Chargebacks: What they are and how to avoid them

It's been quite a while since I first posted this guide, and it's overdue some updates. The "classic" guide and its 5 steps will remain, but I've added some information about stolen paypals, and what to do if ever faced with a chargeback.

For many a seller who uses paypal, chargebacks are a scary thing. Now most people know that payments can be reclaimed, but gifts are safe right? WRONG! If a buyer makes a payment using their credit card, they can simply call the credit card company and claim an unauthorized payment. Paypal takes the funds out of your account and you're screwed like a ... we'll just say like a screw. However, there is one way to prevent this from happening. Also, become familiar with the method of "claim and cancel" to add extra security to your received payments. This method is detailed in another guide found on this forum so I will not go into detail on how it is done.​

Steps

• 1. Before trading, ask the buyer how their paypal is funded. If they respond "credit card", respectfully decline and try to find another buyer. Also, during your conversation, have the buyer state the email address of the paypal account they will be paying you from. This will be helpful later as proof should a chargeback arise.
  [*]2. If they say "bank" ask them to provide a screenshot of their account that shows that they are bank-verified. This can be found by clicking "my account" then "profile" then "add or edit bank account" Alternatively, you can ask them to send you a screenshot of their balance, if their balance covers the amount of the trade. Teamviewer can also be used to verify payment funding source. Payments from bank account/balance are harder to file chargebacks on. (In earlier days, these types of payments used to be impossible to chargeback-it now seems that paypal has loosened up and it is possible to chargeback these payments)
  This is what you should see
  
  [*]3. If you feel that the screenshots are legit, then proceed as usual, but ask for a final screenshot of the buyer's payment. It should either say "balance" or "bank account" as the funding source. If for some reason it says credit card, refund the payment and find another buyer. Hopefully you will not have been going first, or you are using a middleman
  This is an example of payment from funds
  
  [*]4. Try to have a moderate level of common sense. If someone adds you out of the blue and offers to buy your $150 account for the autowin, there is probably something fishy going on
  [*]5. Rest easy knowing that your payment will not be reclaimed

Stolen Paypals​

This is a fairly uncommon scam, but if you sell large-ticket items, it's something to be aware of. A stolen paypal scam is pretty self-explanatory, someone has phished someone else's account information or obtained it through other means, and is now trying to pay you using the stolen account. It's not easy to detect stolen accounts, but twice I've had buyers try to pay me through stolen accounts and I was able to identify the accounts as stolen and proceed without any kind of loss. Here are some things to look for:

• 1. The payment comes from an email completely different from the msn used to contact you. This is certainly not the only criteria to look for, as many people use a paypal address that is different from their msn, but it's just something to look out for. Ask the buyer to email you from his/her email address used to send you the payment as further confirmation, but be warned, most people use the same password for their accounts and it is easy for hackers to access email accounts if they know the paypal password. Be aware of changes in name (example, Mike on msn is contacting you, but a payment comes from Stacy). Again, plenty of kids use their mom's paypal. Chances are, it's not stolen, and if it is, you'll probably notice the following step as well.
  [*]2. The buyer is extremely rushed in paying you, as in the trade must happen now because kid is crying, etc. For the record, I'm certain that fewer than .1% of the people use this site have a kid of crying-age. The reason a buyer could be rushed in paying you is because in the case of stolen accounts, paypal/the owner is usually very quick to detect that an unauthorized payment has been made. I got lucky once because some kid sent me a payment and was trying to rush me, but he was just being very sketchy so I stalled him, and sure enough, not ten minutes later, paypal withheld the payment and the kid typed out some obscenities and racial slurs and then blocked me. Being smart about whom you trade with really solves a lot of problems.

If you suspect that the payment you received is from a stolen account, you can try contacting the buyer through the phone. Oftentimes, the payment information will provide a shipping address and you can do a lookup on this person's phone number online. Call the number, and if the person you're talking to has no idea that he/she sent you a payment, it's definitely unauthorized.

What to do if a chargeback occurs​

Sometimes, you gotta just bite the bullet and refund the payment. For whatever reason, paypal's found a reason to side with the buyer's dispute and there's nothing to change their minds. But you should at least do the following steps in the event of a chargeback. Btw, these are steps that I have used personally to have a chargeback dispute become ruled in my favor and the payment was returned to me. It's a pretty good feeling, not gonna lie.

• 1. Call paypal's customer service line. From the main page, look to the right and click "contact us"
  
  
  [*]2. They'll ask you to identify why you're contacting them but this isn't important for now. You can go with "close a dispute" or something else, you just need to go from this:
  
  
  
  To this:
  
  
  [*]3. Click the link to call them, and they'll give you a phone number to call, depending on what country you're from, and a 6-digit number unique to you. Now give them a call
  
  
  
  
  [*]4. At some point during your call, an automated voice will tell you to state why you're calling. Just say "chargeback" and it'll put you in contact with a human.
  [*]5. When the (hopefully) helpful associate answers your call, state that you are a virtual goods seller and that someone is trying to charge you back. Also explain that you have proof of the transaction (msn logs, hopefully you are saving your chats on your comp). Don't expect to win the chargeback yet, this is just to make yourself seem legit and it certainly won't hurt you.
  [*]6. You're going to have to respond to the dispute being made. Since everyone uses the standard gift payment, you'll be responding to an unauthorized claim. There will be a red link that asks for your response from your main page. I'm sorry I don't have pictures of this atm, but it'll be very easy to find. Go ahead and click that link.
  [*]7. There will be a 3-radio button selection screen that comes up. Click the button that looks like "I have already shipped this item and I can provide proof of this" and continue.
  [*]8. Go ahead and pull up your msn logs at this point and take some screenshots. The next screen should be a prompt to attach any proofs you have and a little box to add more information. Attach all relevant screenshots, and say something to the effect of "I have attached screenshots of my conversation with the buyer, that show the buyer confirming that he/she received the item paid for". It's good to add more detail than that if you have any.
  [*]9. Paypal will then review your case and may/may not rule in your favor. If there are more than a few days between the day of the sale and the day of the chargeback, go ahead and make a note of this in your response. In theory, if a payment was truly unauthorized, it would have been noticed sooner, and paypal will take note of this when they review the case.
  

Hopefully you get your money back, but sometimes, some things are just beyond your control. Sticking to bank-funded/balance-funded payments will certainly help you, but paypal was designed to provide security for buyers. At the end of the day, the buyer has the advantage when using paypal, but as a seller, you can stay secure without too much difficulty. Be smart about whom you trade with, how you trade, and when in doubt, leave them out (block them, delete them, or simply say "no thank you")

 

Not a bad guide. If you want to make it better, I would recomend adding some pictures for each step. Very helpful though.

 

You cant really add pictures. Its pretty straight forward.

Btw, nice guide. I will use it in my future transactions.

 

Yeah, I wanted to, but it's kind of a hassle. I may feel the need to add some later, if other people would find them helpful

Thank you Look out for more guides in the future, hoping to become UE

 

There is already a sticky that involves this i believe.

None the less, it is a useful guide.

 

i llve you video <33333

 

I think this guide could be expanded onto, a method I use to see if they are credit card funded is to go to where you can issue a refund and click continue, and it will show you the source of the funds. I also suggest adding pictures to this guide, maybe one for each step. Also, I suggest adding in some colors, different font sizes, text effects, etc. This is because when a person clicks on a guide and sees just plain text. It makes it look like a crappy guide, even though it may not be.

So overall, it's a good concept, I think you should just expand on it, and tweak it with effects and pictures.

 

Thank you very much for your suggestions. When I find the time, I would like to edit this, as I have seen other, much better-looking guides. Also, great tip about the refund, I will have to look at that myself

 

Great guide and very useful information. However I support the buyer having a way to charge back as the seller have a way of taking back their accounts. But overall 8/10 guide!

 

Thanks very much this was very helpfull to me

 

Guide edited with colors, formatting, and pictures!

 

thanks helpful for a newbie

 

It is a very good guide, and close to UE Worthy.

8/10

And thanks for the helpful info.

Off topic: Woot 625 posts (Apprentice)

 

Video, love the edits you made. I never knew about the way of verifying that it is bank funded, and starting now, will be using this method for all my transactions. Thanks

 

nice guide. really helps.

 

+1 for this guide.

I have a screen shot of my bank account showing I am verified since March 2008 anytime it is needed. Helps speed up transactions also.

 

Excellent guide. I didn't know about this Thanks for writing.

I do, however, have a suggestion. I feel that you shouldn't just use one colour when writing, but try to alternate between colours. Only my opinion though

 

How can you tell if they sent the payment via gift?

 

Other then pictures, there isnt a way i know of.

@Guide: Great guide, very helpful to newer members, and I never had done the CC thing before, will start that. Thanks.

 

Chargebacks are the reason PayPal sucks.