Thread: PayPal doesn't properly protect sellers

I have now recieved the second "chargeback" claim in the last month from a customer who paid via paypal.

They purchased a domain and hosting and stayed with me for a few months, then they cancelled the subscription and transfered the domain to another provider, then after the domain was transfered they filed a chargeback claim via paypal and paypal refunded the cost of the domain and hosting to their accounts, the apparent reasoning was that the customer claimed their card was used fradulently.

Each time this has happened PayPal have failed to respond to my queries and do not seem to aknowledge my responses to the chargeback claim, to be perfectly honest I am now fed up with PayPal, their charges and the lack of protection for buyers. It is a ridiculous systema and I will now be using Google Checkout in the future.

I am just wondering if anyone else has had similar issues?

Originally Posted by articweb

I have now recieved the second "chargeback" claim in the last month from a customer who paid via paypal.

They purchased a domain and hosting and stayed with me for a few months, then they cancelled the subscription and transfered the domain to another provider, then after the domain was transfered they filed a chargeback claim via paypal and paypal refunded the cost of the domain and hosting to their accounts, the apparent reasoning was that the customer claimed their card was used fradulently.

Each time this has happened PayPal have failed to respond to my queries and do not seem to aknowledge my responses to the chargeback claim, to be perfectly honest I am now fed up with PayPal, their charges and the lack of protection for buyers. It is a ridiculous systema and I will now be using Google Checkout in the future.

I am just wondering if anyone else has had similar issues?

I have had the EXACT same issues. I had two customers sign up for one of my services. Both customers were from the same country and the same Class C IP address range. One customer used the service for just over a month. The other one used it for 2 months. They both submitted PayPal disputes within a couple days of each other. I called PayPal and their CS put me on the phone with someone who is a manager or supervisor. I was told that there's nothing I could do because there was a chargeback on the credit card that linked to their account. This meant that PayPal had no control over it because it was in the issuing bank's hands. He explained to me that the only real seller protection with PayPal is if you sell an item on eBay and have proof that you shipped an item to a customer.

With some merchant accounts it can be worse. You might have to pay a chargeback fee on top of paying the money back. PCI basically holds the merchant accountable for keeping an eye out for fraud.

It is ridiculous. The merchant pays the fee's and keeps the Payment Processor in business, so the payment processor should be protecting the merchant or am I missing something?

And yeh, you may respond "but they would also make no money if there were no customers".... the payment processor does not generate customers for us, nor does it generate income for us, it is simply a gateway for the customer to pay us.

I have been using Google Checkout for quite a while, alongside PayPal (as an alternative gateway for customers) and the vast majority of my customers are now, by choice, paying via Google. I have not, as yet, had any problems with any Google Checkout transaction and they have declined two or three transaction in the last few months because they were suspected as fraudulent, so that's quite re-assuring.

However, if anyone has had any problems with Google Checkout it would be great to hear them before I kick PayPal off my site.

e-onlinedata combined with Authorize.Net have caused me far fewer problems. Though when there is a chargeback with them I'm actually hit harder than I am with PayPal.

it happens a lot and they don't insure intangible items. that sucks for a lot of us.

Originally Posted by vectro

e-onlinedata combined with Authorize.Net have caused me far fewer problems. Though when there is a chargeback with them I'm actually hit harder than I am with PayPal.

how are you hit harder? are there a host of fee's associated with the chargeback? and how often would you say they occur?

Originally Posted by FireWire

it happens a lot and they don't insure intangible items. that sucks for a lot of us.

Yeh, it sucks... a hell of a lot. But I thought that was why we put "terms & conditions" and other agreements in place?

Originally Posted by articweb

Yeh, it sucks... a hell of a lot. But I thought that was why we put "terms & conditions" and other agreements in place?

we have to abide by their terms with certain items.

I'm glad I read this, because I was about to get a paypal a/c after I get myself a new bank a/c. I am taking your advice, but I wondered if anyone knows if the google one has caused any problems?

Originally Posted by articweb

how are you hit harder? are there a host of fee's associated with the chargeback? and how often would you say they occur?

It has only happened to me once with my merchant account a couple of years ago. I had to pay a $50 chargeback fee. With PayPal all I had to do was give the money back without any additional fees, which I suppose is not too bad. The only thing is that this chargeback stuff happens much more often with PayPal.

PayPal make me laugh.

In the UK many large stores who are stock exchange listed have signed up with them so their customers can pay via PayPal.

I wonder what type of service they will be receiving from PayPal when things start to go horribly wrong with their customers!

Well I was scammed the other day so I am actually glad that PayPal sided with me as the buyer. But they should also give genuine sellers some protection too.

Originally Posted by menj

Well I was scammed the other day so I am actually glad that PayPal sided with me as the buyer. But they should also give genuine sellers some protection too.

My whole theory is that they want to have a good reputation for protecting buyers and credit card owners from fraud. For that reason they end up siding with the buyer.

I have had a PayPal account for 9 years and have never had anyone do a chargeback against me.

I have never encountered such problems, perhaps this is an error. but you are exactly sure that your customers pay you? perhaps this is all fraud from your customers.

Originally Posted by UKhun

I'm glad I read this, because I was about to get a paypal a/c after I get myself a new bank a/c. I am taking your advice, but I wondered if anyone knows if the google one has caused any problems?

This is what I would like to know, whether or not anyone else has had any similar or worst problems with other payment gateways (such as Google)

Originally Posted by vectro

It has only happened to me once with my merchant account a couple of years ago. I had to pay a $50 chargeback fee. With PayPal all I had to do was give the money back without any additional fees, which I suppose is not too bad. The only thing is that this chargeback stuff happens much more often with PayPal.

Ah, $50 chargeback fee would anger me even more than just the chargeback claims, that is quite a hefty fee! So there seem's to be one "pro" of PayPal's chargeback scheme - no fees.

Originally Posted by vicdigi

PayPal make me laugh.

In the UK many large stores who are stock exchange listed have signed up with them so their customers can pay via PayPal.

I wonder what type of service they will be receiving from PayPal when things start to go horribly wrong with their customers!

It would be quite interesting to see what happens when a large merchant (who generates thousands of dollars in transaction fees for PayPal) and is highly reputable has a chargeback claimed against them. On the other hand, companies like that have the finance available to be able to simply accept the chargeback, write it off. Unfortunately smaller traders, such as myself, can often struggle with chargebacks.

Originally Posted by menj

Well I was scammed the other day so I am actually glad that PayPal sided with me as the buyer. But they should also give genuine sellers some protection too.

I must admit, if I was a buyer and had recieved a crappy item I would claim a chargeback, but I would put a lot of effort into trying to resolve the issue with the seller first. So it is good that they protect sellers, I just find it slightly unreasonable that they pass the transaction as normal (so haven't suspected it fraudulent) and then a few subscriptions later (so the buyer's card has been charged multiple times, surely they'd pick that up if it was fraud?) PayPal decide to believe the buyers claim. Genuine sellers, with good transaction history should be protected a little more.

Originally Posted by vectro

My whole theory is that they want to have a good reputation for protecting buyers and credit card owners from fraud. For that reason they end up siding with the buyer.

That is all very well, but if they continue in that way then a lot of the merchants will begin taking their business elsewhere and this whole theory (if used by PayPal) will be useless. This is why I think Google Checkout will end up doing extremely well, they have implemented some great fraud prevention schemes from what I can see, they have relatively low fee's and are a reputable and well recognised internet name which gains consumer trust. The only downside to Google Checkout at the moment is that they do not offer a subscription facility, which is pretty usefull for webhosts.

Originally Posted by kentuckyslone

I have had a PayPal account for 9 years and have never had anyone do a chargeback against me.

What kind of products/services do you sell? Maybe we could find some sort of pattern in the way that chargebacks and "fraud" seems to work with PayPal.

articweb added 3 Minutes and 59 Seconds later...

Originally Posted by Harvester

I have never encountered such problems, perhaps this is an error. but you are exactly sure that your customers pay you? perhaps this is all fraud from your customers.

100% sure I recieved the money, I withdraw cash from my PayPal account weekly. And it was a subscription so I recieved payment multiple times. Maybe I am just unlucky and have been hit by a load of fraudsters. Still incredibly annoying.

Originally Posted by menj

...so I am actually glad that PayPal sided with me as the buyer.

It's unfortunate that they weren't able to recover all your cash.
:sangry:

Just found this short video about a seller who was scammed by a reverse chargeback scheme, and his item was tangible... so this shows it's not just webhosts etc. that a subject to these scams.

[VBTUBE]lr_7--e5A1g[/VBTUBE]

Pretty much sum's up how bad PayPal are at handling fraud etc and has made up my mind for me. I am no longer going to accept PayPal as a method of accepting money through my main websites.

Originally Posted by Halobitt

It's unfortunate that they weren't able to recover all your cash.
:sangry:

Not too worried about it, I have won dispute cases before and I am sure PayPal will give me my money back. Its a shame though that the scammer made it out as though he is the "victim"...you can see how he tried to do a fast one on PayPal via the screenshots.

Originally Posted by articweb

Just found this short video about a seller who was scammed by a reverse chargeback scheme, and his item was tangible... so this shows it's not just webhosts etc. that a subject to these scams.

[vbtube]lr_7--e5A1g[/vbtube]

Pretty much sum's up how bad PayPal are at handling fraud etc and has made up my mind for me. I am no longer going to accept PayPal as a method of accepting money through my main websites.

Wow, very nice video....really shows how corrupt PayPal is...

And now I can't even pay the money I "owe paypal" as a result of the latest chargeback because I cannot pay more than I owe into my account, nor can I pay the exact amount to balance of my account, nor can I pay less.


My PayPal Balance

An attempt to pay the balance

An attempt to pay less than the balance.

Which means I am now stuck without a PayPal account (need to pay some eBay fees) whilst I wait up to 7 days for a cheque to reach them by snailmail and to be cashed in. I am really, really starting to get annoyed with them now.

I found this in PayPal's fine print:

If you want a refund, you must mail or deliver your written request to PayPal at P.O. Box 45950, Omaha, NE 68145-0950. If you do not receive your refund, you may be entitled to your money back plus a penalty of up to $1,000.00 USD and attorney's fees pursuant to Section 1810.5 of the California Financial Code.

No wonder they side with buyers.

haha yea paypal can be harsh. I had a friend that was selling an ebook and paypal locked his account with $7,000 in it just because he got 2 refunds in the same day.

I've gotten scammed out of a few copies of my ebook that way.

However, with PayPal being the internet commerce standard now, I feel forced to use them.

At least I have their debit card. That's convenient :-P

i try to use paypal to a minimum.. as it all works digital theres no place to complain the issues.

Originally Posted by vectro

I found this in PayPal's fine print:

If you want a refund, you must mail or deliver your written request to PayPal at P.O. Box 45950, Omaha, NE 68145-0950. If you do not receive your refund, you may be entitled to your money back plus a penalty of up to $1,000.00 USD and attorney's fees pursuant to Section 1810.5 of the California Financial Code.

No wonder they side with buyers.

that explains it all.

@xclist3x: ouch, that's a lot of money. I had about £400 locked into a PayPal account a few years ago because they found out that I was under 18, oops!

Yeah i agree with "PayPal doesn't properly protect sellers"

i m a seller and it happened to me sometimes that paypal charged me back unjust...
i sold a php script and he got the exact script i offered in the thread...
but he insisted that he didnt get the script he ordered...
he opened a dispute and paypal watched us some time fight each other...
then the guy realised that he is mistaken and he didnt see my demo page before and cancelled the dispute ...
if he wouldnt agree with me, i d probably have lost some bucks
becoz there is no way for you to prove you have delivered the tengible product...

i think it s good for ebay sellers who can prove it with shipping details...

but i cant find a better solution than paypal to make transactions at the moment...
any body knows?

If there is chargeback, PayPal will pass a $10 fee onto you.

I agree that merchants are not given sufficient information by PayPal to judge whether an order is valid or not. For example, a credit card processor may give you the following information

1. CVS (security code) matched or not
2. AVS (address verification) matched or not

Some processors will tell you whether the credit card was issued in the same country as the customer. In our experience, this is by far the most important indicator of fraud, since fraudsters like using hacked US cards to pay for goods to their country.

However, despite the apparent shortcomings. Our reversal rate with PayPal was still less than with our credit card merchant account.

And I guess the % of cut off when you transfer it to a bank account is just too much for me. That's why I prefer to use xoom for receiving money abroad.

I have also suffered losses becoz of Paypal's rule of not covering virtual goods.

Originally Posted by runbrun

Yeah i agree with "PayPal doesn't properly protect sellers"

i m a seller and it happened to me sometimes that paypal charged me back unjust...
i sold a php script and he got the exact script i offered in the thread...
but he insisted that he didnt get the script he ordered...
he opened a dispute and paypal watched us some time fight each other...
then the guy realised that he is mistaken and he didnt see my demo page before and cancelled the dispute ...
if he wouldnt agree with me, i d probably have lost some bucks
becoz there is no way for you to prove you have delivered the tengible product...

i think it s good for ebay sellers who can prove it with shipping details...

but i cant find a better solution than paypal to make transactions at the moment...
any body knows?

The alternative I have though of is to say account details will be posted to the buyer recorded mail. That way you can proove to PayPal that you have sent them some goods, they do not need to know what exactly has been sent.

I do not have much of a problem with chargebacks on hosting as, once my costs are covered (which they currently are) anything else is 100% profit so a chargeback on a hosting account, although annoying, doesn't affect me too much financially. The problem is with domains, as I cannot get a refund or make any of the money back from them. I was tempted to require postal/telephone verification for domain registrations but realised that this would take way too long and cost way to much.

Originally Posted by Sammy1899

I have also suffered losses becoz of Paypal's rule of not covering virtual goods.

Sorry to hear that, what have you lost and how?

Yes PAYPAL gives first preference to the buyers.

I got a chargeback once and eventhough I have finished working with it my client just charge back and told me that he has problems with his paypal although their is none ...I tell paypal about it but they have no protection for sellers only for buyers

There is plenty of protection for sells of actual goods, services and virtual however is a different story.

Credit Card processors are even worse than Pay Pal

Its a living knowledsge already that paypal doesnt protect sellers and usually protect buyers more...I have paypal dispute before eventhough I have given the articles already and their is nothing wrong with it he disputed me so I lost the case ...

Originally Posted by technohive

Its a living knowledsge already that paypal doesnt protect sellers and usually protect buyers more...I have paypal dispute before eventhough I have given the articles already and their is nothing wrong with it he disputed me so I lost the case ...

What it for an item that you shipped to the buyer or was it a virtual on-line item? You are more likely to get protection as a seller when you can prove you shipped something to the buyer.

Originally Posted by vectro

What it for an item that you shipped to the buyer or was it a virtual on-line item? You are more likely to get protection as a seller when you can prove you shipped something to the buyer.

Its an like an article so I have send it to the client and he agrees to it even saying he likes it but the problem is that he makes chargeback few days after without even contacting me and asking if what is wrong with my services rendered....

Originally Posted by technohive

Its an like an article so I have send it to the client and he agrees to it even saying he likes it but the problem is that he makes chargeback few days after without even contacting me and asking if what is wrong with my services rendered....

When you responded to the dispute did you use PayPal's dispute resolution process in your account? If so, did you enter the address of the person you shipped the item? PayPal asks for that for tangible items.

Originally Posted by vectro

When you responded to the dispute did you use PayPal's dispute resolution process in your account? If so, did you enter the address of the person you shipped the item? PayPal asks for that for tangible items.

Yes I have provide them a screen shot and also the e-mail address where I have shipped the article and I dont know what happens but I lost the case

When you ship an item you need to ship to to the confirmed address and have a tracking # to prove it was delivered.

Originally Posted by technohive

Yes I have provide them a screen shot and also the e-mail address where I have shipped the article and I dont know what happens but I lost the case

If you didn't ship it to a physical address you're really not going to get seller protection from PayPal. I've been scammed like you were a couple of times selling virtual products.