BaFin investigates PayPal over alleged fraudulent transactions

An alleged failure of the security system at the payment service provider PayPal is also occupying the Federal Financial Supervisory Authority (BaFin). BaFin is in close contact with the Luxembourg supervisory authority, a spokeswoman for the Federal Ministry of Finance said on Wednesday in Berlin. PayPal has its European headquarters in Luxembourg.

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Earlier, the Süddeutsche Zeitung (SZ) reported that security systems at PayPal, which are supposed to filter fraudulent payments, had apparently failed. The Finance Ministry is aware of the incident, is monitoring the situation closely, and is in contact with BaFin, the spokeswoman said. So far, no final information is available regarding the affected institutions. It is currently being investigated "whether and to what extent unauthorized debits actually occurred."

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According to research by the SZ, several German banks blocked PayPal payments totaling billions on Monday. The banks reportedly noticed the arrival of millions of suspicious or seemingly fraudulent direct debits from the payment provider beforehand.

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The German Savings Banks and Giro Association (DSGV) stated on Wednesday that "in recent days there have been incidents involving unauthorized direct debits from PayPal to various financial institutions." This had "significant effects on payment transactions throughout Europe, and especially in Germany." Customers of Sparkassen financial group also experienced this on Monday for several hours, since Tuesday morning, payment transactions have been running normally again, "but remain under observation."

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PayPal "acknowledged the disruptions in business operations and assured that the problem has now been resolved," the association continued. Customers affected by the disruptions should contact the company directly for clarification. The spokeswoman for the Federal Ministry of Finance assured that "affected consumers are protected against damages resulting from unauthorized debits."

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