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Less Fraduelant Orders With Paypal?

versus normal credit card transactions

   
8:37 pm on Jan 4, 2004 (gmt 0)

10+ Year Member



I've been using Paypal for my international orders because I've always thought that it would be harder to set up a fraudelant Paypal account than simply typing in stolen cc #'s. I haven't had any problems at all with fraudelant orders.

The reason I'm questioning my reasoning now is because I just received an order from France for $200 (1 item), and I just want to be sure it's not fraudelant. (Most my other items are $40-$50 so not real big of a deal if I lose one. Larger items different story.)

The buyer is verified. However, Paypal doesn't confirm addresses in France, so I can't confirm the address.

I wouldn't worry it normally, but the customer just asked me to declare a lower amount on the customs form for taxes.So now I am questioning the order.

Any thoughts?

Thanks!

8:48 pm on Jan 4, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



> customer just asked me to declare a lower amount on the customs form for taxes

I say over 50% of international customers ask to have customs value lower than sale price - they want to pay less in customs/import duties. I don't see this as a red flag. I do ask to pay for Global Express EMS if the item is above a certain value so the product can be tracked and insured.

6:42 am on Jan 5, 2004 (gmt 0)

WebmasterWorld Senior Member essex_boy is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Ok here are some hard and fast stats;

13 NOV - 31 Dec

200 Transactions

one chargeback due to non receipt - Fraud I have proof this item was sent - refund given goodbye $132

Three attempted chargebacks due to non receipt- complaint thrown out by paypal due to transaction being over 30 days old. Total $180

One chargeback in consideration - Non receipt have proof of posting $132 - awaiting outcome

Considering we took around $6500 on paypal over that period im quite happy. Does this look ok to others?

6:56 am on Jan 5, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



> Does this look ok to others?

I think it depends on what you sell. Any industry that has high customer return or fraudulent charges will be more risky. In October 2003, Paypal completely updated their "Acceptable Use Policy", to disallow the sending or receiving "payments for any "adult" or "sexually oriented" materials or services." (https://www.paypal.com/us/cgi-bin/webscr?cmd=p/gen/ua/use/index_frame&ed=mature)

We have 3500+ transactions through Paypal and only one fraudulent order causing chargeback.

7:13 am on Jan 5, 2004 (gmt 0)

10+ Year Member


Essexboy NO it does not look OK. This part stinks: "one chargeback due to non receipt - Fraud I have proof this item was sent - refund given goodbye $132". Was the item an "intangible" or was it mailed with a tracking number?

I sold a website with hosting to a guy, switched the domain over to him and now he told Paypal he doesn't like what he got and wants his money back and it looks like since it is an "intangible" that they are givng him back his money. He is not even disputing that he got it. He just said after he got it he didn't like it and since it is an intangible item he gets a refund? NO from now on I use western union. Paypal is helping him commit fraud.

12:50 pm on Jan 5, 2004 (gmt 0)

WebmasterWorld Senior Member essex_boy is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Lizzie:

Yes the item was sent via a tracking system, couldnt lay my hands on the papers this morning to prove he had received. I suspect he has.

Its several copys of Ghettopoly so I suspect he resold them and shafted me. Nice.

I have one other attempting to do the same, So im looking at a $300 out of pocket expense. The thing that really sucks is that I was selling them at 20% BELOW retail offering customers a good deal anyway.

I suspect theres there chuff all I can do, just sit back and think of England.

5:25 pm on Jan 5, 2004 (gmt 0)

10+ Year Member



Lizzie, it's the opposite. PayPal is not able to protect the buyer for intagible items. Has there actually been a reversal out of your account?
7:12 pm on Jan 5, 2004 (gmt 0)

WebmasterWorld Senior Member essex_boy is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Yep there has been a reversal for $135 - the only good thing is if the customer IS telling the truth (santa does exist) then I can claim on the insurance.

Which is odder still becaus I only insured around 8 out of 200 parcels - two which im having trouble with. Flukey or what....

10:14 am on Jan 6, 2004 (gmt 0)

10+ Year Member



We took Paypal off our e-commerce. We had lots of orders with signature delivery confirmation and PayPal would not back us up when clients complained of non-delivery. Might have been a fluke, but we lost a grip of money.
12:49 pm on Jan 6, 2004 (gmt 0)

WebmasterWorld Senior Member essex_boy is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Interesting point, its funny you know just how many people suffer from the same ecom based troubles.

How about the union of webmasters!

7:24 pm on Jan 6, 2004 (gmt 0)

10+ Year Member



It depends on how the customer places the chargeback. If the customer places it with their credit card company, tough luck winning it as I don't think PayPal ever adequately handles those chargebacks for the merchant. Heck, they might not even respond at all.

If it is a paypal related dispute, THEN you can comply with PayPal's policies to fight it.

As far as the order from france. you have no way of really knowing. I don't think they really can confirm international addresses and such like that. Even verified buyers file chargebacks when they know how to work the system (or claim their account was hacked).

11:56 pm on Jan 6, 2004 (gmt 0)

10+ Year Member


Yes they took the money out of my account! Right away. I think it is true that it depends on if the person paid with a credit card as one person I talked to at Paypal said something to this effect. I am done with Paypal.

What do you mean if it is Paypal related then you can comply with their policies to fight it?

12:02 am on Jan 7, 2004 (gmt 0)

WebmasterWorld Administrator brett_tabke is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month



> We have 3500+ transactions through Paypal
> and only one fraudulent order causing chargeback.

That is about our track record too. Compared with 1500 standard CC processess that got hit with 18 fraudulent orders in 2003 and 12 chargebacks.

I don't know how we could ever get more secure than paypal. I guess cash would be the only way.

2:10 am on Jan 7, 2004 (gmt 0)

10+ Year Member



It would be easy if the credit card companies cared.

When ordering:

1) Get credit card #
2) Send Encrypted Pin
3) CC company Verfies address

Then if ok CC Company ok's merchant to ship guaranteed. Maybe a cost of .10 per transaction.

If customer chooses cheap method of shipping it is their problem.

2:29 am on Jan 7, 2004 (gmt 0)

10+ Year Member



What do you mean if it is Paypal related then you can comply with their policies to fight it?

Well... I suppose if the buyer claims that their account was hacked, you have trouble. But if the buyer used buyer protection, PayPal is pretty good about sticking to their rules. For example, if it's an electronic product and they try and use buyer protection, you respond electronic product, policy does not apply. Done, reversed. If it is a physical product and you provide delivery conforrmation or tracking, you respond with that, done.

They are pretty good about sticking to their own policy. It's when the customer actually charges back that you lose almost all the time (with paypal-- I have fought and won chargebacks with a regular merchant account).

PayPal doesn't even give you a phone number, people cut back on a lot of crap when you're on the phone. Oh I'm soooo sorry, sooooo sorry, that was a mistake... blah blah blah

3:00 am on Jan 7, 2004 (gmt 0)

10+ Year Member


You said,"But if the buyer used buyer protection, PayPal is pretty good about sticking to their rules. For example, if it's an electronic product and they try and use buyer protection, you respond electronic product, policy does not apply. Done, reversed."
I am trying to understand this. It was a website I sold and he said it was "Not as described." So I tell them it was a virtual product and they do NOT refund his money? Or they DO refund it?
5:28 am on Jan 7, 2004 (gmt 0)

10+ Year Member



I am trying to understand this. It was a website I sold and he said it was "Not as described." So I tell them it was a virtual product and they do NOT refund his money? Or they DO refund it?

If you designed a website, that's a service, not a virtual product. If you sold someone a website/domain I'm not sure how that is classified. But IF the buyer pays with paypal funds AND they make payment for a transaction not covered under buyer protection, then yes, paypal will stick by their rules regarding that transaction and related disputes.

5:36 am on Jan 7, 2004 (gmt 0)

10+ Year Member


IT is an intangible product which is anything you can't ship in the mail. IT says on the Paypal website it is inelible for buyer protection. Does that mean they will not give him a refund--since it is NOT elibible for buyer protection?
11:16 am on Jan 7, 2004 (gmt 0)

10+ Year Member



Don't mean to disagree with anyone but I use PayPal for one of my sites and it is the one which gets the most reversals, by far. I just hate it when UPS state that it has been delivered into the customers hands and signed for, yet the reversal still goes through.
4:38 pm on Jan 7, 2004 (gmt 0)

10+ Year Member



IT is an intangible product which is anything you can't ship in the mail. IT says on the Paypal website it is inelible for buyer protection. Does that mean they will not give him a refund--since it is NOT elibible for buyer protection?

Seeing that paypal has a separate classification for "service" under thesend money options, I think we are in disagreement on whether designing a website is a service or an intangible product. So to be sure, you should clear this up with PayPal.

Don't mean to disagree with anyone but I use PayPal for one of my sites and it is the one which gets the most reversals, by far. I just hate it when UPS state that it has been delivered into the customers hands and signed for, yet the reversal still goes through.

Are they actually filing chargebacks throught their issuer or disputes with paypal? Paypal doesn't tell you which unless you ask.

Listen novice merchants used to blindy ship any credit card order that got approved until they started getting hit with chargebacks and found out that authorization code does not equal everything is okay. NOW merchants get a PayPal order and blindly assume everything is OK. You STILL need to use fraud protection analysis, judgment calls, some verification with paypal orders too.

Believe me, I have turned down paypal orders too. And there is nothing wrong with shipping only to confirmed addresses SO LONG AS you still accept regular credit cards and paypal is not your only payment option.

12:07 am on Jan 10, 2004 (gmt 0)

10+ Year Member


I wanted to say that Paypal came through on MY side of the dispute. It seems that since it was a website and hosting I sold which is an intangible product, they have neither buyer protection nor seller protection. As a buyer of an intangible he has no buyer protection. I don't know why they didn't just do that immediately. Maybe they didn't know what the product was. They have released the funds of mine they were holding. I will continue to use them.
2:56 am on Jan 14, 2004 (gmt 0)

10+ Year Member



we had to remove paypal as an option from our site too...

we would receive orders, and before we had even sent the items, we would get nasty notes from paypal saying there was going to be a chargeback, which would wind up costing us money before we ever sent anything out....

this was due to paypal immediately debiting the accounts when an order was placed, as opposed to a manual debit when we shipped the item.

needless to say, after about 6 or 8 of these escapades, each costing us $40-$50 in chargeback fees, we decided that paypal was too much of a hassle.

7:15 am on Jan 19, 2004 (gmt 0)

10+ Year Member



I been using PayPal for about a couple years now for some online sales and so far I had no problems with chargebacks yet but I have been charged for a $600 order that a person never delivered which I am still trying to clear up with PayPal. But after reading so much about the risk of using PayPal, I'm thinking very seriously about dropping anymore sales using PayPal before they eventually do burn me in one way or another. Anyone here know of a better way to accept credit cards that are more friendly? Thanks.
11:59 pm on Jan 20, 2004 (gmt 0)

10+ Year Member



lizzie, the buyer would not have been able to dispute the charge through PayPal since it was for a non-tangible item. What likely happened is that the buyer requested a chargeback through his credit card issuer which typically results in an automatic debiting of the merchant's account. PayPal can provide protection for US merchants who ship with a trackable shipping service.

skateboards, it actually sounds like PayPal was doing you a service by catching fraudulent transactions before you shipped out the goods!

2:32 am on Jan 21, 2004 (gmt 0)

10+ Year Member



Yes, but paypal does not charge $40-$50 in chargeback fees (per transaction)
2:54 am on Jan 21, 2004 (gmt 0)

WebmasterWorld Senior Member ogletree is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Big red flags are if they want to get it sent as fast as possible and are willing to pay really high shipping. If it is to Indonesia just assume it is a stolen credit card. Also if it is very close to the ammount that Pay Pal will allow for somebody with just a credit card. Make them wait a day see how patient they are. Email them a form with a signature line. Have them sign that and fax you with that and a copy of their ID with a matching signature. You have to be carefull if your item can be resold real easy like digatal camera. I got taken on memory once from a guy in Indonesia. Go to the message boards at Ebay and type in Indonesia. You will find a lot of talk about fraud.
3:21 am on Jan 21, 2004 (gmt 0)

10+ Year Member



I've been retailing online since 1999. And am still learning valuable lessons about spotting and preventing fraud.

I have to admit that the products we sell are hot propoerty for the fraudsters and deviants. Hence we do sometime attract a certain kind of clientele.

In the early days we would be hit hard by countries from Eastern Europe, we were excited by the big orders, and these guys have methods for making you feel comfortable about shipping.

A year later we had stopped doing any overseas and focused just on England. This left me with a clear indication of the UK fraudster hotspots. I dont want to generalise but it goes a bit like this.

Glasgow, Bristol, Middlesex - thats just my experience. It seems to be in places where there is a great deal of anonymoty(?) and where crime might be prevalent.

You typical country folk still have addresses like sunnyhill cottage that is a bit different to flat 31, 7th floor, doomsville.

SO I still take the odd hit of 800$ in these areas.

Any UK order that looks slightly dodgy on Worldpay gets the following treatment.

#1 A phone call requesting landline number that matches the delivery address

#2 Director enquiries or electoral roll check on phone number.

#3 Folow your instincts, if you are not 100% sure dont ship it. This includes considering things like students are away from home where their ccards are reg - these guys will usually have a recognised education authority email address.

If I do get screwed I make sure I phone the mobile they gave me for at least 4 weeks at 3am every morning.

For OVERSEAS orders that are impossible to check with worldpay and such;

#1 Get the customer to fax over their drivers licence, front and back of credit card, utility bill and passport. DONT THINK that this will osse you the sale - most people are happy to do it if they have made the effort to search you out and buy. Its better than loosing your money and the BIGGER cost of shipping.

AVG LOSS to worldpay chargebacks is now 500$ per month.

One final thought - signatures mean jack. All it takes is for the recipient to sign as mickey mouse and they get off with a free dvd player.

Until we all have identity cards and data tags so the couriers can scan us the merchants are going to loose.

Just my two charebacks worth

best wishes and good luck to all.

3:54 am on Jan 21, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Between myself and my clients, about 2000-3000 PayPal sales over the past years and not one chargeback (or fraud).

Not saying problems like that are impossible to happen with PayPal, just less likely. I am sure the chances will go up as PayPal gets even more expansive in the world.

I am sure it also has to do with what you are selling and to what market.

4:38 am on Jan 21, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



To be blunt, I am not sure if the question is really relevant...

What are your alternative choices, and how good are the alternatives' charback and fraud prevention methods? What are the costs?

The only other way I know that is just as viable, AND accepted worldwide is direct credit card processing.

The cost associated with direct credit card processing is ridiculous compared to PayPal.

Back to the original question, fradulent PayPal transactions, and charbacks - with credit cards, depending on the service or product you sell, you can expect to pay 5 to as high as 15% of the gross. On top of that, the higher (yes higher) rate you pay, the more likely they (Visa, MC, Amex, etc) will take the buyers' side.

So... Is there any other viable alternative?

6:14 am on Jan 21, 2004 (gmt 0)

10+ Year Member



It depends on where you are. The way you wrote, I was sure that you were not from the states becasue my merchant account rates for direct credit card processing are less than paypal, same fees for chargebacks ($10).

Hmmm don't know if you can post links here, but try emerchantsgroup or Costco's program (through Nova).

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