PayPal "Loophole" Gone

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Many people prefer to sell digital goods through PayPal (versus let's say Clickbank) because Buyer Protection doesn't include digital goods.

As of July 1, 2015 in the United States, this is no longer true. Digital goods are eligible for refund for 180 days after purchase.

CB's refund policy is 60 days versus 180 days.

Will you change to CB or other sources for selling digital goods now?

Mark
#loophole #paypal
  • I think "eligible" is the keyword here.

    Sure, your customers can "request" a refund with Paypal up to 180 days, but (depending on your position) it may not mean they will get it.

    As where with Clickbank, I recall seeing a notice from Clickbank a while back saying that they had refunded a customer. (without me being aware of any issue, etc). CB is technically able to favor the customer automatically without much of your input. Usually however, Clickbank will allow you to try and fix the issue, as long as you respond within 24 hours I believe.

    With Paypal, it wouldn't matter much (to me) whether a customer is eligible to request a refund up to 30 days, or even up to 180 days. What matters to me is that my product was delivered to them, they were able to access it, and were "happy" with it. Otherwise, they deserve to be refunded.

    When someone however purchases and requests a refund within seconds, or files a charge back claiming that "someone in their household used the card without permission",
    those I usually am a bit skeptical about, and I will let Paypal investigate,

    as I did with my recent one:

    Dear STOLTING MEDIA GROUP,
    As you know, one of your buyers opened a chargeback with their credit card issuer. This means that the buyer has asked their card issuer to reverse the money for this transaction.
    However, after submitting all required info to Paypal, it ended up with:

    Dear STOLTING MEDIA GROUP,
    We're happy to confirm that the chargeback was decided in your favor.
    We've reimbursed your PayPal account for the disputed amount.


    So no, I am not making any major changes, but then again, I have several products already listed on different market places including Clickbank.
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  • Profile picture of the author unifiedac
    If your business model is to avoid buyer protection, there is something wrong with your approach. Provide quality products/services to your buyers and you shouldn't have refund problems. You will always have unhappy buyers, it's just the nature of sales. But if you can keep your refund rate under 5%, you shouldn't be worried about buyer protection.

    Also, if you offer a money back guarantee as part of the purchase agreement, say 30 days, the PayPal resolution department is more willing to side with you on a dispute if you can demonstrate the buyer had an opportunity to evaluate the product and request a refund.
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    • Profile picture of the author nicheblogger75
      Originally Posted by unifiedac View Post

      If your business model is to avoid buyer protection, there is something wrong with your approach. Provide quality products/services to your buyers and you shouldn't have refund problems. You will always have unhappy buyers, it's just the nature of sales. But if you can keep your refund rate under 5%, you shouldn't be worried about buyer protection.

      Also, if you offer a money back guarantee as part of the purchase agreement, say 30 days, the PayPal resolution department is more willing to side with you on a dispute if you can demonstrate the buyer had an opportunity to evaluate the product and request a refund.
      EXACTLY! I'm not going to change a thing. My refund rate right now is well below 2%. That means people are happy with the products they are purchasing from me. I believe right now for US customers they have 45 days to file a dispute on a digital goods purchase. If my customers have not asked for a refund or filed a dispute within the first 45 days, chances are pretty good that they never will. As unifiedac pointed out, if you provide quality products/services to your buyers you shouldn't have refund problems.

      That being said, I am sure there will be a few buyers who may decide to take advantage of the new time limit, but that's the nature of the business. I don't foresee a lot of buyers doing that as long as they are satisfied and feel they got a good value for their money. Overall, this new time limit should not affect the businesses of people who are already doing the right thing and providing top quality products at a great price.

      I almost always offer a 60-day refund policy (there are few exceptions) , and it is no questions asked. I also try and respond to any refund request within 8 hours. This helps ensure that the buyer does not get upset and begin to think that they are being blown off. Also, I have had many buyers request refunds and then come back and buy another product from me, and never ask for a refund. I suspect this is partly because they understand that I will honor my refund policy with no hassle on their part if they are not satisfied with the product for any reason.

      I actually think stretching the time limit to 180 days is a positive change, because I think it will improve the quality of digital products overall, as the sellers will want to ensure that their customers are very happy with their purchases.

      I have to admit, though, it does get my goat when people open a dispute instead of first contacting the vendor and asking for a refund. I think it is simple courtesy to allow the product vendor a maximum of 24 hours to address your problem/refund request before hitting the dispute button. Still, some buyers will always go for the dispute first. Again, that's the nature of the business we're in. If this happens, the best thing to do is to address the dispute as soon as you can and refund the buyer.

      The only real problem I can foresee with this is if you have a refund policy that is shorter than 180 day time limit, which most do. This opens up the question of whether or not it's best to refund someone who files a dispute even if it's beyond your stated refund policy. I predict we may also see refund policies being stretched to 180 days instead of the normal 30 or 60 day policy offered by most sellers. We'll just have to wait and see how it plays out I guess.
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    • Profile picture of the author michaelkoehler92
      Originally Posted by unifiedac View Post

      If your business model is to avoid buyer protection, there is something wrong with your approach. Provide quality products/services to your buyers and you shouldn't have refund problems. You will always have unhappy buyers, it's just the nature of sales. But if you can keep your refund rate under 5%, you shouldn't be worried about buyer protection.

      Also, if you offer a money back guarantee as part of the purchase agreement, say 30 days, the PayPal resolution department is more willing to side with you on a dispute if you can demonstrate the buyer had an opportunity to evaluate the product and request a refund.
      You can provide digital products of the highest quality, once you reach a certain amoutn of customers paypal disputes will happen.

      I just had this case some days ago. Guy purchases 5 digital items/services, we delivered them correctly and 2 weeks later he makes a dispute via paypal.

      This happens all the time cause people use paypals buyer protection to scam the seller.

      But you won't notice that if you only have a few cutomers.
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  • Profile picture of the author Jennifer Hutson
    If you have a great product, it shouldn't worry you.
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    • Profile picture of the author yukon
      Banned
      Originally Posted by unifiedac View Post

      If your business model is to avoid buyer protection, there is something wrong with your approach. Provide quality products/services to your buyers and you shouldn't have refund problems.
      Originally Posted by Jennifer Hutson View Post

      If you have a great product, it shouldn't worry you.
      That's silly If the product is targeting the IM niche which is notorious for habitual refunds.

      Now If you was talking about something like a woodworking or gardening niche product, sure, very few refunds will happen.
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  • Profile picture of the author Raydal
    Quality product or not, I have found that refund request for products
    sold on CLICKBANK are 100X that for PayPal. My same product
    sold on PayPal receives far fewer refund request than on PayPal.

    Many people, especially in the IM space, know that ClickBank is a
    refund haven.

    -Ray Edwards
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    • Profile picture of the author Mark Singletary
      Ray,

      Part of my point here is that I think the reason for this difference is that many consumers know that PP wouldn't refund their money on an ebook but CB would. So the CB refund rate was much higher. Now that they get the protection with PP, I believe refund rates will be higher with PP. PP will potentially become a refund haven.

      Everyone,

      I agree with the quality product part of the conversation. The reason I called this a loophole is that I've heard people say in effect that they use PP so they can sell whatever junk they want to sell without having to refund.

      One of the new rules is you can't refund just because you don't like the product. It has to be substantially different than advertised. So I think the advertising may need to be tightened up a bit.

      Also they point out that proof that someone downloaded the product, I guess through log files or some other mechanism, would prove that they did receive the product and they might side on you behalf. However interestingly enough there is NO seller protection for digital goods - only buyer protection.

      Talk about 180 day refund periods is also interesting when many WSOs are closed within a couple weeks, and some of the domains don't even work within 6 months of the sale.

      I think the total effect will be that consumers will get the protection they deserve, scammers/frauds/crooks (on both sides) will continue, and legit sellers will need to be more diligent and more legit in the sense that they have to look at this from a more long term point of view and 6 months is long term compared to the average hit and run WSO.

      Mark

      Originally Posted by Raydal View Post

      Quality product or not, I have found that refund request for products
      sold on CLICKBANK are 100X that for PayPal. My same product
      sold on PayPal receives far fewer refund request than on PayPal.

      Many people, especially in the IM space, know that ClickBank is a
      refund haven.

      -Ray Edwards
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      • Profile picture of the author Sid Hale
        Hey Mark,

        I'm still having trouble following your thought process (or you're having trouble following mine)...

        Originally Posted by Mark Singletary View Post

        Part of my point here is that I think the reason for this difference is that many consumers know that PP wouldn't refund their money on an ebook but CB would. So the CB refund rate was much higher. Now that they get the protection with PP, I believe refund rates will be higher with PP. PP will potentially become a refund haven.

        As stated above, any change made by Paypal with regard to their refund policy, will almost certainly be mirrored by CB.

        That's because CB doesn't process the payments when a CB purchase is made, it simply submits the customer's order to its own Paypal account - which is governed by the same Paypal refund policy as any other seller's Paypal account.

        In other words, those CB sales that are processed by Paypal, will also be subject to the same protections afforded to ANY buyer who pays via Paypal.

        If (after 1 July) I purchase a product from the CB Marketplace using my Paypal account, and then after 5 months I file a Paypal dispute... CB has no more control over the settlement of that dispute than would any other vendor using Paypal as their payment method.

        The Paypal policy trumps the CB policy in much the same way that the CC chargeback policies have always trumped Paypal's 60 day refund policy.
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  • Profile picture of the author Sid Hale
    Hey Mark,

    Originally Posted by Mark Singletary View Post

    CB's refund policy is 60 days versus 180 days.
    Since CB's 60 day refund policy is 1) exactly the same as Paypal's current policy, and since 2) CB uses their own Paypal account (rather than the seller's) to provide the buyer an option of purchasing via Paypal...

    how much you want to bet that CB's refund policy will also change?

    Just think of the financial exposure CB would incur if they didn't conform? Any refunds that occurred between day 61 and day 180 - they would either have to eat... or get into a pissing contest w/ Paypal. I wonder who would win?
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    • Originally Posted by Sid Hale View Post

      how much you want to bet that CB's refund policy will also change? Just think of the financial exposure CB would incur if they didn't conform? Any refunds that occurred between day 61 and day 180 - they would either have to eat... or get into a pissing contest w/ Paypal. I wonder who would win?
      That actually makes allot of sense.
      CB would either have to change their refund policy as you say,
      and/ or, perhaps hold on to your funds much longer from the time someone purchases, to the date you actually see the proceeds of that sale in your own bank. Obviously this would only apply to people who choose "Paypal" when buying via Clickbank.
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      "I LOVE The Song! The Vibe Is Positive And Firm!" - Kymani Marley. (Son of Bob Marley)
      "Keep Up The Good Work!" Tony Lindsay - Lead Vocalist, Carlos Santana.

      "Very High Quality!" Jeremy Harding - Manager / Producer. Sean Paul.
      "They Are FANTASTIC!" - Willie Crawford.

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  • Profile picture of the author Cosmit
    Originally Posted by Mark Singletary View Post

    Many people prefer to sell digital goods through PayPal (versus let's say Clickbank) because Buyer Protection doesn't include digital goods.

    As of July 1, 2015 in the United States, this is no longer true. Digital goods are eligible for refund for 180 days after purchase.

    CB's refund policy is 60 days versus 180 days.

    Will you change to CB or other sources for selling digital goods now?

    Mark
    Why exactly would you switch to clickbank or other processors?
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  • Profile picture of the author Sid Hale
    An important thing to keep in mind here is that ClickBank is not a payment processor.

    They are a reseller.

    They are are bound by the same Paypal rules and/or merchant account rules as any other seller.
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    • Profile picture of the author yakim1
      Originally Posted by Sid Hale View Post

      An important thing to keep in mind here is that ClickBank is not a payment processor.

      They are a reseller.

      They are are bound by the same Paypal rules and/or merchant account rules as any other seller.
      With clickbank as a reseller, they must have a special contract with PayPal because ClickBank is really participating in what PayPal calls Aggregation, which is a violation of PayPal's Acceptable Use Policy.

      But with my personal dealing with PayPal, PayPal does not understand their own definition of Aggregation, especially in the Adaptive API Department.

      Best regards,
      Steve Yakim
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      • Profile picture of the author Sid Hale
        Sorry Steve...

        Originally Posted by yakim1 View Post

        With clickbank as a reseller, they must have a special contract with PayPal because ClickBank is really participating in what PayPal calls Aggregation, which is a violation of PayPal's Acceptable Use Policy.
        That's pure speculation on your part.

        CB offers PP as a payment option for the same reasons that any other vendor uses them. There is no reason to assume that CB even has anything with which to negotiate such a special contract.

        But with my personal dealing with PayPal, PayPal does not understand their own definition of Aggregation, especially in the Adaptive API Department.
        I don't know to what definition of aggregation you might be referring, but I suspect that it is your own understanding that is lacking.

        Rather than get an argument started... feel free to share any reference information you may have and maybe we can come to a mutual understanding of that information.

        Edit... I just pulled up the Paypal Acceptable Use Policy to have a look.
        Neither the word "aggregate" nor the word "aggregation" is used anywhere in that document.
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        • Profile picture of the author yakim1
          Originally Posted by Sid Hale View Post

          I don't know to what definition of aggregation you might be referring, but I suspect that it is your own understanding that is lacking.

          Rather than get an argument started... feel free to share any reference information you may have and maybe we can come to a mutual understanding of that information.

          Edit... I just pulled up the Paypal Acceptable Use Policy to have a look.
          Neither the word "aggregate" nor the word "aggregation" is used anywhere in that document.
          I'm sorry Sid, I referred you to the wrong set of rules. The rule is in the developer agreement for which ClickBank is the developer of their script. This is a quote from the aggregation part of this set of rules...

          Payment Rules for Your Applications.

          8.1 No Payment Aggregation. This applies to all Purchase Payments.

          8.1.1 All payments must flow directly from the Buyer's PayPal Account to the Seller's PayPal Account. Payments may not flow from the Buyer to a third party and then be transferred to the Seller.

          8.1.2 The Seller must be the Seller of Record and be identified as such to the Buyer in the context of the sale. Identification may consist of listing the Seller by full name in the sale terms, on a website used or referenced in the sale, or in other representations to the Buyer at or near the time of sale. Identifying an agent or intermediary in the sale transaction is not sufficient identification of the actual Seller.

          According to these PayPal rules, ClickBank is the third party. Since ClickBank is using their own PayPal account ClickBank becomes the Seller of Record. Maybe thier order page establishes them as the Seller of Record.

          But they are still the third party in the transaction because ClickBank does not own the products they are selling. Aggregation is a very fuzzy area and is not clearly defined. when does clear Aggregation become no Aggregation.

          I just wanted to let you know about Aggregation because I'm going rounds with PayPal now because they are saying a micro second pause in one of my apps is Aggregation. Developers can apply for special consideration for their Apps from PayPal.

          Best regards,
          Steve Yakim
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          • Profile picture of the author Sid Hale
            Hey Steve,

            I think I understand your quandry, now.

            Originally Posted by yakim1 View Post

            8.1.1 All payments must flow directly from the Buyer's PayPal Account to the Seller's PayPal Account. Payments may not flow from the Buyer to a third party and then be transferred to the Seller.

            8.1.2 The Seller must be the Seller of Record and be identified as such to the Buyer in the context of the sale. Identification may consist of listing the Seller by full name in the sale terms, on a website used or referenced in the sale, or in other representations to the Buyer at or near the time of sale. Identifying an agent or intermediary in the sale transaction is not sufficient identification of the actual Seller.

            According to these PayPal rules, ClickBank is the third party. Since ClickBank is using their own PayPal account ClickBank becomes the Seller of Record. Maybe thier order page establishes them as the Seller of Record.
            Your understanding of Clickbank's role is flawed.
            They are NOT a third party in the transaction. They are the retailer, and besides the customer... the ONLY party in the transaction.

            The product creator (owner) gives Clickbank resale rights to that product as a condition of listing their product in their marketplace. The product creator is totally removed from the purchase transaction. The sales transaction is never recorded in his/her Paypal account (he doesn't even have to have a Paypal account).

            Clickbank requires the merchant to maintain a sales page and a thank you page (making the merchant an advertiser and at the same time a fulfillment house), but that does not involve the payment processor. Listing a product on Clickbank makes them the seller in all respects by virtue of the resale license granted at the time of the listing.

            But they are still the third party in the transaction because ClickBank does not own the products they are selling.
            "Ownership" is not required, nor is this term used in the rules you quoted above. The merchant gave them resale rights (a legally binding license) and removed themselves from the relationship and the transaction.
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  • Profile picture of the author Curtis2011
    Most sellers shouldn't have to worry about refunds if they are selling digital goods. There's very little cost of production involved in selling digital goods (or none at all) and thus a refund doesn't cost anything except the lost revenue from the sale.

    And if your products are high quality, and your ad copy is not deceiving, you shouldn't have a high refund rate anyways. The refund rate of my ebook is extremely low, somewhere around 2% or so. It's small enough that I don't have to worry about it at all.
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  • Profile picture of the author LillyR
    Originally Posted by Mark Singletary View Post

    Digital goods are eligible for refund for 180 days after purchase.
    This is fantastic news if true since I am mostly a buyer. Under many circumstances, 60 days is simply not enough time to fully extrapolate everything you need to know after making a purchase. I suppose this is bad news for Paypal merchants who will now be held to account longer, making potential refunds a bigger problem.
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    • Originally Posted by LillyR View Post

      This is fantastic news if true since I am mostly a buyer. Under many circumstances, 60 days is simply not enough time to fully extrapolate everything you need to know after making a purchase. I suppose this is bad news for Paypal merchants who will now be held to account longer, making potential refunds a bigger problem.
      Are you saying that you don't just want to have 30 or 60 days to inspect the overall quality of a product, let's say a needle pointing course, but you want to be able to see if you can learn to needle point according to the lessons in the course, but if you don't manage to "get it" in 180 days, then the product is worthy of a refund?

      If that's what you are saying, then this is actually helpful to marketers who would wonder why it sometimes takes a month or two before a refund is requested.

      If that's not what you are saying, then please elaborate on what you meant by: "not enough time to fully extrapolate everything you need to know " and why you as a buyer would need 180 days?
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      "I LOVE The Song! The Vibe Is Positive And Firm!" - Kymani Marley. (Son of Bob Marley)
      "Keep Up The Good Work!" Tony Lindsay - Lead Vocalist, Carlos Santana.

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      • Profile picture of the author bernmac
        Originally Posted by stoltingmediagroup View Post

        Are you saying that you don't just want to have 30 or 60 days to inspect the overall quality of a product, let's say a needle pointing course, but you want to be able to see if you can learn to needle point according to the lessons in the course, but if you don't manage to "get it" in 180 days, then the product is worthy of a refund?

        If that's what you are saying, then this is actually helpful to marketers who would wonder why it sometimes takes a month or two before a refund is requested.

        If that's not what you are saying, then please elaborate on what you meant by: "not enough time to fully extrapolate everything you need to know " and why you as a buyer would need 180 days?
        H i I have had a lot of Bad sellers Never reply to your emails
        you all talking about Refund Haven Are bad News we have purchase products and Services
        and within a 20 Days after we access product/Service and do go back to use it the Links are no available, a lot of you sellers do not and Avoid getting back, and what you say on a Sales page and the end product is not what you thought you was Purchasing ,
        Serve all the Crooks Right!Sell good products and give back good Service you will not have to Worry about Refund Havens Be truthfully and be real and Honest and you will have no Problems with RH"S Good and Paypal Paypal help me get a refund form some Crooks of over $2 ,900
        From the same Online Crooks you guys are trying to Protect the online crooks that are all over the Net
        We are all Busy and sometime we have purchase 2/3 Products/Service in a day or week and forget we have them that is what i am saying We then to forget things we already purchase all waiting on our Hard Drive, That is what i am saying do not try and Twist it. Honest Sellers have nothing to worry about if Fair, they will get the same buyers back .You try and sell Good Products and Services
        and you yourself will be Safe from R-H"S
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    • Profile picture of the author Mailnoi
      Originally Posted by LillyR View Post

      This is fantastic news if true since I am mostly a buyer. Under many circumstances, 60 days is simply not enough time to fully extrapolate everything you need to know after making a purchase. I suppose this is bad news for Paypal merchants who will now be held to account longer, making potential refunds a bigger problem.
      That's true and I agree as a buyer, sometimes it's needed more than 30 or 60 days. Some marketers think that their customers doesn't have any better thing to do than testing their products. And some products have a long learning curve and also a longer developing process.
      I've realized that if an IMer found a loop or a stratagy that worked OK
      once, then they've get a "proof" of his results, and immidiately makes a "product" without testing in other market conditions.
      IMers are always stressed to get "more products to sell" in order to fit their way of living and selling.
      Another thing that I been experiencing as a buyer is that I'm being bombed by tons of "rubish marketing products".

      Nowadays to find a " really new" product is almost a miracle. 90% of them are the same old crap with a new envelope and a very good landing page.

      We all know these tricks. They have corrupted the market and the increased refunds rate are the result.

      Trust is easy to break when you promised "heaven" in the landing page using synonims or marketing "euphemisms". A seller can justify saying..."I didn't say exactly that promise" but he knows or his copywriter knows that they really wanted to insinuate it. That's another form of cheating "my freind"...and buyers have they're own right to be defended from the "soft lies".
      When I want "sweet little lies" I do prefer to listen to Flewood Mc.

      In France one writer packed his book with a "doll" of President Sarkossy with all the "needles for vodoo him". He sold a lot!

      Maybe SEO marketers are "missing an opportunity here to market with this strategy....I would like not to be Mat Cutts!

      If IM and eCommerce has to be a freeland with no strong regulations I'm gonna buy to the mall again.
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      • Profile picture of the author RecessionPROOF
        In my experience, the loop hole with Paypal is almost always the fact that they favor the buyer, not the seller, always has, always will, and this just opens the door to more of the same treatment against sellers while buyers get an open door to claim they never recieved item, as they do with delivered merchandise. Even when you have supposed proof of delivery, as in the post office claims it was delivered, Paypal still hits the seller with chargeback, so with this long standing policy of buyers always being right, I feel those selling digital are in for a rude awakening if you use Paypal.

        I don't care what you are selling, the greatest product in the world, fairly priced, whatever, you as a seller are going to get screwed in the end with Paypal. Happened to me several times, post office says delivered, no signature on delivery, forget about it, item could have been stolen from mailbox or front step if a home, so the proof item was delivered is mute, all one has to do is dispute with Paypal and they hit the sellers account immediately. Imagine how bad it will get with digital deliveries which can also be unreliable, this too has happened many times after a purchase, I never recieved anything, so just as I disputed for non delivery, so too will others, even if they did receive digital download, so easy to play the system is what I am saying, just as it is with CB.

        Success to all,
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        • Profile picture of the author Sid Hale
          Hi,

          Originally Posted by RecessionPROOF View Post

          In my experience, the loop hole with Paypal is almost always the fact that they favor the buyer, not the seller, always has, always will, and this just opens the door to more of the same treatment against sellers while buyers get an open door to claim they never recieved item, as they do with delivered merchandise. Even when you have supposed proof of delivery, as in the post office claims it was delivered, Paypal still hits the seller with chargeback, so with this long standing policy of buyers always being right, I feel those selling digital are in for a rude awakening if you use Paypal.
          Your experience is apparently being influenced by your lack of understanding and/or ability to properly defend your rights per the Acceptable Use Policy.

          First, there are only 3 ways that a buyer can get a refund from your Paypal account.

          1. Refund Request Direct to Seller
          The buyer can request a refund directly from the seller via email, their help desk, etc. At that point the. seller should certainly issue the refund if it is within the terms of the original sale. Note that this is the seller's decision and is not a forced refund.

          2. Paypal Dispute
          While the buyer should have attempted to use method 1 (above) prior to filing a dispute with Paypal, buyers cannot be expected to be as familiar with the workings of Paypal as a regular seller should be. A dispute provides 20 days for the seller and buyer to resolve the situation unless the dispute is escalated to a claim.

          3. Credit Card Chargeback
          If the buyer (who may/may not even have a Paypal account) disputes the transaction via the credit card company the credit card company will file a chargeback with Paypal (or any other payment processor).

          With regard to #2 above, assuming that the refund request is outside your warranty provisions, a simple response to Paypal via the resolution center 1) reminding them that there is no buyer protection for digital purchases (intangibles) and 2) pointing out the terms of your sale (i.e. a link to your sales page with guarantee/warranty statement) has always, in my experience, been sufficient to prompt Paypal's denial of the dispute.

          With regard to #3 above, Paypal is less able to fight a chargeback because of the terms that credit card companies have with all credit card merchants. However, IF you can adequately document the customer's use of your product/service (i.e. date last logged into a membership area, frequency of access, or helpdesk correspondence indicating use of your product/service and the IP address associated with such usage), you can supply this information to Paypal and, in my experience, they will dispute the chargeback with the credit card provider. Whether they win or lose that dispute is very much dependent on what information you can provide to Paypal to warrant a dispute of the chargeback.

          It is important to note that Paypal is not alone in their position with the credit card companies with regard to chargebacks. It bears repeating... All payment processors are subject to the final decision of the credit card company with regard to a buyer chargeback!

          Happened to me several times, post office says delivered, no signature on delivery, forget about it, item could have been stolen from mailbox or front step if a home, so the proof item was delivered is mute, all one has to do is dispute with Paypal and they hit the sellers account immediately.
          Hmmm. Did it ever occur to you that the parcel delivery services (even the one owned/operated by the federal government) offer "signature on delivery" for a reason? You made the decision not to pay for the extra processing for the acquisition/storage of a signed receipt. You imagine that is somehow Paypal's fault?
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          • Profile picture of the author RecessionPROOF
            Hmmm. Did it ever occur to you that the parcel delivery services (even the one owned/operated by the federal government) offer "signature on delivery" for a reason? You made the decision not to pay for the extra processing for the acquisition/storage of a signed receipt. You imagine that is somehow Paypal's fault?

            Did I say it was Paypals fault, no, I said they do not take word of USPO on Priority delivery confirmations, the buyer stated they never received item, I provided USPO confirmation, didn't matter, I lost out and had to refund buyer. Sure, signature would offer more protection, lesson learned, but the point is that Paypal sided with suspected liar buyer, and P.O. confirmation was useless, so my point is why side with buyer Paypal?
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            • Profile picture of the author Sid Hale
              OK, I'll concede.

              You didn't actually say that it was Paypal's fault.

              Originally Posted by RecessionPROOF View Post

              Did I say it was Paypals fault, no
              But I don't think that I inferred that from your statement, either:

              Happened to me several times, post office says delivered, no signature on delivery, forget about it, item could have been stolen from mailbox or front step if a home, so the proof item was delivered is mute, all one has to do is dispute with Paypal and they hit the sellers account immediately.
              You obviously did not consider yourself responsible, and I think the implication was that Paypal should have sided with you, regardless of the fact that you didn't request Signature Confirmation.
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  • Profile picture of the author dvduval
    I mostly sell on subscription basis now, and really have ZERO refunds. I have moved some of my business to credit card processing outside of paypal.
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  • Profile picture of the author Robert Puddy
    Originally Posted by Mark Singletary View Post

    Many people prefer to sell digital goods through PayPal (versus let's say Clickbank) because Buyer Protection doesn't include digital goods.

    As of July 1, 2015 in the United States, this is no longer true. Digital goods are eligible for refund for 180 days after purchase.

    CB's refund policy is 60 days versus 180 days.

    Will you change to CB or other sources for selling digital goods now?

    Mark
    Of course the downside to this change is that affiliates will now have to wait 180 days before they get paid their commissions, in case there is a refund request.

    I can see that causing some pain in support desks around the net
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  • Profile picture of the author HostZealot
    PayPal have always been, remains and, hopefully, will be in the future one of the most popular means of payments for our services. People go to us for a reliable hosting service and they receive it. They want their payments to be processed by a reliable payment processor - and they receive it. We rarely see refund requests and chargebacks are even more rare, so we support PayPal with both our hands.
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  • But at least if you can still fight a dispute or charge back and win then it's ok.

    Just hope Paypal is doing what's best for business....
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  • Profile picture of the author Mark Singletary
    Sid, that part you quoted of mine was directed to Raydal above who said that his CB refunds were much higher than PayPal's. My point was that was true, partially I think, because everyone knew PP didn't refund, for the most part, on digital goods but CB did.

    So that was talking about the past and up until the change happens. When that happens, I agree with you about CB's refund policy changing.

    Sorry for the confusion.

    Mark
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  • Profile picture of the author Robert999
    Originally Posted by Mark Singletary View Post

    Many people prefer to sell digital goods through PayPal (versus let's say Clickbank) because Buyer Protection doesn't include digital goods.

    As of July 1, 2015 in the United States, this is no longer true. Digital goods are eligible for refund for 180 days after purchase.

    CB's refund policy is 60 days versus 180 days.

    Will you change to CB or other sources for selling digital goods now?

    Mark
    I think if your product is good then you should not worry about this. Some people will ask for refund whether there is 1-day or 180-days refund policy. But these people are only 1-3% according to my experience.
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  • Profile picture of the author emptee
    I think there's potentially a bigger problem here which hasn't been mentioned..

    PayPal may freeze/hold funds for the full 180 days in order to protect themselves, should they need to issue a refund.

    I myself am not really worried about refunders at all - my refund rate is around 2% or so.. But the possibility of PayPal holding my cash is another story..

    On a side note, I also noticed a significantly higher refund rate on CB - I think the main reason for this is that dishonest buyers can request a refund without having to request it from the buyer (as they would when purchasing from JVZoo or WarriorPlus). I think this seperation of buyer and seller allows them to feel less dishonest about their behaviour.. much the same as music/movie pirates would be pretty uncomfortable walking into a bricks and mortar store and taking off with a DVD/CD!

    Cheers,
    Michael
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    • Profile picture of the author Sid Hale
      Originally Posted by emptee View Post

      I think there's potentially a bigger problem here which hasn't been mentioned..

      PayPal may freeze/hold funds for the full 180 days in order to protect themselves, should they need to issue a refund.

      I myself am not really worried about refunders at all - my refund rate is around 2% or so.. But the possibility of PayPal holding my cash is another story..
      That probably wasn't mentioned here because it's not news.

      Paypal has been able to freeze an account for 180 days since forever (maybe even since their inception). It has nothing to do with buyer protection and everything to do with the elimination of online fraud and criminal activity.

      BTW - All online payment processors have the same/similar policies with regard to freezing an account.

      On a side note, I also noticed a significantly higher refund rate on CB - I think the main reason for this is that dishonest buyers can request a refund without having to request it from the buyer (as they would when purchasing from JVZoo or WarriorPlus).
      ??????

      Where did you get that?

      Dishonest buyers through JVZoo/WarriorPlus have NO requirement to refund through those platforms. With JVZoo/WarriorPlus/Clickbank/(and any other you care to name), these buyers can simply file a Paypal dispute or a chargeback (if they used a credit card to purchase).
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      • Profile picture of the author emptee
        Originally Posted by Sid Hale View Post

        That probably wasn't mentioned here because it's not news.

        Paypal has been able to freeze an account for 180 days since forever (maybe even since their inception). It has nothing to do with buyer protection and everything to do with the elimination of online fraud and criminal activity.

        BTW - All online payment processors have the same/similar policies with regard to freezing an account.



        ??????

        Where did you get that?

        Dishonest buyers through JVZoo/WarriorPlus have NO requirement to refund through those platforms. With JVZoo/WarriorPlus/Clickbank/(and any other you care to name), these buyers can simply file a Paypal dispute or a chargeback (if they used a credit card to purchase).
        Hi Sid,

        Oh yea for sure they've already been able to - but if they are, by policy, promising the ability to refund buyers up to 180 days post-purchase.. then they'll be A LOT more interested in making sure they've got the asses covered good and proper! Always follow the money (or liability). It always tells the truth..

        As for JVZoo/WarriorPlus - yes, buyers can simply go to PayPal or their credit card company. But.. they don't. At least, not often (I've had this happen a grand total of... once).. But, should they want to get a refund via JVZoo or WarriorPlus, there is no method for them to do so without contacting the vendor, keeping them more honest.. In Clickbank on the other hand, the buyer NEVER needs to contact the vendor in order to get a refund.

        Cheers,
        Michael
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    • Profile picture of the author Raydal
      Originally Posted by Mark Singletary View Post

      Ray,

      Part of my point here is that I think the reason for this difference is that many consumers know that PP wouldn't refund their money on an ebook but CB would. So the CB refund rate was much higher. Now that they get the protection with PP, I believe refund rates will be higher with PP. PP will potentially become a refund haven.


      Mark

      I think this is a HUGE part of the reason why:

      Originally Posted by emptee View Post

      On a side note, I also noticed a significantly higher refund rate on CB - I think the main reason for this is that dishonest buyers can request a refund without having to request it from the buyer (as they would when purchasing from JVZoo or WarriorPlus). I think this seperation of buyer and seller allows them to feel less dishonest about their behaviour.. much the same as music/movie pirates would be pretty uncomfortable walking into a bricks and mortar store and taking off with a DVD/CD!

      Cheers,
      Michael
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  • Profile picture of the author Angshuman Dutta
    Does it really matter if its 60 days or 180 days?

    If my customer is not happy with my product, chances are I don't want him as a customer in the first place! So, I'll just refund him and sleep peacefully and well yes focus on "more important issues".

    Yes, there are some who are always loking for free lunch...but I've been lucky enough to not encounter a lot of them over the last 15+ years. For them it doesn't matter what the rule book says...they'll always look for free products.

    I sell on both CB and Paypal and I don't think I'd be changing that because of the refund period changes.
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    • Profile picture of the author yakim1
      Originally Posted by Angshuman Dutta View Post

      Does it really matter if its 60 days or 180 days?
      Yes, it does matter. With PayPal's Adaptive API the maximum time that delayed payments will function is now 90 days which is half the time that the customer can ask for a refund. This is an added responsibility for the vendor when Chained Payments are used.

      I believe Warrior Plus and JVZoo have their delayed payments set for 60 days. I have my system set for 55 days.

      Unless the affiliate/vendor platform takes special security precautions to prevent affiliate fraud, this can open the door a little wider for fraudulent affiliates.

      Best regards,
      Steve Yakim
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    • Profile picture of the author Robert Puddy
      Originally Posted by Angshuman Dutta View Post

      Does it really matter if its 60 days or 180 days?

      If my customer is not happy with my product, chances are I don't want him as a customer in the first place! So, I'll just refund him and sleep peacefully and well yes focus on "more important issues".

      Yes, there are some who are always loking for free lunch...but I've been lucky enough to not encounter a lot of them over the last 15+ years. For them it doesn't matter what the rule book says...they'll always look for free products.

      I sell on both CB and Paypal and I don't think I'd be changing that because of the refund period changes.
      It matters to affiliates of products, because as I mentioned above a lot of them will be pissed they will now have to wait 6 months to get paid instead of 3 months.
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      • Profile picture of the author nicheblogger75
        Originally Posted by Robert Puddy View Post

        It matters to affiliates of products, because as I mentioned above a lot of them will be pissed they will now have to wait 6 months to get paid instead of 3 months.
        Where do affiliates have to wait 3 months to get paid? I am mostly an affiliate and I get instant commissions on Warrior Plus & JVZoo, and weekly payments from Clickbank and several CPA networks I belong to.

        Maybe I'm not understanding your statement. I'm just not aware of any affiliate platforms that make you wait 90 days to get paid. I guess if you get approved on delayed commission at JVZoo you could be made to wait that long, but most affiliates like myself who have sales into the thousands almost always get instant commissions on JVZoo & Warrior Plus.

        Also, I thought the current time allowed to file a dispute on a product at PP is 45 days? I could be wrong. It may have changed to 60 days and I'm just not aware of that.
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        • Profile picture of the author Robert Puddy
          Originally Posted by nicheblogger75 View Post

          Where do affiliates have to wait 3 months to get paid? I am mostly an affiliate and I get instant commissions on Warrior Plus & JVZoo, and weekly payments from Clickbank and several CPA networks I belong to.

          Maybe I'm not understanding your statement. I'm just not aware of any affiliate platforms that make you wait 90 days to get paid. I guess if you get approved on delayed commission at JVZoo you could be made to wait that long, but most affiliates like myself who have sales into the thousands almost always get instant commissions on JVZoo & Warrior Plus.

          Also, I thought the current time allowed to file a dispute on a product at PP is 45 days? I could be wrong. It may have changed to 60 days and I'm just not aware of that.
          So you sell one of my products, I pay the commissions after 60 days, then 60 days later the customer asks for refund.

          I already paid you, now I have to refund the original sale. So as the vendor I'm out of pocket

          That may come out in the wash if your an affiliate that makes regular sales, but as many affiliates are not in that category. Its not in my interest to pay commissions until the refund deadline is up.

          And there are plenty of products out there that run their own affiliate programs, JVzoo and CB are very small players in the scheme of things.
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          • Thanks for the info

            I've never lost a dispute, but this is good to know.

            I usually call Paypal whenever I have one, and the case is usually settled by the time I hang up.

            I as long as it's not on the same note as CB's no questions asked, money back guarantee, we still have the chance to make our case
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          • Profile picture of the author nicheblogger75
            Originally Posted by Robert Puddy View Post

            So you sell one of my products, I pay the commissions after 60 days, then 60 days later the customer asks for refund.

            I already paid you, now I have to refund the original sale. So as the vendor I'm out of pocket

            That may come out in the wash if your an affiliate that makes regular sales, but as many affiliates are not in that category. Its not in my interest to pay commissions until the refund deadline is up.

            And there are plenty of products out there that run their own affiliate programs, JVzoo and CB are very small players in the scheme of things.
            I didn't realize you were referring to private/vendor run affiliate programs. I can understand what you mean now. If an affiliate were to make a sale of your product and you pay the affiliate their commission instantly, and then later on the customer asks for a refund, your only recourse then would be to contact the affiliate and ask for the commission back. If the affiliate refused, couldn't you dispute the commission payment you sent them? I see how that could get real messy, though.

            I've always promoted only from the bigger networks like JVZoo, Warior Plus, Clickbank, MaxBounty, RapBank, etc. I know that with JVZoo for instance, if a vendor has to do a refund, it automatically pulls the commission out of my PP account and sends it back to the vendor as soon as the vendor refunds the customer.

            I can see how this may lead to problems with affiliates who don't make that many sales, because if they do not have the money available in their PP account, I'm not sure if the vendor would be out of luck or if the affiliate's PP account would then go into the negative.

            I guess that's why it's SO important to have a good relationship and to know the affiliates who you give instant commissions to really well.
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  • Profile picture of the author Harvey Segal
    Originally Posted by Mark Singletary View Post

    CB's refund policy is 60 days versus 180 days.
    Note that ClickBank's refund policy is no longer a mandatory 60 days.

    A vendor can choose not to offer a refund or to use any time period up to 60 days

    See
    https://accounts.clickbank.com/terms.html
    Your Vendor Return Policy must fall within the range of "no refunds" to allowing refunds or replacements up to sixty (60) days after the date of purchase (i.e., a 30-day refund policy or a 45-day refund policy would each be acceptable, if appropriate). If You believe that a Vendor Return Policy longer than sixty (60) days after the date of purchase is appropriate for Your Products, ClickBank will review such a request, and in its sole discretion, may allow an extended Vendor Return Policy. You can only provide such an extended Vendor Return Policy with ClickBank's written consent.


    There seems a slight conflict with this clause from

    https://accounts.clickbank.com/return_policy.html
    Vendors may request a return, on behalf of a customer, of any purchase up to 90 days after the date of the ClickBank customer's purchase.
    Maybe at a guess it means that even if your stated policy is 60 days (i.e you did not request or get agreement on a longer policy) you can still request a 90 day return on an individual case.

    .
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    • Profile picture of the author emptee
      Originally Posted by Harvey Segal View Post

      Note that ClickBank's refund policy is no longer a mandatory 60 days.

      A vendor can choose not to offer a refund or to use any time period up to 60 days

      See
      https://accounts.clickbank.com/terms.html
      Your Vendor Return Policy must fall within the range of "no refunds" to allowing refunds or replacements up to sixty (60) days after the date of purchase (i.e., a 30-day refund policy or a 45-day refund policy would each be acceptable, if appropriate). If You believe that a Vendor Return Policy longer than sixty (60) days after the date of purchase is appropriate for Your Products, ClickBank will review such a request, and in its sole discretion, may allow an extended Vendor Return Policy. You can only provide such an extended Vendor Return Policy with ClickBank's written consent.


      There seems a slight conflict with this clause from

      https://accounts.clickbank.com/return_policy.html
      Vendors may request a return, on behalf of a customer, of any purchase up to 90 days after the date of the ClickBank customer's purchase.
      Maybe at a guess it means that even if your stated policy is 60 days (i.e you did not request or get agreement on a longer policy) you can still request a 90 day return on an individual case.

      .
      Interesting find - I think you may be right.. perhaps after 90 days they "close" the transaction and dissallow any further changes..

      Cheers,
      Michael
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  • Profile picture of the author samng
    I do not see it impacting the business so long as the vendor provides quality products. People who ask for refunds will always be the same few anyway.
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    • Profile picture of the author discrat
      Personally, it is a non issue for me. As one member said that if you are selective in what you promote everything will take care of itself !


      - Robert Andrew
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  • Profile picture of the author Terry Jett
    I cannot remember how long we have used Paypal, been years. Very little issues and if someone asks for a refund they normally get it.

    There are some exception to those rules though:

    1) If the person asking for a refund has been a "repeater", they may or may not get it.
    2) If the person did not contact us first and just filed a complaint we call up our dedicated account manager and talk about it. The account manager reviews the person's past actions and if he determines they are serial refunders case closed (sometimes their account closed too). Many times if the buyer files a complaint before contacting us, it is a closed case because account manager knows we support our products.

    99% of the time if a person wants a refund, they get it. I do not want anyone using a product they do not like, that is bad business.

    Since we protect most high ticket items, once the refund has been processed the product cases to work anyway.

    We sell very little on forums or other similar places and think this results in much lower refund requests. Don't get me wrong, nothing wrong with selling on forums (occasionally do it) and not saying that. Mostly our reason it just does not fit our business model.
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  • Profile picture of the author depotgang
    Clickbank never questions a customers refund request...If its less the 60 days all they have to do is forward their Clickbank receipt to refunds@clickbank..... and boom they get a refund.

    Fact is if you request a refund FOR your customer clickbank almost always honors it... up to I believe 90 days...

    So the change at Paypal is only a problem if you dont deliver or you have crap products.
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  • Profile picture of the author Rustyknuckles
    If your sales proposition properly describes your product; your returns should be small. People need to get what is promised and perceive fair value exchange. If you over promise and under deliver you will get high refunds and better go back to drawing board. Paypal is raising the bar and I think it will remove skunks that hurt our industry. And of course you will have that small percent of dishonest buyers that screw you, but look at it as the cost of doing business and focus on the 99% of the honest folks out there.
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  • Profile picture of the author amberdog
    It would be nice to be able to install a "Kill switch" piece of programming that would turn off the product after the 60 or 180 day refund window if a refund is issued.
    All "good customers" would receive an update to their product.

    I say this with tongue in cheek :-)
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  • Profile picture of the author Claire Koch
    people ask for refunds this is not much different then paypal always was. You dont get rewarded from paypal for not giving refunds and being a moral seller. many will forget thy bought if they have that long anyways imho. thatswhy giving refunds for up to a year was always a good idea too.
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  • Profile picture of the author tecHead
    PayPal vendors might wanna look a little deeper into PayPal policies. I've been with them since they were x.com and love them even more today than before. They don't 'advertise' it, but PayPal is much more partial to their vendors than the buyers; as they feel that with no vendors there's no buyers.

    The dispute system was put in place to allow for the appearance of a "fair trial"; for the most part, this is so. Yet, PayPal allows for the vendor to put things in place that help any dispute go in their favor. Like your refund policy. If you DON'T have one in place, that's a strike against you, as a vendor. Or if you DON'T have a clearly identifiable linear path to your Support dept.; that counts against you, as a vendor.

    Just think like a CEO and not a 'worker' and you'll better understand PayPal's moves. I've not once seen them (or known them to) make a move that wasn't for the greater good and longevity of the company on a whole; (this includes vendors).

    Here is an old post I did just for this...
    http://www.warriorforum.com/main-int...-disputes.html
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    • Profile picture of the author Mark Singletary
      This may be true. However, they go out of their way to state that with the new policy, there is zero seller protection on digital goods - only buyer protection. They do indicate that on a product not received claim, the vendor can provide proof that the product was downloaded and it may help their chances for winning a dispute.

      On the not as described claims there are no such indications. I think this would cover most of the complaints (see dozens/hundreds on this board) where people say they did the work as stated in the product but it did not work. I imagine most claims for refunds will be in this area.

      And how will vendors prove their stuff works as stated in the sales letter? It's one thing when it's a radio - another one can be shipped out. It's another thing when you're talking about getting 67% more optins or 45,000 new visitors or hundreds of dollars in new cash because of X, Y, and Z.

      Several people have said to "just put out quality products and it will be okay." We'll see if it's all okay when the vendor has to prove their secret methods work. Because if their secret method does NOT work for the customer, then the product is NOT as described and is refundable for 6 months under the new policy by the way I read this.

      Now how they implement it all in real life is yet to be seen and we'll only know once it starts happening.

      Mark

      Originally Posted by tecHead View Post

      PayPal vendors might wanna look a little deeper into PayPal policies. I've been with them since they were x.com and love them even more today than before. They don't 'advertise' it, but PayPal is much more partial to their vendors than the buyers; as they feel that with no vendors there's no buyers.

      The dispute system was put in place to allow for the appearance of a "fair trial"; for the most part, this is so. Yet, PayPal allows for the vendor to put things in place that help any dispute go in their favor. Like your refund policy. If you DON'T have one in place, that's a strike against you, as a vendor. Or if you DON'T have a clearly identifiable linear path to your Support dept.; that counts against you, as a vendor.

      Just think like a CEO and not a 'worker' and you'll better understand PayPal's moves. I've not once seen them (or known them to) make a move that wasn't for the greater good and longevity of the company on a whole; (this includes vendors).
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  • Profile picture of the author Marked09
    Personally, I it doesn't really matter which platform you use, if you don't make false claims on your sales page and you got good quality product then you don't need to be afraid of getting a refund.

    If what you promised on the sales page is what really you delivered then I don't see any reason why people will ask for a refund.
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  • Profile picture of the author BIG Mike
    Banned
    [DELETED]
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    • Profile picture of the author Sid Hale
      Mark,

      I looked earlier and couldn't find anything either.

      It didn't totally surprise me, as I really wouldn't expect them to publish "future" policy guidelines in the current policy statements. The "legalese" involved would quickly become overwhelming.

      I just assumed that I had overlooked an email from Paypal.

      I've since searched high and low and cannot find any announcement from Paypal that sounds like the source of your original statements. Can you point us to a Paypal published document? Some specific wording they have published?
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      • Profile picture of the author Mark Singletary
        My bad on the terminology. In my mind a refund request, directed at the payment processor or to the vendor is basically a dispute and a dispute is opened because someone wants a refund. But I can see where it's technically different things.

        The new US user agreement including the new Buyer Protection for digital goods is located here:https://www.paypal.com/us/webapps/mp...le.x=en_US#r13

        It's about halfway down the page. The top is the current user agreement and the bottom is the future one.

        Mark

        Originally Posted by BIG Mike View Post

        Mark, maybe I missed something here, but in reading through the US and EU PayPal Legal Agreements, I couldn't find this. The 180 days applies to customers opening a "Dispute", which is being increased from 60 days.
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  • Profile picture of the author Nikhil V Nair
    What percentage of people will ask for a refund
    in the 60-180 period?

    How many people even remember they bought
    this product in the 60-180 period?


    Other than the refund period battle between Clickbank Vs Paypal,
    Is this a big issue?
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    • Originally Posted by Nikhil V Nair View Post

      What percentage of people will ask for a refund in the 60-180 period? How many people even remember they bought this product in the 60-180 period? Other than the refund period battle between Clickbank Vs Paypal, Is this a big issue?
      Times are tough!

      Even honest people are starting to do sh.. they normally wouldn't do. Your customers asking for a refund, (because you know, the 3D eBook cover on the sales page looked like a real book)
      or some other made up reason, can probably be expected more and more in these days.

      Most of the higher volume vendors in here are already familiar with charge backs on a daily basis.
      Some come in months later from the date of purchase. I would think this will also increase.

      (My statements are just my personal prediction, not based on any stats.)

      Interesting article here: Chargeback fraud - Wikipedia, the free encyclopedia
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  • Profile picture of the author Van Dam
    It makes sense for them to offer such protection with the amount of junk that is being sold these days but as mentioned already, if you are selling a good and honest product then this shouldn't worry you. Good to know though.
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