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  1. #1
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    Question Protecting yourself from PayPal chargebacks

    Hi everyone,

    I used to operate a VPS hosting business and am looking to get back into the playing field. In the past I had had a few small occurrences of charge-backs from my orders; there never seemed to be a pattern from PayPal's fraud department - I won some, and I lost some - regardless of my billing records from WHMCS and emails sent between my billing system and customer to show that my service was indeed active.

    PayPal had once sent me some information about how to prevent charge-backs, but it all related to the shipping of a physical product.

    Being in the hosting industry - how have you taken measures to prevent charge-backs?

  2. #2
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    Mention in your response that it is a non-tangible product. Explain also why the chargeback is unfounded/or in the case of suspending service, why you suspended it.

  3. #3
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    Quote Originally Posted by Flapadar View Post
    Mention in your response that it is a non-tangible product. Explain also why the chargeback is unfounded/or in the case of suspending service, why you suspended it.
    Do you happen to know exactly what is PayPal's stance on non-tangible/virtual goods? I've heard both ways from they support the seller, and others from that they support the buyer.

    Thanks for the input!

  4. #4
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    Quote Originally Posted by ThomasBiddle View Post
    Do you happen to know exactly what is PayPal's stance on non-tangible/virtual goods? I've heard both ways from they support the seller, and others from that they support the buyer.

    Thanks for the input!
    Most cases stating non-tangible will win you it. If they buyer claims they didn't authorise the payment you have a chance of losing.

  5. #5
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    Charge backs are done by the credit card company, not by PayPal too.

  6. #6
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    Quote Originally Posted by Katatonic View Post
    Charge backs are done by the credit card company, not by PayPal too.
    True. Is there anyway to help a hosting provider's case here then?

  7. #7
    You should also keep and provide records of the account being used, like access logs. State in your terms your refund terms, how you handle chargebacks, etc.

  8. #8
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    Quote Originally Posted by ThomasBiddle View Post
    True. Is there anyway to help a hosting provider's case here then?
    To be fair, PayPal already protects sellers pretty well in this regard already.

    Make it clear with a Terms of Service agreement that's presented to the client during their order process that can easily be referenced stating no refunds or whatever your agreement is.

    PayPal only charge $10 for each charge back, other providers are more than this, especially directly through bank merchants.

    If the buyer states that charge that was made was not authorized on their behalf, you can't really dispute this though and 99% of cases these are fraudulent orders.

    There is probably more merchants out there besides PayPal for credit card processing that have better policies or flexibility if you look else where besides PayPal.

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