Yea, domains aren't refundable. If someone files a dispute then you would need to just deal with it , most of the time if someone does this the provider would go and list the domain for sale. You could even run a contest for all your clients and winner could win the domain.
You shouldn't have a problem, if someone files a dispute with PayPal, you still have authority to provide proof of purchase to the PayPal claim and show that they have gotten there services from you, and that your TOS States a non-refundable purchase,
This was discussed in another thread here, where the guy had the same problem with 5 orders and he won every order that the PayPal disputes where closed and he wasn't for the loss.
From what had been stated, i think the most important is to list out Domain is non-refundable at the T.o.s so if there's a charge back, just show the ToS to the paypal dispute. I think it would be alright, as i think i need to prepare myself for this case too.
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We usually try to fight the chargeback. If this fails, the domain is put up for sale, but the chances to actually sell the domain are very low since the traffic is nearly zero. Nobody is interested in buying an unused domain, unless they really like the name.
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