EFT fee, about the same as a returned check, and had extra fees from PayPal for the same reasons. If you made all those good quickly you would have only lost a good bit of money. I back my PayPal accounts with a CC so the worst I will lose is what I spend. I personally disagree with their their virtual goods policy. But their policies are in effect to keep the CC companies and Feds happy. Even with all that they are about the best game in town for a low volume user.
Well with me, my account was just backed by the bank account, no CC. I know from experience that if you go -$20 or more for a month they will just shut your account down. Now, I could have went -$250 in the hole if I would have bought that stuff. What then? Just get billed?
Your account gets put on hold until you pay it. They don't automatically go into your bank or any attached credit card. I imagine they could send your account to collections, but I haven't seen it happen. It would definitely get limited though. They wouldn't take any real legal action unless you owed thousands or probably tens of thousands of dollars.
I do not think Paypal would put you behind bars for $ 250. At best, they would send you e-mails about the same and may try to contact you personally. But that is about it simply because the cost of legal fees to recover $ 250 would be too high for them to consider going to court.... imo Regards, RightMan