I asked a lady at BofA about how it was that PayPal would be able to take money out of my BofA account by merely knowing my Routing Number and Account Number. In short she answered that PayPal has “special permission” to do so. I think she mentioned that this permission stemmed from an arrangement between BofA and PayPal, presumably a contract, that allows PayPal to act as a bank agent and make transactions on behalf of the bank—to do some things as if it were part of the bank. I don’t know banking law but I have come to trust banks thru experience. I have no experience with PayPal but I know that they serve many people. I am tempted to assume that banks impose standards on PayPal in order to protect their own reputation but I have no reason to believe this.
Suppose I pay the cleaners with a check. They copy my Routing Number and Account Number from the check. They establish a PayPal account using those numbers. They spend $1000 on the web paying with my account. I find a deduction of $1000 from my bank account on my bank statement. What is my recourse.