Posts categorized “PayPal Buyer Protection”.

Welcome To The New PayPal

On November 1st 2010 PayPal’s newly renamed Purchase Protection policy expanded to putatively ‘cover’ buyers no matter where they shop. PayPal is not just for eBay anymore. You can enjoy the protection of the “faster safer way to buy” anywhere PayPal is accepted, from Auntie Zuleika’s tiny website to venues like Etsy or Bonanza.

As you can see, two scenarios are covered, an item is not received or the item bought is ’significantly not as described’, known as SNAD on eBay.

Sounds wonderful!

Buyers can sleep better at night cradled in the beneficent arms of PayPal the Protector (insert superhero background music here.) Sellers everywhere will undoubtedly reap the blessings of increased sales volume from confident and secure buyers. PayPal, aw shucks, will just be happy doing a better job all around.

How can this be a bad thing?

Primarily because for small sellers PayPal functions as prosecutor, judge, jury and executioner. For example, the old empty box scam lovingly detailed below, in which PayPal is unwaveringly likely to decide in favor of the zero feedback buyer while ignoring all evidence to the contrary and an impeccable multi year sales record from the seller.

Add a beautifully written primer (def.#2) on how to scam the system for neophytes (def.#3) to the great game of get something for nothing and a door into a world of grief is opening for sellers on all the venues they fled to from eBay’s punitive policies, exorbitant fees and ham handed micro-management.

The fly in the ointment for buyers, ‘putatively’ explained

It should be noted that these protections do not apply when shopping with the big boys, who would not tolerate this nonsense for a New York minute.

Real buyers, as opposed to crooks, are unlikely to know how to differentiate between the protected transaction and the unprotected. We wonder if they would even know where to find the eligibility requirements. (Look for section 13.2) The crooks already know exactly what they are doing.

For a seller overview or comparison of the three versions of Payflow which are exempted from the Purchase Protection Plan see this Red Ink link. Note that all the exempt payment channels are a la carte subscription models; generally inferior in fraud protection (that is another post) to comparable commercial merchant processing products; but cunningly (def.#1,2,4) priced to entice the unsophisticated entrepreneur.

By an amazing co-incidence, increased merchant movement (where possible) to their a la carte payment processing system will substantially increase revenue for PayPal.  Just multiply a fraction of the number of sellers currently using PayPal by $30 per month ($360 a year), whooo-eee!

In summary
Only you, dear seller, can assess the degree of attractiveness your merchandise has for crooks and only you know the amount of dollar loss you can afford or are willing to tolerate. Other factors for consideration are the alternatives available to you and the cost of those alternatives.

This year we expanded and upgraded our product line and the PayPal loss potential has, I believe, increased in a direct ratio to the increase in ASP.

As a low volume seller on Bonanzle Bonanza and my own website the cost of a standard Merchant Payment Processor is not yet a viable option, nor are they all totally problem free.

I have removed PayPal as an option on Bonanza and will find the money somewhere to have someone install Google Checkout on my Zen Cart. I have been ‘going to do it’ for years, it is time to stop procrastinating and just do it.

Y’all come back!
Henrietta!

New Fake PayPal Buyers Scam Alert

A reader from Europe writes about a new (to me) scam targeting sellers who accept PayPal off eBay, Gumtree is specifically mentioned. Comments on this Gumtree blog entry are an eye opener and the blog entry is good for a laugh

“How to avoid this scam:

• PayPal does not hold funds until an item is sent.”

eBay sellers of “high risk” merchandise who are routinely subjected to 21 day holds might argue that point.

We can expect to see this and other scams in the US at the end of this month when the latest Buyer Protection amendments to the User Agreement take effect, giving buyers protection on classifieds sites.

It is not unreasonable to blame PayPal for this,  the sheer volume of criminal fraud aimed at PayPal users is fostered by PayPal’s inexorable (def.#2) pro-buyer stance and encouraged by their amateurish and unwieldy back end operating system.

The Classic Scam

Buyers purchase goods and ask for them to be posted to an overseas address, not their PayPal registered address but offering some extra money to cover shipping. When the goods are safely on their way, the buyer cancels the payment, often claiming an unauthorized transaction. The seller is left with no recourse because sellers are only protected if they ship the item to the registered address of the buyer.

The New Scam

Exquisite in its simplicity the scam consists of a fake payment received email.

Sep 30, 2010 17:36:16 PDT | Transaction ID: XXXXXXXXXXXXXXXXX 

Hello "your user name",

You received a payment of $386.25 USD from Fake Buyer
(fakebuyer@any-free-email-provider.com)
Thanks for using PayPal. You can now ship any items. To see all
the transaction details, log in to your PayPal account.

It may take a few moments for this transaction to appear in your
account.

Seller Protection - Eligible

----------------------------------------------------------------

Solution

First and most obvious do not pick, pack, print labels or ship anything, ever, without first logging in to your PayPal account to confirm a Payment has actually been made.

This may be inconvenient for sellers with significant volume who use Payment notifications in their system and do not go to PayPal until it is time to enter tracking information.

Second, if you sell on classified sites do not give out any clues to your PayPal ID or the main email address associated with your PayPal account. Set up and use an additional address specific to that sales venue for enquiries.

Finally

I hear some scammers make a trial purchase of something inexpensive to establish themselves as a returning good customer before moving in for the con.

The obvious protection for all transactions is to decline to ship to any unconfirmed shipping address, but on classified sites you may wish to consider moving to cash on pickup terms bypassing PayPal and fraud risk altogether.

Y’all come back!
Henrietta!

PayPal’s Latest Scam

PayPal announced an amendment to their user agreement effective November 1st which purports (def.#1) to expand buyer protection off eBay.

“The expanded protections will cover shoppers on merchant websites if they don’t receive an item they purchased, or if they receive an item that is significantly different than described by the merchant.”

An unutterably (def.#1) perky post on the PayPal Blog offers Tips for Sellers to Avoid Buyer Claims which neatly encapsulates the eBay/PayPal philosophy in this quote:

“Unfortunately, it’s a fact in retail that some buyers can never be satisfied, and it does little good to fight them because of the risk to your reputation.  Better to accept a return and move on than to waste valuable time when you could be selling other items.”

So, (as we say on eBay) now you know.

Personally, I have a very simple and liberal return policy on both my website and Bonanza. I don’t mind taking something back, I would be very unhappy if I didn’t get my item back.

Caveat Emptor

As always with anything concerning eBay Inc., which includes PayPal, it is wise to read beyond the announcement.

Buyers from large merchants who have virtual terminals are unprotected by this change and in fact are specifically excluded.

Mass Panic & Outrage

Forums on multiple venues lit up with furious (def.# take your pick) comments from sellers who have lost both payment and merchandise to scamming buyers on eBay, crooks who are well versed in gaming PayPal Buyer Protection on that site.

Amounts are not always chicken feed! For example the case of Cornerstone Supply, their loss for an ‘unauthorized charge’ was in excess of $1200. My good friend Scott Pooler,  ex-eBay seller and ecommerce expert, was the victim of a similar but not identical scam, his was a SNAD claim. (Seller Not As Described)  There are scads of stories with the same ending.

Numerous sellers, like Cornerstone Supply, left eBay because they would not risk further losses. Some set up shop on their own website, others changed venue, many simply stopped selling online.

In any case it is important not to be confused between the two different current PayPal Buyer Protection programs. Before October 31st buyer recourse under the PayPal Buyer Complaint Policy is limited as follows:

“If PayPal makes a final decision in your favor, we will collect any available funds in the Seller’s PayPal balance at that time. However, recovery is not guaranteed and is limited only to the amounts that PayPal can recover from the Seller’s Account. Any amounts collected from the Seller will be placed in your Account.”

Risk Analysis

This latest PayPal change should not have come as a total surprise. An identical policy was implemented in the UK in May. The UK and the EU have distance selling regulations which do not exist in the USA, but the eBay policy there substantially exceeds the legal requirements.

I believe that a small website like mine, not selling particularly valuable items will probably not see any great increase in risk. On the other hand sellers on Bonanza, Etsy, eBid, iOffer etc will have a higher risk factor, how much higher will depend on the desirability to crooks of what you sell. Sellers on eCrater will be safe because eCrater is entirely Google Checkout. Amazon of course has it’s own payment system.

Now what?

The very smallest venue based sellers do not really have any viable alternative to PayPal except Google Checkout, in my opinion infinitely superior, and identical in cost. Unfortunately, when I ran a ‘GC only’ trial early last year my completions rate dropped substantially. As more sellers dump PayPal and buyers see Google Checkout as the only method of payment more frequently this may change, we can only hope. Canadian sellers are SOL, there is no alternative for them unless they are going the Merchant Processor route.

PayMate, if your venue supports them, costs more at 50c per transaction plus 3%. This is currently the only option for my Australian friends.

What do you think? Is eBay’s cash cow going to turn into it’s crash cow? What are you going to do? Got your pitchfork sharpened up?

Y’all come back!
Henrietta!

Open Season on Sellers is Extended

Today I learned something new about PayPal. After some research I learned that this is not that ‘new’ a problem, just new to me.

I received an email from a friend who has been selling on eBay for many years. I have removed all identifying information to protect his privacy.

“Buyer bought an item from me. Said he wanted to return it, I said OK, he didn’t return it. 30 days later he said he was returning it and was delayed due to a “family emergency”. When I checked his eBay history, he was very active during the “family emergency”.

Buyer emails that he mailed back item, item doesn’t arrive. I asked for information, when sent, tracking number, etc. He doesn’t respond. Buyer evidently tried to file a SNAD or INR with PayPal but filed after PayPal’s 45 day deadline for filing.

BUT WAIT!

I get the stunning email below from PayPal alerting me that I have some sort of black mark for a “Deferred Dispute”. The “Help” link referred to in the email takes you to PayPal’s full monte “Help” page which has nothing about something called “Deferred Dispute”.

—– Original Message —–
From:
To:
Sent: Tuesday, October 20, 2009 4:09 PM
Subject: Notification of Deferred Dispute: Case #PP-xxx-xxx-xxx

Hello M***r,

We are contacting you to let you know that one of your buyers recently visited the Resolution Center and attempted to open a dispute against a payment. The buyer wished to dispute the payment sent on Sep 3, 2009 (Transaction XXXXXXXXXXXXX). This dispute has been deferred because it was not opened within 45 days of payment.

Although this dispute is not eligible for negotiation in the Resolution Center, we have noted that the buyer was dissatisfied with this transaction.

We encourage you to work directly with the buyer to resolve this matter and take this opportunity to provide customer service as you see fit.

Thank you,

PayPal

Please do not reply to this email. This mailbox is not monitored and you will not receive a response. For assistance, log in to your PayPal account and click the Help link in the top right corner of any PayPal page.
—————————————————————-

PayPal Email ID PPxxx

The ‘Deferred’ Dispute

Evidently buyers can file “deferred” PayPal Disputes against eBay sellers after the 45 day time limit has passed. The first reference I have been able to find on deferred disputes was an unanswered question from a Canadian seller a year ago on a PayPal Merchant board. A Malaysian seller posted on his blog in July of 2009.

Most sellers understand the PayPal dispute process as it applies to Buyer Protection, which may be found in Section 13.3 (a) of the User Agreement. There is absolutely no reference to ‘deferred dispute’ anywhere on the PayPal website.

What is it?
When a buyer files a deferred dispute PayPal annotates their account. If another buyer files a dispute the ‘evidence’ from the deferred dispute is reviewed and may be considered in making a judgment. It is possible, if both disputes are similar and look like a scam the deferred dispute may be reopened.

The danger here is that the only ‘evidence’ is from the buyer, it is almost certainly verbal and PayPal will not always ask for tracking information etc. The seller has had no opportunity to present their side. To be fair, if a buyer has a history of filing disputes PayPal now requires delivery confirmation on the returned item before issuing a refund.

Y’all come back!
Henrietta!