chargeback newbie

my first experience, what should I know?

[amznVibe]

Just got a chargeback notification from PayPal.
What's really crazy about this one is it's from FOUR months ago, and I didn't know you could dispute that far back.

I've heard really bad things about PayPal and chargebacks.
But separating rumour from reality here, how should I proceed?

This is crazy because the customer was spoken to on the phone
and we have their email info and everything.

Thanks for any experienced advise.

[jake66]

I've gotten them as far back as 9 months.
Best thing you can do is supply PayPal / Visa / whoever with any and all information they request.

If you are supplying emails, make sure you include the full headers else it will probably be automatically disqualified from the dispute.

[LifeinAsia]

Basically, PayPal is a buffer between you and the credit card company. You give them the documentation they asked for, and they will pass it on to the credit card company. If the credit card company sides with the cardholder, that's pretty much the end of the story.

Phone calls mean absolutely nothing, unless they were recorded (with the customer's permission).

Depending on the credit card company, the card holder may have 60-90 days from the STATEMENT DATE to dispute a charge (may be longer for foreign cards). If they made the purchase at the begining of the statement cycle, it could be almost 4 months after the purchase before they dispute it. Then the credit card processes the paperwork and passes it on to your merchant account (or it may take longer if they ask the customer for additional information about the dispute). Then it may take a few days or weeks before you actually get notified of the chargeback. (And remember that PayPal adds yet another layer to the process.) So yes, 4 months after the fact is certainly within reason.

[bwnbwn]

check to make sure it was insured as paypal is suppose to be the fraud protector seeing how you don't have access to the information so you can't check the card.

It is paypal's responsibility and one you should see as it should be insured

Google insures them against fraud if the card passes the test so if you can switch to google.

[jwolthuis]

While Seller Protection applies to PayPal payments, it's not clear from the OP whether this involved a PayPal payment or a credit card payment via Website Payments Pro (which doesn't offer Seller Protection).

You can view this particular transaction on PayPal's website, which should indicate whether it qualifies for Seller Protection. If it's not stated, just give them a call, and they'll help you out.

[gsswhoo]

I've had two chargebacks, one through PayPal. Both times, contacting the customer directly resolved it since it was a mistake on their part to have claimed the charge was not authorized.

PayPal was no help at all. Just a total waste of time trying to deal with them to address the chargeback! (In fact all my contacts with PayPal customer support have been a waste of time, whether through e-mail or telephone.)

PayPal allows you to modify the Credit Card Statement Name (under Payment Receiving Preferences in Profile). They prefix it with PayPal. That was what caused my one PayPal chargeback. The line on the customer's statement confused them.

[LifeinAsia]

Note that even if you have resolved the issue with the customer, you should still submit the requested paperwork to PayPay or your merchant account bank.

Why? You give up some or all of your rights to further dispute the charge if you fail to provide required documention by the deadline.

What if:
1) The customer forgets to cancel the dispute?
2) The customer is lying through his teeth and really has no plans to cancel the dispute (hoping you won't submit the paperwork and he'll win the chargeback by default)?
3) Your merchant account assumes that your lack of answer means you accept the chargeback?

[gsswhoo]

I agree you should always goes through the channels provided. Just don't rely on them to do any good. Especially with PayPal. And especially if your product is not tangible i.e., you don't have "tracking information" proving delivery.

In spite of all PayPal's lip service about fighting on your behalf, if your product happens to be digital you automatically lose the chargeback. This was the case for me even though I could prove to anybody who would take the time to look that the product had been provided to the customer. (It was in use on their website with the unique security code which could only be provided by me. All the details were provided to PayPal as they requested.) Even though I "lost" the chargeback from PayPal's point of view, I eventually won it through dealing directly with the customer.

Both of my chargebacks were essentially handled the same way. If I had relied on the channels provided I would have lost them both. If you have tracking/delivery information that's a whole different ballgame.

[krolik]

Gsswhoo,

can I ask you how long it took you to resolve the chargeback after your customer agreed to cancel it?

We are in the same situation. Customer made chargeback last Thursday, I contacted her immediately and she simply didn't recognize the transaction on her statement. She apologized and promised to cancel the chargeback. I also provided all requested information to Paypal and now I am waiting.
Can you tell me from your experience how long should I wait till the case is resolved?

Thanks a lot.

[gsswhoo]

It took a long time. I don't remember exactly but I'm sure it was well over a month if not two or three.

[ispy]

If you get into negotiations with a customer after the chargeback has occurred, be careful to not do any refunds. This is an iffy area and the customer could get their money back twice if you are not careful, because the chargeback does not always resolve permanently as it may appear to. If you really trust the customer you could of course do a refund assuming they would not backstab you but I don't recommend it.

[WiseWebDude]

Oh yea, I had one guy DONATE $5 to one of my sites, came onto my forum, posted his links...I took them off and he put a dispute in Paypal asking for the $5 back since I didn't let him spam me. Some of these freaking people out there are NUTS! I sent him back the $5 and told him to piss off. Another guy donated with a credit card to another one of my forums through Paypal ($30), and then put a chargeback on it and Paypal gave it back to him. I mean these were donations! I just sat back shaking my head...so, yes, Paypal CAN be a pain in the butt to be sure!

[Corey Bryant]

Usually the most amount of time for a chargeback is about 6 months. But it depends on the card issuer. I think that Bank of America check card (with a card assocation logo) is 60 days.

One of the larger card associations pretty much has no time limit, I have seen them issued from the cardholder 18 months out.

And as mentioned, having another party involved in the transaction can cause a few more problems unfortunately

-Corey

[card_demon]

180 days is the norm for most card types/issuing banks.

But for AMEX the time period is must long up to 18 months in some cases.

[rajivlodha]

If you check paypal's policy, they do not support chargeback after 45 days .. how could this happen?

[Corey Bryant]

That is Paypal's policy. It does not override the issuing bank / card association rules.

Thanks for mentioning the specific card association names card_demon since I cannot name them

-Corey

[krolik]

"can I ask you how long it took you to resolve the chargeback after your customer agreed to cancel it? "

Short follow-up:
cusomer cancelled the chargeback through AMEX and paypal closed the case after 3 weeks. We got our money back.
I am rather surprised it was so quick, considering other stories I read.

[card_demon]

krolik your very lucky the AMEX card holder was honest in this case.

You are welcome Corey.

For check cards that is because in the US of Fed Res. Regulation E. If you take ACH check cards you should read up on that a real eye opener.

[amznVibe]

Just a quick update that a month later after both us and hopefully the customer protesting to PayPal that this is a mistake, PayPal's vague, unhelpful messages on the account have changed to this (once you dig in two or three menus deep)

This chargeback is the result of a processing error. We are resolving this situation with the credit card company. No further action is required by you at this time. We apologize for any inconvenience.

So that means sometime in the future the money will be put back into our account hopefully. But they still are holding it after some kind of reversal/recharge they just did again.

I think my goal this year is to get off my PayPal dependence on our sites.

[Bjorn Iceland]

amznVibe wrote:

I think my goal this year is to get off my PayPal dependence on our sites.

I think by now my objections to PayPal's business model of automating most customer service functions (you send them a fax in a chargeback dispute, they OCR it instead of it going to a human, etc.) are well known here. For those who are not familiar read here [webmasterworld.com].)

The most shocking thing for those merchants using vanilla PayPal alone is that they will see a 30-40% increase in sales (or even more) by taking credit cards the normal way in addition to PayPal (or instead of PayPal).

PayPal know this and that's why they bought VeriSign's payment gateway and called it Payments Pro (although their fraud screening leaves something to be desired and is merchant hostile).

<rant>PayPal is great for eBay payments, but for online merchants it's a nightmare. It has uncontrollable chargeback risks (like Google Checkout), without the control of screening clients yourself you have with online credit cards. There's a reason PayPal doesn't insist on Verified accounts only. If they did their growth in new accounts would stop almost dead overnight.</rant>

While it's true that adding PayPal to a site that already accepts credit cards directly can increase your sales, you are most definately losing sales if you accept PayPal only.

But the main area where there is plenty to go wrong with PayPal is with customer disputes that might result in a chargeback.