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  #1  
Old
Invented the Internet
 
Join Date: Feb 2001
Location: West Michigan, USA
Posts: 9,675

Unauthorized Paypal Transaction


Today I got this from Paypal:

------------------------------------------------
During a recent review of our system, we determined that you received funds from an account that reportedly has been associated with possible unauthorized use. In accordance with PayPal's Seller Protection Policy, the following transaction has been reversed:

(transaction details removed)

The transaction was reversed because you were not covered by PayPal's Seller Protection Policy. Note: This reversal is in accordance with our User Agreement, Section VII, Paragraph 3.
-------------------------------------------------

I immediately suspended the account. The customer contacts me and says

"You were paid twice. Only one of the payments was reversed."

To me, it sounds like he disputed the transaction. Still, its strange since it wasn't the normal Paypal dispute process, they literally took the money out and there is no recourse or dispute. I replied:

"> The account was reported by Paypal as being possible unauthorized use. It
> didn't say that the payment was reversed because we were paid in error,
> nor did you come to us and ask for a refund. Because it was reported as
> possible unauthorized use, we must protect ourselves and not accept
> anymore payments from that account."

He replied:

"I didn't ask for a refund because I assumed you would apply the duplicate
payment to a future bill."

I asked him why he reported it as fraudulant. He replied:

"I had only transferred enough money into the paypal account to make one payment. When the second payment came through there weren't enough funds in the account. That is why the second payment was reversed"

This customer has not been with us very long (3 months), so I'm wondering if I'm being paranoid about the whole thing. I've never had the 'unauthorized' notice from Paypal before. The whole thing sounds very fishy to me. Anytime I've ever tried to send more than what is in my Paypal account, it either doesn't go through or it takes from my bank account. Opinions???

--Tina

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  #2  
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Join Date: Jul 2005
Location: Buffalo, NY
Posts: 2,626
Most likely the client paid you with their credit card and then disputed the charge with them. Credit card payments via PayPal can be reversed at any time without notice, dispute, or resolution. Unfortunately, you can't do much about it, and either can PayPal. If the charge was reversed with the client's credit card company, it is automatically reversed with PayPal as well. Basically:

- Client paid you with CC
- Charges were reversed with his CC
- PayPal must now reverse this since the funds were "never there" in the first place
- Funds are automatically removed from your account because of this

Disputing the reversal doesn't help much. I've had serious proof of frauddies before and showed that information to PayPal, and I still didn't win it.

If I were you, I'd make sure to verify this account (if you haven't already) and run some searches. If 1 payment was reversed, the other one most likely will be reversed, too.

  #3  
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Join Date: Aug 2004
Location: Mumbai
Posts: 183
Quote:
"I had only transferred enough money into the paypal account to make one payment. When the second payment came through there weren't enough funds in the account. That is why the second payment was reversed"
I don't think that is possible. Paypal will never allow you to send out more than what is in your paypal account.

Possible reasons for this reversal

1. Paypal account information used by your client is stolen.
2. Your client disputed the charges with Paypal or funding source.

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  #4  
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Quote:
Originally Posted by PE-Steve
Most likely the client paid you with their credit card and then disputed the charge with them. Credit card payments via PayPal can be reversed at any time without notice, dispute, or resolution. Unfortunately, you can't do much about it, and either can PayPal. If the charge was reversed with the client's credit card company, it is automatically reversed with PayPal as well. Basically:

- Client paid you with CC
- Charges were reversed with his CC
- PayPal must now reverse this since the funds were "never there" in the first place
- Funds are automatically removed from your account because of this

Disputing the reversal doesn't help much. I've had serious proof of frauddies before and showed that information to PayPal, and I still didn't win it.

If I were you, I'd make sure to verify this account (if you haven't already) and run some searches. If 1 payment was reversed, the other one most likely will be reversed, too.

Actually, the Paypal chargeback email is different. It specifically states that a chargeback has been filed. I know, we recently got one of these. Paypal is fighting the chargeback on our behalf, since we have proof of that.

--Tina

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  #5  
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Quote:
Originally Posted by wonderpoint
I don't think that is possible. Paypal will never allow you to send out more than what is in your paypal account.

Possible reasons for this reversal

1. Paypal account information used by your client is stolen.
2. Your client disputed the charges with Paypal or funding source.

That is *exactly* what I was thinking.

I'm not sure what to do in this case. I kind of believe the customer just jumped the gun and disputed it as a fraudulant charge. On the other hand, I can't be sure.

--Tina

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  #6  
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Quote:
Originally Posted by AH-Tina
Actually, the Paypal chargeback email is different. It specifically states that a chargeback has been filed. I know, we recently got one of these. Paypal is fighting the chargeback on our behalf, since we have proof of that.

--Tina
If you have an option to reply to the claim, all you need to do is provide proof of shipping and enter "VIRTUAL" in the fields. PayPal doesn't reverse disputes that are non-tangible goods (at least they never have for me).

EDIT: Chargeback/unauthorized payment usually means the same thing with PayPal.

  #7  
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Quote:
Originally Posted by PE-Steve
If you have an option to reply to the claim, all you need to do is provide proof of shipping and enter "VIRTUAL" in the fields. PayPal doesn't reverse disputes that are non-tangible goods (at least they never have for me).

EDIT: Chargeback/unauthorized payment usually means the same thing with PayPal.
This wasn't a dispute. It was a reversal based on unauthorized use of the paypal account. Unlike the normal chargeback or Paypal dispute, there is absolutely no disputing this.

--Tina

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  #8  
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Quote:
Originally Posted by AH-Tina
This wasn't a dispute. It was a reversal based on unauthorized use of the paypal account. Unlike the normal chargeback or Paypal dispute, there is absolutely no disputing this.

--Tina
From my experience, the "unauthorized use of the paypal account" usually means that the buyer filed a chargeback with their credit card company. In the case, there's really nothing you can do.

  #9  
Old
Junior Guru
 
Join Date: Aug 2004
Location: Mumbai
Posts: 183
Quote:
Originally Posted by AH-Tina
That is *exactly* what I was thinking.

I'm not sure what to do in this case. I kind of believe the customer just jumped the gun and disputed it as a fraudulant charge. On the other hand, I can't be sure.

--Tina
If your client has disputed the charges with the funding source (eg. credit card provider) most probably their PayPal account will be closed by now.

Call up your client on the telephone number associated with the Paypal account in question. If they (owners) really ordered from you, they'd be more than happy to hear from you

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  #10  
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Join Date: Jan 2003
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Tina,

Did you contact Paypal? they may have a good explanation for it. Is possible that you charge the customer twice however he most always go to you first and ask for a refund like you said, however if the account had a cero balance why did you suspend it?

I would contact paypal first to find out what could be going on, it could be that the customer use the account to do fraudulent things or maybe it was just a mistake...

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  #11  
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Thread moved to E-Commerce Discussion.

  #12  
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Back when I was in the hosting biz, I had a similar email come through from Paypal, and they eventually reversed the funds to the payer's account.

As soon as I got the email I contacted the client and asked them if there was a problem and if I could do anything to help, and they responded that it was a mixup on Paypal's end and as soon as things were cleared up they would make their payment again. This client had been with me over a year at that point and had always been courteous, paid on time, and generally very little trouble. True to their word, they paid a week or so later when the mess was cleared up, and I never had any other problems with them.

This part of your post

Quote:
"You were paid twice. Only one of the payments was reversed."
definitely makes me think that the customer initiated a dispute/chargeback/whatever somewhere.

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  #13  
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I hope you will be able to tell us how things ended up

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