PayPal users are frauds :-(

[Curt]

Reading the posts on Bits du Jour, I came along this post from Susan Westlake from Technology LigthHouse, maker of ColorCache, PTFB (Push The Freakin' Button), and PromptPal, about why they have removed PayPAL as an payment option in their shop:

Susan Westlake: Jim, I'm afraid we disabled the paypal option some time ago as it was an open door for fraud.

Susan Westlake: Hi Joe, I'm so sorry I can't help you. I appreciate that it's nice to be on the buyers end with Paypal - I happily use Paypal as a buyer. For a few years we used it quite successfully on the sellers end, but things changed I think because in the last couple of years we had nothing but bother. I know there are lots of honest people that use paypal as buyers (I'm one of them), but when it came to software sales we found that only a handful of people used paypal and the majority of them refused to pay claiming that the purchase was made fraudulently by a third party. When we switched it off all we seemed to loose were those fraudulent sales. I'd willingly switch it on just for you, but we no longer have an account. So sorry I can't help.

Of course I was very sad to read this, because I prefer to use PayPal for the sake of my security. Now it seems that my security is the opposite to the seller, because too many users now are frauds.

This is all news to me. Sad news.  

[mouser]

We've used paypal here for many years and i've not seen any such problems..  in fact i still love paypal and am very happy with them.  i dont know anyone else with such small fees for small payments.

Maybe it's because of the nature of the site, but i don't really get what they say is going wrong..
Are they are saying that people who buy with paypal demand returns or that paypal contacts them after purchase and takes the money back saying the payment was made due to a stolen account?

Even if that happened a lot -- i'm not sure how that negatively effects a seller of digital goods -- they don't lose anything and paypal doesn't charge them anything when this happens, so what's the problem?

[skwire]

I wonder if these are cases where:

1) User buys a piece of software using Paypal.
2) User receives software key/serial via email.
3) User then claims a fraudulent transaction and demands refund.
4) Paypal refunds user and seller loses that transaction and monies.
5) User now has a legitimate key/serial and is not out any money.

Perhaps?

[mouser]

Yeah but so what.. if a user is going to do that then they weren't going to purchase from you anyway, so what do you care if they got a free license key or not.

[skwire]

*shrug*  I'm going to guess it's a "it's a matter of principle" thing and the avoidance of feeling like you're getting screwed.

[jgpaiva]

Yeah but so what.. if a user is going to do that then they weren't going to purchase from you anyway, so what do you care if they got a free license key or not.

I agree. Also, the scammer could always have gotten the software through other "less than legal" ways. On the other hand, if paypal has something like "reputation" associated to a seller, it'd be awful to lose reputation due to a bunch of scammers. I wonder how ebay handles these situations.

This report just made me find the first genuinely useful use for DRM: if a scammer tries to get free software, you could just revoke his key. (even without DRM, you can always make sure that the scammer's key won't work for the next versions)

[mwb1100]

This report just made me find the first genuinely useful use for DRM: if a scammer tries to get free software, you could just revoke his key. (even without DRM, you can always make sure that the scammer's key won't work for the next versions)

This reminds me of some software (that I can't recall at the moment) that worked their money back guarantee like so:

  - when you buy the software, you got a time-limited key (say a 60-day key).
  - if you asked for a refund withing the 30-day guarantee period, then they gave you your money back and that was that - all you had was a key that would expire in a few weeks.
  - after 30 days passed without a refund request, they sent you a permanent key so your software wouldn't time out.

It was a bit confusing, but not terribly so. But I imagine it had a heavier than usual support requirement on the vendor.

[mwb1100]

Yeah but so what.. if a user is going to do that then they weren't going to purchase from you anyway, so what do you care if they got a free license key or not.

It sounds like she's saying that they got few non-refunded paypal sales, so why should they bother with it?

[Curt]

I originally posted because I interpreted her words the same skwire did:

1) User buys a piece of software using Paypal.
2) User receives software key/serial via email.
3) User then claims a fraudulent transaction and demands refund.
4) Paypal refunds user and seller loses that transaction and monies.
5) User now has a legitimate key/serial and is not out any money.

[Renegade]

I wonder if these are cases where:

1) User buys a piece of software using Paypal.
2) User receives software key/serial via email.
3) User then claims a fraudulent transaction and demands refund.
4) Paypal refunds user and seller loses that transaction and monies.
5) User now has a legitimate key/serial and is not out any money.

Perhaps?

I've had this happen maybe once or twice. It's not a reason to quit Paypal. I make much more money with Paypal than without.

When it comes to this case, well, it's going to happen every now and then. I figure just suck it up and move on.

[app103]

Even if that happened a lot -- i'm not sure how that negatively effects a seller of digital goods -- they don't lose anything and paypal doesn't charge them anything when this happens, so what's the problem?

I have had this happen to me a few times before and you do lose money.

• Buyer pays with Paypal. (or donates to you)
• Paypal deducts their fee before you get the money.
• Buyer requests refund.
• Paypal refunds the entire amount to the buyer from your account.
• Paypal does not refund you the fee they charged you.
• You lose money on the transaction and Paypal still makes their profit.
• Paypal then warns you not to accept payments from shady sources, claiming if you do it too many times they will cancel your Paypal account. (This is kind of ridiculous on a donation because you can't control who clicks the donate button on your website.)

What's more, sometimes the buyer/donor doesn't request a refund or dispute it. Paypal takes it up on their own to dispute it and refund the money to them, holding the funds for 30 days and not even notifying the buyer/donor about it. And they won't release the funds back to you, even if you notify the buyer/donor and tell them about it and they contact Paypal, scream bloody hell at them and demand they give you the money....that they meant for you to have it.

The first time this happened to me, Paypal lost a customer because they refused to give me the money he donated and charged me for the transaction any way. He was so pissed at them that he closed his Paypal account.

He had never had a Paypal account before and opened one just to be able to donate to me. This botched transaction was his first Paypal experience...and his last.

It was this transaction that lead to me adding a 3rd donating option to my website.

• Donate through Paypal.
• Donate credits through this site.
• Purchase a grocery item from my Amazon Wishlist.

[app103]

Oh, by the way, Paypal has provided me with a way to force many companies to accept my Paypal to pay for purchases, including offline purchases. Their Mastercard debit card is great! 

[mouser]

Hmm.. well that is shady.. paypal should not charge you a fee if they refund the buyer due to no mistake on your part.  

[f0dder]

Hmm.. well that is shady.. paypal should not charge you a fee if they refund the buyer due to no mistake on your part. 

Paypal acting shady is news to you?

[Renegade]

If you simply suck it up and issue a refund, you only lose that transaction. However, you could end up losing a chargeback fee if you try to hold your ground and lose. It's simply better to suck it up. Whether you're in the right or wrong has little to do with anything, unfortunately. Principles often leave you out of pocket. You can either be less of a victim, or a worse off principled victim.

[Tinman57]

 I've read horror stories about "chargebacks" on paypal.  It's only dangerous for sellers of big ticket items, which is why I won't accept paypal for large purchases.  Apparently, from what I understand (but yet still don't understand) is someone will buy a car through paypal.  They take possession of the car and then make a chargeback to paypal for the order, however that works.  When it's all over and done with, you don't have the car or the money and paypal isn't liable in any way, which pretty much sucks.  I've had people try to buy big ticket items from me using paypal in the past, and I knew for a fact they were trying to scam me this way.  I emailed them back "Sorry, cash only"......
 It's getting to where it's almost impossible to sell now days.  Crooks make fake cashiers checks and money orders.  By the time the check/money order bounces back the crook is long gone and untraceable and your out of the item and money.  And right when we thought paypal was there to save the day, the crooks figures out a way to screw you through them....

[cmpm]

The seller taking some risk, evens it a little.
It's usually the buyer who is at risk and the greater risk.

I'm not for underhanded transactions from either.

[Renegade]

  I've read horror stories about "chargebacks" on paypal.  It's only dangerous for sellers of big ticket items, which is why I won't accept paypal for large purchases.  Apparently, from what I understand (but yet still don't understand) is someone will buy a car through paypal.  They take possession of the car and then make a chargeback to paypal for the order, however that works.  When it's all over and done with, you don't have the car or the money and paypal isn't liable in any way, which pretty much sucks.  I've had people try to buy big ticket items from me using paypal in the past, and I knew for a fact they were trying to scam me this way.  I emailed them back "Sorry, cash only"......
  It's getting to where it's almost impossible to sell now days.  Crooks make fake cashiers checks and money orders.  By the time the check/money order bounces back the crook is long gone and untraceable and your out of the item and money.  And right when we thought paypal was there to save the day, the crooks figures out a way to screw you through them....

It's a bit of a different story for software compared to physical goods. I'd certainly be more careful for physical deliveries.

[wraith808]

Yeah but so what.. if a user is going to do that then they weren't going to purchase from you anyway, so what do you care if they got a free license key or not.

It's not that simple.  Paypal is pretty heavy handed from the seller side.  And you can easily lose not just the single sale, but anything that you have sitting in your Paypal account.

This report just made me find the first genuinely useful use for DRM: if a scammer tries to get free software, you could just revoke his key. (even without DRM, you can always make sure that the scammer's key won't work for the next versions)

This reminds me of some software (that I can't recall at the moment) that worked their money back guarantee like so:

 - when you buy the software, you got a time-limited key (say a 60-day key).
 - if you asked for a refund withing the 30-day guarantee period, then they gave you your money back and that was that - all you had was a key that would expire in a few weeks.
 - after 30 days passed without a refund request, they sent you a permanent key so your software wouldn't time out.

It was a bit confusing, but not terribly so. But I imagine it had a heavier than usual support requirement on the vendor.

I saw software like that too, and from that standpoint it makes sense.

I have had this happen to me a few times before and you do lose money.

Let's not forget shipping fees, which can be not an insignificant part of operating expenses if you're dealing with a physical item.

[cmpm]

As a seller or buyer one should not let paypal have direct access to your bank account.
At least, if you have too, set up an account just for paypal use.
Other then that use paypal through a credit card.
Then you can dispute any transaction with paypal and your credit card company.
It's in the rules of all credit cards (that I know of) that you can hold up any payment for a certain amount of time in order to settle any dispute.

And yes I have sold things through paypal, but not a car, lol, or anything that much.
I did not know you could buy a car through paypal, too big of a risk either way

[kyrathaba]

It's in the rules of all credit cards (that I know of) that you can hold up any payment for a certain amount of time in order to settle any dispute.

Yes, by law in all fifty states. Not sure if there are international variations.

[wraith808]

As a seller or buyer one should not let paypal have direct access to your bank account.

You don't have to.  It takes a while before the funds to become available for you to transfer.  At any given time if you're selling anything but one-off's through there, you'll have a the minimum a few days worth of funds tied up with them, even if you're conscientious about transferring as soon as able.  The more likely scenario is having a week's worth.  

So take a week's worth of sales tied up for months.  That's enough to kill a lot of small businesses.

[cmpm]

Yes, I know wraith, I had to be prepared for extended periods of time with no income or work. Sometimes I was and sometimes I was not. Or to spend the time and money preparing and getting to a job, only to be turned down due to a customer's whim or weather or some other reason. Or doing a large job that takes a couple of weeks and to wait, minimum, 30 days for payment. Here in the usa, the best advertisement is by way of the yellow pages, (for my type of work) and they know it, very expensive. Word of mouth happened a lot, but the phone rang more via the yellow pages.

edit- and yeah I got burned on a few jobs for a substantial amount of money, not many times but enough to demand cash in advance from certain types of corporations, or avoid them completely

[wraith808]

Yes, I know wraith, I had to be prepared for extended periods of time with no income or work. Sometimes I was and sometimes I was not. Or to spend the time and money preparing and getting to a job, only to be turned down due to a customer's whim or weather or some other reason. Or doing a large job that takes a couple of weeks and to wait, minimum, 30 days for payment. Here in the usa, the best advertisement is by way of the yellow pages, (for my type of work) and they know it, very expensive. Word of mouth happened a lot, but the phone rang more via the yellow pages.

edit- and yeah I got burned on a few jobs for a substantial amount of money, not many times but enough to demand cash in advance from certain types of corporations, or avoid them completely

It's different when it's something to do with getting payment, vs retrieving your payments from the service.  And it's different when it's unreasonable.  I had a situation where I was contracting with a large firm, and they said it was to take 30 days to get paid from the time I submitted my first invoice.  I normally had 60 days set aside, but set aside 4 months.  I didn't get paid for 6 months.  The difference between not being prepared and unreasonable.  That's not a normal cost of business when you are working and accruing, but not getting the money that was accrued, especially when you have overhead.

In the end, each business has to see what the acceptable risks are.  And for more and more people, Paypal is becoming not an acceptable risk.  And you can't blame them for saying that, if its their choice- just pay as they will accept, or take your business elsewhere.  Would I go back to that company?  If I were still in their system... yes.  If not... no.  If a company can't pay me in 6 months, yeah, I avoid them completely.

[cmpm]

If paypal didn't pay me like they should, I would quit them too.
It would be like giving them your work or money with no return.

i guess my point was the edit in my other post
took the long scenic route