i hear other web hosting providers talking about it..what is it?

when one of your clients claim they were not provided with what they bought and paypal automatically refunds them despite what you say.

Example.
Someone buys a dedicated server for $300 for 1 month. After the 1 month is up, they file a claim to paypal saying you didnt provide them it. Unfortunantly alot of the time paypal just refunds them the money that you earned. So now you are -$300 and you lost a server for a month.

This is also a big problem for designers because there is really no way to prove they sent the psd or the coding depending on what they do. My desgner went -$900 in paypal because someone filed a $1,300 chargeback. NOT FUN!!!! However something I have learned for the designers/coders reading this. If someone files a chargeback you can fedex/ups them a cd of it and provide paypal with the tracking id.

after they make their second payment, though, they cant get their moneyback for their first payment right?

Im not sure about that but I know they cant file a claim after 45 days

PayPal is nutz. There terms of service is crazy. Web Hosting/Dedicated servers are services and by their protection policy is not refundable.

We purchased a website from a company who stated the stats were xxx.xx/month in revenue and was not the case. I skipped PayPal and went straight to my credit card company. Now PayPal is fighting it.

Fraud is fraud. Don't use PayPal if you don't have to.

In the end the best way to fight it is calling your bank. The bank is more on your side the paypal is and you have a better chance of getting your money back with them

when one of your clients claim they were not provided with what they bought and paypal automatically refunds them despite what you say.

In most cases, a chargeback is outside of paypal's control. As stated above, this would be a dispute filed within paypal and most of the time, the seller wins as a service provider. In the terms of service of paypal, if someone files a dispute on service, this is not usually awarded on the buyer's side. This can be good and bad on both sides! (if some1 rips you off for service.. etc), but back to the OPs question..

A chargeback is usually filed by the purchaser with their credit card company and/or bank. Since paypal has no control of this, the money is automaticly removed from your account and then you have to fill out a bunch of information for paypal to try to "fight" for your money back. On top of this pain, they charge you a 10 or 15 dollar fee!

after they make their second payment, though, they cant get their moneyback for their first payment right?

With a chargeback, I had experience with someone trying to claim money back from 4 months before! but, in that case paypal actually got our money back, but it took over 2 months.

Im not sure about that but I know they cant file a claim after 45 days

This only applies to that of an internal paypal disput.

If something is wrong within this, please justify, but this is from my own personal experience. I've dealt with the game server business and it seems to be parents who "claim" their child stole their parents credit card.

One way to cut down on chargeback is to do manual fraud check for new signup.

One way to cut down on chargeback is to do manual fraud check for new signup.

you can use service like phone verification by maxmind.com


My desgner went -$900 in paypal because someone filed a $1,300 chargeback. NOT FUN!!!!

true, not fun at all

For the designer that had a $1,300 chargeback filed, we a formal agreement made? Something documentable and signed?

When you get into agreements over $500 in value, you need to have a formal agreement of the services being done and the promise to pay for said services. If you don't, it cannot be held up in a court of law.

If you enter into a large project, sent a fedex shipment to them with the papers, have them sign on it and return it, etc. If it's large enough, have them get it notarized. Basically, do what it takes to cover yourself.

Credit cards are great for this because it allows you to resolve things without going to a court of law. It forces a certain level of professionalism on the person providing the services.

I highly recommend reading basic law books to get a solid understanding of what exactly qualifies as fraud, what constitutes a contract, etc. You might think it's obvious, but there are much more detailed levels of this that are worth knowing.

If you're working with someone from another country, all I can say is to be careful, and that trust is going to be a big part of the relationship.