Tell HN: Another PayPal Farce - Refunds my money to customer

[ozres1]

I run an Australian Calling Card website on the side which sells roughly A$800 in cards per month. I've never had an issue previously with PayPal up until now but I've read some shockers about PayPal which concerns me (http://notch.tumblr.com/post/1096322756/working-on-a-friday-update-crying-over-paypal).

I received an email from Paypal over a week ago which states that they've decided to open an investigation of their own accord into a transaction of mine and that they require more information from me. I explained the transaction and that the buyer was furnished with a calling card code which they can use to place calls overseas in exchange for the payment made.

Today I receive the outcome of PayPal's decision. They decide to reverse the transaction and refund the customer. They provide no reasons for the decision they've made (which seems to be pretty standard for them based on what I've read).

So now the money's gone and I can't resell the calling card code either. Great.

So I write a complaint to PayPal:

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To: PAYPAL

You have decided to reverse the transaction on this case:

Inquiry by PayPal - Case ID: PP-001-*

for transaction ID: 6VB

Can you please explain your decision?

I explained previously to you when the investigation was opened that in exchange for the payment the buyer made, the buyer was sent a Calling Card Code.

This same buyer has made the same purchase on two previous occasions over the course of a year as you can see from the following transaction codes:

8TK6 9PD3

Yet you have decided for no apparent reason to investigate and reverse the third transaction.

You have arbitrarily opened an investigation into a regular transaction and have created for me an unnecessary cost of time, effort and money. Furthermore, you have damaged my reputation to a repeat customer of mine.

I request that you reconsider the said case and explain your decision.

Richard

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I emailed the buyer as well and he's decided to pay again for the previous transaction ;)

The way PayPal treats its customers baffles me sometimes. If it has a legitimate reason to open an investigation and concludes that the transaction is wrong/fraudulent or whatever, then it should state its reasons rather than leave its customers in the dark.

[reidbradford]

When something like this happens with Paypal, you're lucky when you get out alive. Your business is still intact, your Paypal account is not disabled and the customer has payed again for the previous transaction. Why persist with this? If your goal is to try to change Paypal, your business can't have much going on - because there should be lots more important stuff that you need to deal with. Be grateful and move on.

[cobrabyte]

I agree. As someone who has had their business PayPal account frozen and eventually (permanently) disabled, I can tell you that you'll get no response from them that will give you closure.

PayPal is a silly, silly business. You only stand to drive up your blood pressure if you go back-and-forth with them. You'll send passionate pleas for an explanation, only to be met with robotic responses.

Frustrating does not begin to describe it.

Move on and find another processor if you want closure.

[phaus]

PayPal has turned into just another mechanism for online fraud. Basically the way it works in the past few years is a customer can buy whatever they want from you using a credit card linked to their PayPal account. As soon as they get the item, they cancel the transaction and tell their credit card company that their card was used in a fraudulent manner without their knowledge. The credit card company then seizes the funds and PayPal is left in a situation where they can either eat the cost of the item and give you the money, or their "investigator" can find you at fault and force you to eat the loss. Because they don't have the power to challenge the credit card companies, they side with the customer almost 100 percent of the time and then stick you with the bill.

With non-tangible items, such as calling card codes, video game subscriptions, and digital items, there is pretty much nothing you can do to get your money. PayPal has act to like it has investigated the situation fairly, so they tell you that they sided with the customer no matter what evidence you have presented them with.

Unfortunately, this type of behavior is largely why eBay is in decline. My parents ran an online antique business in their spare time but they were forced to shut it down because it no longer felt safe. Personally, I've been on both sides of a PayPal dispute. When I almost lost a few hundred dollars selling a non-tangible item(luckily the item was recovered), the PayPal customer support rep told me that it didn't really matter what evidence I furnished and that if I wanted to sell something similar in the future, that I should try to deal locally because being scammed on PayPal has become an epidemic.

[citricsquid]

DO NOT SEND AN EMAIL.

Seriously, don't, you're wasting your time. Phone them, their phone support is fantastic, their email support is close to non-existent.

(ps: the issue Notch had with Paypal is misleading, they weren't in the wrong)

[dholowiski]

This is absolutely true. I had a paypal issue recently and got immediate, useful help when I called, before they had even looked at the case I submitted online. Call!

[westiseast]

I had pretty much exactly the same. A friend bought one of my products via my site (tea) and I gave it to him personally the same day. Later Paypal reversed the payment with zero explanation. I didn't receive a single explanation from them, or even a response to my emails. They have a practical monopoly it seems, and dont seem to care an ounce about customer service for merchants. Let's all just switch to Stripe when they expand out of the USA!!

[MediaBehavior]

1000+ HN points can't be all wrong. From 2 days ago: http://news.ycombinator.com/item?id=3053883

[c16]

I've not had any issues up to date however I've heard many other horror stories, and so I'm sitting and waiting for the worst to come. Till that day comes, I can't say I've had any problems.

I saw this link in my twitter feed (https://stripe.com/) and while it's not paypal, it seems relatively easy to integrate, though if I were a customer I'd probably prefer PayPal since it's much better known and there's the added bonus of not having to give your card details.

Since your client has paid you back the money, I'd let it drop so long as it doesn't affect your future payments and clients.

Good luck getting it all resolved.

[ozres1]

Thanks. Unfortunately stripe is currently restricted to US customers

[shinratdr]

I always try to play devil's advocate for PayPal. I think they process a shitload of transactions every day and end up getting a lot of flak for simply trying to cover their ass a little.

Imagine this scenario. You are a payment processor. A new client appears out of nowhere, and is processing transactions for $20 from credit cards all over the world all throughout the night, hours after creating his account. A percentage of these transactions fail and are placed multiple times. In a matter of days, the client has accumulated $600,000 and you have no idea what he's doing other than trusting the information he willfully provided in his merchant info.

What do you do? Do cash out 600k the moment this client requests it without performing any due diligence? Or do you freeze the funds, make him call in and verify, and get him his money within a week or two?

The business PayPal is in is inherently risky. Whenever I see some surprised post about how PayPal freezed your massive pile of rapidly accumulated funds instead of just handing it to you and assuming that they won't be dealing with thousands and thousands of scammed customers, I can't help but roll my eyes.

Have a little perspective, people.

This is obviously more about notch's situation and less about yours. Yours is just a simple misunderstanding and a less than adequate support system. Once again, thousands and thousands of transactions a day. Some aren't going to go perfectly.

If you are about to cite Stripe, well:

> Stripe is ten people.

Stripe is nice, but Stripe is ten people. They have nowhere close to the scale that PayPal has to deal with. If they reach PayPal's size and still remain developer friendly and don't have issues like this, I would be truly amazed.

[ozres1]

UPDATE: For those of you that are interested, here is PayPal's reply below

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Dear Richard,

Thank you for contacting PayPal.

Our Seller Protection protects you from claims, chargebacks or reversals that are a result of unauthorized purchases or items your buyer didn’t receive. With PayPal’s Seller Protection, you are protected for the full amount of all eligible transactions.

If a transaction is eligible for seller protection, it will be marked as eligible or partially eligible on the ‘Transaction Details’ page. If it is marked as partially eligible, you are only protected for items a buyer didn’t receive. Transactions of $250.00 or more requires the customer signs for the merchandise.

Here are some additional requirements you need to meet for seller protection:

   * Ship the item to the address on the ‘Transaction Details Page.’
   * The goods must be physical items that can be posted.
   * Provide proof of delivery (we require online tracking to confirm

delivery). * Respond to our requests for documentation and other information.

To learn more about PayPal’s Seller Protection Policy, click ‘Legal Agreements’ at the bottom of any PayPal page, and then click ‘PayPal User Agreement.’

Sincerely,

PayPal Account Review Department PayPal, an eBay Company

Copyright© 2011 PayPal Inc. All rights reserved.

Consumer advisory: PayPal Pte Ltd, the Holder of the PayPal™ payment service stored value facility, does not require the approval of the Monetary Authority of Singapore. Consumers (users) are advised to read the terms and conditions carefully.

[0x12]

> I emailed the buyer as well and he's decided to pay again for the previous transaction ;)

That alone should be enough for PayPal to issue apologies all around. Good luck with that.

[brackin]

We have lots of issues with Paypal, I run a digital deals network for designers, coders, etc and our paypal account is constantly having issues. Being told it'll take 10 days before we can send payments because there was an influx in payments to us. When we run a deal there's an influx in payments because obviously they're daily deals.

This causes a list of problems but we're going to eventually switch to Stripe or another option.

[matthewking]

It would be interesting to see how PayPal justify this given that the customer paid you again after they reversed it, not that id count on ever getting an answer out of them.

I don't think I've ever seen such terrible customer service and reputation management, it's like they're trying to scare people away.

[ozres1]

My thoughts exactly mate

[ig1]

It seems pretty weird, but I'd recommend you'd move off paypal. Paypal is designed for low risk businesses, you're selling something which is "cash-like" which automatically puts you into a high risk category. And Paypal fraud detection systems give you far less leeway if you're considered to be high-risk.

[ozres1]

if you suggest a good alternative that's available in Australia, i'm all ears

[rs]

This can happen from time to time, and I think most of the time they just end up giving the customers a refund.

From my personal experience, its better to just ask Paypal to refund the money and ask the customer to re-pay. Its a bit annoying, and you may get some disgruntled custoemrs, but a whole lot easier than going through the pain of asking Paypal for an explanation.

[LUTOPiA]

PayPal should at least bother to investigate thoroughly before meddling with someone's livelihood. They pass judgement based on baseless assumptions and have no empathy for the damage they are causing.

If they can't handle the load, then they should just pass up the information to law enforcement and let them do the investigating and prosecuting of crimes made using their service.

Either one has to happen, but the current way they do business is damaging alot of lives. Something's got to give.

By the way, there is a Class Action Lawsuit being mounted against them for their unethical practices, like withholding funds from users or simply making unauthorized charges to the bank accounts of users and abusing their privilege of access.

Here's the link: http://www.freedweiss.com/PayPal-Holding-Money.shtml

Also, i called the District Attorney's office of Santa Clara County and they said that they get alot of people filling small claims suits against PayPal.

This is what happens when a company gets too big, empathy and respect for customers gets flushed down the sink :/