Thread: Is it ethical?

Recently people have started to request being paid by the "gift" category on PayPal when selling items on the Swapmeet. I understand that people don't like paying fees to PayPal, but they are providing a service, after all. Do you think it is ethical to ask for or to pay for something to be bought but paid for as a "gift"? I have to admit that I did this upon request, but I am seriously re-thinking it now in light of some of the recent threads.

Yes, I do. I'm not a business, I am a private person and I am not making a profit off of these costumes (usually there is a loss). If I were a high volume selling trying to make big bucks, I would understand the squeamishness of using the gift option. And from another post on bhuz it looks like PayPal may be catching on to some of our tricks.

I thought that if you pay as a "gift" it makes it nearly impossible to file a claim if something goes wrong. I would rather pay a few extra bucks than pay for an item that gets lost in the mail.

I have done this (pay using the gift option) for smaller amounts with people who have been fairly active on Bhuz. E.g., I would not hesitate purchasing a CD from you with that option. With larger amounts, no matter who the seller is, taking the official route protects everybody involved. I do not think that asking the buyer (esp. after the transaction was agreed upon) to pay using the gift option should be done.

In general, I think it is fair for the seller to request that the buyer pays for Paypal fees, similar to how shipping costs are handled, or even better,to add the cost for Paypal when determining the asking price.

I never, ever use the gift option. I always calculate out and pay the fee exactly. When I'm selling something, I send them the final number with the exact Paypal fee included. It doesn't matter to me so much that it is ethical, but that if something goes wrong a dispute can be filed. If the amount is so large that Paypal fees are a pain I happily take money orders and have paid people with money orders before.

It may be less convenient but it's safer for me in the long run.

Originally Posted by andalee-oriental

Yes, I do. I'm not a business, I am a private person and I am not making a profit off of these costumes (usually there is a loss). If I were a high volume selling trying to make big bucks, I would understand the squeamishness of using the gift option. And from another post on bhuz it looks like PayPal may be catching on to some of our tricks.

But why is paypal obligated to provide you with free service then? They are a business, trying to make shareholders happy and turn a profit.

This argument is a little like saying that since your students don't want to go pro or plan on making any money off their dancing, they shouldn't have to pay you for classes.

This may be ridiculously provincial and old-fashioned, but ethical matters to me more than almost anything else in my life. The Golden Rule matters to me, I believe in karma, and I don't like to lie. As a business person myself, I don't like to rip off other businesses.

I've been asked to use the gift option in the past, and I've done it. But I didn't like it. I've also been asked by international buyers to lie on customs forms, and I don't like that either.

I hate sounding like a goody-two-shoes all the time, but I think in the future I'll just say no when I'm asked to lie.

They're not. They can take away that option at anytime.

I have paid and received items with the gift option, (small amounts) but after the latest problems we've seen, I'd just as soon pay the fee or take a check or money order. Edna

Originally Posted by Lauren_

But why is paypal obligated to provide you with free service then? They are a business, trying to make shareholders happy and turn a profit.

This argument is a little like saying that since your students don't want to go pro or plan on making any money off their dancing, they shouldn't have to pay you for classes.

I also hate the goody-two-shoes hat, but I have to agree with this.

The "gift" option is for one person giving a gift to another. It is nice to have--sending a monetary gift to a friend, a parent can easily wire money to a child, people can contribute to a fund for something, or I could transfer money from my paypal to my hubby's without a fee....

It would be a shame for something like that to disappear because it is being used in a way that paypal would consider an abuse.

Originally Posted by andalee-oriental

They're not. They can take away that option at anytime.

But then they also have to take it away from the people who are legitimately using it for the purpose of sending a monetary gift.

I'm sorry, but I'm with Lauren. It's the transaction does not constitute a gift by any definition of the word, so stating that it is is a flat out lie, and IMO unethical. If you have a problem with the fees, either build it into the price of what you're selling, or simply don't use Paypal. But I think it's ethically wrong to say, "I don't believe that the rules should apply to me because of X, so I'm going to completely ignore them."

FWIW - I don't select the gift button...I use "other" or "payment owed".

Pardon my ignorance, but what financial difference does it make if you choose one payment option or the other? I don't use Paypal that often.

If you choose "gift" there is no fee associated with the paypal service. What is sent is the amount that arrives, 100%.

If it isn't a gift, paypal takes a percentage of the amount, so the recipient receives less than what is sent.

Originally Posted by Lauren_

This may be ridiculously provincial and old-fashioned, but ethical matters to me more than almost anything else in my life. The Golden Rule matters to me, I believe in karma, and I don't like to lie. As a business person myself, I don't like to rip off other businesses.

I've been asked to use the gift option in the past, and I've done it. But I didn't like it. I've also been asked by international buyers to lie on customs forms, and I don't like that either.

I hate sounding like a goody-two-shoes all the time, but I think in the future I'll just say no when I'm asked to lie.

Isn't there another problem with this, which has to do with taxes?

Those of us who make our living in the arts can't deduct costume expenses that aren't there. If we pay for a costume but say it's a gift, poof - no expense.

Costumes are like any other form of business expense.

I'm glad you brought this up, dunyah, it was on my mind, too. I think things like "truth" are so fuzzy these days that we've forgotten how to determine what is truth and what isn't. But in actuality, it's really simple. If you're selling something to someone, it isn't a gift.

I think declaring a sale may also affect customs charges, as well, when shipping overseas. The recipient may get a fee from customs when they receive the package... But I don't think it's fair to ask your seller to lie for you, even if it does you a financial favor. You're asking them to compromise their honesty, and that's not a cool thing to ask somebody, in my book.

Originally Posted by Elibelinde

Isn't there another problem with this, which has to do with taxes?

Those of us who make our living in the arts can't deduct costume expenses that aren't there. If we pay for a costume but say it's a gift, poof - no expense.

Costumes are like any other form of business expense.

Used costumes are different. If you are selling a used costume, you already paid sales tax on it when you originally bought it. It's like a "double tax" if you have to pay taxes on a used item. The govt. already has gotten its share IMO.

Originally Posted by andalee-oriental

FWIW - I don't select the gift button...I use "other" or "payment owed".

Exactly. I don't see anything wrong with using "payment owed" (for example, when you are making layaway or installment payments, technically it IS an amount sent for a "payment owed"). At least, that's my understanding. If I were selling an item on Ebay, for example, or vending at a festival, then it's an item I originally bought for resale, it's retailing, so I am obligated to collect and pay the sales tax at the end of the tax year.

Originally Posted by naiyahayal

Used costumes are different. If you are selling a used costume, you already paid sales tax on it when you originally bought it. It's like a "double tax" if you have to pay taxes on a used item. The govt. already has gotten its share IMO.

Not sales tax. Income tax (schedule C). She means being able to deduct the costume purchase as an expense to decrease the business income we have to claim. Buying costumes is a legitimate expense in our business.

I don't think Paypal has anything to do with sales taxes.

Exactly Lauren! Thanks - this has nothing to do with sales taxes.

Rather, when you do your income taxes you add up everything you've earned, then you are entitled to take deductions for expenses like music, costumes, travel, studio rent, etc.

Originally Posted by SpicyThai

If you choose "gift" there is no fee associated with the paypal service. What is sent is the amount that arrives, 100%.

If it isn't a gift, paypal takes a percentage of the amount, so the recipient receives less than what is sent.

Actually, that isn't quite true in all cases. It depends on what the source of funds is that the sender is using. If you are using your paypal balance or an instant transfer from a bank account, then "gift" transactions have no fees.

If you are using a credit card, then there ARE fees for "gift" transactions, and they are higher than if have a premier account and do the transaction as a purchase. I read the paypal policies yesterday and provided the relevant links in that other thread about the email from paypal.

Originally Posted by andalee-oriental

Yes, I do. I'm not a business, I am a private person and I am not making a profit off of these costumes (usually there is a loss). If I were a high volume selling trying to make big bucks, I would understand the squeamishness of using the gift option. And from another post on bhuz it looks like PayPal may be catching on to some of our tricks.

You can read the paypal policies on this. It doesn't matter if you are a for-profit business or just a casual seller of used goods. Transactions involving the buying/selling of goods and services are supposed to be charged a fee, which is collected from the recipient of the funds.

Being a retailer, making a profit, or having a certain volume of sales/transaction isn't part of their criteria.

If all this ethical stuff and following the rules isn't compelling though, just consider that as a *buyer*, choosing the gift option to save someone else a few dollars leaves you in a completely vulnerable position should anything go wrong with the transaction -- seller doesn't ship the stuff, stuff gets lost in mail, stuff arrives not as described or damaged, etc. Too bad for the buyer because there is no paper trail that the transaction ever took place.

Originally Posted by ssipes

If all this ethical stuff and following the rules isn't compelling though, just consider that as a *buyer*, choosing the gift option to save someone else a few dollars leaves you in a completely vulnerable position should anything go wrong with the transaction -- seller doesn't ship the stuff, stuff gets lost in mail, stuff arrives not as described or damaged, etc. Too bad for the buyer because there is no paper trail that the transaction ever took place.

Oh, I've had that problem in the past, which is why I am now discerning when choosing how to send money through PayPal.

I've never asked for this...
however, I am guilty of asking a seller to declare a lower value on the customs form. Knowing I have to pay more for international sales will sometimes make me second guess a purchase.

the "gift" idea is so when your mom paypals you something as a gift you don't have fees removed. The sender pays the fees unless it is directly from their paypal balance to yours. Don't use the gift option unless you know the person very well or don't care about ever seeing the money again.
And if you are selling something then adjust your price so you don't lose money on the paypal fees. Maybe come up with a price that includes free shipping and absorbs the fees. It's no fun to buy something and then see a bunch of fees tacked on. Also you can't open a dispute when it's a gift.

Originally Posted by Elibelinde

Isn't there another problem with this, which has to do with taxes?

Those of us who make our living in the arts can't deduct costume expenses that aren't there. If we pay for a costume but say it's a gift, poof - no expense.

Costumes are like any other form of business expense.

Good point! I think I will have to politely decline to send any money for BD related items or services as a gift anymore. I go through my paypal transactions every year for tax time, and you can bet that I deduct all my bellydance things!!

I have asked folks to use the gift option, but only if they are standing right in front of me and taking the item with them. I wouldn't dream of asking them to use it on an item to be shipped. I've never not sent something that's been paid for, but I don't want to strip the buyer of their rights to help from Paypal. They won't have to use it with me, but I want them to have that peace of mind.

Originally Posted by ssipes

Actually, that isn't quite true in all cases. It depends on what the source of funds is that the sender is using. If you are using your paypal balance or an instant transfer from a bank account, then "gift" transactions have no fees.

If you are using a credit card, then there ARE fees for "gift" transactions, and they are higher than if have a premier account and do the transaction as a purchase. I read the paypal policies yesterday and provided the relevant links in that other thread about the email from paypal.

I didn't know that, how strange. So if you were paying by credit card either way, would you pay more for the "gift" option, or are you just comparing bank account transfer vs. credit card? I rarely have any balance in my paypal so it is almost always a credit card charge.



In other thought--having a seller ask me to pay as "gift" when it isn't a gift raises a red flag for me. I inquired to some DVDs once, where she requested that arrangement. She may have been entirely on the up-and-up, but it spooked me and I did not choose to buy the DVDs.

Wow! Who knew there was a 'gift' option? (Well, you all did!) I have never encountered this, but I will be wary of it. I do deduct costume/business purchases from my taxes and don't want to mess with that.