I used Paypal to accept payment for an editing assignment. As soon as I got the payment, I transferred it from Paypal to my bank account, figuring that I was safe. After I completed the work, the client apparently did a chargeback on his credit card, so Paypal did the logical thing: withdrew the money from my account retroactively.
I wrangled customer support, got nowhere, and had a fat negative balance in my account, but I figured I was okay -- until six months later, when I got sent to collections, when I gave collections the money and then sued Paypal in small claims court (this might not have been the wisest move in the world; given recent experiences: http://jseliger.com/2010/08/28/dont-rent-an-apartment-from-n... , I don't think I'd bother with the same course of action today). Their EULA says you can't do that, but they offered me half the money to make me go away, which I did.
The moral of the story: I no longer use Paypal. Ever. For anything.
Moral #2: the horror stories are real.
EDIT: One other thing -- if you are selling virtual services, Paypal will not back you up. If I'd been smarter, I would've shipped something to the client's address, with a tracking number, which might've helped me.
I don't want to sound harsh or anything, but how/why exactly is paypal to blame here? Client did a chargeback, paypal did what they must do. It's you and your client at work here, not paypal.
I don't want to sound harsh or anything, but how/why exactly is paypal to blame here?
It's Paypal's fault if the company makes it appear that I have the money safely in hand... and then it turns out that I don't. If someone sends me a check, and I deposit it, within a day or two I know the money is mine and can't be yanked back.
Furthermore, they don't make it obvious that they'll do this. It's yet another "gotcha." As another commenter noted, Paypal is great, right up to the point you have a problem, at which point they're terrible to me.
No company is more indicative of the power of Metcalfe's law than this one: that another, less jerky company hasn't superseded them is amazing.
Thia argument doesn't make any sense. Really, what are you asking them to do? What you seem to be saying is, if the money posts to your account, and the customer does a chargeback, Paypal should eat the charge.
PayPal will back you up on virtual services provided that you log the customer's IP so that you can prove that the access was legitimate (e.g. from the customer's IP that he uses to log into PayPal regularly).
I have yet to lose on a chargeback or dispute.
That said, sweeping the PayPal balance to a real bank account is always the smart option.
That is interesting. I run ~35K/month through Paypal and have yet to win on a chargeback. I receive probably 2-3 a month, and Paypal will specifically indicate in each resolution that virtual goods (in my case subscriptions) are not covered by their protection policies.
I have NEVER won a chargeback. When I used paypal I just treated it as a cost of business. The problem is they dominate the market. I had two payment options, Paypal and Googlecheckout... people preferred paypal 10 to 1. There's pros and cons, and that massive gap in people's preference of payment system was worth more than the chargebacks.
The protection thing runs both ways... You will usually lose chargebacks but you will win item not received/not as described disputes filed with Paypal every time. But if you're doing 30K a month why are you with PayPal??? Get a merchant account and you will pay much less for processing.
Comments
I used Paypal to accept payment for an editing assignment. As soon as I got the payment, I transferred it from Paypal to my bank account, figuring that I was safe. After I completed the work, the client apparently did a chargeback on his credit card, so Paypal did the logical thing: withdrew the money from my account retroactively.
I wrangled customer support, got nowhere, and had a fat negative balance in my account, but I figured I was okay -- until six months later, when I got sent to collections, when I gave collections the money and then sued Paypal in small claims court (this might not have been the wisest move in the world; given recent experiences: http://jseliger.com/2010/08/28/dont-rent-an-apartment-from-n... , I don't think I'd bother with the same course of action today). Their EULA says you can't do that, but they offered me half the money to make me go away, which I did.
The moral of the story: I no longer use Paypal. Ever. For anything.
Moral #2: the horror stories are real.
EDIT: One other thing -- if you are selling virtual services, Paypal will not back you up. If I'd been smarter, I would've shipped something to the client's address, with a tracking number, which might've helped me.
I don't want to sound harsh or anything, but how/why exactly is paypal to blame here? Client did a chargeback, paypal did what they must do. It's you and your client at work here, not paypal.
I don't want to sound harsh or anything, but how/why exactly is paypal to blame here?
It's Paypal's fault if the company makes it appear that I have the money safely in hand... and then it turns out that I don't. If someone sends me a check, and I deposit it, within a day or two I know the money is mine and can't be yanked back.
Furthermore, they don't make it obvious that they'll do this. It's yet another "gotcha." As another commenter noted, Paypal is great, right up to the point you have a problem, at which point they're terrible to me.
No company is more indicative of the power of Metcalfe's law than this one: that another, less jerky company hasn't superseded them is amazing.
If someone sends me a check, and I deposit it, within a day or two I know the money is mine and can't be yanked back.
Not true. Any and all financial transactions are reversible, per US law.
They don't make it obvious that they'll do this
This is a standard policy for all electronic funds transfers, not specific to Paypal.
Thia argument doesn't make any sense. Really, what are you asking them to do? What you seem to be saying is, if the money posts to your account, and the customer does a chargeback, Paypal should eat the charge.
Just curious: why did you not sue the client who did the fraudulent chargeback? Was he/she located in another country?
PayPal will back you up on virtual services provided that you log the customer's IP so that you can prove that the access was legitimate (e.g. from the customer's IP that he uses to log into PayPal regularly).
I have yet to lose on a chargeback or dispute.
That said, sweeping the PayPal balance to a real bank account is always the smart option.
That is interesting. I run ~35K/month through Paypal and have yet to win on a chargeback. I receive probably 2-3 a month, and Paypal will specifically indicate in each resolution that virtual goods (in my case subscriptions) are not covered by their protection policies.
I have NEVER won a chargeback. When I used paypal I just treated it as a cost of business. The problem is they dominate the market. I had two payment options, Paypal and Googlecheckout... people preferred paypal 10 to 1. There's pros and cons, and that massive gap in people's preference of payment system was worth more than the chargebacks.
The protection thing runs both ways... You will usually lose chargebacks but you will win item not received/not as described disputes filed with Paypal every time. But if you're doing 30K a month why are you with PayPal??? Get a merchant account and you will pay much less for processing.
our volume qualifies us for lower processing fees - the reality is that Paypal is pretty competitive when you add it all up.