Do I have to refund a banned miscreant?

Or will I get a chargeback

[zomega42]

I have a service-oriented site that people pay a few dollars and get something for 3 months. If somebody is blatantly and maliciously violating my terms of service and I ban her from the site, do I have to give her a refund, since she still has one month of membership left?

I clearly state in my TOS that if you violate the TOS you will not get a refund if you are banned for a violation, but I don't know if the credit card company will be okay with that. Actually in this case she paid with paypal.

Do you think I'm safe refusing a refund, or should I forget it and give her money back? We're talking about 20 transactions totaling over $200.

[derekwong28]

I feel that you can take a risk in refusing a refund. PayPal normally does not intercede in the case of non-physical products. Although she can raise a chargeback against PayPal, her PayPal account would be put at risk. My hunch is that she will be unlikely to do so. Even if she does and succeeds, the PayPal chargeback fee is only $10 or $0. The only situation I would issue is if she explicitely threatens to raise a chargeback.

[zomega42]

I'm a bit worried because it's so many transactions (at least 20) -- if Paypal counts those as separate chargebacks, that could be a hefty fee. I'm a 1000+ seller and have never had a dispute before, but I wonder what would happen to my account if I suddenly had 20 chargebacks all at once.

Judging by her behavior on my site, she will lie, lie and lie some more to PayPal in an effort to get whatever she wants, if she even knows what a chargeback is.

[LifeinAsia]

Why not contact PayPal pre-emptively? Send them a copy of your ToS and examples of how the person broke the ToS. If they come back and say they may side with the customer, I would immediately stop accepting PayPal for payment for those services.

Of course, just because one service rep says they will side with you doesn't mean if/when the customer issues a dispute that PayPal will still side with you.

Also, if the customer used their credit card to pay (instead of sending funds from a PayPal account), PayPal is just the middle person in the dispute between the customer/credit card company and you. So even if PayPal sides with you, you'll still have to fight with the credit card company.

[Corey Bryant]

Yes and no and it depends....

How did they pay you thru Paypal - with a credit card, bank account, or just money in their account?

If it was a credit card, there can always be a chargeback issued as well. Even though the consumer might have violated the terms of service, the consumer did not get what he / she paid for. So he / she can contact Paypal / the CC issuing bank and let them know. Chances are they will side with the consumer.

-Corey

[zomega42]

Is there a way to find out through Paypal if they paid with a CC or not? When I look at the transaction details, it just "instant".

It's starting to sound like in the end if she wants a chargeback, and she paid with a credit card, she'll probably get it. If I tell her no refund, then wait and see what she does, do you think I will still have a chance to voluntarily refund before the chargeback hits me, or will it be too late at that point?

[Corey Bryant]

A chargeback can occur if the server was not performed as expected.

You can usually issue the refund and then: (even though some of this might not be needed it is just easier for me to copy and paste from my notes / blog):
Even when you do receive a chargeback, you may be able to resolve it without losing the sale. Simply provide the merchant account bank with additional information about the transaction or the actions you have taken related to it. You may be able to resolve the issue by providing proof that you submitted the credit on a specific date. Send this information to the merchant bank in a timely manner.

-Corey

[derekwong28]

If you are very worried, just refund the last transaction. Since you have provided services for the previous 19 transactions, I doubt that she will raise an issue. Besides, there is a time limit that her bank will entertain a chargeback request after the transaction. Normally 6 months is quite safe but it depends on her bank.

[zomega42]

The problem is that each transaction is the purchase of a 6-month thingy. Those 6 months haven't expired yet, for any of the 20 transactions.

I think I will have to give the refund... the only other idea I have is to threaten the customer that if she tries to dispute, I will post publicly why she was banned. Doing so would probably cost her tens of thousands of dollars in business, if not completely bankrupt her. But the last thing I need is to do something that will get me dragged into court, even though I'm right.

[Beagle]

I usually just lurk in the ecommerce forum, as it's an area I don't know much about. But when it comes to human nature... If you're dealing with someone who will lie, lie, and lie again - especially if it's someone who's good at it - public revelations about why the person was banned can also be turned back on you. I've been in a somewhat similar situation, although it wasn't online; the truth finally won out after a couple of years, but by then some of the damage done was permanent.

[jsinger]

I will post publicly why she was banned.

Great! Then she can file an invasion of privacy suit against you and may well prevail. Maybe what she wants you to do!

[ispy]

Never do refunds if they are not deserved. It's like cheating to protect your good name and reputation at the expense of the rest of us. Some people are just bullies and use bad PR or chargebacks as their sticks. The more you fail to defend yourself, the bigger their stick gets. This lady has probably manipulated many others into doing what she wants with the same techniques.

[jsinger]

The more you fail to defend yourself, the bigger their stick gets.

So you imagine that the Online Bullies and Scammers Club meets monthly at the local Pancake House to share tips for ripping off vulnerable retailers? LOL

---
Truth is the customer IS OFTEN right and the retailer's employees are sometimes wrong. In my decades in B/M retailing I've seen it many times.

Aside from that utterly compelling reason to be lenient, there are others:
1) Arguments consume huge amounts of management time.
2) Win or lose, the rest of your day will be ruined.
3) A web-savvy disgruntled customer can do a lot of damage.

[zomega42]

Yes I think I'm with jsinger on this one. It's easy to say refuse a refund on principle, but this has to be a business decision. Disputes just take way too much time to handle, and often it's not worth it.

(Incidentally regarding the privacy lawsuit I think I'd be pretty safe, she was banned for dishonest business practices, and as far as I know businesses have no right to privacy.)

[woop01]

Send her prorated refunds for the time left but keep the money for portion of the services you provided. Doing partial refunds is very easy with Paypal and she'll be on shaky ground if she attempts to get a full refund after that.

It's a good compromise that's worked well for our sites where we have to ban customers for cheating on a regular basis. We make it clear that if you are caught violating the TOS and you have paid for a long term subscription, we will send a prorated refund with the amount of time used billed at the highest monthly rate.

Paypal has also started sticking up for online service providers. If she does file a dispute, just indicate it's an online service when asked for a tracking number.

[jsinger]

The (US/UK etc) tort of invasion of privacy has four catagories including public disclosure of private facts.

Wikipedia:

"Public disclosure of private facts arises where one person reveals information which, although truthful, is not of public concern, and the release of which would offend a reasonable person."

A business or corp can claim it too.

Thats why businesses should never publicly post bad checks they received, as I've seen done in restaurants.