European Banks Face Billions in Rogue PayPal Payments

European banks have seen widespread unauthorized direct debits from PayPal accounts, the German Savings Banks Association (DSGV) says.

The German newspaper Sueddeutsche Zeitung (SZ) reports that payments worth around 10 billion euros (£8.6bn) have been blocked due to the failure of PayPal's fraud-checking system.

Payments were halted on Monday when lenders reported millions of suspicious direct debits from the payment firm.

The DSGV confirmed to the BBC that there were incidents involving unauthorized direct debits initiated by PayPal against various credit institutions.

The BBC has reached out to PayPal for comment.

PayPal stated that certain transactions from our banking partners and potentially their customers had been affected by a temporary service interruption.

PayPal's spokesperson assured that the cause was quickly identified and that the company is working closely with its banking partners to ensure all accounts are updated.

The DSGV noted that PayPal has acknowledged the disruptions and assured that the issue has been resolved.

Normal payment transactions to and from PayPal have since resumed, although the incidents reportedly caused significant disruption to payment transactions throughout Europe, particularly in Germany.

The supervisory authorities have also been made aware of the incidents at PayPal.

PayPal aims to prevent scams from reaching banks through its security systems, particularly targeting fake direct debits set up by criminals through various deceptive tactics.

According to SZ, the filter system malfunctioned on Monday, allowing unchecked direct debits to be sent to banks alongside legitimate transactions.

The fallout from these disruptions led to a 1.9% drop in PayPal’s shares on Wednesday following the report.