Are you privacy oriented but hate the idea that PayPal displays your real name when doing transactions?
If so, you’ve probably wondered if you can use a fake PayPal name instead.
You can use a fake name on PayPal only to spend money, but you cannot withdraw money unless you use your real name and provide identification documents. Finally, using a fake name violates PayPal’s User Agreement, so you risk having your funds and account suspended for 180 days.
What happens if you use PayPal with a fake name?
At some point, PayPal will ask you to confirm your identity and real name in order to continue using the app.
Confirming your identity usually means providing PayPal with a photocopy of your ID (front and back), proof of address, and a social security number (or your country’s equivalent of one).
If you don’t confirm your identity, the functionality of your PayPal account will be completely or partially disabled, depending on the laws and regulations of your country.
That might not be that much of a problem if you just use PayPal as an extra “security gate” between an online eCommerce store and your credit or debit card.
However, if you have large sums of money deposited on PayPal, you won’t be able to withdraw them to your bank account unless you first verify your identity.
One of the most common consequences of using a fake name on PayPal is having your funds suspended for 180 days for violating PayPal’s user agreement.
The screenshot above was taken from PayPal’s User Agreement.
Some people claim that using a fake name on PayPal constitutes fraud and can be prosecuted as such.
In our view, this is mostly an exaggeration since most of the time PayPal doesn’t demand identity documents right at signup, so simply using a fake name shouldn’t qualify as fraud.
However, verifying your identity with a fake ID or address, or by using someone else’s ID and address, almost certainly qualifies as fraud or identity theft. It’s best to consult a lawyer before attempting this.
In any case, if you do decide to use your real name, don’t try to skirt or bend the rules. This means you must:
- Use your proper legal name, as it appears on your government ID (Driver’s license, non-driver’s ID, passport, etc.)
- Spell and format your name correctly.
- Do not use initials unless your ID also has the same initials.
You’ve already used a fake name on PayPal
Don’t worry if you’ve already created a PayPal account with a fake name. PayPal allows you to change your account username, probably for this exact sort of situation.
Be mindful, though, since PayPal allows you to change your account username only once. So you better be sure the name you use is your own and exactly matches the name on your government ID.
To change your PayPal username, do the following:
- Go to the actual https://paypal.com website, either on mobile or desktop browser. You can’t change your username within the PayPal app.
- Log in to your account.
- Underneath your Profile Name, click on Account Settings.
- Click on Account Owner Information.
- Click Change next to Account Name.
After you’ve changed your username, you are safe to verify your identity without having to worry that PayPal will suspend your account, money, or anything like that.
Legal regulations do not allow PayPal to accept fake names
The simple reason PayPal doesn’t allow you to sign up by using a fake name is because they are subject to a very strict set of financial regulations known as KYC or “know your customer,” laws.
Nearly every country has these sorts of laws in place, and they apply not just to PayPal but to any financial institution such as banks, investment funds, brokers, etc.
The primary purpose of these laws is to allow law enforcement authorities to see money flows between people suspected of illegal activities. This includes tax evasion, money laundering, terrorism, fraud, etc.
Which brings us to confidentiality.
Just as PayPal has the obligation to know the identity of its clients, it also has the legal obligation to maintain the secrecy of a client’s financial relationship with PayPal.
These financial secrecy laws prevent PayPal, banks, and other financial institutions from disclosing your information to other banks, companies, or people without your consent.
The biggest exception to these financial privacy laws are information requests by law enforcement or tax authorities.
However, even these sorts of requests are very tightly regulated. Police and tax authorities can’t just access PayPal’s databases at any time, for whatever reason they want.
Thus, the police must first obtain a court order or subpoena in order to access your PayPal information. But obtaining such a document is more difficult than it sounds, since the police must first demonstrate probable cause.
Workarounds for using your real name on PayPal
Before reading this section, it’s best to limit your expectations. You can’t really use PayPal to its fullest without providing some sort of proof of identity.
However, there are some ways to at least limit how many people can see your real name.
Get a business account
By using a PayPal business account, people who receive or send money to your PayPal account will see the company name instead of your real personal name.
The problem with making a PayPal business account is that here too, you’ll have to provide real documents to verify both your personal identity and, most of the times, the identity documents of the business.
So if you don’t have a registered business or sole proprietorship, you’ll first have to set one up.
Another disadvantage of PayPal business accounts is that you have to pay transaction fees if you give or receive money to friends and family. Personal accounts don’t have these fees, but business ones do.
Finally, even with a business account, it is possible for a determined user to determine your address, name, and other information.
A buyer will receive your business name, address, and other contact information; the only thing hidden is your personal name, and there are ways to retrieve that information as well.
So again, there is no such thing as anonymous with PayPal.
Use a limited PayPal without providing your real name
If you really don’t want to use your real name on PayPal, then you can try to use PayPal without identity verification.
However, this severely limits what you can do on PayPal.
The most important limitation is that you can’t withdraw money from your PayPal account.
So if a friend sends you $30 to pay for dinner, you can’t withdraw it to your bank account without first verifying your information.
What you can do, however, is use PayPal to pay for stuff. In this situation, PayPal will directly draw money from your credit or debit card but not from your PayPal balance.
As an example, if a friend sends you $30 in your PayPal account, you won’t be able to use the $30 in your PayPal balance to buy something from Amazon. Instead, PayPal will directly draw the money from your credit or debit card.
The problem with using PayPal just for purchases is that, at some point in the future, you’ll probably want to cancel a transaction and get your money back.
In this situation, your refund will be deposited into your PayPal account instead of your bank account. This means you’re back at square one and cannot access the refund money in your PayPal balance unless you verify your identity.
Use someone else’s PayPal account
If you rarely use PayPal and only need it for one specific transaction, then consider another PayPal user you know and trust to see if they are willing to do the transaction for you.
It’s pretty cumbersome and lets other people inside your personal space, but it’s generally not worth making a brand new PayPal account for a random one-off thing.
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