posted on January 25, 2001 06:49:13 AM new
Paypal has announced a proactive new seller protection policy in hopes to alleviate charge backs to online traders.
e-Tailers and SuperSellers have long awaited new methods of protecting themselves from charge backs and fraudulent orders. Vince Sollitto, director of communications at Paypal said; "Our customers are always asking us for additional ways to be protected from charge backs."
The new seller protection policy will basically put sellers in control of the risk they are willing to take. Paypal verifies the customer’s credit card billing address, thereby providing a credible shipping location for the seller and then gives the seller the option to accept or deny the transaction based on that information.
However, SuperSellers who opt to take the risk of shipping to somewhere other than the credit card billing address will no longer be covered under Paypal's Seller Protection Policy. Also, the other terms of the new policy will only extend to domestic sales and items that can be tracked online.
According to the National Fraud Information Center, the risk is still minimal for most SuperSellers since charge backs only occur in about 2 percent of online sales. The downfall is the risks of fraudulent sales, although small, end up being absorbed entirely by the seller.
Credit card companies place the liability for charge backs entirely on to the seller, which can add up to significant losses; especially hard-hit are the small businesses and online auction traders working from their home office. SuperSellers suffer not only product loss but also the shipping costs.
That risk, in addition to the penalty fee incurred from the credit card companies as a result of a fraudulent purchase, can be frustrating and expensive for online traders.
"Unlike the average retail store, until recently, many online sellers have had to accept the risk of charge backs as an inherent part of business," Solitto said. "We are one of the first to offer our customers the most secure and reliable method of reducing fraudulent payment. We want to provide sellers with a secure and risk-free environment to conduct their business. Our new Seller Protection Policy was in response to our customer demand and our dedication to do just that."
According to VerifyFraud.com, one of the leading Web sites for online merchants and consumers, the risk of fraud is real for e-commerce sellers. Verifyfraud.com referred to an actual investigation it conducted which compared the credit card company's reaction to a charge back from brick and mortar store to one of an online seller. The result was the credit card only penalized the online seller, even though the online seller and the brick and mortar store had an identical return policy.
Verifyfraud.com said two of the two of the 10 most important rules to ensure an Internet sale is not fraudulent are:
1. Know who you are shipping to.
2. Verify the address.
"We are dedicated to bringing the most secure transaction environment for online sellers, and will continue to look for new ways to minimize their risk," Solitto said.
