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  1. #1
    Join Date
    Jan 2010
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    PayPal's own investigation and reversal

    On a recent order I've received, I came across this with PayPal. See emails attached.

    Essentially, PayPal emails me immediately after payment was made, letting me know that they've selected this transaction for review and for me to log in and provide more details. The payment was also placed on hold. This appeared to be an investigation initiated by PayPal themselves.

    Upon logging in, I was presented with options to either refund the transaction immediately, provide shipping details, or none of the above. I chose none and the next page requested the buyer's shipping address as well as any additional details regarding the transaction. Obviously, there is no shipping information since I provide hosting. My client for this order appears to have checked out with a credit card without creating/logging into a PP account. At the end, I stated that this was for digital goods/services and that there was nothing to ship.

    Fast forward to today, I received the 2nd email attached stating that PayPal has concluded their investigation and they've decided to reverse the payment. I'm quite baffled by this.

    What I then did was email the client to inform what was going on. I kept the service on and just sent another invoice, this time telling my client to use Google Checkout.

    Has anyone seen this before? If so, what's the best way to approach this? I would like to know how to deal with this should it happen again.
    Attached Thumbnails Attached Thumbnails Untitled-2.jpg   Untitled-4.jpg  
    Last edited by Hsunami; 03-25-2011 at 12:31 AM.

  2. #2
    Join Date
    Mar 2004
    Posts
    523
    Due to the amount of fraud involved in hosting, you really shouldn't be taking payments from any non-confirmed PayPal user, less someone who isn't even registered.

    I would have refunded the payment and asked the client to use some other payment method or sign up for a PayPal account.

  3. #3
    Join Date
    Feb 2006
    Location
    India
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    Paypal users from some countries are not allowed to use the balance in their Paypal accounts for making payments, so they are forced to use a credit/ debit card.
    Some of the payments made using a credit/ debit card are then reversed.

  4. #4
    Join Date
    Oct 2010
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    ON, Canada
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    We got one of those yesterday for a client who has been with us for a few months and has paid each monthly invoice from the same verified PayPal account. We've contacted the client to let them know to contact PayPal to tell them that they explicitly authorized this transaction.

    When we called PayPal and asked them why they decided to open a case for a client who hasn't disputed the transaction and has had several prior transactions on the same day each month for several months and all for the same dollar value, to the cent, they had no real answer for us. They would only say that the account holder didn't initiate the dispute for this transaction; they did it of their own accord.

    So until the PayPal case is resolved, the funds are temporarily held.
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  5. #5
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    This is becoming quite common Ive actually seen it as well.
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  6. #6
    Join Date
    Oct 2007
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    As far as I understand PayPal will only take action to investigate a transaction if it looks suspicious, for example if the client pay you by login to his PayPal account from an IP far away from his normal locations.

    If you provide the proper information and explanation to PayPal about the transaction, most of the time they will just conclude their investigation without reversing the payment.
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  7. #7
    Join Date
    Feb 2002
    Location
    New York, NY
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    We get these once in a while. We explain that we have no reason to suspect fraud, and then they close the investigation a few days later. They've never actually reversed a transaction so far.
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  8. #8
    Join Date
    Feb 2003
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    Cumbernauld, Scotland, UK
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    735
    Quote Originally Posted by WickedFactor View Post
    What I then did was email the client to inform what was going on. I kept the service on and just sent another invoice, this time telling my client to use Google Checkout
    Did you get a response form the client?
    Equally, did they make this alternative payment?

    I tend to look at the payment received, check and confirm the payment is from a verified account
    If not, then I email the account holder (not the PayPal email address) and advise them to make sure the payment address and card used are the same

    The most usual cause for this is a mis-match between the addresses, as a result the card issuer declines the payment

    For unverified accounts we then don't place any orders for Domain Names until the payment confirmation arrives from PayPal, typically taking up to 48 hours but for some cards is within 1 hour
    However, for existing clients this is waived
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  9. #9
    Join Date
    Oct 2007
    Location
    Hong Kong+Toronto
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    We currently have one of such transaction being reviewed by Paypal at the moment. It comes now and then, we do not activate the service until the review is done and the funds effectively reach our account. For me it is a positive thing as such transactions if successful are unlikely to be fraudulent.

  10. #10
    Join Date
    Jan 2010
    Location
    San Francisco
    Posts
    1,800
    Thanks for the feedback, guys.

    Quote Originally Posted by m8internet View Post
    Did you get a response form the client?
    Equally, did they make this alternative payment?
    We've just emailed the client late last night so hope to see something today. The account didn't seem suspicious and is one of the more legit orders thus far, also didn't throw up flags in maxmind. Guess we'll see.

  11. #11
    Join Date
    Aug 2010
    Location
    Jakarta, Indonesia
    Posts
    142
    Please check who the clients are from.

    1. This happens when the money that is being paid with is from illegal account login (read: hacked account)
    2. Paypal usually reacts within 1 hour if the transaction is done by a different IP (compared to regular IP that usually login). Or, the original owner of the account disputes the transaction....whichever comes first.

    Why do I know this? as shameful as it can be, it is a commonly done activities here in our country. Many honest people surely wont even try doing this. However, some people will just keep trying.

    So, what would be the outcome? You are lucky enough only to have the fee reversed to the owner. Even worse, you can have a 'limited' account (google it) else, if you have a previously already zero balanced, your balance will be negative (yes sir..it is oddly happening).

    Anyhow, if this is regarding hosting services...it is pretty simple, suspend the account when the due date is up. This is a simpler case compared to item purchasing where the items have been sent out.

  12. #12
    Join Date
    Jan 2010
    Location
    San Francisco
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    Thanks mipra. Just wanted to give an update - after further research, the individual was hosting a check cashing scam. It wasn't apparent at first when I reviewed the individual's website as it looked like a legitimate business as a 'front' and the check cashing page was deeper in the site.

    It looks like PayPal doesn't simply go around reversing payments and it's only done to transactions that really throws up their flags - in this case, most likely a stolen credit card. Thank you everyone for your feedback. Much appreciated.

  13. #13
    Join Date
    Feb 2011
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    Nirvana
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    Quote Originally Posted by GGWH-James View Post
    We got one of those yesterday for a client who has been with us for a few months and has paid each monthly invoice from the same verified PayPal account. We've contacted the client to let them know to contact PayPal to tell them that they explicitly authorized this transaction.

    When we called PayPal and asked them why they decided to open a case for a client who hasn't disputed the transaction and has had several prior transactions on the same day each month for several months and all for the same dollar value, to the cent, they had no real answer for us. They would only say that the account holder didn't initiate the dispute for this transaction; they did it of their own accord.

    So until the PayPal case is resolved, the funds are temporarily held.
    Yes I would have immediately called PayPal. They are actually pretty good about getting things straightened quickly.

    Wow, hadn't caught that last post. People will try anything these days
    Last edited by musicman153; 03-26-2011 at 03:03 PM.
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  14. #14
    Quote Originally Posted by GGWH-James View Post
    We got one of those yesterday for a client who has been with us for a few months and has paid each monthly invoice from the same verified PayPal account. We've contacted the client to let them know to contact PayPal to tell them that they explicitly authorized this transaction.

    When we called PayPal and asked them why they decided to open a case for a client who hasn't disputed the transaction and has had several prior transactions on the same day each month for several months and all for the same dollar value, to the cent, they had no real answer for us. They would only say that the account holder didn't initiate the dispute for this transaction; they did it of their own accord.

    So until the PayPal case is resolved, the funds are temporarily held.
    does paypal charge fees when they do that??
    maybe they want to make money

  15. #15
    Join Date
    Aug 2004
    Location
    Canada
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    3,785
    Quote Originally Posted by GGWH-James View Post
    We got one of those yesterday for a client who has been with us for a few months and has paid each monthly invoice from the same verified PayPal account. We've contacted the client to let them know to contact PayPal to tell them that they explicitly authorized this transaction.
    .

    Those are the ones that get me why after the 5th transaction or something some red flag goes off. Usually ends up in a reversal then the customers goes and pays again and it goes through.
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  16. #16
    Join Date
    Aug 2010
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    Quote Originally Posted by WickedFactor View Post

    Has anyone seen this before? If so, what's the best way to approach this? I would like to know how to deal with this should it happen again.
    In my experience, whenever they start investigating a payment, they mean to say, "We'll reverse the payment.". What we do now is simply refund the payment, and ask the user to pay again. Most of the times the user is genuine(with some of them being with me for a while) but for some reason PayPal raised the bell.
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  17. #17
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    Feb 2011
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    THE TOOOOOON , UK
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    If paypal are told its a virtual item doesn't that work for the sellers favor?

  18. #18
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    Aug 2010
    Posts
    238
    Quote Originally Posted by GSpinkz View Post
    If paypal are told its a virtual item doesn't that work for the sellers favor?
    Not necessarily.

    As for the above investigations, the transactions are always reversed. I've yet to see a single investigation raised by PayPal that rules in my favor.
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  19. #19
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    Jun 2009
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    UK: Oxford
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    Everyone Gets them every now and then. There is nothing we can do about it other then what deemed appropriate from PayPal.
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  20. #20
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    Oct 2002
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    Vancouver, B.C.
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    This just happened to us. Long time client's payment was investigated, and reversed despite my informing PayPal that they were a long term client, who had made many regularly recurring payments in the past without any issue. PayPal decided to reverse the charge anyway. The most infuriating part is that they also charged $8.06 for a reversal fee.
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  21. #21
    Quote Originally Posted by hhw View Post
    The most infuriating part is that they also charged $8.06 for a reversal fee.
    Charged you or the buyer?

    We had the same thing happen the other day. Someone from Brazil ordered a dedicated server and PayPal put the Payment on hold. I was told by PayPal rep to choose "None of the above" option and put in the comment box "As per requested by PayPal, service has not been received". This was the 2nd of May, now on 6th of May and the payment is still on hold.
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  22. #22
    We had this happen twice. Once they reversed and the other they let go though. Both times took too long and both times they didn't bother answering any questions.
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  23. #23
    Paypal is changing their T n C every year. They are making it more secure.

  24. #24
    Join Date
    May 2006
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    San Francisco
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    This also happened to us a few days ago. Waiting to see what PayPal will do.

  25. #25
    Join Date
    Sep 2003
    Posts
    3,857
    This has happened to us before and still does, but 99% are all in our favour.. Sometimes we don't bother responding any more because they release the funds back to us. In some cases, PayPal doesn't even freeze any of the investigated funds anymore.

    I find them a pleasure to deal with. Even when it comes to credit card chargebacks, we submit a few documents and usually win the case. I don't know whether it's the length of time we've been using them, the volume of transactions we do or if I've just been lucky so far, but I would recommend you contact them.

    Depending on the volume/value of transactions and the type of account, they typically give a separate business division number for you to call which isn't outsourced and they're extremely helpful.

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