A recent set of threads has developed surrounding a chargeback and the impact it had on a user. Chargeback liability is always a risk when accepting payments via credit card (through any payment method)and it is something to bear in mind when accepting credit card payments.
Our Seller Protection Program applies to:
1. Claims of non-delivery
2. Fraudulent Credit Card usage.
The seller, provided they follow the program above, will not be held liable for these items.
However, consumers are granted the right to do a chargeback for virtually any reason. This is a right that PayPal does not have any control over.A buyer could file a chargeback for quality of merchandise, which is an item NOT covered by the Seller Protection Program (we also do not cover merchandise quality through our Buyer Complaint Process). This does not, however, completely eliminate the risk that the buyer may turn to their credit card company....this is a risk factor that some users need to gauge on their end (many sellers familiar with merchant accounts/payment services know that chargeback liability is a reality that can't be avoided). We will fight chargebacks whenever possible, but the final say in issuance is with the credit card company.
We do, at times, receive the merchandise back from the buyer. We will return the merchandise to the seller if:
1. The liability for the chargeback has been settled to us.
What good does this do?
The seller will not be out both the goods and money for the transaction. The seller can be free to sell the item again, which could offset any potential loss from the original transaction/chargeback.
PayPal DOES NOT act as the agent of either party in any transaction or resulting dispute, though PayPal does control the outcome of disputes initiated through the Service's dispute resolution process.
Are you telling us that, when you accept merchandise on behalf of the seller, you're not acting as their agent?
If not, then on whose authority are you assuming to take possession of merchandise which does not belong to you? And why, as in this case, do you actively encourage the buyer to return the item to you rather than the rightful owner?
posted on July 27, 2001 07:16:57 PM newSo essentially, PayPal requests that the buyer send the item to PayPal in order that it may be used as ransom against the seller?
As collateral against the seller, to ensure that the money is returned to PayPal from the seller? That's what it sounds like Damon is saying.
If so, then this is quite disturbing. PayPal should return all items which are sent to them, straight back to the sender. Doing otherwise is outside the bounds of ethics.
posted on July 27, 2001 09:19:21 PM new
I can see part of this.
If:
1. A buyers bank ok's a chargeback (which is beyond paypals control, but paypal should be active in fighting chargebacks).
and
2. The seller is "protected" and has no funds taken from them.
Then sure, if paypal can get their hands on the merchandise, and salvage something, go for it.
But if:
1. A buyers bank ok's a chargeback
and
2. Paypal recovers their funds from the seller.
Then the merchandise belongs to the seller, and NOBODY else, and if paypal has possession of the merchandise, they need to send it back to the seller ASAP.
And now if:
1. A buyers bank ok's a chargeback
and
2. Even if the seller isn't covered by the so called "protection plan" If Paypal can't recover from the seller, then the seller has the money and has no claim to the merchandise.
Again, Paypal can't be faulted for trying to recover something.
Trouble I see in the other thread is (if we are getting the whole story) that the seller has had the money taken out of his account, but for some reason paypal still has the merchandise. If this is true, the seller should have have a tracking number that is trackable "online", and the merchandise should be on it's way back to the seller.
posted on July 27, 2001 09:28:39 PM newAgain, Paypal can't be faulted for trying to recover something.
Well, if the merchandise just showed up on their doorstep, maybe. Telling the buyer to send the merchandise in question to PayPal is a bit of a stretch, however.
I'm still interested in the answer to this question:
What happens if the item, when eventually returned to the seller, turns out not to be the same item the seller sent out?
posted on July 27, 2001 09:35:20 PM newroofguy, jrb3 is that you?
Probably not roofguy- since he is on record having said:
PayPal does not get involved in quality of merchandise disputes. Never has. Never.
this topic (PayPal getting involved in a quality of merchandise dispute) is probably going to require some reconsideration. Or maybe not- who knows for sure?
posted on July 27, 2001 09:54:20 PM newWhat happens if the item, when eventually returned to the seller, turns out not to be the same item the seller sent out?
I would say if the seller could prove that (with auction pictures etc.) paypal needs to ante up some money. They are taking on a risk of their own when they take action like this. Just as Damon is so fond of saying "....this is a risk factor that some users need to gauge on their end "
Telling the buyer to send the merchandise in question to PayPal is a bit of a stretch, however.
Hmmmm.... That kind of depends on where the refund money came from. If it was a "chargeback" and the money was stripped from paypal, until they can recover from the seller, they would have a "vested interest". (at that point, only one "out" anything is paypal)
I am certainly no paypal fan by ANY MEANS (in fact, I refuse to do business with them), but I'm trying to look at this the most fair way I can.
If a buyer gets a charge back from his bank, (for a good OR a bad reason), the correct thing to happen is the seller gets the merchandise back, and paypal gets their money back. What happens if the seller strips their paypal account, and their is nothing to recover? Is paypal just out money because a jerk did a bogus charge back, and the seller gets the money and the merchandise? That isn't right either.
Who Need's a stink'n Sig. File?
posted on July 27, 2001 10:07:47 PM newroofguy, jrb3 is that you?
Not even close. Unlike the above mentioned I HATE paypal, and refuse to do business with them. I'm on of those "Money Order" sellers. (makes me the master of my own fate... )
I'm just trying real hard to see both sides of this. It looks a little "heavy handed" to me, but I can see situations where paypal would be intitled to the merchandise. Once a bank has ok'd a charge back (right or wrong), paypal has to cough up money. If they recover from the seller, the merchandise should go to the seller. If a seller strips their paypal account, then what???
Who Need's a stink'n Sig. File?
posted on July 27, 2001 10:10:41 PM newIs paypal just out money because a jerk did a bogus charge back, and the seller gets the money and the merchandise?
Well, that wouldn't be fair, of course, but this seller doesn't *want* the merchandise- they want the money. And PayPal has already gotten their money back.
When a fraud is committed, *somebody* will end up with the short end of the stick. PayPal is doing everything they can to avoid being that party (which is their right), but they are also the *only* party to the transaction (buyer, seller and PayPal) to have access to all the available information regarding that transaction. They will not (without a subpoena, anyway) share that information with the other parties, which seems a little unfair to the buyer and seller, don't you think?
posted on July 27, 2001 10:23:52 PM newThey will not (without a subpoena, anyway) share that information with the other parties,
Whats fair seems to me that ALL interested parties (ie. those with a vested interest, not us lurkers) should have access to this information. How in the world could paypal intelligently dispute a bogus charge back, unless they gave the information to the seller, and then in return gathered related information from the seller? How could a Seller give them the right information to dispute a bogus charge back with out knowing exactly what the buyer is claiming. What do they do, just roll over when someone wants to screw a seller?
posted on July 28, 2001 07:11:06 AM new
I highly doubt PayPal encourages any buyer to return merchandise to them. That being said, the above posting from Damon is highly disturbing in that PayPal would then involve itself with a set of conditions as to what to do with the merchandise. That is so contradictory to their TOS it boggles the mind.
But, since PayPal is actually the merchant of record, not the seller... they are probably required to accept the return... However, in the spirit of their TOS, it should automatically be forwarded to the seller. There should be no involvement on the part of PayPal there. Why PayPal would even want to burden itself with merchandise tells you something about the way this company thinks (or doesn't).
posted on July 28, 2001 09:12:17 AM new
OK- ignoring the transaction currently being discussed, what's to stop the scenario below from happening?
Crook wins auction, pays using PayPal. Crook's credit card is charged, PayPal's merchant account is credited, and the funds are transferred into seller's PayPal account. Seller sends item to crook. Crook switches fake item for the authentic one received from the seller, files a chargeback with their credit card over "quality of goods", and sends the item to PayPal. Crook's credit card company issues a chargeback, debiting PayPal's merchant account. PayPal debits seller's account to cover the chargeback, and is now in possession of the switched item. PayPal sends the fake item back to the seller, and calls it good. Seller contacts the crook regarding the fake item. Crook says it's not their fault- they sent it to PayPal, and somebody there must have switched it. PayPal says they sent back the same item they received. Crook has the real item and his money, PayPal is out nothing, and the seller takes it in the shorts.
You admitted on the other board that, until very recently, Paypal has been telling users that sellers are protected against quality-of-merchandise chargebacks.
Since you/Paypal have been making these statements publicly for so long, shouldn't Paypal actually provide that protection, at least until you have clearly communicated to all your users that what you said then isn't what you're saying now? Shouldn't Paypal stand behind the public statements it made about the extent of seller protection?
Unless, of course, the Paypal purse-snatchers were deliberately trying to scam sellers into relying on a protection that wasn't there?
IMO any seller who has not been protected against a quality-of-merchandise chargeback has a pretty good fraud case against Paypal, if Paypal was publicly promising a protection it didn't intend to offer.
posted on July 28, 2001 09:42:43 PM new
I spoke this weekend to the head of fraud at a major bank's credit card division. He told me that buyer's remorse is NOT acceptable for charge back. If the buyer claimed "not as advertised" or something of the sort and the seller has proof to the contrary, such as a positive feedback from the buyer or an email stating that she wanted a partial refund only because she saw it cheaper elsewhere, the buyer would have lost. It was only because of the intermediary (in this case Paypal) that the buyer won, because no defense was made. Paypal's action in taking back the bag was both good and bad. It was good because having lost the charge back, seller would have lost everything and this way seller at least gets the bag. It's bad because now the news will spread that buyers can upgrade their equipment free. Buy a new one and send PP back the old one and charge it back.
So this once again illustrates two points that I have made repeatedly. 1) The introduction of ANY payment service (Paypal, Billpoint, Paydirect) that won't fight for the seller, means that the seller is WORSE off using the service instead of a real merchant account. 2) Despite Damon's claims to the contrary, Paypal's seller protection is worthless when a credit card is used.
What do you do in real life? Do you work in the financial services industry? Why do so many officials at these companies seem to have time to talk to you and is this in person, email, by phone?
I only ask because you seem to be regarded as something of an expert on these issues on the boards, but I have yet to run across the posts that detail your credentials.
posted on July 28, 2001 10:22:58 PM new
If the buyer who wins the chargeback is instructed to return the merchandise to the merchant, wouldn't it actually be their card company that instructs them to return it to Paypal (who is technically the merchant)? People are framing this as if PayPal is calling the shots when its the buyers CC company that has nothing to lose by screwing the seller.
Also, when do buyers flat out say "I'm charging this back because of remorse."? Get real, these scammers will more likely make up a story of damage or bait and switch to get their money back. They aren't stupid, just unscrupulous. That's like someone calling their job and saying they just don't feel like coming in today because the weather is nice, instead of pretending to be sick.
At least PayPal does mount something of a fight on the seller's behalf. It would be more constructive to rail against the banks and credit card associations that offer all this blanket buyer protection that we as sellers are actually paying for. Anybody who thinks that banks don't overcharge, fee gouge, freeze accounts, and generally screw anybody when it suits their purposes has never worked for them as I have. The reason you won't see too many (if any) reps from banking institutions on these boards is because the industry as a whole prides it self on hiding its foibles from the public.
posted on July 29, 2001 08:01:48 AM new
Bemused: the short answer
>What do you do in real life? <
I am a computer consultant and sell on the Internet
>Do you work in the financial services industry?<
No
>Why do so many officials at these companies seem to have time to talk to you and is this in person, email, by phone? <
As I have said many times, I am not doing anything that anyone else can't do. When I put information here, I suggest to folks that they call the same companies and ask the same questions. But rather than take a moment to do that, they would rather just attack me based on no knowledge at all.
>>I only ask because you seem to be regarded as something of an expert on these issues on the boards, but I have yet to run across the posts that detail your credentials. <<
the long answer:
Unlike many other posters here, I dont hide behind a phony name. If you go to my web site and read my pages, I spell it out. I accepted credit cards directly and then had a rude awakening with three charge back attempts which fortunately failed. I also believed the promises of some payment services and later learned how little protection they really provided. When I got tired of sending the same message over and over again to everyone who asked why I didnt take this form of payment or that form, I created a page with a few links showing why I consider certain services unsafe. As more folks emailed me with their problems, it grew into this.
The first info I provided was public knowledge that anyone could have gotten with an email or phone call. As more and more folks linked to my site and reporters started contacting me (and I refer to folks who were really scammed since I personally have never had a problem with any service) some of the services started contacting me directly to ask what they could do to attract customers. Some did it by email, most by phone, C2it and one other company which hasn't launched yet actually had a face-to-face meeting.
In an attempt to get accurate facts, I used the "6 degrees of separation" rule to meet officers at credit card departments of major banks. I now have a good relationship with one of the chief fraud prevention officers at a major bank (not Citibank, Wells Fargo or any bank currently involved in payment services) who provided me with a lot of good information on credit cards and their problems.
Incidentally, I was also contacted via phone by someone who claims to represent major paypal investors. Because he provided some information that did not become public until sometime later and from other emails I have received from him, I believe he is genuine. We discussed some steps Paypal could take to make their service better and he agreed with most of my suggestions and promised that they would be implemented. It is well over 6 months now and I am still waiting. One of those suggestions was to provide a hotline specifically for folks whose accounts were restricted because PP flagged possible fraudulent activity.
Damon occasionally tries to insinuate that because I signed an non-disclosure agreement with C2it, I am in some way affiliated with them. To clarify, a non-disclosure agreement just means I can't reveal anything we discussed. We spoke about protection plans for buyer and seller, fraud prevention, fee structure, etc. Naturally, C2it does not want me telling anyone else the details of these talks. We also discussed fraud and if I revealled some of what I learned, scammers could declare open season on sellers. Other services which contacted me by phone (and this includes the Paypal person) asked me not to reveal anything and I agreed. That does not make me an affiliate of any of these. C2it wanted the protection of a signed piece of paper. I would have abided by a verbal agreement. So once again, I am in NO way affiliated with ANY payment service.
Now as to your next post:
>>People are framing this as if PayPal is calling the shots when its the buyers CC company that has nothing to lose by screwing the seller.
Also, when do buyers flat out say "I'm charging this back because of remorse."? Get real, these scammers will more likely make up a story of damage or bait and switch to get their money back.
At least PayPal does mount something of a fight on the seller's behalf<<
As I said, I spoke to the credit card fraud person at a large bank. He told me that buyer's remorse is not an acceptable reason for charge back. If the buyer lied and claimed "item not as described," the seller would have been able to send in a positive feedback on ebay or the email from the buyer asking for a partial refund as proof that the buyer got what was ordered. It is only because Paypal did NOT put up a defense that the seller lost.
But worse than that, PP just opened up a huge can of worms and it is only a matter of time before scammers across the country take advantage of it. They are now offering free upgrades to any scammer who pays through PP and returns an old piece of junk and claims goods not as described.
I asked C2it why they don't post on AW. They told me because their legal department was worried that if their rep made an exception for someone or posted something that was misinterpreted, it could lead to a major problem. I think this is exactly that kind of major problem they were worried about.
posted on July 29, 2001 08:38:39 AM newAt least PayPal does mount something of a fight on the seller's behalf.
I don't know if they do or don't. Based on the way they handle communications with their customers, I wonder. If they do the same kind of job communicating with the various vendors who do chargeback investigations, then one would be in deep doo-doo.
Why is the fraud person you talked to any more trustworthy than Damon? After all he is "just a guy" at one bank and doesn't speak for all his counterparts. I would suggest to you that he would skew his answers to make his industry/organinization look good as I'm sure Damon does. What he says to you regarding all this fairness to sellers isn't necessarily born out in practice either at his bank or others. Banks also say that they don't practice redlining, but some do even though it is against their policies. Wanting to believe something is true doesn't make it so.
I still contend that the buyer protection that CC companies extend to their customers is carried on the backs of merchants as I learned recently due to a Billpoint chargeback. They have little to lose by offering it. If as much collective energy was spent calling these great guys at the banks and CC associations on the carpet about their policies as was spent bashing PayPal perhaps there would be some real fairness in the system. Your buddies in the traditional financial services industry are really at the root of the problem.
As for C2it, of course they won't post here they don't want to leave a slime trail by operating in the open. They hide behind walls of silence, Billpoint does the same thing if you ask them any pointed questions. It's what banks do. What do you suppose will happen when one of these bank backed services reaches Paypal's size? Higher rates thats what because banks only care about one thing, fee income. One bank I worked at actually had a contest among its 1000s of employees to see who could come up with the best ideas to raise customer fees, none of which was related to increased costs.
I guess that my opinion is skewed as well by having worked for three banks, because I don't find banking officials to be either impressive or inherently trustworthy.
[ edited by bemused on Jul 29, 2001 10:39 AM ]
[ edited by bemused on Jul 29, 2001 10:50 AM ]
How does positive feedback equate to proof that a buyer got what they paid for? Where is this standard written. Because if this is a known industry standard with the card companies then it must be your contention that PayPal for some bizarre reason wants to lose chargeback challenges. Ultimately how does it help them to have disgruntled customers?
Feedback on eBay's imperfect system doesn't equal proof of anything. I've had buyers leave me positive feedback before I even shipped because they were pleased with the experience up to that point. Would these people not be able to win a chargeback under your scenario? What if a buyer amends their positive comment with negative comments in a follow-up? What if damage was discovered after a positive was left prematurely. The card companies only care about keeping their card holder happily paying interest, not being fair to the merchant. They can get away with this because they are a monopoly that can't be ignored if one is seeking to capture the consumer that isn't going to leave his chair just to pay you.
Because there is virtually no way to prove a seller's innocence in these quality disputes, PayPal can't offer protection for that. Who here would be willing to pay the rates necessary for them to offer that level of protection without them going out of business?
posted on July 31, 2001 06:45:12 AM new
Suppose somebody with a PayPal business account sells an item through eBay (let's say it's a purse, for example) for $2500, and the buyer chooses to pay through PayPal. From the current rate schedule (Premier or Business Standard Rate - 2.9% + 30¢), it would appear that the fee for this transaction would be 2.9% of $2500 + 30¢ or $72.80, so the seller would have a total of $2427.20 credited to their account.
Now, let's suppose further that, after a month or so, when the buyer is finished using the item and no longer wants it, they do a chargeback for $2500 through their credit card. When PayPal removes the money from the seller's account, how much will they take? Will it be the $2427.20 that the buyer originally received or will it be $2500 for the amount of the chargeback?
posted on July 31, 2001 11:50:11 AM newmrpotatoheadd
They'll do what Billpoint did to do to me and what every other payment service or merchant account provider would do, remove the original total including the fee they already took out. In their minds they've already provided the service, the chargeback is a seperate issue. Business can be harsh that way.
Oh, forgot to mention that most services will take an extra chargeback fee ($10 for Billpoint), as will PayPal unless you are PayPal Preferred in which case the chargeback fee is waived.
[ edited by bemused on Jul 31, 2001 11:53 AM ]
posted on July 31, 2001 12:04:03 PM new
I pretty much expected that was the answer.
I had hoped that somebody from PayPal would be willing to come here and post that information. I guess it's easier to get a response from them if all you want is a T shirt.
Unlike the above mentioned I HATE paypal, and refuse to do business with them. I'm on of those "Money Order" sellers. (makes me the master of my own fate... 
