Forum Moderators: LifeinAsia
If you sell advertising and get paid by using PayPal, you can be hit with a chargeback by the client for no reason at all, and PayPal will side with the client, regardless of whether there are any grounds to the client's dispute or not.
Here's the story:
I have a client, who has been buying online advertising from my website for a couple of years. The ad was paid for with a subscription on a credit card through PayPal. The card was billed to an employee of the company, who ended up leaving the company. He did not bother to cancel his subscription for his ad, so his credit card continued to be charged once each month.
He did not want to pay for the advertising after he left the company, so he disputed the charge, rather than seeking reimbursement from his former employer. Here's what I got from PayPal
> We recently notified you of a chargeback stating that the merchandise
> received had one of the following problems:
> It was damaged or defective
> It was not as described, or
> Services were not rendered
I provided PayPal with proof that the ad was still running and the guy's employer was happy with it. It didn't matter. I appealed and that didn't help. Here's what PayPal sent me:
> This transaction was reversed for the following reasons(s):
>
> - This chargeback type is not covered under PayPal's chargeback policies.
>
Is there anything that I can do to fight this? Has anyone had a similar experience?
Thanks in advance!
By issuing a chargeback, PayPal has basically said that they are siding with the customer and not you. As has been pointed out in other threads, payment by credit card (or through PayPal) is only one method of payment.
Assuming you had a valid contract with the guy, he is still legally liable for payment of services delivered according to the contract. If you're in the U.S., send him a certified letter demanding payment within a specified amoutn of time, otherwise you will take him to small claims court to recover the amount due. (Different countries may have different recourse methods.)
I just re-read your post and I think some more clarification is needed.
1) Who was the client?- the employee or the employer?
2) Was it a company credit card issued to the employee or personal credit card belonging to the employee?
It seems that you should be trying to collect form the company instead of the ex-employee.
It seems that you should be trying to collect from the company instead of the ex-employee.
Right - plus I'd suggest having a try for extra expenses you've incurred due to the chargeback - admin time and interest due for late payment, if nothing else.
If you have a contract with them and you've performed the service, then they owe you the money, by whatever means it's paid.
hth, a.
My issue is with PayPal for siding against me with the employee, on the allegation that something was wrong with my service, when that wasn't true. PayPal was not presented any evidence (as far as I know) to backup the claim that something was wrong with the advertising. I provided them with links to the advertising so that they could see it was up and running.
Despite that it I lose. I find that incredible. When I have disputed charges in the past on a credit card I had to provide some evidence to back up my claim. It seems that's not the case when (like me) you are a website selling advertising.
Or, maybe it's just a case of PayPal taking the easy route and figuring that since I'm a small business and the credit card company is not, then the heck with me because I probably won't be able to do anything about it.
I provided them with links to the advertising so that they could see it was up and running.Despite that it I lose. I find that incredible.
Sadly this is the way Internet CNP chargebacks normally work, in my experience.
In a case we had a while ago, a chargeback was made in error (the customer hadn't requested it), we (as the merchant) were able to provide the bank with a signed statement from the cardholder that they didn't want the chargeback - and it still went ahead!
So I'd say PayPal isn't picking on you - this is just the way things work.
There's at least one firm that specialises in fighting chargebacks, maybe you should contact them?
You could also look at chargeback insurance or 3dsecure.
best, a.
I wonder if I'm going to be penalized for this somehow, beyond the $10 fee for each chargeback that PayPal is hitting me with.
The first mistake in the entire situation is that the company used the employee's card for payment instead of a company card (or the personal card of the company's owner).
The second mistake is that the employee/company did not switch the billing at termination (which is why the billing should not have been tied to an employee's card in the first place).
If the relationship between employee/company is no longer amicable, I certainly don't blame the employee for disputing the charge instead of trying to get reimbursed from the company. However, he should have had the decency to contact you FIRST to reverse the charge, instead of imemdiately disputing the charge.
Yeah, the ex-employee is a jerk for contacting his credit card company first instead fo you. But the issue of payment is with the company, not the ex-employee. I would write this off as a learning experience and make sure that all future payments, especially recurring payments, are made with a corporate card instead of an employee's personal card.
I would write this off as a learning experience and make sure that all future payments, especially recurring payments, are made with a corporate card instead of an employee's personal card.
When you use PayPal as a seller you have no idea whose credit card you are being paid with. I'm still unclear about that in this case. I am told by the client that it was a corporate card that was billed directly to the employee. The client tried to cancel the card when the employee left (so they say), but the credit card company (AmEx) was slow in taking care of it. I have no way of verifying any of this, but that's what I was told.
I wish that I could come away from this with a way to avoid it in the future, but I don't see how (other than to stop taking credit cards, which would mean losing some business).
I called the former employee at home this evening to try to find out why he was disputing the charges. He was out, but his fiance, who is familiar with the situation, told me that it isn't the employee causing the chargebacks, but the employer.
This business is telling me that they want to continue to advertise with me and meanwhile they are disputing the charges behind my back! I am waiting to confirm all this and should know more by tomorrow. They've been my advertising client since December of 2004, and with good results according to the employee.
The employee gave over 3 weeks notice and left on good terms, according to his fiance, so I've definitely got a really good and twisted mystery plot going on here.
The client tried to cancel the card when the employee left (so they say), but the credit card company (AmEx) was slow in taking care of it
it isn't the employee causing the chargebacks, but the employer
Maybe Amex is charging-back all transactions that took place after the date they were told to cancel the card?
best, a.
Maybe Amex is charging-back all transactions that took place after the date they were told to cancel the card?
That's a possibility too. But if the card was cancelled, why would Amex pay the charges in the first place and then dispute them. They could have refused to pay them initially, right? That's what usually happens when PayPal tries to charge a cancelled or expired card - no payment is made, and they'll retry a couple times before giving up and cancelling the subscription.
I spoke to the client this morning and he assured me that he wants to continue advertising. He promised to get back to me by 11am, which was an hour ago and hasn't, but he had to leave the office.
I spoke to the ex-employee this morning and he said that he left on good terms, but is still owed money by the employer months later, and warned me to watch out for him.
