‘My 17-year-old nephew’s exam money disappeared after he transitioned from being female’

Dear Katie,

I have a nephew who lives in America, and back in November last year, the whole family was proud to hear he had passed his school exams. My elderly mother wanted to send him £250 as a “well done” present, so I used my PayPal account to send my mother the money on his behalf.

I checked with my nephew that he had received the money and he told me he no longer used the account I had sent the money to. He said he had been locked out of the account after trying to change his contact details. As the money was a gift from his grandmother, who was expecting a “thank you”, I got him to send me a request from his new PayPal account and I sent £250 to the new account, which he did receive.

I contacted PayPal to explain what had happened and it advised me to contact my bank, Barclays, and request a “chargeback” on the original payment. It said it was unable to refund the money as I'd ticked a box to say it had been paid to a family member.

I raised the chargeback with Barclays, but this is where things started to go wrong. Barclays pulled back the wrong payment, and now, hours of online chat sessions later with both Barclays and PayPal, the original money remains lost. I raised a dispute with PayPal, but it insists it will not refund my money. This is because Barclays raised a dispute about it, which remains unresolved. However, Barclays is insisting it has not raised a dispute over either payment with Paypal.

Now PayPal is showing my dispute as “resolved in my favour” even though nothing has been refunded and it will not tell me where the money is. I am at my wits end over this.

– SL, via email

Dear reader,

It transpired that your 17-year-old nephew was locked out of his original PayPal account after attempting to register his name change from a female name to a male name beginning with the same letter. Your nephew, who was assigned female at birth, has recently started self-identifying as male and changed his name at school and on his PayPal account accordingly. Or at least, he had tried to. He told you that when he tried to update his details he was locked out of this account, hence why he was unable to receive the payment.

You sent an additional £250 to his new PayPal account and then asked Barclays to do a chargeback on the first one. However, something went wrong and chargebacks were applied to both transactions. A so-called “pre-credit” of £250 was then applied to your account. But unfortunately, due to what Barclays described simply as a “technical fault”, Barclays was unable to proceed with the chargeback on the initial £250 payment.

Then, the £250 pre-credit for the second transaction was removed from your account because you had said this one had been successfully received by your nephew. So despite all this rigmarole you were still £250 down.

I wondered whether your nephew's name and gender change might have had something to do with the initial chargeback having failed, but when I asked PayPal, it said this shouldn't have been the case. It said the process for changing personal details on accounts was very simple and should not result in a person getting locked out. It confirmed your initial £250 payment had been successful, meaning it wasn't sitting in a so-called “suspense” account where the money is effectively floating in thin air, as I had suspected. However, as I didn't have permission from your nephew to discuss the account, it was unable to comment on the specifics of it. So the whereabouts of the money remains a mystery.

To resolve the matter both Barclays and PayPal both decided to refund your £250 as a gesture of goodwill, so instead of being £250 out of pocket, you are now £250 up. You feel very uncomfortable about profiting from this situation so you are donating the additional £250 to Diabetes UK in honour of your brother (and your nephew's father), who very sadly passed away several years ago.

A Barclays spokesman said: “We have every sympathy with our customer. Once a debit card payment has left a Barclays account we have limited sight of what happens to it, so we encourage customers to always double check they have the correct account details before making a payment.”

A PayPal spokesman said: “We are sorry the customer had a frustrating experience when using PayPal to send money to a family member who had changed their PayPal account details. A chargeback was raised through his bank against the second (correct) payment, but this was denied. We have not received a chargeback against the original transaction. We have issued a goodwill refund to the customer so that he is not out of pocket.”

Anyone planning to send money to family or friends via PayPal should ensure they are using the correct email address for the recipient, as it's not usually possible to recall a payment once it's been sent.