After using PayPal to accept payment for all my sales for years without incident, I feel utterly let down by their service today. I’ve discovered that mine is not an isolated incident, but arose from a decision on their part to exclude virtual products from their Seller Protection policy. So if you sell patterns, eBooks, or any other information product, please read on and spread the word about how you may end up out of pocket when PayPal decide to return your customers’ money to them – after they have already downloaded your products!
Here’s the scenario:
- Customer orders lots of patterns and pays with her husband’s PayPal account. (Note: she is a repeat customer and has ordered 4 times before this, always paying with her husband’s account.)
- Customer downloads her patterns and everyone is happy.
- PayPal get suspicious of a potential fraud because she’s paid with an account that is not her own.
- PayPal dispute the transaction and put a hold on the funds so I can’t access them while they investigate. PayPal contacts me and customer.
- I send PayPal proof that customer has downloaded patterns.
- Customer, for whatever reason, does not respond to PayPal’s email.
- PayPal decides this is proof that customer is a fraud, and returns my money to her.
- Customer has patterns AND money. I have nothing except for a bad taste in my mouth.
- I phone PayPal, sure that this silly mistake will be sorted out if I can speak to a real person, right? PayPal rep informs me that virtual items (e.g. patterns) are not covered under their Seller Protection, and that all I can do at this stage is contact my customer and ask her nicely if she’d like to pay again for the goods she’s already received.
So apparently, all you need to do if you’d like some free stuff is to order it online, pay with a friend or relative’s account, and then get your co-conspirator to ignore any emails from PayPal enquiring if they really did place that order. PayPal will reverse your payment, but by that time you’ll have your merchandise already – and you’ll get your money back too! Sweet! Oh, except for the poor seller, who is left with nothing.
Nice going, PayPal.
I am so upset about this, but the part I really don’t understand is that PayPal decided that not getting a response from my customer’s husband was proof that my customer had taken the money from him without permission, and made them decide to return the money to him.
There are many legitimate reasons why my customer’s husband could have not responded, for example:
- He was out of town or sick and didn’t check his email
- He only uses that email account for PayPal payments and doesn’t check it at all
- The email from PayPal was filtered as Spam and he never saw it
- He did see it, but assumed it was a phishing scam and didn’t respond
Any of these are perfectly legitimate (and likely) reasons for his non-response, and do nothing to prove that his wife stole the money from him and thus it should be returned to him. Surely the only way PayPal could really have obtained proof of this so-called theft is if the husband responded to PayPal saying “yes, this money was taken from me without my permission” – and PayPal confirmed to me that this did not happen!
I am appalled that PayPal would take such a stance. This entire scenario was based solely on a “review of recent transactions” that PayPal took it upon themselves to conduct. There was never any complaint for PayPal to respond to! They just decided to “protect” the buyer (my customer’s husband) even though he had not complained about the transaction, and didn’t even respond to PayPal to confirm that any fraud had occurred.
So the buyer got his money back, even though he didn’t ask for it, and a trustworthy small business owner lost out on a sizeable transaction, even though no theft/crime/fraud/error has occured. The only error is on PayPal’s part, for taking this scenario to such an absurd conclusion.
Considering that I conduct all my business online, through PayPal, that means that PayPal basically get to keep 3% of my gross income! You would think that would make them eager to look after reliable customers like myself who keep them in business.
But, apparently, PayPal do not deem sellers of virtual products worthy of protection. And in this age of so many digital products – patterns, eBooks, etc – this is a decision that affects many of us! I think we should all be aware of it, even though we’re pretty much stuck with using PayPal because there sadly isn’t much competition for their service. Let’s hope that changes, or that PayPal will take notice and change their policies to allow some kind of protection for those of us that make our living selling virtual products.
Luckily in my case, after hours of worry on my part, I heard back from my lovely (and honest) customer, who has paid me (again) for the patterns. Let’s hope that PayPal don’t decide she’s still “a fraud” and give the money back to her husband again!