DC businesses hit by scammers using PayPal prepaid debit cards

An Anacostia businessman says he has a warning for business owners who accept prepaid PayPal debit cards. After scammers used the cards at his clothing store, he is now out thousands of dollars and wants to make sure it doesn't happen to anyone else.

These days, Alexander Mosby will gladly take cash at his store, District Culture, after his run-in with debit card scammers. He says in January, some customers came in and bought clothing with PayPal MasterCard prepaid debit cards. Everything seemed fine with the transaction at first.

"Customers would come in, they would swipe the cards," Mosby said. "But what the cards actually did was it would run and approve on our system. But it wasn't actually being approved. It would throw the credit card processing machine offline, which we did not know about."

He said they would sign it like a normal credit receipt and take off. Days later, he got hit with charges and other fees for fraudulent cards.

He said he lost about $15,000 and he is not the only one.

"Eventually I ended up getting hit for over $20,000 in fraudulent PayPal cards," said Romeo Gordon of Morgan's Seafood.

He was hit by the same scam with the same type of card last summer.

"I contacted PayPal themselves to let them know they have a problem with their card with this scam," he said. "PayPal is telling me it's not us. It's the company that manufactures the card. I said it has your name on it."

Gordon said PayPal claimed it would investigate the problem.

Meanwhile, Mosby has stopped taking the prepaid debit cards and is working with a lawyer to see about getting his money back.

"I guess you live and you learn and you move on from it," he told us.

Law enforcement officials say the cards are most likely stolen and the thieves tend to hit small business owners with older point of sale systems that allow the card to go through.

We have reached out for comment from PayPal and are awaiting a response.