As merchants of non-tangible goods the products that we sell do not qualify for any seller or buyer protection. From our experience the only way a customer can end up with a service 'chargeback' via paypal is by claiming fraud @ their bank.

We had an payment of ours reversed and PayPal did not notify us. I just happened to start a payment to one of our contractors and noticed I was paying alot more for the service because PayPal wanted the charged back funds from us.

PayPals system did this after their office hours so I couldn't call anyone for a response.

I called the following day and was told a customer can reverse a charge at anytime for any reason. I was stunned and requested to speak to a manager. The manager told me pretty much the same thing except she said the client of ours had numerous reversals.

At this point we shut the customer down and left a voicemail for them. The customer didn't contact us however I noticed PayPal reversed the reversal (once again without contacting us). When I called PayPal regarding this they said yeah we made a mistake your customer didn't do anything.

Now how do you like that? How often is it in the banking industry that when people make a mistake they don't end up paying for it. I didn't ask PayPal for anything but I asked them to compensate our client since PayPals actions resulted in our client server being shutdown for about 24 hours. I don't know if PayPal offered the client anything but this was a quick wakeup call for us.

The agent I spoke with agreed with me on the buyer/seller protection however this was enough for us. PayPal makes a mistake and merchants/clients suffer the consequences. They don't notify you and when you call them you get attitude.

So how exactly did PayPal "screw up"?

It was your choice to shut your clients services down, not Paypal's

In my opinion it should be you that compensates your client for the downtime that your client suffered.

PayPal reversed the clients payment without any action of the customer. Perhaps your company keeps services going for charged back services.

They reversed the payment, didn't contact us. Corrected the reversal, didn't contact us.

If I hadn't of called them the initial time nothing probably would of happened with the reversal.

I guess I can change this a little bit. You write a check to a company for something and the bank accidentally returns the check unpaid to the company. Your bank would reimburse you for any fees you would incur because of their action (most banks). PayPal on the other hand elected to first attack a merchant by saying people can request reversals at anytime for anything, then by saying our customer had numerous returns on their account. They gave me the whole canned response about non-tangible goods. The canned response that wouldn't apply in this instance since this customer paid for services _after_ this disputed transaction. Surely a client that had a problem with a company wouldn't continue to purchase from the company unless it it was a fraudulent situation which this was not.

I guess it's all my word against theirs, it's a lesson to be learned. PayPal is fine to deal with until something goes wrong.

Perhaps your company keeps services going for charged back services.My company does not keep services running for client's that have charged back.

What my company does do however is not pass the blame to a third party for its own actions. Paypal issued a charge back to its client because it seemed like a fradulent transaction, you rightly suspended the account.

Paypal then investigated a bit further and noticed that their client was still paying for your services and so reversed their earlier decision. The fact this only took 24 hours is amazing but it did.

I do not fault you for suspending the services but what i do fault you on is where you are laying the blame for the outage. seriously how much "compensation" for 1 days outage are we looking at?

Just for your information, in the 4 years that DephNet Technologies has been trading we have had a 0% chargeback rate. We only marmarket to local small and medium enterprises, and not to world+dog, so most of our transactions are in cash or BACS.

You may want to look into the PayPal IPN, I've never had a problem with it... and it will notify you of reversals.