Sold a Website - Was Paid Through Paypal - How to Protect Myself from a Refund

use escrow in future. paypal are useless with sales todo with websites. it is a big purchase so im sure the person involved it serious about keeping his new website, so you should be fine. however if he does scam you, you should look into getting a small claims lawyer involved but this can be costly.

i hope you all the best. keep us updated

Yeah I think I'm going to use Escrow.com in the future. Are they pretty good about protecting both the buyer and seller?

Why don't you tell him your not going to hand the domain over until the possibility of him reversing the payment has passed.

Kim

It's too late to use escrow.com, but you should never do a Paypal transaction for that amount for a digital good. Make a complete copy of the website on a CD. Request his address and send him the website via certified mail. Then it is no longer digital goods.

Get one of Flippa's website contracts. Make him sign it and send it to you via fax or mail .. anything with a signature.

Those two things might save your butt this time.

You can also hold the domain for 46 days. I've done this, but the other two things should protect you.

I'm in the business of buying/selling/building large websites, often being in the 6-7 figure range, with my last website I sold being well in excess of a mil. I've pretty much seen it all, and above anything else, 4 big rules will apply:

#1 - Make sure everything is in a contract executed by both parties.
#2 - Require the payment transaction to be done via bank wire.
#3 - Deal with companies that are located in your country of origin, for legal purposes.
#4 - Require that the asset transfer be done after a verified bank wire transfer.

The #3 part offers protection, with the potential buyer having many avenues of recourse due to the information in #1.

The #4 offers the seller protection because, due to how the technology works, the risk is far in excess to the seller than to the buyer, and in the case of website sales, the buyer needs to understand the risk and be the initial point of action.

#2 needs to occur versus check (which can be redacted), versus Paypal (easily reversed with a few mouseclicks), and versus escrow (which offers little protection to the seller). Bank wires are not reversible under nearly all conditions.

Ti, above expresses my thought as well.

For clean deals in the $1000 and up rang you need to
be using wire transfers and/or some sort of escrow
process.

With a wire transfer, the money is real and
any refund must be done with your permission and
participation. This is not to say there is no room
for fraud in bank wires, so you should learn about
wire fraud to protect yourself.

For that sum ALWAYS use escrow.com.

I've suffered from a similar situation.Sold a website for $3.000 and buyer made a chargeback.Paypal of course protetected the "honest buyer".Like you,lost my website and MY money.
Never again!

Here is what i do for paypal transactions that i'm worry of reversal, i make buyer to write this in payment description, never had a reversed payment.

Buyer "his name" owner of paypal account X purchase whit this transaction of price from seller your name domain name (registrant id) and website content. In case f reversal of this payment domain x must be transfered back to seller your name.

Probably this must have put off scammers, i never had any problems when people bought with this text in transaction description.

Awesome ideas! In the past, I've simply not transferred the domain until the refund time has expired.

Sorry but I don't get how he can scam you. If he pays you money... only you can reverse the payment correct? Only you can refund him

Today I took a payment for $3500 from PayPal.
It's best you avoid e-check. Also PayPal should have
called the guy and verified his purchased because the price was
so high. They did that with my customer and everything is fine.
My payment was instant because he logged into his PayPal account to do it.
Just make sure that check clears bro.

Good luck Steve. That would make me nervous too! I use escrow.com for anything over $500. Both parties are protected, although there are ways for a true scammer to beat the escrow system too. A bank wire is the surest way, short of him handing you the cash.

Once you break the barrier of a few hundred bucks you need to have a real contract in place and be willing to enforce it.

I certainly hope that everything goes well. I know that if someone tried to take me for 7k I would be filing suit for recovery plus damages.

Another reason only to sell to people in your country.

There is also always the problem of people using stolen/hacked Paypal accounts to make the purchase. The solution is to simply not use Paypal for this kind of thing.

It's entirely possible for someone in Russia to use a hacked USA paypal account to make the buy. Once the real account holder sees they've been debited the funds they will dispute it and you will be screwed. A good reason for bank wire/escrow only.

I have seen another Warrior mention that they had been scammed and used the Digital Millenium Copyright Act, the same laws that cost Napster 1.0 their existence, in order to shut the "buyer" down. What they did was, once the reverse happened they notified the buyer and all people connected to the domain that they were aiding in the distribution of stolen goods or something to that effect. They contacted the domain name registrar, the hosting company, and any other company and served them with legal notice they were in violation of the DMCA.

The "buyer" would then skulk off to another webhost, and then the 2nd (and 3rd) host would also get notice of violation of the digital copyright law so they would shut down the hosting.

So while the buyer had made off with the goods, they could not use what they had stolen. Realizing they would be pretty much banned from the net as far as the domain and hosting was concerned, they paid up. I guess they wanted the site more than they wanted the thought of ripping someone off.

Another thing I have to say is, not all wire transfers are actual wire transfers. What do I mean? An associate of mine who rented a house they owned to someone received what they thought was a wire transfer, and eventually it was reversed by the bank and he was out of the money . . . plus additional funds, due to the person sending more than the payment requested and asking for a refund of the overpayment ala Nigerian scam style. And even though he was the victim of a crime, the bank actually came after HIM! I don't know all of the details of this case, I only mention it to say to be careful, as there are some scandalous people out there. Money orders? Do you know EXACTLY what they are supposed to look like? They can be forged, duplicated fraudulently, and possibly flat out stolen. Again, be careful.

Thanks for the great advice everyone. I'm going to be sending the files on a disc by registered mail. This was an excellent idea!

I used Escrow.com for a 5K site. The buyer paid to Escrow by wire transfer to my bank account. The deal is done without any fraud. But then again it is never too cautious when it comes to any business dealings. Take the best precautions you can and go ahead with the deal.

$7,000 for a website through Paypal?

Are you crazy! Hopefully with a bit of luck it goes through for you, fingers crossed...

I would strongly suggest that you use Escrow from now on, they protect both parties also no charge backs.

All the best

Steve M

ps Great Sale

The best thing to do is.

1. Know who is your buyer. If your buyer is a big company, them you have a peace of mind. I had an an seo blog before with a real great domain and was sold to ientry.com. I had no worries.

2. Use escrow for amount bigger than $500.

3. Since transfer of domain can be done later, include a policy in your sale to transfer only the domain once all payment is cleared.

4. As much as possible, create a separate bacnk acocunt just for PP if you are doing buy/sell on Flippa on regular basis... Empty your bank account every now and then... if someone wanted to screw you up by reversing the payment, you don't have to worry if your bank is empty.. Bank does not care about reverses due to bank secrecy (correct me if I'm wrong) as long as you have all the evidence just in case needed...

Hope it helps..

Wow! First off congratulations on the sale Steve.

I read all the post, some good responses. In my humble opinion in dealing with any LARGE transaction I will tell you this piece of advice from my ebay drop ship experience...Never purchase goods from an overseas supplier with WESTERN UNION OR MONEY GRAM etc.

Why?
Because your money is gone. It has been picked up probably spent. And you receive no goods LOL.

So this little anecdote applies to Steve how?

WESTEN UNION buddy it's the only way to go my friend, the only way to go. Trust me! I have lost a small fortune ($2474 to be exact) in my search for a legit manufacturer in my industry. Now I make all my resellers pay by Western Union, no worries. You get your money the old fashioned way CASH IN HAND!

Hi guys

i would put the money into my bank account from paypal first.

this is the only way that you can completely safe guard yourself.

What happens if on tuesday you sign it over and an hour after you do paypal limit your account because of the size of the payment flagging it for suspicious activity? which lets face it - it can be the norm!!!

kind regards


sam
X

For that much cash, escrow is the only way to go really, but for now get that money out of paypal quick!

One ADVANTAGE of an echeck is that I THINK you have the money when the money hits your bank. I don't think they can be reversed. That is NOT necessarily when the check "clears" though. ESPECIALLY with the expedited release of funds rules. So ask paypal if they actually got the money.

By contrast, credit cards can be reversed after quite a while. I USED to think that was like 60-90 days, but it is really anyone's guess. Ask 5 banks, and you may get 15 answers!

Steve

So what happens with a small sell? $7, $27, $47, etc.? Will Paypal still allow chargebacks?

I have taken people to small claims court and it is a success. That is one of the reasons, I do business in america. Please be more careful in the days to come. Paypal is terrible with money. However, if a person gets enough complaints against him they will freeze the account and investigate in. That said, you need to protect you. BTW, judges like to see written contracts so make your customer sign.

Right now I am taking a person to small claims court in a lawsuit that is near $5,000 and it takes time to prepare a case.

Ouch. Paypal might try to come after you for that later on. They typically start to get a little skiddish about your account after the first $2500 earned in profit.

The more you make, the more liable you are for falling into one of Paypals BS tactics to get your money. They got me for 10's of thousands, my brother for $30k, my business associate for $40k another guy I know for a lot more than any of these...be very careful about using paypal.

If you're doing business volume of 2k or above monthly, get a real merchant and link them to 1 Shopping Cart. It's safer in the long run.

You can still do a reversal even when escrow is used, so never think that they are the ultimate protection as a seller.

The way I handled this when I took on clients was to be sure everything was done properly and no refunds would be given.

I do not use any 3rd party escrow as that does NOT protect you like many think it does.

I required my clients to pay a portion by western union, yeah I know what some are thinking.. "I would never do that" You may think that but if someone really wants a site they will.

I gave the client all my info.. Name, Address, Phone, and Etc and in exchange he gave me his/hers. They would go to western union and make a payment (normal at least 25% of the cost of the site). I would go and pick up the payment. The client would be supplied an email and terms before information is sent.

By sending the payment by western union they have agreed to our agreement and as such are obligated to pay. Once I had the site done and client tested then final payment would be made by paypal and within 72 hours the site would be installed on the clients server..

This worked great for me and never had a problem. When I did things differently is when I had problems of chargebacks and people not wanting to pay.

James

Download the entire website to a CD, and mail it to him, insured, proof of delivery etc. That way at least you have proof of delivery of the product they bought. That will help you a little, but there isn't much that can guarantee that you will not lose out. PayPal is a pain in the ass, and we just have to live with that as they dominate.

Never forget to put in your listings that you will only take payment via escrow, and the buyer must split the fee with you (or insist that the buyer pay the fee if you can get away with it). Don't leave yourself open to this in the future.

You should definitely only accept escrow or direct deposit, or something much safer than paypal if you sell a site for a lot of money. That doesn't help you now but remember that for the future. Not sure what you can do now other than what has already been suggested.

REFUND HIM AND GO THROUGH ESCROW ASAP

Im worried about this as wel since I have a website that Im about to sell for $4250 via payapl.
I never fully trust any buyer on the internet so I wonder werther I should ask him to wire me the transfer.
Great post...

I dont want to scare the buyer by demanding a bunch of safety rules in order to save my butt.

OMG....I have had chargebacks for $1.25 ....so you can imagine my feelings on this. I really hope you get your money.