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  1. #1
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    Thumbs down Paypal horror story - Merchants I think it's our time to start fighting back

    This is what I've received almost 50 times in past 3 months period.

    >Hello GameFrame,

    >Recently, you were notified that PayPal received a chargeback from a
    >buyer's card issuer. The buyer claimed he or she did not make this
    >purchase. Details of this transaction are as follows:

    >Buyer Name: Cynthia *censored*
    >Buyer Email: *cencored*@verizon.net
    >Case ID: PP-001-329-952-232
    >Amount: $25.00 USD of $25.00 USD
    >Transaction Date: Mar 17, 2011
    >Your Transaction ID: 3MV54391JF067041H
    >Buyer's Transaction ID: 8LY150357N103801G

    >After careful consideration of the evidence provided by you and the buyer
    >in the case referenced above, we have determined that you are liable for
    >the chargeback amount. The amount of the above-referenced transaction has
    >been debited from your PayPal account.

    I did not provide them any evidence because I knew the outcome (it's usually decided beforehand)

    >PayPal has been charged a fee from the buyer's card issuer, and a result we
    >have had to assess your PayPal account a chargeback settlement fee of
    >$10.00 USD.
    The above case is where malicious user managed to get access to Cynthia's email and to her credit card and then this fraudster abused our services.

    Condering the above. Every fraudulent user is paypal's victory. You get charged like you would be guilty for that fraudulent purchase. This is utter crap policy. Remember, paypal will still charge you for their fees even they reversed the payment + that chargeback settlement.

    There more the transaction amount is, the more you will be charged in case of unauthorized use or chargeback !!

    Their security is a joke. I mean their system pass-through every transaction even it would be a proxy. Next day their automation will held your funds 'due to the security' and you have already lost the case, especially if you was selling non-tangigle items such as services like we do. Question is, what's the point pass-through payment and reverse it some hours after or the next day ??

    I have answer, this way they fool new users to pretend they have good security and bla-bala. At this point they have got already their fees and nothing else matters although they pretend to be caring.

    Does anyone know how other payment gateways enforce these polices in cases like that?

    When we add their easy-to-abuse dispute system what they call 'flexible', you should think twice before using them (this is for new users).
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  2. #2
    Join Date
    Mar 2010
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    abandon all hope ye enter here (stupid support is their deterrent)

    Quote Originally Posted by GameFrame View Post
    This is what I've received almost 50 times in past 3 months period.

    When we add their easy-to-abuse dispute system what they call 'flexible', you should think twice before using them (this is for new users).
    I don't think there's any other company that so brilliantly walks the line between market leader and fraudster as Paypal does.
    The factors they use for this
    * a lot of money to be in the lead
    * extremely strict rules that are stupid but always applied
    * very incompetent and unavailable support

    This is like during the cold war - they induce the fear to complain, as the idiotic rules and support might terminate your account. They have absolute power because their bad support makes them completely intangible.
    When they i.e. freeze some large transaction for longer than their TOS allows, many people end up writing them *emails* instead of filing a lawsuit and sending a debt collector. This way they win each and every time.

    I am sure there are other companies that have as bad policies, but the others don't have the leadership to (ab)use them as successfully.

    Personally, I'm offering paypal, but only after manual verification and the payment of choice is classic wire transfer.
    Luckily in germany this is the standard payment method instead of CC's or Paypal, most businesses wouldn't even be able to do Paypal payment. If I were in the US with CC fraud and PayPal fraud, i don't know where I'd turn hehe.

    If Paypal gets you to give up - they earn money for nothing, and thats what they want.
    One $10 backcharge is like 10 standard transactions, so they earn more from the backcharges... Go figure.
    Last edited by wartungsfenster; 06-14-2011 at 04:27 AM.
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  3. #3
    Join Date
    Mar 2010
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    Florida, USA
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    186
    The bottom line is: ANYTIME you take a card sight unseen with no original signature or card swipe, you do so at your own risk with virtually no chargeback defense no matter how fraudulent or outrageous the dispute claim. That's why non-swiped transactions carry a higher risk and correspondingly a higher discount percentage. This unfortunate truism is due to both bankcard association rules and banking rules. As an internet vendor, you should be aware of this and build a chargeback loss overhead amount into your overhead factor--it's a cost of doing internet business. Now, I know that doesn't ease the pain of this chargeback, but it IS one way of looking at it. At the end of the day, as an internet merchant, chargebacks come with the territory, and you would be well advised to find a mechanism to deal with it.

    Now, let's take it one step further. We are in the payment processing business and are often confronted with prospects deciding between Payhpal and a 'real' merchant account. We have always suggested that there is no reason not to have Paypal as a part of one's payment processing arsenal, but to have Paypal as the ONLY option is shortsighted and often dangerous. This is true for many reasons, and your case demonstrates just one of them. Paypal is NOT a true merchant account, has no underwriting security blanket to speak of, and accordingly is not subject to banking and bankcard association rules regarding plastic payments, some of which protect merchant and buyer alike. This presents some very real security shortcomings, as you have just experienced, since for reasons mentioned Paypal is viewed as an alluring environment for fraudulent buyers and merchants alike. With a traditional merchant account, you may or may not have had a little better chance to deal with this issue (depending on the specific processor plus many other factors), plus with the correct gateway configuration you may have benefited from the many security tools at your avail, and avoided this situation altogether.

  4. #4
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    What I tried to say, it does not need to be fraudulent purchase or unauthozried use. If your buyer will open a dispute and will win it, once againt it's You merchant who will be still charged for paypal fees (4% from the paid amount).

    How it's possible people are this modest to accept that? Paypal is doing 100% risk free business and it's us merchants who pay their bills and take all risk.

    I will be done with paypal as soon as i have arranged replacement payment processor. Im tired of being their 'toy' which they abuse with their stupid policy.

    Provide this information and that information to comply with their stupid rules. Be our puppy boy and pay more our bills and take our risk. This is paypal.

    I am going to file a lawsuit against them.
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  5. #5
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    Good luck funding a payment processor that doesn't charge you for chargebacks, paypals $10 rate is lowest you will get, normal is $30 with a merchant bank.
    Its not paypal's fault, visa/mc charges it to them and they pass it on to you.

    You are doing something wrong if you are getting this many chargebacks with paypal.
    Over 8 years I have gotten 3 or 4 actual fraud CC chargebacks with paypal (mostly its just bad customers open a dispute, which are easy to defend against).
    Are you doing reverse lookups on the customer IP to make sure its in the same city and state as the billing address, check with proxy databases, require verified payments and/or do phone verification if its not verified?
    If your just accepting any payment you get then your going to end up in trouble.

    If these 50 chargebacks are all from same person it may be profitable to file a lawsuit or take it to small claims court.
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  6. #6
    Yet another in a long line in paypal horror stories. there are actuall about 30 sites dedicated to customers complaining about paypal. Once you get your site past the hobby stage its time to find a legit commercial merchant services provider and get a built in shopping cart for your site.

  7. #7
    Join Date
    Jul 2011
    Posts
    67
    Actually, i always say that paypal is the worst payment processor out there.

    when you lose money for an unfair refund, paypal staff listen to the scammer and don't listen to you whatever you say.

    they have alot of bugs in the system and more more bugs in the people working there.

  8. #8
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    48
    Quote Originally Posted by wartungsfenster View Post
    I don't think there's any other company that so brilliantly walks the line between market leader and fraudster as Paypal does...
    That is well put. A brilliant choice of words!

  9. #9
    Join Date
    Apr 2009
    Location
    India
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    We are using PayPal since 3 year without any issue, Last year we got $200 as a gift from PayPal

  10. #10
    Join Date
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    Europe
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    Guys, actually its not that simple as you say.
    1. There may be several reasons for Chargeback, and, simply, there's little mistake in the message from PayPal as its not the only possible case that customer doesn't recognize the transaction. CB may be easily made if the services are not fulfilling customer's waitings or not provided in terms that were offered, etc. There may be lots of reasons with the CB result in the merchant end.
    2. As a customer may think, all processors are running risk-free business, as they use customers money and dont use any money of their own, but its not quite true.
    You have to remember that after the payment the money from client CC is not acually comming to the account of processor, this money is just blocked on CC and released to the acquiring bank later. In case if processor has small delays like weekely payouts with no hold this is actually 100% credit that processor release to customer, as money is not yet on account. SO this is like going to the bank and borrowing some sum for beer before your friday's salary.
    Processor gives you the credit.
    3. As it was mentioned, you will never be protected from the CBs in existing ecommerce world, cause actually noone cares, banks dont really care why you had the CB, they look on figures and analyze if they work with you or not, processor is the only structure that can help you, though, if you're providing some services like hosting or support, you will never win the case, with tangible goods its much more simple.
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  11. #11
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    Actually, even with tangible products alot of disputes lost unfairly.

    this thing happens everyday lots of times and its a fact that paypal has weird staff working without experience and just solve issues in the way they find easy for them not giving the time to investigate at all.

  12. #12
    We once have same issue with paypal and decide to change to google checkout, now we use both.

  13. #13
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    Quote Originally Posted by Host Ultra View Post
    You are doing something wrong if you are getting this many chargebacks with paypal.
    While PayPal may not be perfect, this is a valid point. Unless 50 transactions in three months is a low number for the OP and within normal chargeback ratios, OP needs to improve fraud checks and tighten anti-fraud security systems.

  14. #14
    I agree with what the other people are saying here, if you have had that many chargebacks, you should consider looking into the service you provide maybe?

  15. #15
    Paypal is good If you are selling a physical product otherwise you will always face a problem.

    Last year I receive 40 - 50 paypal dispute but now I review every orders and If I found anything wrong then I deny their order and before they open a dispute I refund their money..

    ;( (I happy when I see that my client pay invoice through Liberty Reserve or his fraud check score is 0 - 7)
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  16. #16
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    Quote Originally Posted by DewlanceHosting View Post
    Paypal is good If you are selling a physical product otherwise you will always face a problem.

    Last year I receive 40 - 50 paypal dispute but now I review every orders and If I found anything wrong then I deny their order and before they open a dispute I refund their money..

    ;( (I happy when I see that my client pay invoice through Liberty Reserve or his fraud check score is 0 - 7)
    I agree with you, LibertyReserve is alot better than Paypal, No Scammers allowed, No chargebacks and provides more security and very helpful team unlike those stupids working in Paypal, and even if you sell tangible or intagible items, you will face big problems with that weak full of pugs payment processor.

  17. #17
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    Quote Originally Posted by GameFrame View Post
    This is what I've received almost 50 times in past 3 months period.
    Then maybe it's time you actually started listening to professionals and start taking fraud prevention into your own hands. Think smart, they'll never get to you. Case in point:

    I started doing this online thing in '02. Even back THEN I was using some soft of fraud protection, ANYTHING to keep my tail end secure.

    In almost 9 years, how many chargebacks have I had? 5. Every one of them was fraudulent, every one of them. Care to guess how many times I lost? Twice. Both times because the client lied to the bank. No worries, it happens, it's a part of business.

    50 chargebacks in 3 months is far too much. You're doing something wrong here, and it's time for you to step back and look at just what you're doing , and WHY you're getting so many chargebacks. The problem isn't the customer, it's you.

    This line pretty much says it all:'
    Recently, you were notified that PayPal received a chargeback from a buyer's card issuer.
    Don't blame PAYPAL for this, there aint NOTHING Paypal can do here. This is 100% the customer and their bank. Once the customer calls the bank and says "Hey, this is invalid" or "Hey, this company didn't give me what I paid for", guess what? It's curtains for that charge. Paypal CAN NOT fight these, seriously. Well, let me re-phrase that. They CAN, but they know they're going to lose, so they DON'T. Without even blinking an eye, the credit card issuer is always, always, always going to side with the customer where there is no signature
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  18. #18
    Quote Originally Posted by linux-tech View Post
    This line pretty much says it all:'

    Don't blame PAYPAL for this, there aint NOTHING Paypal can do here. This is 100% the customer and their bank. Once the customer calls the bank and says "Hey, this is invalid" or "Hey, this company didn't give me what I paid for", guess what? It's curtains for that charge. Paypal CAN NOT fight these, seriously. Well, let me re-phrase that. They CAN, but they know they're going to lose, so they DON'T. Without even blinking an eye, the credit card issuer is always, always, always going to side with the customer where there is no signature
    Currently I am use MB and PayPal but I never get any dispute or chargeback from Moneybookers(MB)

    I don't know why I never get any credit chargeback from MB..
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  19. #19
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    Quote Originally Posted by DewlanceHosting View Post
    Currently I am use MB and PayPal but I never get any dispute or chargeback from Moneybookers(MB)

    I don't know why I never get any credit chargeback from MB..
    because MB is a legit payment processor unlike paypal which is crap.

  20. #20
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    Birmingham - UK
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    I hate paypal but its my payment method for both my ebay business and hosting. I had person buy from me and opened a case on me cause i had sent the item to the address on the ebay account when the person said i should of sent the item to the paypal address. Which you only send to the ebay address, paypal took £14.99 + fee's and paid this person back. PayPal need to look more into things. I was in the right and that person in the wrong.

  21. #21
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    Is the OP for real? From the website in his/her sig
    Are you tired of filing PayPal unauthorized claims and being charged outrageous fees due to fraudulent users?

    Using the advanced blocking mechanisms, your site's member area is much secure and requires a massive amount of resources for anyone to breach.
    Just saying...

  22. #22
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    Quote Originally Posted by Itslee View Post
    I hate paypal but its my payment method for both my ebay business and hosting. I had person buy from me and opened a case on me cause i had sent the item to the address on the ebay account when the person said i should of sent the item to the paypal address. Which you only send to the ebay address, paypal took £14.99 + fee's and paid this person back. PayPal need to look more into things. I was in the right and that person in the wrong.
    same scenario like you here, used it for ebay and online businesses and the paypal crap staff usually work for scammers.

  23. #23
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    Quote Originally Posted by PCTechMe View Post
    Is the OP for real? From the website in his/her sig

    Just saying...
    Spam? Good catch

  24. #24
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    Its simple to fix, Do not use unsafe payment processors such as paypal.

  25. #25
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    Quote Originally Posted by FirstNetServ View Post
    Its simple to fix, Do not use unsafe payment processors such as paypal.
    yes, you are right.

    paypal system is full of bugs and has crap staff who support scammers.

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