Something to think about before you process credit cards.

In my post, I remarked that I was unsure if paypal put members who had a high chargeback ratio on the TMF or not. Also, what if someone sends payment with their own paypal, but funds it with a linked credit card and then reverses it?

I emailed this question to paypal and will update everyone on the response.

The thing is, this goes beyond offline marketing, but also doing services in wso section, etc. Someone may just do a charge back so they can get something for nothing...some card companies offer unquestioned chargebacks to their customers.

Will let everyone know what comes back from paypal on the issue.

Chargebacks are not new. They are a fact of life. If you protect yourself legally you should be able to fight them. Your bank and merchant is normally on your side, with the opposing bank and cc company on the customers side so you do have help. And It doesn't work as you say, as soon as you hit 1% they don't automatically close your account and blacklist you.

They take into account your volume of processing, how many transactions per month etc.

Online marketing will never move away from paypal. It's what's trusted by customers.

Offline however we try to limit our credit processing by using bank drafts.

You should opt for a high risk merchant account, if your online business is prone to High Chargeback rate.
There are several acquiring banks that accept high risk businesses.
And there are several Aggregator merchant account providers who offer a payment processing solution to merchants put on the TMF list.

Updating this thread really late, so sorry about that.

The email to paypal really didn't clarify things much. However, I did find this thread: Limited due to match list. - eBay Suspension & Paypal Limited Forums

Apparently, the author was making over $50,000 per month on Ebay when paypal closed his account due to him being on the tmf list, and it seems like paypal put him on the list. That being said, with all of the people using paypal, it looks pretty good if this is the only instance I can find.

MaxwellB, you're well informed and thanks for the input. Sorry if I mis-explained how the process went. I didn't mean to imply that it's an automatic trigger if you go over 1-2%, just that it's a general rule it seems. Also, it's good to hear that your bank and merchant will help you get off the list. I've read a story, however, where the business person had someone buy from his site using stolen cards, causing chargebacks, etc. He filed reports and did all the best practices, but still lost his merchant acct. Maybe that story is the exception to the rule.

Also, as to them taking your volume into acct., I've read some say that if you have a high-volume month, followed by a low-volume month, and the chargebacks come in from the high-volume month on the low-volume month, they will calculate the % based on the high/vol month's chargebacks compared to the low/vol month's volume. Wow, that's a confusing run-on sentence, but to sum it up, it's an inaccurate way of calculating percentages. Now, maybe this is only with certain merchants and others are more fair.

Not saying that you're incorrect. My experience in only anecdotal whereas yours seems to be real-world. Again, thanks for your input.

For every client in Offline I ALWAYS insist on a filled out and signed credit card authorization form and it includes a photo copy of the CC and DL.

That gets attached to the clients Statement of Work contract as an addendum and the contracts states that the CC authorization form is a part of the binding agreement of the contract.

Most people tell their credit card company that the charges were unauthorized so when you present the agreements the tables turn and the card holder can actually get in trouble for fraudulently claiming unauthorized charges.