Recently have been having suspected fraudulent signups with paypal, and just wondering what the best method is to handle this?
Currently I am just refunding the payment and refusing service.
Any advice appreciated, thanks.

Have you tried calling the customer to get a "feel"? If you refund payments and you don't hear back from the customer, that's usually a good sign you're dealing with a fraudulent payment. Give paypal a call but don't expect much.
Regards

Well I'm about 99% sure its a fraud order, different names on order and the paypal address, IP resolves to a different country, etc..
So refunding the payment is adequate? I'm trying to prevent my account from being limited.

Are you using any fraud detection service like MaxMind?
If you are getting paid by a name not on the order, I found that its common. However, if everything doesn't resolve correctly, and you are 99.9% sure it's fraud, I don't see the problem with it.
I wouldn't bother with a phone call, just shoot a email to the email on the hosting account and see what he/she says.

Yes maxmind is good what billing system do you use nexbyte?
1 problem i have had tho with fraud modules is you lose customers because they wont order a 2nd time with the correct details and even with a fraud module it wont check if the details match.

Got my first suspected fraud order today lol. Didn't fill in the first name (only an initial) different email address than the paypal, IP didn't match the state, tried ordering a subdomain instead of a regular domain, and hasn't responded to the email that was sent giving notice of why I marked as fraud. Instead paying for an auto checker I manually screen every order for fraud and make a judgement call as to whether its fraud or not. Rather lose a good sale than get a bad one where I start getting hasseled by paypal. But, fraud orders are a risk we take in this business eh?

dang, missed the edit time. The person also didn't use the 75% off first payment coupon code.

Got my first suspected fraud order today lol. Didn't fill in the first name (only an initial) different email address than the paypal, IP didn't match the state, tried ordering a subdomain instead of a regular domain, and hasn't responded to the email that was sent giving notice of why I marked as fraud. Instead paying for an auto checker I manually screen every order for fraud and make a judgement call as to whether its fraud or not. Rather lose a good sale than get a bad one where I start getting hasseled by paypal. But, fraud orders are a risk we take in this business eh?
Maybe the person didn't have a full name or could have a legal name that is a single character. There are a lot of people with initials as their first names.
If they are using paypal they could be using different email addresses. One maybe personal and the other for online transactions/business.
Orderinig a subdomain is wrong? You should disable it then. Maybe he or she doesn't have the money right now to buy one.
The IP not matchin gis the only concern I could see and everything adding up maybe suspect. Did you have a fraud score?
You should have emailed and waited 24-72 hours for a response, then marked it as fraud or cancelled.
And on other note PayPal wouldn't give you hassles. If the transaction is fraud they will refund the money to the rightful owner, however PayPal will decide with the seller for services or you could refund after no email response.
dang, missed the edit time. The person also didn't use the 75% off first payment coupon code.
How is that bad? You made 75% more. Some people don't use coupons or promotional codes. Doesn't make it absolute fraud.

Definitely use a anti-fraud service such as Maxmind. Do not automate orders and manually verify each one of them. Refunding them is definitely the way to go. If the person does claim that they are a victim of fraud, then refund them right away and terminate the account without any backups. I believe Maxmind has an automated phone service to see whether the person is legit or not.

Recently have been having suspected fraudulent signups with paypal, and just wondering what the best method is to handle this?
Currently I am just refunding the payment and refusing service.
Any advice appreciated, thanks.
I would call to verify the order before refunding the payment and refusing the service. As for preventing the orders from coming in, the people that do this will always find a way.

Not only that, there is another host on this site that got the same person as I did. I marked the order as fraud and gave him time to respond (I marked it right after it came in) and received no response. If you want to take customers like this then have at it. We all run our businesses a different way. This is how I do mine. :D

If we get an order for a decent amount of money, and the website doesn't exist, or the WHOIS info looks fishy, we'll usually give them a call.
If we have any doubt at all we'll void the order in Authnet or PayPal rather than cross our fingers and be hit with chargebacks months later from a card owner who has no idea what's going on.
I remember the days where we did hosting though, and fraud is definitely a bigger problem for hosts than software providers, since having a free hosting account allows all kinds of malicious activities for the ethically challenged. ;)
We've managed to keep our transaction rates lower by just not dealing with chargebacks (I think we had *one* in 2008). It's tempting to accept any business you can get early on, but it's also a lot more painful in the beginning to have your bank account docked when you aren't expecting it.
There is plenty of legitimate business out there. :)

We've just solved a massive fraud problem - started in mid december, every day we were getting lots of fake orders, always paying through either PayPal or WorldPay. Ended up getting MaxMind with telephone verification. It has stopped all fraudulent orders (afaik) and i seem to have more time on my hands. This will ulitmately save me money as we will get less chargebacks.

What do you do if you get a suspected fraudulent order and the ordered 2 domains!? They paid with a credit card (Authnet) and I don't get refunds on domains (can't "unregister" them) so I don't want to give a full refund. I emailed them but haven't gotten a response.

I think you have 5 days to be able to drop a domain but tbh, we used to just write them off. You have already lost money, don't lose resources by wasting more time and effort... move on, the next sale will be a good one ;-) (sounds easy for me to say but i can honestly say you have to think positive - you were only ripped for a few quid, it could have been far worse).