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May 06, 2009 A reader who works in the chargeback section of a major credit card company has just about had enough with people tossing around 'chargeback! As the solution to every customer service. In an online casino environment, the user may create an account and make a purchase using a credit card They then request a chargeback from their banking or credit card provider, which means getting refunded at the online gambling provider’s expense. The credit card company will maybe also list the user as a 'high risk user'. And there is also a risk that the bank will reverse the chargeback again, so to do a chargeback is risky when not valid (fraud etc). The casino, the casino provider and the credit card company will all keep track. In an online casino environment, the user may create an account and make a purchase using a credit card They then request a chargeback from their banking or credit card provider, which means getting refunded at the online gambling provider’s expense.

• In OffShore Insiders
• April 15, 2011
• 7596 Views

The #1 thing NOT to say to an online sportsbook, Internet casino or poker room should a payout problem arise.

Last week we made mention in our BLOG of a couple of things that have gotten players into trouble with their gambling houses. And one player, who admitted that he read the BLOG, did not heed our advice and now has a bigger problem. So, we thought it might be useful to outline the top thing NOT to say to an online sportsbook, Internet casino or poker room should a payout problem arise.

Quite often players in the U.S. have trouble getting their money sent in a timely fashion once a request has been put in and accepted. This can happen at just about any outfit offshore, and usually is a just a one-time issue. However, too many players get frustrated and starting popping off at the next available clerk once a payout does not arrive as planned.

The #1 thing NOT to say is that you are thinking of making a charge back on your credit card deposits. Do not even mention the words ‘charge’ and ‘back’ in the same sentence. The word (or words) ‘chargeback’ instantly will get a player into trouble. Even if you are not planning to do the dirty deed, DO NOT mention a charge back. Unfortunately, this week’s case proves this point.

A player called us because he had not received a bank wire from Bodog, who in the past had been very reliable for him with payouts. The player claimed that the wire did not arrive in his account, while Bodog said it had been delivered. This player went round and round with the sportsbook giant and finally resorted to calling OSGA. Once we got involved the wheels started moving. But unfortunately, these types of problems do take some time to sort out. The player got more and more frustrated. Bodog insisted that it was sent. The player got bank records and letters saying it was not sent to his account. Bodog still insisted it was sent to him. Finally, through our involvement, Bodog’s processing company began to make an extra effort to find the wire.

Meanwhile, the player got more furious and more steamed with each passing day. This week he decided to make the ‘chargeback’ threat. And it was a veiled threat at that. He said, “A lawyer friend suggested that I charge back my deposit,” when he was inquiring if there were any updates with the clerk who was handling his issue. The warning bells went off and within a few hours the players’ account was closed.

Credit card charge backs are such a big problem that the mere utterance of the words makes an offshore outfit react or overreact, and not in a positive way. The problem is that too many chargebacks will cause VISA or MasterCard to drop the processing company and thus the gambling house has to find a new credit card processor. This not only affects the book or casino, it affects all of the players at that place and the industry itself. Many new books are not even taking credit cards and most places have lost the ability to accept credit cards at one time during the last few years. We spoke with one operator who recently launched a new shop in Costa Rica. “I am not taking credit cards at this time, it’s just too much of a headache. Credit cards cause nothing but problems,” we were told.

In addition, the sportsbook or casino has a further problem if a chargeback is made – they never collect that player’s deposit money. Years ago when these problems began to surface regularly we, of course, got involved with many disputes. At the time one operator told us that he could NOT pay the player in question because of the threat of a chargeback. Why? “Because, if I pay the guy and then he charges back, I lose twice.” Puzzled, we inquired further. “I lose twice because (one) the player beat me and got paid and then I lose again because I can’t collect his deposit money.”

In recent years, frustrated players have made charging back on a deposit part of their modus opperandi. As soon as a problem occurs, the easiest thing for a player to do to recoup his money is to charge back. However, players need to be aware that this behavior is now being tracked. There is a list, a big list. And the list is being shared amongst all of the major players in the gambling community. One player was recently shut down within hours after depositing at one of the franchises of Sportsbook.com. Of course, we inquired as to why this player was shut down, with bets pending. Here Sportsbook ran him through the list and found a chargeback from 7 years ago! According to the management at Sportsbook.com, “We caught his account within 2 hours of being created and no actioned all wagers, then credited back the initial deposit.”

This is what all of the sportsbooks, casinos and poker rooms are doing now once a player utters ‘charge back’. If a player threatens to reverse his deposits, the gambling house will cut the alleged offender off at the pass and refund all cards used to deposit, closing the account and keeping all monies. This is the knee-jerk reaction that operators have been forced into in the face of mounting losses and repeat offenders. And once a player says ‘charge back’ our hands are pretty much tied in trying to achieve any type of positive resolution.

Players should remember that if they are playing a reputable house (rated Elite or Premier) they should not sweat whether or not they are going to be paid; maybe ‘when’, but not ‘if’. Quite often complaint resolution takes far longer than anyone wants and due to the murky world of money processing, missing wires and delayed checks are particularly frustrating. Players should use the chargeback only as a last resort, as a virtual ace-in-the-hole to use after all other means of resolution have been exhausted.

Saying chargeback is like going ‘all in’. It’s a last ditch effort to get the money sitting in the pot. And who goes all in announcing what is in their hand? You would get creamed doing that. And most players who utter the word charge and back together end up getting screwed too.

PayPal holds immense brand authority for online payments, that is one of the reason that PayPal chargeback has become one of the hottest dilemmas amongst online sellers.

To address this concern we have decided to dedicated this post about ‘ how to chargeback on PayPal ’, or put simply getting a refund for your purchases.

In the sections that follow we discuss ‘what a chargeback is?’ and ‘how to do a chargeback on PayPal?

What is a Chargeback?

The PayPal defines it as “…when a customer files a chargeback with their credit card issuer, it means that they’re disputing a charge and asking the card issuer for a refund.”

Buyers can simply demand refunds for transactions and inform their credit card company to cancel/refund the payment.

These refunds are termed “chargebacks” in banking terms.

In case of the chargeback, PayPal will freeze the funds in the seller account. There are several reasons that can lead to a chargeback:

• The buyer does not receive the product(s)
• A buyer receives damaged or defective item(s)
• Buyer doesn’t recognize/remember the credit card payment
• The buyer receives gets the charge more than once for a transaction
• When a buyer did not authorize the payment

In case of a chargeback on PayPal, the seller incurs a chargeback fee but this fee can be waived (few cases) off if the seller is subscribed to the Seller Protection Policy.

A better way sellers can manage chargeback on PayPal is using breakthrough ecommerce assurance & order verification app. These apps charge a meager amount to guarantee verification of orders and a 100% refund guarantee in case of chargebacks.

Generally, when a buyer requests a chargeback, the service immediately contacts the buyer’s credit card issuer. PayPal does not hold any authority during the chargeback process though.

That’s how a chargeback process works with PayPal.

1. The buyer requests a chargeback from their credit card issuer for a chargeback. A phone call or email with complete evidence of the transaction is enough.
2. The credit card issuer then informs PayPal’s official merchant bank and withdraws the funds from their account.
3. PayPal then puts the chargeback funds on hold and deems them untouchable.
4. Both buyer & seller are then notified through email. PayPal will request for all information that can help resolve the chargeback.

That’s the basic PayPal chargeback process.

When dealing with chargebacks, some points you need to remember:

• Buyers are eligible for chargebacks on PayPal transactions for 120 days or more after placing the order.
• Sellers who receive chargebacks have a 10 day time period to respond to the dispute.
• Chargebacks on PayPal usually take a matter of weeks but can take up to 75 day or more depending on the case.

How can Sellers manage chargeback on PayPal

Usually, PayPal sides with the buyer providing them a complete refund while the seller is left hanging. You can always get PayPal’s seller protection, but the feature comes with its own rules & restrictions leading sellers nowhere.

Signifyd, is a leading solution available on the Shopify app store designed specifically to support sellers in case of chargebacks. Signifyd’s eCommerce assurance features allow sellers to mitigate against growing eCommerce challenges.

Signifyd provides sellers some brilliant features that:

• Automatically assess order reliability & validity

Signifyd automatically assesses all transactions and verifies if orders are to be completed or not. All orders are secure with chargeback protection to ensure the seller does not experience massive losses.

• Provide auto fraud prevention

The zero fraud prevention feature guarantees all your transactions. In case of fraud as PayPal chargeback, Signifyd app offers the seller a brilliant verification system that ensures no fraudulent transactions can go through. Refund payments are made within 48 hours to sellers.

• Provide fraud liability insurance

The liability insurance as mentioned above covers 100% of refund & chargeback costs. In case a fraud transaction is ever accepted, Signifyd covers the cost of the sale and the chargeback fees.

• Automatic Order Approval/Rejection

The leading edge Signifyd console lets you manage orders automatically removing the hectic tasks. Signifyd will automatically send verified orders for processing while rejected orders are left out.

To learn more about Signifyd, check out this page.

Among other types of scams that a buyer can commit include:

• Claims that products were not delivered, when actually they have.
• When a buyer claims products were defective, but actually they were fine.
• Disputing the quality of the products or services.
• Claims that the transaction was not authorized by them.

The absence of proper eCommerce chargeback laws are the primary reason many of these buyer scams are a success. The developments in eCommerce have led to great ease but also encouraged scams from different parts of the world.

You can take several steps to ensure your shop is not hit by scams:

1. Never ship to a freight company, always ship to the buyer’s home address
2. Verify buyer IP Address. Then verify if billing & shipping address complies with, the IP and location
3. Use a customer & order verification tool that identifies fraudulent buyers. E.g. No Fraud app on Shopify
4. Be sure your store complies with all FTC Regulations
5. Create accurate and easy product descriptions, so there is no objection later from buyers
6. Be very clear about product quality & features, don’t forget to mention anything
7. Be in contact with the customer 24/7 over phone, email or WhatsApp
8. Publish your contact information on the webstore
9. Always consider having PayPal Seller Protection – it may not be perfect but still a great way to protect against scams
10. Always check the email address that sent you the PayPal chargeback notice. Sometimes scammers create fake PayPal related emails to send out scams. (see example below)

Differences between Chargebacks and PayPal Disputes

Since we already know what a chargeback is, let’s quickly overview of PayPal Chargeback vs PayPal Dispute.

In case the buyer & seller fail to agree terms, the buyer can launch a dispute through their dashboard. PayPal freezes the funds till both parties reach a resolution.

The buyer & seller are required to negotiate from this point on, in case the two parties fail to agree PayPal moderation gets involved to resolve the issue and this is then called an “escalated claim”.

Parties Involved

The first difference is of the parties involved. Chargebacks on PayPal involve the buyer and their credit card issuer.

In case of a dispute PP administration keeps the issue in house to get it resolved between buyer & seller.

Account Suspensions

In case of chargebacks on PayPal, the buyer cannot conduct transactions and their account goes into “suspended” status.

In disputes, only the amount for that disputed transaction remains on hold, the buyer’s account remains active for other transactions.

Decision Making

The credit card company holds authority and makes the decision in a chargeback.

In a dispute, first buyer & seller can reach an agreement without escalation. If both parties don’t agree, PP moderators steps in and offers a resolution best for both.

Resolution Times

A chargeback can take up to a minimum of 6 weeks to arrive at a result.

A dispute takes no longer than a month, with both buyer and seller required to act quickly.

Other Types of Objection on PayPal

The objection means any unwanted event happened in PayPal transaction. The Buyer, seller or even the bank could initiate the objection.

Generally, three types of objection occurred on PayPal,

• Dispute

Buyer initiates the dispute when the problem with the transaction occurred.

Reasons for Dispute
The dispute can occur for two reasons:

• Item Not Received (INR): In this case, buyer claims of not receiving the order after the payment.
• Significantly Not As Described (SNAD): In this case, buyer claims the product is not up to the expectation as described by the seller or product is different.

The complaint is through PayPal’s resolution center however, PayPal would not involve in the scene of dispute. Seller will receive an email where he can directly contact the customer to resolve the dispute.

• Claim

Claim is an advanced version of dispute when the disputes is not resolved in 20 days and buyer escalates the issue to PayPal.

Another reason for the claim is ‘Unauthorized Transaction’. It means the buyer’s account may have been compromised or hacked and someone made a purchase from the account without their permission.

In the claim, the seller has 10 days to respond. If the seller does not resolve it in the given time, PayPal will close the claim in favor of the buyer.

If sellers respond within 10 days, PayPal will evaluate the claim and resolves the case within 30 days. However, in complex cases, it could take a long time.

• Bank Reversal

It happens when the buyer or the bank request to refund the transaction made by the bank account.

The Reasons for Bank Reversal:

Bank reversal usually happens when someone uses the buyer’s account information without their consent. The situation in which bank reversal happens,

• The buyer’s bank account was used to purchase an item without their permission.
• Buyer identity unknown transaction.
• When the purchased item did not arrive.
• The buyer was charged twice for the same item.

how to get a refund on PayPal if scammed?

For a buyer, getting money from PayPal, after being scammed, process is very easy and can be done by reporting a dispute with PayPal using their dashboard. Decisions usually take 5 to 10 days and are mostly ruled in favor of the buyer. PayPal will return money to the buyer after an investigation.

For sellers, it is tough to get a refund. PayPal is not an ideal method to use without its Seller Protection service, but even in the case of the protection, some cases are ruled in the buyer’s favor. As a recommendation, sellers should keep all evidence of the transaction and sale, keep track of shipping and delivery, and have a solicitor just in case a large amount is involved. There are no types of PayPal chargeback fees.

Can PayPal Payments be Reversed?

Yes, the PayPal payment can be reversed when a chargeback occurred. The buyer has the authority to ask their credit card provider to reverse the payment that has been made through PayPal account.

Is PayPal safe for sellers on Craigslist?

Sending and receiving payments on PayPal are safe most of the time. Nonetheless, on these websites, there is higher for you to come across with a scammer who would promise to make payment via PayPal but does not follow through it. To identify the Craigslist scam here are some points PayPal mentioned for your guideline.

If you come across any of these conversations just back off, it is a scam.

How to get money back from PayPal friends and family dispute?

There no guarantee of getting a refund from PayPal friends and family dispute. Because there is no buyer’s protection option available if you transfer money as a friend.

So, avoid transfer money to anyone as a friend or family if you do not know the receiver.

Can you get scammed by using PayPal?

There have been cases occurred in the past where some scammer hacked someone’s PayPal account. You have to be sharp to identify forged email or any uncertain activity on PayPal account. PayPal usually reimbursed the payment if you could confirm about being scammed or hacked.

How do I link a debit or credit card to my PayPal account?

You can link your debit/credit card to your account as follows:

1. Sign into your account
2. Click the Wallet button on top of your dashboard page
3. Click + Link a card or Bank
4. Next, click Link a Debit or Credit Card
5. Fill the provided boxes with your card details

What is the PayPal chargeback time limit?

A buyer can file a chargeback 120 days or more after making the purchase. A Seller has 10 days to respond to a chargeback. Usually, chargebacks take up to a few weeks to process. Depending on the complexity of the case some chargebacks can take 75 days or more to process.

What happens to the Seller PayPal Dispute?

In the case of a chargeback, no accounts get freezes or puts on hold, the buyer and seller are requested to come an agreement. If that doesn’t happen, then the PayPal dispute resolution comes to resolve the issue and moves the dispute to claim.

Can I cancel a payment on PayPal?

Recurring payments are canceled through your dashboard, but, one time payments cannot be canceled and must go through the dispute process or chargeback.

How to chargeback on PayPal debit card?

You can get chargebacks on PayPal debit card like any other credit/debit card by demanding a refund from the bank. The amount should take 3-5 days to come back to your account.

How does PayPal Work for Sellers

PayPal was a payment gateway primarily designed to help buyers make secure payments for online purchases. The service has never really been an ideal method for sellers. This is largely due to the lack of protections available for sellers. PayPal does, however, accept payments in 25 different currencies from 200+ countries around the world.

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Types of Seller Accounts

PayPal allows sellers to receive and send out payments through all of its 3 account types namely basic, premium, and business.

A basic account allows receiving payments but only allows withdrawals of $500 per month. When a bank account is connected to the PayPal account, it is then classified premium and removes the withdrawal limit. A business account is more or less the same as a premium account, it provides the facility for multiple users to access the account.

PayPal Seller Account Fees

Sellers with registered businesses on PayPal also pay a 2.9% fee + $0.30 for every sale transaction. E-store owners who are not using Shopify or an eCommerce platform can embed PayPal for $5 a month. E-Store owners can also make use of the PayPal Payments Pro service which basically allows sellers to accept credit card payment over the phone.

Receiving Payments

When a buyer pays for purchases payments can take upto 5 days to appear in the seller’s account. Usually, if the payment is made by a buyer account linked to a bank, card, or current PayPal balance it is immediately sent to the seller, who can then dispatch the goods. In case of an eCheck payment, the payments usually clear between 5 and 7 days.

Seller Protection

PayPal offers sellers protection from fraudulent buyers through the Seller Protection feature. The process is quite simple:

1. Sellers only ship items to a PayPal authorized address for the buyers
2. PayPal registers authorized buyer addresses beforehand
3. Authorized addresses are verified through bank account or credit card information
4. Sellers are recommended to provide a tracking number as poof of delivery

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In adding to the points as mentioned earlier, there are several other conditions to meet to qualify for a Seller Protection payment. The first of these is that if an order is above $250, sellers need to provide a signature for authentication. This is followed by the principle that goods must be shipped within 7 days of the order. Once all these terms have been met, PayPal guarantees payment for shipment and the product(s).

In a Nutshell

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PayPal remains one of the most popular payment processors for online transactions. Buyers unaware about refunds and disputes will definitely love learning about making chargebacks on PayPal transactions. Remember to share my article and leave your feedback to improve my content accordingly. Subscribe to our mailing lists to get the latest Ecommerce tips, hack and strategies for a prosperous business experience.