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Updated: 19 Oct 2020

PayPal to charge £12 inactivity fee: how to avoid the charge and spot a scam email

Your PayPal balance is at risk if you haven't used your account for a year but watch out for opportunistic scammers
PayPal logo on phone screen

People who only occasionally use PayPal could be charged under new plans from the payment platform.

If you have money in your PayPal account and you haven't used it or signed in for 12 months or more, you will be charged either £12 or your entire PayPal balance (whichever is lower).

Customers who don't have money in their PayPal accounts won't be charged, no matter how long their accounts have sat dormant.

PayPal will be contacting affected customers ahead of the rule change, which could create an opportunity for scammers who often impersonate the online payments system.

Here, Which? looks at how to avoid the fee and how to tell if an email from PayPal is genuine.

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How does the new PayPal fee work?

The inactivity fee will only apply to customers with money in their PayPal digital wallets, and this is where the fee will be taken from. PayPal will not take money from a linked bank account.

The first fee will be charged on 16 December 2020.

Those with balances over £12 will be charged the whole fee. So if you have £20 in your wallet, you'll owe £12.

If your balance is under £12, its entire value will be deducted. Say you have £6 in your account, you'll be charged £6.

Why is PayPal launching an inactivity fee?

Inactivity fees are common with prepaid travel cards, but many have been shocked to see PayPal bring in these charges.

PayPal did not answer when Which? asked why it was introducing this fee. But it could be down to increased competition at the online checkout from new buy now, pay later payment platforms such as Clearpay and Klarna, and the fact that eBay is set to replace PayPal as its primary payment platform partner later this year.

How to avoid the PayPal inactivity fee

Avoiding the fee is actually really simple, provided you know your login details. All you have to do is sign into your account on paypal.com. This alone will reset the clock for another year.

If you do have money in your PayPal wallet, transferring it to your bank account or spending it will stop you from having to log in every 12 months to keep the fee at bay.

How to tell if a PayPal email is genuine

Scammers are opportunists, and whenever a company launches a mass customer communications campaign, they're quick to jump in with messages impersonating them.

PayPal is already a go-to for scammers to impersonate, as it's a big-name money-related brand. Since online scams are becoming increasingly sophisticated, it's important to make sure any emails you get from 'PayPal' are genuine.

If they're not, clicking any links they contain could be dangerous, as they could install malware or take you to a fake login page to steal your details - known as phishing.

According to PayPal, its genuine emails will always address customers by their first and last names. So anything with a generic 'Dear Customer' introduction is not legitimate.

There are other things you can check if you're concerned:

  • The sender's addressAn email might look like it's from a company you trust, but if you look closely at the address it came from, you might be able to spot a fake. The address after the @ sign should be the actual company's website (eg paypal.com).
  • Dodgy linksNever click a link in an email you're unsure about. Instead, hover your cursor over it so the page it links to displays in the corner of your browser window. Then you'll be able to see if it's taking you to the company's legitimate web address, or somewhere completely different.
  • Bad spelling, grammar and formatting Scam emails can be very convincing, but often you can still identify them through details such as spelling errors.

Find out more: PayPal phishing scam warning

Which? advice on scams

You can read our guide to spotting scams for more tips and tricks to stay alert.

The police have seen a huge increase in scam reports as a result of the coronavirus pandemic.

Fraudsters capitalising on the virus have run phishing and malware scams, but some have also knocked on doors pretending to offer to buy groceries for people self-isolating.

Read more on coronavirus scams and how to avoid them here.