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Paypal Policy Changes Heads Up

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  • Paypal Policy Changes Heads Up

    We got our start on eBay and with PayPal. All I can say about our PayPal experiences is that we DO NOT accept PayPal on our website. For those of you that do be forewarned PayPal has extended it's so called Buyer Protection Program to include all PayPal payments. Of particular interest should be "not as described" disputes. Refunds in cases which PayPal finds in favor of the buyer will now include the initial shipping charges. Bear in mind that you have very limited recourse in disputing PayPal findings since governing government regulations are limited to some states and nothing federal.

  • #2

    Like you, I originally started on E-bay with Paypal and continued with Paypal Pro when I started my website back in 2006. I just got burned with their "significantly not as described" policy. All a buyer has to do to keep the product AND get a full refund, including shipping, is to simply SAY that the product was not as described. No proof is required. The whole dispute resolution process is a joke. This may be the proverbial straw that broke the camel's back in spurring me to look elsewhere to process claims, BUT I don't want to go through the hassle of changing everything if you run into the same thing with other merchant accounts. I've been very fortunate in that I've only had one chargeback, but can anyone tell me what the process is if a buyer files a complaint when you have another merchant account? Is it another situation where the buyer is going to win no matter what? If the credit card company that the buyer uses is the one that is going to "decide" the matter, I would imagine that the buyer is going to be the winner. Why isn't it a neutral third party to decide disputes based on the actual facts? Right now I feel like I want to get rid of Paypal entirely and not even accept Paypal payments, but I'm also aware that about half of my customers use Paypal and I don't know what the fallout would be.


    • #3
      For whatever it's worth I think the Paypal scenario is fairly typical. Buyers not happy can charge back. Most also have a $25-$35 fee too.


      • #4
        Paypal vs. merchant account

        Thanks for the feedback. Fox guarding the henhouse again? Thank God *most* buyers are good honest people!

        What is the process? Is the seller notifed by E-mail, respond by E-mail? Has anyone ever had a dispute decided in their favor? Any semblance at all of fairness?


        • #5
          Our site is currently doing 35-50% of what we do on eBay. We use merchant account through our bank - Bank of America with Cypersource as gateway. Site went up 2/09 and to date we have NOT HAD A SINGLE disputed charge and have had no complaints of "not as described" nor "not received". In the past 18 months we have had 40 of these cases on eBay. We use the same product descriptions on site as on eBay with the same grading on used parts, same handling time, and same shipping methods. I firmly believe that eBay's and PayPal's so called buyer protection policies invite buyer abuse.


          • #6

            I gave up E-bay entirely about 2 years ago in order to concentrate all of my efforts on my own site and I'm glad I did. Most of my profits were going to E-bay anyway.

            I totally agree that their policies are ridiculous. I sell jewelry castings and settings. This particular customer bought a pair of gold filled earrings. He broke off one of the posts while trying to set them and instead of simply notifying me at that point as most customers do, this guy (says he's a professional jeweler) decided to just solder the post back on himself. When he melted the layer of 14 kt gold off and totally ruined the casting, he claimed the earrings were gold plated and not gold filled and therefore "significantly not as described". I don't manufacture the earrings, but I do buy only from reputable manufacturers and without boring you to death with details, the bottom line is that he is wrong. The earrings bear a hallmark for 14 kt 1/20 gold filled as well. My return policy says that items must be returned within 30 days in their original condition. According to Paypal's decision in this case, my return policy doesn't mean anything. A buyer can buy the product, totally mess it up due to user error, then claim it is "significantly not as described" and Paypal will agree with him. He gets to keep the product AND get a full refund, including shipping. The amount of money at stake in this case was never the issue; it's Paypal stepping in and essentially telling the seller what he/she can and cannot do, without any regard for the seller's policies or fundamental fairness.

            I think I'm just going to have to put the time and effort into researching merchant accounts and other gateway options, etc. I just don't think I can tolerate what they've done here. By agreeing with the buyer, they are essentially telling me (and him), that yes, I misrepresented the product and that it's gold plated and not gold filled. That is just totally wrong! Plus I feel like a sitting duck now and feel like I'm at Paypal's mercy. Excuse me, but I thought *we* were the ones that put the time, effort and expense into developing whatever business it is that we run, but yet it's Paypal that gets to call the shots?

            So what do I need besides a merchant account and gateway? I use a shared SSL certificate; the one you get with 3D cart. Will I need to get my own SSL certificate? Recommendations anyone? I'm also not a "techie". I will need something easy to use.


            • #7
              We have never had a CB but I guess it will one day happen.
              We also shutdown E-bay a year ago.

              E-bay makes it perfectly clear to the buyer at every step that "you are protected" Not happy, money back no harm no foul buy now. It encourages bad purchases. I had one return last year that she actually said she wasn't sure so ordered 3 different models from 3 different places to figure out which on she wanted and decided to keep "the one from so and so" and had already returned one before doing that. Never even contacted anyone to get help or advise. We actually talked for a while and bounced some ideas back and forth. We did not refund the shipping.


              • #8
                Thanks for all the advice about Paypal. I have used the Paypal option when shopping, as I sometimes don't want to give my credit card information out. As a merchant, I don't like what I'm seeing in these forums and am reconsidering.

                Lea, as for the SSL certificate, I just learned that our SSL provided by 3dcart is a shared certificate. As such, it apparently can throw up some red flags regarding security. And now I've told you as much as I know about that. Also, while I love 3dcart thus far, I only want my store's name visible to buyers, which becomes an issue when they get to the 'secure' part of my store. Here, our store URL changes from to The appearance of our store is better (my biased opinion) than our competitors, so I also don't want them knowing who hosts our store site. ;)

                I just got the premium SSL from GoDaddy for $75/year. They *always* have deals, so I got 29% off my purchase. Total: I paid $106 to them for the SSL for a 2-year contract, and then $99 to 3dcart for the install. Not a bad deal.
                Last edited by vkmcewen; 01-23-2011, 08:39 PM.
                Zephyr Kites


                • #9
                  Using Paypal Pro means that the buyer doesn't know who your processor is. It could be any of the hundreds out there. Nothing comes up telling them you are using paypal. So it won't encourage bad buyers. They have no clue who is doing the processing.

                  Now if they pay through paypal express or the other lower plan they are not merchant accounts so they will know they are using paypal and that could encourage bad buyers.

                  We use paypal pro as our online merchant processor and have had no problems with CB or disputes.



                  • #10
                    You can appeal a charge back decision.

                    What I have seen is most processors/credit cards back the customer.

                    A client of mine I set up their store is changing from PayPal Pro because of too many charge backs that sided with the customer.


                    • #11
                      Some Basic Chargeback Information

                      Hello everyone!
                      A question surfaced in this string regarding the life cycle of most chargebacks. With an industry standard merchant account, the following is the way these normally go. Please note "normally". Since chargebacks are disputes between banks (your customer's bank and your merchant processing bank), the standards and operating practices change with each bank.

                      Perhaps the most important 1st step everyone here is aware of: be very careful with international orders and orders where the shipping address does not match the billing address. Check your AVS and CVVC responses for match as well. Use your gut instinct when deciding whether to fulfill an order, and make sure your website is very clear about your policies. I have heard of PayPal merchants winning chargebacks, but apparently it is becoming harder.

                      1) Customer sees a charge on their statement that they don't want, or they think is fraudulent (unauthorized). Per the credit card associations, they have a right to do this up to 6 months from the end date of final delivery of your product. It's a consumer protection we all may need some day, but it does require some diligence and extra work on the part of the merchant.
                      2) Instead of contacting you (which they could do by referencing your merchant phone number that travels with every transaction), your customer contacts their bank to dispute the charge.
                      3) Their bank then contacts your merchant bank. In some cases, there is an automatic debit at this point, which can be reversed if you win the chargeback. In others, you have a chance to respond before there is a debit to your account.
                      4) Be sure to respond to the chargeback on time, sending in any and all supporting documents. In the response, pay special attention to the specific reason for this chargeback, and address it head on. For instance, if the customer says the product is "not as described", include the product description and proof that the shipped product matches that description.
                      5) Most merchant account banks should have a chargeback team. Contact them with questions on what to send in to win the chargeback. It is in your merchant processor's best interest to win chargebacks with you.
                      6) Your merchant bank will submit your documents to the card holder's bank. The bank will then respond on their own, or again involve the card holder.
                      7) Either a final decision will be made/accepted, or the chargeback will be come a 2nd chargeback. From there (though rare), many cases can move to pre-arbitration or arbitration.
                      8) Continue to respond as the case is updated through these stages.

                      Good luck! Feel free to message me if you have any further questions!


                      • #12
                        I have never won a chargeback, ever. Had proof of delivery and signature as well. This was through another cc processor. But I feel having to be a paypal member helps keep the chance of a chargeback lower through them.


                        • #13
                          With two previous companies I worked for, I was the one tasked with dealing with any chargebacks that happened to come along (one company sold services, another sold product). IIRC, my success rate with reversing a chargeback was about 70-75%, but it took a lot of footwork...if you didn't have all of your ducks in a row, so to speak, it was almost a given that you'd lose.

                          I found that the key is to respond to a chargeback notice promptly and provide every sliver of evidence you have (including any phone records and emails), accompanied by a well-written rebuttal (the more detailed, the better it seemed). A lot of times, providing all of that information won the case on the first go around, but not always. Sometimes it took two rebuttals to finally win. It's kind of a crapshoot win some, you lose some. ;)
                          Last edited by Burnspot; 03-02-2011, 10:19 AM.


                          • #14
                            More Paypal Changes 3.15.2011

                            Paypal now to place hold on some accounts....




                            • #15
                              To Burnspot and Julie ....
                              I couldn't have said it better! Excellent and VERY accurate info about chargebacks.

                              Keep in mind .... if you accept CCard payments (PayPal or otherwise) you will eventually get a chargeback. It's just a matter of time. And yes, just as Burnspot and Julie pointed out, even when going through the proper methods of dispute, you win some and you loose some. Chalk it off as a part of doing business in the Wild Wild West (www).

                              Overall, since accepting credit card payments since 1999, our experience has been positive and chargebacks have been relatively minimal considering the number of transactions we have successfully processed over those many years.