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Don't these sellers worry about losing their Paypal accounts?

by perneali45
8 replies
Several "make money online" offers generate 5,000+ sales, but they also have 10+% refund rates.

The math explains why these sellers do it...

Option 1: Sell 500 copies with "tame" ad copy. 5% Refund rate = 25 refunds. 475 sales left.

Option 2: Sell 5000 copies with "hype-y" ad copy. 10% Refund rate = 500 refunds. 4500 sales left.

"Option 2" is almost 9 times as profitable.

BUT, don't these sellers worry their Paypal / Stripe / Merchant account will get shut down for this?

If this happens, they wouldn't be able to generate further income.

What do you think about this?
#accounts #losing #paypal #sellers #worry
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  • Profile picture of the author Profit Traveler
    Banned
    These days more can be made on the back end with a low price upfront.

    Paypal may become more concerned with chargebacks/stolen cards used scenarios.
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  • Profile picture of the author agmccall
    Stop wasting your time worrying about other people and their business practices

    al
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    "Opportunity is missed by most people because it is dressed in overalls and looks like work." Thomas Edison

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  • Profile picture of the author TobiMDD
    They should rather worry about their moral lol
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  • Profile picture of the author WF- Enzo
    Administrator
    Good business practice is to mind your own business

    Originally Posted by perneali45 View Post

    Several "make money online" offers generate 5,000+ sales, but they also have 10+% refund rates.

    The math explains why these sellers do it...

    Option 1: Sell 500 copies with "tame" ad copy. 5% Refund rate = 25 refunds. 475 sales left.

    Option 2: Sell 5000 copies with "hype-y" ad copy. 10% Refund rate = 500 refunds. 4500 sales left.

    "Option 2" is almost 9 times as profitable.

    BUT, don't these sellers worry their Paypal / Stripe / Merchant account will get shut down for this?

    If this happens, they wouldn't be able to generate further income.

    What do you think about this?
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    • Profile picture of the author perneali45
      Originally Posted by agmccall View Post

      Stop wasting your time worrying about other people and their business practices

      al
      Originally Posted by WF- Enzo View Post

      Good business practice is to mind your own business
      I agree, and I'm doing that. :-)

      I guess the direct question I should have asked is:

      "What refund rate do payment processors find acceptable?"

      Thanks!
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      • Profile picture of the author perneali45
        I just found an article with a very healthy discussion on the topic:

        yudkin.com/refunds.htm

        And yes, it's by a fellow Warrior forum member (Marcia Yudkin).

        The article was written 15 years ago, but the points in it are still valid.
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        • Profile picture of the author Claude Whitacre
          Originally Posted by perneali45 View Post

          I just found an article with a very healthy discussion on the topic:

          yudkin.com/refunds.htm

          And yes, it's by a fellow Warrior forum member (Marcia Yudkin).

          The article was written 15 years ago, but the points in it are still valid.
          I read Marcia's article.

          There are even far more extreme examples.
          Some "Make money" Gurus sell systems for thousands of dollars. And a large part of the pitch is "You can cancel within 30 days. No Risk".

          I know a popular real estate guru that typically got 30-40% refunds on that offer. But the net sales were far greater than when he didn't push the guarantee. This is math. And some marketers care about the math.

          I've recently seen a few "Make money" pitches on webinars, where the guarantee is the central selling point. My guess is that about half the people cancel. But they probably sell many times as many than if they did a real features and benefits presentation.

          It's whatever you are comfortable with.

          Me? A refund ruins my day. I take each one personally. It angers me. So I do everything I can to make sure that they don't ever think about refunds, or are unhappy with what they get.

          Out of about a thousand sales a year, (at $400-$1,000 each) we get about one refund request. We make it easy to get a refund, if that's what they want.

          An if you are selling online, and make it really easy to ask for a refund, and explain that in your presentation, you'll probably never have a problem with your processors.

          You just don't want a customer calling their VISA supplier....claiming fraud.


          One thing you need to understand. There are buyers out there that habitually buy something and then get a refund. There are far more present in the "Information" trade.

          Some trainers and Guru's just make it plain that there are no refunds. They repeat it on the order form, and you have to check a box saying you understand that there are no refunds if you buy.

          I think that will be my approach when I sell sales training programs. Less sales. Less hassles.
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  • Profile picture of the author Claude Whitacre
    Originally Posted by perneali45 View Post

    Several "make money online" offers generate 5,000+ sales, but they also have 10+% refund rates.

    The math explains why these sellers do it...

    Option 1: Sell 500 copies with "tame" ad copy. 5% Refund rate = 25 refunds. 475 sales left.

    Option 2: Sell 5000 copies with "hype-y" ad copy. 10% Refund rate = 500 refunds. 4500 sales left.

    "Option 2" is almost 9 times as profitable.

    BUT, don't these sellers worry their Paypal / Stripe / Merchant account will get shut down for this?

    If this happens, they wouldn't be able to generate further income.

    What do you think about this?
    Several things.

    You may be looking at far higher refund rates with a more hypey...and less qualified audience. And I doubt very much is you would get 10 times as many sales with hypey copy. Ten times as many sales generally come from an established relationship with the customer, or a joint venture.

    If the customer ask you for a refund, you just process the refund. I don't think Paypal (or any other processor) cares that much. They are still getting the processing fee.

    It's when the customer starts contacting them, that they get antsy.

    Especially when your a newer vendor, payment processors get panicky if they start getting refund complaints about you.
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