Paypal's Credit Card Processing: Fraud Management?

[grobe]

Everybody want to reject 100% of all fraudulent orders and accept 100% of all nonfraudulent orders. This is of course is seldom possible; tradeoffs have to be made. I am interested in any opinions/facts as to how well Paypal's optional credit card processing meets these criteria. [For example the first obvious point is that Paypal's limitation to 40 or so countries both cuts down on a lot of fraud but also eliminates some good orders].
Does Paypal reject the common case of a recently stolen US card number(but unreported) where shipment is to be made to Nigeria? Are a lot of good non-US cards being rejected?....

[nancyb]

I am looking into PP for a friend who does not have a merchant account. Recently someone from PP called me on the phone to inquire why I wasn't using PP on my website (the call did seem to be legit) and I engaged her in a discussion about fraud and chargebacks.

The PP rep basically said that if the merchant follows the "rules" and fraud is discovered later, they would reimburse the merchant up to $10,000.

Now, I haven't finished my investigation, or read the voluminous amount of legalese, this did inspire me to continue thinking about PP as an alternative.

To answer you specific question, I would guess that shipments to Nigeria are not approved within the "rules" and if you did so it would be at your discretion and not covered for reimbursement should the sale turn out to be fraudulent.

[PCInk]

> if the merchant follows the "rules"

Yes, that's correct. But have you read the rules? They make it virtually impossible to claim anything.

[nancyb]

yep, that's what I meant

... voluminous amount of legalese

[pp_rb]

PayPal requires billing and shipping addresses to be in the same country, so yes, it would block an order on a US credit card from having a shipping address in any other country.

The Seller Protection Program covers you in the case of chargebacks. For every order you receive, the Transaction Details page will tell you whether the purchase is Eligible or Ineligible for the Seller Protection Program.

In general, in order to qualify for the SPP, you must:

1. Have a Premier or Business account
2. Ship to the address shown on the Transaction Details page
3. Ship using a method that provides online tracking
4. Respond to PayPal's chargeback inquiries in a timely manner

If you require your customers to ship their orders to Confirmed Addresses, you may increase the number of purchases that qualify for Seller Protection.

[HRoth]

I just got off the phone with Paypal on this very topic. I was concerned because with international orders, sellers have no protection--and the Paypal representative verified that in fact is the case. I wanted to know how I was supposed to determine the probability that an international transaction is fraudulent or not, outside of the usual glaring indicators, like "ship overnight to Nigeria." Well, according to the Paypal person I spoke to in Resolution, there is no way. International transactions are at the seller's risk. The representative also at first said that AVS was used on the card when the person registered, but when I said I thought there was no AVS for international cards, she said they used "other means." They do collect the CVV number, but if the card was stolen and Paypal is told of that after the transactions go through, the seller is liable for the money, not Paypal.:(

With international charges coming in through Authorize.net, I have been using a fraud probability predictor that uses the ip address, whether the email addy is free or not, where the phone number is located, and so forth, to come up with a fraud score. Worse comes to worst, I ask the customer for the bank name and the customer service number from the back of their card. I know I lose some customers this way, but most are happy to give it. But with Paypal, I can't do that. The whole point for the customer is that they don't have to give out their cc info to all and sundry. I have a small but growing number of international customers, and I would like to have more. But I don't see any way to resolve this issue with Paypal outside of just going with my gut. It bothers me that Paypal doesn't mind charging a hefty fee for these transactions without providing the usual protection for the seller (which isn't all that great anyhow).