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What I learned so far about financial claims of outstanding payments and the ways to enforce it is:

You need, at least, to let the person receive 2 reminders which have to name a reasonable period (after the first exceeds, you can send the second) and if the last deadline exceeds, you have the possibility of escalating further.

I don't see in what way PayPal is complying to this.

A friend had times ago this situation: He did a purchase where the debiting of PayPal failed. They notified him about that, sent him a reminder by saying "do it as soon as possible". 2 months later, he got mailed by a debt collecting agency. They claimed almost the quadrupled amount of the already-charged added amount Paypal was claiming.

Now I'm in a situation where something similar happened. (I just paid the debts 2 days ago and everything should be fine, but) Now I just ask myself, since I didn't get any mail that looked to me like an official reminder:

The first mail:

Dear X

There wasn't enough money in your bank account ending in **XX to cover the below payment you sent.

Transaction Details

Payment Recipient: XXXXX
Recipient’s Email: 
                     XXXXX
Your Transaction ID: XXXXX
Transaction Date: XX XXXXX 2016
Transaction Amount: XXXXX EUR

As a result, we debited the amount from your PayPal balance. Your account has also been charged XXXXX EUR, that your bank charged us as processing fee.

Your PayPal account balance now shows an amount owing to us. Please restore your balance as soon as you can.

We may retry charging the outstanding amount, including the bank processing fee, from your bank account. Please make sure that you have enough money in your bank account for this payment, to avoid any penalty fees that your bank may charge.

Sincerely,

PayPal

And the second mail arrived few days after the second charge didn't work as well:

Reminder: Negative PayPal account balance

Dear X,

We would like to remind you again that your PayPal account has a negative balance. Please add funds to your account as soon as possible.

Account Holder's Name: X
Bank Name: X
Sort Code: XXXXX
Account Number: **XX
Transaction Date: XX XXXXX 2016    
Transaction Amount: XXXXX EUR    
Date of Reversal: XX XXXXX 2016    

To see details of this transaction, go to your PayPal account history by logging in to your PayPal account and clicking the History tab.

Don' t hesitate to call customer support at 0800 723 4500 (Mon-Fri 8am till >9.30pm and Sat-Sun 9am till 7.30pm, Free call from a landline. Note: If you >are calling from outside of Germany, use the following telephone number: >+353 1 436 9003 (international call charges may apply.)).

Sincerely,

PayPal

My friend told me that's also all he received before the agency contacted him so:

Is PayPal under German law entitled to escalate the outstanding payment legitimated to an debt collecting agency which is claiming a multiple1 of the original claim, while the only 2 mails received related to the claim were worded as these 2 mails?

If so, what are the criterias that have to be complied and in what way these 2 mails are complying it?


1I'm not asking if the amount itself was justifiable

5

You need, at least, to let the person receive 2 reminders which have to name a reasonable period (after the first exceeds, you can send the second) and if the last deadline exceeds, you have the possibility of escalating further.

Although often repeated, this is not correct which makes most of your argument moot. By German law (specifically § 286 BGB) these are the exact conditions for a default of payments:

(1)If the obligor, following a warning notice from the obligee that is made after performance is due, fails to perform, he is in default as a result of the warning notice. Bringing an action for performance and serving a demand for payment in summary debt proceedings for recovery of debt have the same effect as a warning notice.

(2)There is no need for a warning notice if

  1. a period of time according to the calendar has been specified,

  2. performance must be preceded by an event and a reasonable period of time for performance has been specified in such a way that it can be calculated, starting from the event, according to the calendar,

  3. the obligor seriously and definitively refuses performance,

  4. for special reasons, weighing the interests of both parties, the immediate commencement of default is justified.

(3)The obligor of a claim for payment is in default at the latest if he does not perform within thirty days after the due date and receipt of an invoice or equivalent statement of payment; this applies to an obligor who is a consumer only if these consequences are specifically referred to in the invoice or statement of payment. If the time at which the invoice or payment statement is received by the obligor is uncertain, an obligor who is not a consumer is in default at the latest thirty days after the due date and receipt of the consideration.

(4)The obligor is not in default for as long as performance is not made as the result of a circumstance for which he is not responsible.

Depending on what was contractually agreed on the default happened even before the first warning. For example that is the case if a specific payment due date was agreed to.

Even if a warning would be required it is only one and you can see that no requirements on the specific wording or form on that warning is given. I don't know how you assume an "official reminder" should look like. According to the law a specific and explicit demand to fulfill an obligation is enough. Also, the warning does not need to contain a specific date. If it doesn't the default is effective immediately.

3

neo's answer already explains the rules for being "in default" (in Verzug).

In addition to that, you asked:

Is PayPal under German law entitled to escalate the outstanding payment legitimated to an debt collecting agency which is claiming a multiple1 of the original claim [...]

That seems to be a misunderstanding. A claimant can pass (or sell) a claim to a collection agency at any time, with very few restrictions (collection agencies do need to be officially accredited). This can even happen before the claim is due (this is called factoring).

However: The collection agency has no special rights to claim costs or fees, just because they are a collection agency. It is permissible to claim additional costs when payment is overdue (Verzugsschaden in German law), but there are many rules and regulations about it, you cannot just invent your own fees.

If you are in doubt whether the claim is justified, ask for the claim in writing, with explanations, and then consult expert advice. A lawyer will help, but for a fee; a cheaper options could be some consumer protection organization (such as Schuldnerberatung and Verbraucherzentrale in Germany).

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