Some guy called Sven Luthardt ordered Dual Xeon servers from me with SCSI HDs and etc. It was the top of the line server which cost $444/month.

After a week, the server was being used for fraudulent activities which violated our TOS. THe server was disconnected and he was notified.

2 months later, the chargeback of $444 was made and since we resell servers, we lost $405 dollars which was our cost.

I am sick of the amount of fraud that goes on especially around PayPal and Paypal does virtually nothing to stop it.

PayPal always automatically takes the buyer's side which is complete BS.

What would I have to do to get the $405 dollars back?

You sure that the Paypal account wasn't hacked and it was a fraudlent payment?

Rus

What exactly would you like Paypal to do about it? It's your responsibility to screen your orders for fraud. Also, in the future, I would recommend that you don't accept payment for such high-end servers via Paypal.

I doubt the PayPal account was hacked. I sent the welcome e-mail to the PayPal address to make sure.

I believe the guy just filed a chargeback so he can get a free Dual Xeon server for a month at my expense.

Originally posted by woolly
I doubt the PayPal account was hacked. I sent the welcome e-mail to the PayPal address to make sure.

I believe the guy just filed a chargeback so he can get a free Dual Xeon server for a month at my expense.

Have you contacted Paypal? Normally there is a dispute resolution process which you are supposed to be included in.

Originally posted by bqinternet
Have you contacted Paypal? Normally there is a dispute resolution process which you are supposed to be included in. I have written an explaination of what happened and sent it to them.

I will give them a call in the morning tomorrow as well.

How likely is it that PayPal will co-operate with me? It would seem unreasonable if PayPal would take the side of the person who comitted the crime.

How did you confirm the order?

Originally posted by woolly
It was the top of the line server which cost $444/month.
This should have been a red light - the account should have been thoroughly screened before setting up services.

When it comes to orders that cost over $100 per month. I think you should cover yourself from all angles.
For example, for that particular order you had. Not allowing PayPal and mailing him an agreement to authorise credit card charges along with the agreement would cover you almost 100% against a chargeback.

The credit card company does only what is fair. It needs the customers in order to spend, it needs the retailers in order to accept the payment. They cannot be biased towards one or the other as they will lose out.

You should read the policies of PayPal or whatever merchant you use to ensure you have everything covered.

Yikes, that does suck. Something I've found to work rather well... is create one plan that is just off the chart expensive. For example, the same server for $650/m.
In my experience, fraudulent orders stream from overseas. They rarely know the english language, but go for plans with the largest numbers in the amount. For what reason, I don't know. :) Then you just need to double screen those orders.

I was hit pretty hard with fraud about 8 months back... processed over $10,000 of fraud in one month. Most of them where $500+/m plans. Boy I thought I had a good month too. :(

If you get a CHARGEBACK on a Paypal payment, the bank takes the money from Paypal, there is nothing Paypal can do about it. When a customer does a chargeback they do it through their credit card provider, not through Paypal.

Usually banks favor the buyers. This is for a number of reasons - the bank makes more $$ from the buyer (they make money every time the buyer pays at ANY merchant, not just you). Also, if the charge really is fraud then to an individual person $500 is a huge amount of money to lose, but to a business it's nothing. This is why a bank would side with the individual, because even if they are wrong, the business I'm sure is not going to stop accepting Visa's or MC's just because of that one small loss.

For any intangible goods (services) where the seller does not have a FedEx receipt or similar because nothing is shipped, Paypal will be in favour of the buyer in almost 100% of all disputes.

Find a cood collections agency to get the money back.

Start screening your orders, Properly.

Originally posted by jmweb
Start screening your orders, Properly.

QFT. I check originating IP address, match it to the billing info provided, check AVS (if CC payment), CVV/CVN (if CC payment), check referrering site, check phone number, check billing e-mail address (if PayPal payment). Out of over one thousand orders, only one has snuck by me since I instituted that system about a year ago (before that out of over 10,000 transactions, we have had only one bank-level chargeback). Takes only one minute or so of time per order and the few cents for confirming orders via phone that are out of country are worth it.

Also, if it was a PayPal-level chargeback then you should be able to get your money back but if it was bank-level, good luck! As a basic rule of thumb, higher-end packages have a higher probability of being fraudulent -- that would have sent an alarm off for me.

Originally posted by henker
For any intangible goods (services) where the seller does not have a FedEx receipt or similar because nothing is shipped, Paypal will be in favour of the buyer in almost 100% of all disputes.

Partially true. True if it is a PayPal-level dispute but if its a bank-level, typically no.

Originally posted by ThrottleHosting
Find a cood collections agency to get the money back.

Bad advice. I have never seen a fraud order that was within reasonable jurisdiction or traceable. Fraudsters typically use proxies or are over seas.

Originally posted by Josh Stein
Partially true. True if it is a PayPal-level dispute but if its a bank-level, typically no.


Initiating a chargeback and not using the Paypal procedures for a dispute is against Paypal's TOS anyways.

Originally posted by henker
Initiating a chargeback and not using the Paypal procedures for a dispute is against Paypal's TOS anyways.

It may be, but the end result is that if the money is taken from PayPal by a bank, they are going to take it away from the person who received it.

Any reason the chargeback was done ?

Doesn't paypal look for the reason of chargeback before directly taking out money from receivers account.

Even i had a chargeback in paypal once, but paypal favoured me, because it was a verified paypal and the paypal user cannot file a chargeback, they can just dispute via paypal, but if they file a chargeback via their bank it's against the TOS of paypal and hence paypal will favour you.

So make sure if it is a verified paypal account or not.

Originally posted by ircguru
Even i had a chargeback in paypal once, but paypal favoured me, because it was a verified paypal and the paypal user cannot file a chargeback, they can just dispute via paypal, but if they file a chargeback via their bank it's against the TOS of paypal and hence paypal will favour you.

So make sure if it is a verified paypal account or not.

In all of the cases I have seen, if the money gets taken back from PayPal by the bank, Paypal yanks the money from the recipient.

Originally posted by Josh Stein
In all of the cases I have seen, if the money gets taken back from PayPal by the bank, Paypal yanks the money from the recipient.

True, but only if it is case of hacked paypal, but in these kind of cases, paypal usually favours the seller.

But in this case the chargeback came after 2 months, so it was not case of hacked paypal (if it was verified)

though in case of unverified paypal the seller is responsible.

Regards

Originally posted by ircguru
True, but only if it is case of hacked paypal, but in these kind of cases, paypal usually favours the seller.

But in this case the chargeback came after 2 months, so it was not case of hacked paypal (if it was verified)

though in case of unverified paypal the seller is responsible.

Regards

How do you know it wasn't a "hacked" paypal? I have seen PayPal take two months before notifying sellers as such. Verified really doesn't mean anything. In the end, if the money gets taken from PayPal they are most likely going to take it from the seller. PayPal-level disputes are one thing but "hacked" accounts and bank-level chargebacks are another.

I dont mean to sound like a butthead here or anything, but dont you have some type of privacy policy in place which would be getting broke by releasing a clients names. just cuz a client is a butthead, and it would help everyone else knowing to avoid them, doesnt mean it is right to not abide by your own tos. Dont sink to the fraudsters level man.

What billing system are you using? You should activate some kind of anti fraud such as FraudGate or something similar. You can really cut down of the fraud being done if you only take action. You can just sit back as keep telling yourself "well my next order better not be fraud". There are alot of fraud protection software that can work with most automated billing applications such as WHM Autopilot or ModernBill. I would look into it, before you continue to take orders. It can really hurt your monthly income if not!

The violation of your TOS was that important, was it?

It sounds as if the customer felt bad about a $444 box unpluged for a TOS violation without any further resolution or solution from you.

When you shutdown a server you are paid for, TOS violation or not, it is important to don't break the communication with the customer.

Last month, we upluged a customers server for 10 days until a solution was found with him and the server was put online again. Even he is going to rent a second box from us.

Some people do wrong but in good faith. Last week, one of our customers informed us that he bought a CD with emails addresses of "selected" people and his is going to mail them. In total good faith!

Charge back is also possible with credit cards, not only with paypal. If you charge someone for a service than you close this service without further justification, charge back is a tempting option for your customer.

Originally posted by stealthdevil
When it comes to orders that cost over $100 per month. I think you should cover yourself from all angles.
For example, for that particular order you had. Not allowing PayPal and mailing him an agreement to authorise credit card charges along with the agreement would cover you almost 100% against a chargeback.

The credit card company does only what is fair. It needs the customers in order to spend, it needs the retailers in order to accept the payment. They cannot be biased towards one or the other as they will lose out.

You should read the policies of PayPal or whatever merchant you use to ensure you have everything covered. Agreed, this is the whole reason fraudscreening services exist.

man that really sux. post this story on paypalsucks.com forums. you'll get some feedback to help ya

It is *really* important to voice verify (call on the phone) all new orders. By implementing this simple measure, we have cut our chargebacks and fraud to ZERO over the past several years on orders we've called.

--Tina

Originally posted by henker
For any intangible goods (services) where the seller does not have a FedEx receipt or similar because nothing is shipped, Paypal will be in favour of the buyer in almost 100% of all disputes.
Actually it's just the opposite. All of my buyer complaints are settled in my favor since buyer complaints only pertain to physical goods. :)

I agree with Tina on this one. A quick phone call will save you a lot of headache. You'll eliminate most (if not all) fraud, which also eliminates quite a bit of spam and other unwanted situations. :)

Originally posted by Bohica
Actually it's just the opposite. All of my buyer complaints are settled in my favor since buyer complaints only pertain to physical goods. :)



That is 100% correct.

Hosting is not a tangible item. Paypal will side with the seller.

For a $400 a month account I'd -require- a faxed order form with signed authorization AND a voice call. If I ever start doing dedicated servers I'll require a faxed order form and a phone call pretty much for any order unless the person is a longtime customer or known acquainance.

Originally posted by Josh Stein
QFT. I check originating IP address, match it to the billing info provided, check AVS (if CC payment), CVV/CVN (if CC payment), check referrering site, check phone number, check billing e-mail address (if PayPal payment). Out of over one thousand orders, only one has snuck by me since I instituted that system about a year ago (before that out of over 10,000 transactions, we have had only one bank-level chargeback). Takes only one minute or so of time per order and the few cents for confirming orders via phone that are out of country are worth it.

Also, if it was a PayPal-level chargeback then you should be able to get your money back but if it was bank-level, good luck! As a basic rule of thumb, higher-end packages have a higher probability of being fraudulent -- that would have sent an alarm off for me.

Another thing that I forgot: try to match the area code of the phone number with the location provided and the location of the IP.

Not sure if this topic is old or not, but Paypal does suck, I agree with you wholeheartedly. They never try to get you your money back and they do indeed always take the side of the consumer, not the vendor.

Unfortunately, I doubt you'll be able to do anything about it.

Originally posted by ayksolutions
Not sure if this topic is old or not, but Paypal does suck, I agree with you wholeheartedly. They never try to get you your money back and they do indeed always take the side of the consumer, not the vendor.

Unfortunately, I doubt you'll be able to do anything about it.

Actually, my past five years or so of using PayPal for around 10,000 plus transactions has been great! If you know what you are doing, you can prevent almost all problems. They do not suck.

For large orders and especially when reselling servers, I'd rather take the time to call the user and make sure he is not fraud before setting his server up. Much better than losing those money in the end ;)

Originally posted by Josh Stein
Actually, my past five years or so of using PayPal for around 10,000 plus transactions has been great! If you know what you are doing, you can prevent almost all problems. They do not suck.

I beg to differ. I've been with Paypal for almost as long as you have, and yes, recently I have not had any issues with them. But when I just started using them, which was roughly 4 years ago, they were pathetic. I had over $10,000 in funds frozen for no reason, and then eventually dwindled down to nothing.

Give me the benefit of the doubt that I know what I am doing. I didn't just have 10k sit there for the fun of it. It was used to pay for merchandise, etc... I also had to use Paypal as that was the most common and accepted form of gateway in what I was doing.

I do give you that the business I was doing was probably more fraud-possible. I was working with virtual items at the time. So, fraud could have been very easy to commit. However, when I started using 2checkout, they actually took initiative and checked (I did this also) the clients. So, that cut down a lot on it.

Now, all that aside, the main reason that Paypal blows is because it does not want to work with you, as their vendor. They say you have to do this and that, such as faxing items to them. Well, after doing that 200 times, there's still no change. I finally had to talk to some corporate head there to have anything happen and threaten to go to BBB and file a complaint with them.

Only then did Paypal unfreeze my accounts and I was able to transfer the money out.

So, yes, I would say they suck.

This happens to everyone all the time, so you got beat. That's life, it happened to all of us at one point. You should be angry but you shouldn't stress out on it. It just makes your life more complicated.

Not sure if you are talking to me, but well, this happened a long time ago so of course I don't think about it. But still, its a stain on Paypal in my opinion. With their size, they should care for the vendors a bit more I think.

Paypal simply doesn't seem to care.
They are currently handling one fraudulent order i've gotten, they took the funds out from me, but have still not returned to the real paypal account owner neither.

Well, i just hope they don't become b*tchy and snatch that amount of cash out from my bank account without my approval, i've heard they tend to do this also.

They could. You probably agreed to it upon signing with them. You do agree to that with 2checkout for example. However, 2co is much better at actually communicating with you and trying to resolve the problem so usually things dont tend to go that far.

Just look at Paypal and eBay's attitude toward customer service. They run you in circles when you have problems and basically want you to f* off.

I remember back in the day Paypal used to actually care about customer service more. Remember this dude "Paypal Damon"? He would pop out of nowhere on various forums when crap was being said about Paypal.

Now that eBay has absorbed Paypal he's now long gone, and the same usual routine of hiding contact links, closing issues with no recourse, running users in circles with auto-replies, have become the standard practice.

We process approximately 1/3 of our transactions through Paypal per month, which translates into $xx,xxx, for the last 5 years. Every single time, without exception, that I've had to contact their customer service department...they have been amazingly good to work with. They've frozen our account a couple of times, due to some suspicious activities, but a quick call and things were back on track right away.

--Tina

We also had problems with them and lost $200...

Originally posted by NevaCious
We also had problems with them and lost $200...

Care to elaborate?

I could say "paypal has cost me thousands" because they have cost me thousands, in processing fees :) Most times I see someone have problems with Paypal they, well, kinda asked for it, the most common issue I see is people taking money for something when they can smell the fraud but take the money anyway because they want the sale and ignore the niggling feeling that something isn't right. Then when the inevitable chargeback/reversal due to fraud happens they gripe about Paypal.

I had a similar thing happen to me on ebay. Luckily

A user bought used computer equipment off me for about $160 including shipping, and he filed for a chargeback without any warning and after he had left positive feedback explaining he was happy with the purchase.

There was one time where I lost about 300 dollars after I paid someone for some goods and their company simply disappeared. Paypal said they where investigating the issue and I still haven't received my refund. It's been about 2 years since that happened.

Small transactions I don't worry about, but once they get around $100 I think there are better online pay services. For expensive things I usually go with one of the companies that mails out a money order or check.

Tina, you were very lucky. We had our accounts frozen more half a year at a time, and had to keep faxing them information over and over again. It was useless.

Originally posted by ayksolutions
Tina, you were very lucky. We had our accounts frozen more half a year at a time, and had to keep faxing them information over and over again. It was useless.

Its not luck. Its knowing what you are doing and protecting yourself.

I havent had issues with paypal yet with both my personal account and business account. I wouldnt accept any 3 figure sale without doing numerous check's first and like has already been said if it is the card issuer that does the chargeback there is nothing paypal can do, if they didnt remove the cash they would be out of pocket for a chargeback against yourself. There is a risk in credit card payments just as much as paypal, but I dont see merchant's getting slammed when a credit card chargeback is received.

as a happy sidenote: Paypal doesn't steal the cash anymore forcefully from your account.

Now my paypal account happily says -128eur lol..

It's good that they don't take it forcefully back as they used to in the past, it allows one to make a good timing call for getting it back to positives if necessary to time (ie. when is pay day or something like that)

My account is verified.. however, i do not think the buyer's account is verified. Would this mean PayPal won't favor me?

Anyway, I accept the loss. I still would like to try to get the funds back though if possible. I explained the situation to PayPal and now I am waiting for them to review it.

I know as a fact that the customer just wanted a free server for him to spam his e-mails and he did that by getting a server from me and then charged me back after he was done with it.

I notified the customer before I pulled the plug. There WAS communication from my end. I just didn't recieve anything from him.

Anyway, I appreciate the advice.

:lovewht:

woolly: if paypal makes you the payer, that's simply wrong!