I'm curious, I recently had someone do a bank reversal worth $5 to my payment account on an online service they had been using, now it's only $5 and I honestly couldn't care but is there a way to prevent this from happening in the future?

What was the reason of the chargeback?

If the reason its because you did not deliver what the customer purchased then there should be no way to prevent that, as you failed to provide what you promised.

If you are a honest business there are ways to protect your money. Not sure how it works with paypal but if you have a merchant account, make sure before shipping that the Billing Address is verified as the address of the credit card, and don't ship the product to an address different than the billing address.

That way when there is a chargeback you can show the disputes department that you shipped the product to the right address and everything was done the way is supposed to.

If the Credit Card is stolen at least you didn't ship the product to the thief but the owner of the card.

You really cannot to one extent. With a merchant account provider (MAP), when a consumer calls the issuing bank to say they did not get the service, etc, the issuing bank will issue a chargeback. The information is passed down to the acquiring bank and merchant account provider and then to the merchant. Depending on the reason code, the merchant has XX number to reply to the statement.

The issuing bank will refund the money to the customer, taking it from the acquiring bank, the MAP, and then finally from the merchant. When you put another party (internet payment service provider - IPSP) into the mix, you can see it can get a bit more problematic. Before it is your money, it the IPSPs.

With a merchant account, it is the MAPs before it is yours. When the money is refunded to the consumer by the issuing bank, the issuing bank is going to get their money back from somewhere (and so forth down the chain until it gets to you).

If the reason code was 30 (Services Not Provided or Merchandise Not Received), you should be able to provide documentation that the services was provided. If it was 53 (Not as Described or Defective Merchandise), then maybe inmprove on communication with your customers some so they will contact you first to resolve the issue. If it was 83 (Fraudulent Transaction - Card-Absent Environment), then you need to consider to maybe do more scrubbing of the transaction.

From what I understand it was a child who got into mommy/daddy's paypal account and purchased the service from me, the service had been provided but I logged into paypal one day to see it had been reversed, paypal had not contacted me prior.

Then mommy / daddy should change their password. They should have contacted you before requesting their money back and explained the situation.

I am not certain what type of service you offer - but that would be a good rebuttal if they used the services the child bought

is best that you communicate and deliver the login to the buyer on the same paypal address and it will be better also

is best that you communicate and deliver the login to the buyer on the same paypal address and it will be better also
Yeah, I emailed the account associated with the email logs with the "buyer" but they haven't responded.

A found that many of these scammers like to pre-pay, at the end of the term they open a chargeback. So becareful of these scammers, i would suggestion using some sort of fraud detection service such as maxmind.