19 {{ upvoteCount | shortNum }}
19 {{ upvoteCount | shortNum }}

Do paypal frown upon refunding?

by Rambo007
17 replies
Main reason I ask is that I am planning something different with my next product.

It will basically be something that everyone can try within 24 hours and there will be some it works for and some it doesnt. My offer will be to refund everyone who it doesnt work for instantly with no questions asked. I can see from my end if it works so there will be no room for serial refunders or scammers.

The only thing is, it wont work for a lot of people but I believe I can still make a decent profit from those it does work for. Dont worry, its not a scam or anything but I cant reveal the niche.

So I could be potentially refunding around 750 people and making profit from 250. But what sort of payment processor will allow so many refunds in short space of time?

Would paypal frown upon this and lock my account?
#frown #paypal #refunding
  • Profile picture of the author seopert
    refunding or returning the goods back is kind of negative impact. So be careful for your're doing.
    {{ DiscussionBoard.errors[4957406].message }}
  • Profile picture of the author Richard Crooke
    The best source to ask is paypal. With that type of number of returns, I would think that would create a flag for investigation.
    Signature
    {{ DiscussionBoard.errors[4957408].message }}
    • Profile picture of the author Rambo007
      Originally Posted by Richard Crooke View Post

      The best source to ask is paypal. With that type of number of returns, I would think that would create a flag for investigation.
      Indeed, anyone know of a payment processor where refunds wouldnt create a negative impact?

      Another option was for them to open an account with my site and buy credits from me, then if my technique doesnt work i can just refund the credits, but ideally I would like to give them the cashback.

      Any ideas?
      {{ DiscussionBoard.errors[4957438].message }}
      • Profile picture of the author JohnMcCabe
        I can't think of any processor that would be happy with 75% refund rate. Even with advance notice, that kind of ratio is likely to arouse suspicion with the banks behind the processor. If the amount is high enough, it could even draw attention from one of the alphabet agencies as a potential money launderer...
        {{ DiscussionBoard.errors[4957486].message }}
  • Profile picture of the author Rambo007
    What if..

    Instead of using the refund function, I just paid everyone back as if I was sending them cash via paypal?
    {{ DiscussionBoard.errors[4957516].message }}
    • Profile picture of the author SEOFocused
      Originally Posted by Rambo007 View Post

      What if..

      Instead of using the refund function, I just paid everyone back as if I was sending them cash via paypal?
      refund pays back including service fees. if you want to pay back, you will have to pay more than you got
      Signature
      SEO Services: We Develop and Promote Your Business Online
      One stop design, development, content creation and link building service
      {{ DiscussionBoard.errors[4957859].message }}
      • Profile picture of the author Jeff Henshaw
        Main reason I ask is that I am planning something different with my next product.

        It will basically be something that everyone can try within 24 hours and there will be some it works for and some it doesnt. My offer will be to refund everyone who it doesnt work for instantly with no questions asked. I can see from my end if it works so there will be no room for serial refunders or scammers.

        The only thing is, it wont work for a lot of people but I believe I can still make a decent profit from those it does work for. Dont worry, its not a scam or anything but I cant reveal the niche.

        So I could be potentially refunding around 750 people and making profit from 250. But what sort of payment processor will allow so many refunds in short space of time?

        Would paypal frown upon this and lock my account?
        You are going to have to re-think how you promote this, if you are expecting a 75% refund rate. Otherwise you are going to get into serious hot water with PayPal or any other payment processor.

        If you are promoting to your own mailing list, perhaps you could survey list members first; to see how many are interested and only email those interested with your sales pitch for the product. You might want to ask those interested to sign up to a one-time notification list which you can email when the product is ready.

        Just my thoughts,
        Jeff.
        {{ DiscussionBoard.errors[4957926].message }}
    • Profile picture of the author Samrath Gupta
      Originally Posted by Rambo007 View Post

      What if..

      Instead of using the refund function, I just paid everyone back as if I was sending them cash via paypal?
      If you will do this then you will go in loss.

      Suppose your product is worth $100 and paypal will charge $5 or something each time you receive money....

      Now if you will return the payments by paying them neither they will get FULL REFUND nor you will make good profits !!
      Signature



      What Our Affiliates Say About CPA Prosperity? Find It On Our AffPaying Page!

      || Email: sam@cpaprosperity.com || SKYPE: samrath.gupta || AIM: cpaprosam ||
      {{ DiscussionBoard.errors[4957882].message }}
  • Profile picture of the author amritrr
    Paypal is quite strict in its dealings, I don't think it would allow that many refunds. Moreover, you would need to check with them first whether they allow your type of business in the first place.
    {{ DiscussionBoard.errors[4957529].message }}
  • Profile picture of the author laurencewins
    I think whatever you are doing needs a serious rethink. No site would be happy with such a high refund rate.
    Signature

    Cheers, Laurence.
    Writer/Editor/Proofreader.

    {{ DiscussionBoard.errors[4958219].message }}
  • Profile picture of the author Rambo007
    So if i paid the money back with a new service fee then it wouldnt be a problem for paypal?

    I know many on here think this is scheme is crazy but its in a unique niche and I could repeat this on a weekly basis. some weeks there will be some customers who dont "win" and so i send them the money back, there is no outgoing costs so the profit margin is huge and I dont mind paying a service fee sending money back too.

    Is the service fee 5%?
    {{ DiscussionBoard.errors[4958472].message }}
  • Profile picture of the author IamTJM
    I wouldn't risk it. A sudden large amount of refunds will definitely look very suspicious. Perhaps you can offer a free trial and make them pay to keep the product or put the product on a membership site and give them free access before they have to pay.
    Signature

    {{ DiscussionBoard.errors[4958499].message }}
    • Profile picture of the author mgkimsal
      Do a one-month recurring charge, but give everyone a 1 day free trial. If they like it, they do nothing. If not, they cancel the free trial.

      Just a thought...
      {{ DiscussionBoard.errors[4959022].message }}
  • Profile picture of the author iAmNameLess
    The only way around this being an issue is calling ahead to paypal and talking to someone that is somewhat of a decision maker, or supervisor in the risk management department of paypal.

    I highly, highly recommend not doing this though, your paypal will get froze, and you will be paying out more in refunds than you took in.

    Instead, I would do a recurring payment.. or maybe a limited version of what you are doing and have them upgrade. Technically, with intangible items you don't need to give a refund.
    Signature
    {{ DiscussionBoard.errors[4959035].message }}
  • Profile picture of the author AmandaT
    Sending back money isn't a good idea either because you will still get scammers requesting refunds through PayPal and then you'll end up paying them double.

    I'd go with the one day free trial option so it will charge them after 24 hours unless they cancel.
    Signature
    {{ DiscussionBoard.errors[4959038].message }}
  • Profile picture of the author lotsofsnow
    Originally Posted by Rambo007 View Post

    It will basically be something that everyone can try within 24 hours and there will be some it works for and some it doesnt. My offer will be to refund everyone who it doesnt work for instantly with no questions asked.

    Would paypal frown upon this and lock my account?
    Very bad idea. Paypal views refunds as a very bad sign.
    If you have many refunds your account will be closed for investigation.

    So, you should avoid refunds; not invite them.

    HP
    Signature

    Call Center Fuel - High Volume Data
    Delivering the highest quality leads in virtually all consumer verticals.

    {{ DiscussionBoard.errors[4959061].message }}
  • Profile picture of the author Michael Tracey
    I think those who've suggested a free trial of some sort, to determine whether the product worked for them, have made the best suggestion...

    If you're able to do this it would be the way to go.

    Quite frankly the kind of refund rate you're talking about makes your project a total non starter with PayPal or any other payment processor.

    Also, the kind of movement you'd have at your bank, in terms of influx & outflow of money to PayPal, would cause serious problems for you at that end

    Michael
    {{ DiscussionBoard.errors[4959079].message }}

Trending Topics