Paypal: Chargebacks and Limitations

Paypal: Chargebacks and Limitations

I was going to make a UE guide of this, but I think this needs to be seen by EVERYBODY trading using PayPal. PayPal is wonderful because it is so simple; however, PayPal is one of the least secure ways of accepting payment. As such, if you accept a payment from PayPal, you are at very high risk of the money being charged back unless the person is INCREDIBLY trusted. I'll try and explain the types of chargebacks from PayPal, and I'll also discuss limitations, as they tie in with charge backs.


Chargeback 1 - Didn't Receive my Item

Simply put, a chargeback is when Paypal reverses a transaction. The most common reason for a chargeback is that the buyer never received the good. However, Paypal has a policy that it does not offer chargebacks for virtual items, because there is no actual way of proving if it was sent or not. The note included in a selling line, "This is payment for virtual goods which I have received," is always good at assuring PayPal realizes this. Honestly, people have a really hard time accepting any payment except for gifts because gifts cannot be claimed using this type of chargeback, but we shouldn't be worrying about this type at all on Sythe. I've won a fair deal of disputes just by saying that I was selling a Runescape account.


Chargeback 2 - Unauthorized Transaction

This is the WORST type of chargeback. If this type of chargeback comes up, you are nearly defenseless. Nothing you can say will be of much help. This chargeback is technically supposed to prevent stolen PayPal accounts, but on Sythe 99% of the unauthorized claims are faked. This happens by a person using a Virtual Private Network to fake their IP address, and they claim from their normal IP that it was stolen. Yes, this is incredibly illegal.

Just because you are defenseless against this once it is claimed doesn't mean you can't prevent it. There are many clues to tell if a person will commit an unauthorized transaction fraud. Firstly, if they are offering to pay an absurd amount, it's almost surely a scam. Secondly, if they immediately say "I'll go first" or seem to know more about Sythe than a Newcommer should, it's almost surely a scam. Thirdly, anything else suspicious can clue you off: look at their address on PayPal (if they sent Payment for Goods). If it says Massachusetts and they have broken English, it's probably not really true. Even the most vigilant can still get scammed by this, so limit your transactions on PayPal very low. Almost every single high-ball offer for PayPal only is a scam.


Chargeback 3 - Limited PayPal

If a buyer's person gets limited, then most of his transactions will be refunded to him. There's nothing to do to avoid this except trading with verified PayPal members who trade safely. Read the next section for how to avoid getting limited.


Chargeback 4 - Duplicated Payment

Thanks to Grave for submitting this chargeback. It can occur when someone sends two payments back-to-back of the same exact amount, and then informs Paypal that it was an accident. Paypal may likely refund one of them, so be careful. To be safe, make sure that a person buying in increments is buying in uneven increments. For example, trade 10m, then 12m, then 9m, then 15m, and so on.



PayPal Limitations

PayPal will limit an account that it decides violates their terms or is abusing some sort of power. On Sythe, a lot of limitations have been popping up, and for two reasons. Firstly, if you're under 18 and cannot verify your PayPal with a bank account, it is almost certainly going to be limited in the future. This limitation is easy to fix if you're 18+, as you can just send them a scan of your drivers license. If you're less than 18, you'll need your parents to contact them and convince them to put you on a student account. In any case, post on the forums if your account is limited and people with experience will be able to help your individual case.

The second reason for limitations is abusing PayPal charge features--namely gifts. See this thread by Giddy for an explanation of why PayPal hates gifts. These are an interesting phenomenon on Sythe, and I honestly don't understand why it's such a big deal. People think gifts are the only secure way of PayPal, but 90% of chargebacks are because an unauthorized claim anyway. Gifts do not reduce your risk of an unauthorized account chargeback! They also don't help much in a "did-not-receive" claim because virtual goods are not covered in PayPal's buyer protection policies. So, always use the appropriate payment type for what you are selling. If you're skilling, make them pay Payment for Services. If you're selling goods, make them pay Payment for Goods. It's always good to take screenshots of your trades as evidence, but really all you need to prove is that the person paid for virtual items and you'll win the claim.

A very good way to sell items is actually using a checkout page. I wrote a guide on this -- see it HERE.

If your PayPal is limited because you abused gift payments, you're in a much deeper pit. Some of the highest traders on Sythe have been limited because of this, and I still see many of them limited to this day. You have to verify with them extensively that you own your account, etc. etc. etc. Definitely post on the forums for help, as these limitations do need to dealt with on a case-by-case basis. Look HERE for more information about PayPal limiting those who abuse the gift option.


That's it for PayPal. The synopsis: trade smart. If you follow PayPal's rules, the only chargeback you really need to worry about is the unauthorized payment chargeback, and your only way to avoid this is by learning the tactics that people use. Unfortunately, all you have to lose in a sale is the entire value of a sale. All the scammer has to lose is his account, which is probably a Newcommer anyway.

 

First!

I just got charge backed for $50.00 today, I'm in the red now.

He sent it as a gift and 5 minutes later "Unauthorized Claim"

 

You might be able to tip PayPal off that it was fraud based on the time frame. What person would jump on the internet immediately after their PP was hacked?

 

It's called a "HACKED PAYPAL ACCOUNT" The person who did the charge isn't the actual owner of the account. Nothing can be done about it Perhaps the hacker charged, the real owner saw an email sent to him/her saying $5.00 transaction has gone through and he/she decided to call paypal.

 

Great guide mate, I feel sorry for people getting chargebacked on as it's pathetic. No one has never done do this to me but I guess there's always a first which I am dreading the time. I generally do small trades here on sythe and if any are big I sometimes do through eBay and record the transaction, etc. Anyway great guide and I'm sure it will make the community more aware of these scams.

 

I'm pretty sure it's actually fraud. 5 minutes is pretty quick for someone to realize a charge just happened. Like I say in the guide, the scammer probably used a VPN to falsify his IP address and location.

 

Thanks, I'm sure this'll help plenty of people.

 

Stickied

 

Wonderful, thank you so much!

 

I took in well over 200 gifts this year...needless to say paypal wasn't thrilled about that at all.

 

Very useful KeroKero, thanks. I always wondered myself why most sellers insist that people send gifts as payment since it's still relatively insecure. Reading your Checkout Page guide now, looks very promising!

 

So what kind of payment should we accept through Paypal then o_o

 

Just regular, and just be smart and use playerauctions

 

Can we still be charged back through player auctions for stolen credit cards or are we 100% protected?

 

As a note: PayPal will automatically place a hold on funds if their detection system suspects an account is stolen (e.g logging in from different state and immediately trying to buy something will trigger it)..that's why the unauthorized claim comes from in only 5 minutes.

 

Very nice guide. KeroKeroCola has helped me with disputes before! Thanks

 

I always use a checkout page now, but you can just accept it as "Payment for Goods" as long as they are specific in the note that they are buying Runescape items. See my checkout page guide on why and how to make one.

 

because of the fees

 

Avoiding fees gets you banned from Paypal, though. :noworry:

 

very nice guide/warning

what's the best way to let ppl send money on paypal? I currently say this: