I'm Done With Paypal...

by Tony Dean 41 replies
After a lengthy dispute with a buyer who immediately requested a refund no sooner he downloaded some software from me, Paypal has now decided in favor of the buyer and refunded him.

Their own TOS states quite clearly they don'y refund buyers of 'intangible products' : which means 'downloadable products i.e. ebooks and software.

They now seem to be going against their own TOS which to me is reprehensible of any large corporation to do that. Where do you stand as a marketer with an organization like that? Is it the best organization to do business with?

I am now pulling all Paypal buttons off many sites of mine, Paypal will be the loser, not me.
#main internet marketing discussion forum #paypal
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  • Profile picture of the author pjs
    I personally hate Paypal but keep the option because so many people prefer it. I had two incidents before where paypal "froze" my account with several thousand dollars in it.. Because of one complaint over a $60 purchase.. It's crazy. I make it a point to transfer money out of my PP account 2-3 times a week!
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    • Profile picture of the author Andy Money
      That is insane that they are going against their own TOS. Wow. Any room to keep the fight going?
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      • Profile picture of the author Square Smile
        I think Paypal is a necessary evil. Sure, they can sometimes be shady, but what are our other options...eGold?
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      • Profile picture of the author Tony Dean
        While the money amount is small, it's the principle of the thing. If an organization have rules which ALL must be obligated to, then that for me is written in stone.

        There should be no variation of the rules because one individual in Paypal decides they are going against their own companies rules.

        I am escalating this to the highest levels in the Paypal organization - I have not done with them yet!
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        • Profile picture of the author Dan Grossman
          I process about $20,000 a month worth of intangibles through PayPal, and I've never lost a buyer dispute that was escalated to a claim. If the buyer doesn't escalate it, I do, and I write clearly that it's an intangible/service and they aren't covered by buyer protection. PayPal closes all those claims in my favor.
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          • Profile picture of the author Tony Dean
            I wrote three emails to Paypal in regards to this dispute saying it is in their own TOS that buyers cannot ask for refunds against an 'intangible product' and it seems that three times my emails were ignored.
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            • Profile picture of the author sparrow
              Leave it to paypal

              I had someone lately not deliver me a product and took me for money on a ebook and they sided with the seller.

              They just can't seem to get their stuf together, I hate them too but are the 500 pound gorilla here.

              Ed

              Originally Posted by Tony Dean View Post

              I wrote three emails to Paypal in regards to this dispute saying it is in their own TOS that buyers cannot ask for refunds against an 'intangible product' and it seems that three times my emails were ignored.
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            • Profile picture of the author slashman
              This probably has nothing to do with paypal from my experience. People who get refunds contact their banks who reverse the charges.

              Paypal can do nothing about it and it happens often with digital products. You have to understand that this will happen to you. Your job is to make more sales than refunds.

              You will get people who will opt to purchase and then refund. Yes, this is unfair, but it happens. If you get too many refunds, maybe something it wrong. Nobody wants to get taken for their money. Check to make sure the visitor gets his/her download.

              Make sure the product is great and offers what you say it does. Make sure your contact info is good so if they have a problem you can answer it.

              Thanks,

              George Christodoulou
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            • Profile picture of the author Dan Grossman
              Originally Posted by Tony Dean View Post

              I wrote three emails to Paypal in regards to this dispute saying it is in their own TOS that buyers cannot ask for refunds against an 'intangible product' and it seems that three times my emails were ignored.
              As with any big corporation, using the established means of contact (putting this into your original dispute response) is going to be the only sure way of getting it to the right person amongst tens of thousands of employees.

              I know some people find it hard for some reason, but you can also pick up the phone. PayPal has excellent phone support, especially their department for merchant status customers.

              Originally Posted by sparrow View Post

              I had someone lately not deliver me a product and took me for money on a ebook and they sided with the seller.
              Unfortunately this is the reverse of the equation. Since PayPal can't reliably verify a digital product was or wasn't delivered on the massive scale they'd have to in order to provide Buyer Protection, the seller is always protected, even when they're wrong. You have to settle this kind of dispute outside of PayPal.

              Originally Posted by slashman View Post

              This probably has nothing to do with paypal from my experience. People who get refunds contact their banks who reverse the charges.

              Paypal can do nothing about it and it happens often with digital products. You have to understand that this will happen to you. Your job is to make more sales than refunds.
              As someone who sells thousands of digital products and services a year, this is absolute truth. I have to factor in about $20,000 a year in fraud and returns into my pricing... and it's still very profitable. Every real business has a line item in their taxes for losses to payment fraud ("uncollectable accounts") and "missing inventory". You do what you can to minimize it but you always plan on their being some loss.
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          • Profile picture of the author pwebbiz
            Dan,

            I'm with you 100% - I do this every time and it's normally found in my favor in under 24 hours.

            Michael
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    • Profile picture of the author lakshaybehl
      Originally Posted by pjs View Post

      I personally hate Paypal but keep the option because so many people prefer it. I had two incidents before where paypal "froze" my account with several thousand dollars in it.. Because of one complaint over a $60 purchase.. It's crazy. I make it a point to transfer money out of my PP account 2-3 times a week!
      2-3 times a day just after the launch! Transfer it to other friends and family members' accounts and then withdraw from PP if the withdrawal limits are bugging you!
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  • Profile picture of the author braver55b
    I had the same thing happen to me, yeah I agree with the other posts Paypal is necessary,

    I just hope that one day, just one day that there will be a viable alternative. All the freezings and horror stories etc and going against their own terms of not refunding downloadable products etc.
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    • Profile picture of the author LivingCovers
      Originally Posted by braver55b View Post

      I just hope that one day, just one day that there will be a viable alternative. All the freezings and horror stories etc and going against their own terms of not refunding downloadable products etc.
      Yeah! And i hope the viable alternative will include all those countries paypal exempted from their service, like Nigeria.
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  • Profile picture of the author olbiz4cash
    Tony...Thanks for the post. I haven't had any issues of a customer wanting their money bank for any e-books I've sold, but it's good to know how PayPal will react when this comes up. Have you tried 2checkout.com?

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  • Profile picture of the author Monetize
    Try Google Checkout. They support digital downloads.
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    • Profile picture of the author Chris Lockwood
      You can appeal the decision. I did that and got it reversed.
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      • Profile picture of the author Mac Wheeler
        I have serious concerns about PayPal, I think the staff just go with the flow and guess half the time.

        I recently set up a business account, which was linked to a bank in Thailand. After the first transaction they restricted the account, asking for proof of address. I went along to my bank, asked for proof of address from them on official letter paper. I scanned this, uploaded it to PayPal and waited. I then received a response asking me to translate the address, as they do not speak Thai. I called them up at this stage, and asked them if they meant they wanted me to hand write the address in English on the document? They replied yes.

        I re-submitted the document and they accepted it 12 hours later. I was shocked, they asked for an official document showing my address, and accepted a scanned letterhead with my hand written address on it, what's the point?
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    • Profile picture of the author KimW
      I'm surprised. I recently requested a refund for a product that was highly promoted here on the warrior forum and that the seller promised a double money back guarantee. I was unhappy with the product and contacted the seller numerous times and all requests and emails were ignored.
      So I contacted Paypal for a dispute. In this case theyr efused to give me my money back for the same reason you are quoting. As I said, I'm surprised.
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  • Profile picture of the author goralka26
    I feel your pain and frustration Tony Dean! I myself am very dissapointed with paypal right now but I need to stick with it since sooo many people prefer it.
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    • Profile picture of the author dbh
      PayPal screwed me too awhile back. I sold an international item on eBay, shipped via USPS, item supposedly didn't arrive.

      Buyer files PayPal claim for INR.

      I have undeniable proof that item was sent as scheduled, clear down to the name of the USPS clerk who took the package. The USPS computer system also shows that item left the USA via San Francisco. I also have a long-standing 100% positive eBay feedback rating.

      So I show all of this to PayPal, and they still rule in favor of the buyer and want to refund! Fortunately, I anticipated everything and drained my PayPal account beforehand. So this puts the account into a negative balance. PayPal gets mad and threatens collection action if I don't pay.

      I explain to PayPal that since I was able to prove shipment, my responsibility beyond my own return policies ended at the moment I tendered the item for transport. They apparently disagree and send to collection.

      Collection agency sends a nasty letter. I write a 2 page response with all of my proof attached and tell both the agency and PayPal to bug off because this is simply wrong. Yes, I am sorry that buyer didn't get item if thats what really happened, but I did my part. If I pay now, I'm out both the item and the payment!

      In my response letter, I also tell them that since I cannot determine if the item was received, then I'd sure like to know what secret methods they use to determine same .

      Anyway, I know that collection agency receives response because I sent it certified.

      Well, this all happened several months ago and as yet I haven't heard another thing from either PayPal or the collection agency.

      Sorry for the long post but this pushed a button with me.

      Yeah, I'm done with those morons. My digital products will be sold thru Kagi, Clickbank, and Alertpay. WSO's thru my sister's PayPal account.

      I could pay it and get my account back but its the principal. PayPal gets away with this stuff far too often.

      Oh, and like so many others, my eBay sales are now restricted to the USA only.

      - Darrell
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      • Profile picture of the author purple
        Paypal can definitely present problems. I filed for a refund for an "e-book" I received that was not only not what it claimed to be, but the first page was the only one out of forty that was legible. How you botch a pdf only heaven knows but they fed the "digital goods" line t me and I contacted my bank instead. Got my money back.
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        • Profile picture of the author lacraiger
          ive been having issues with paypal for about 10 years now.
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        • Profile picture of the author Dan Grossman
          Originally Posted by purple View Post

          Paypal can definitely present problems. I filed for a refund for an "e-book" I received that was not only not what it claimed to be, but the first page was the only one out of forty that was legible. How you botch a pdf only heaven knows but they fed the "digital goods" line t me and I contacted my bank instead. Got my money back.
          Problem with messing with PayPal like that is they keep it on your account, attached to whatever information they have about you, forever. So if you ever want to use a PayPal account yourself, they'll make you clear any balance you have first.

          I once rented a dedicated server from a small outfit that went out of business -- they stopped paying their bills and the datacenter they rented space in cut them off. They refused to issue refunds to anyone (probably were broke), and I opened a dispute in PayPal, along with a couple hundred other people. All of us, more than 3 years later, still have a won dispute in our claim center against this person. If he ever, ever tries to open a PayPal account again... even if he uses a new e-mail and address, if it's the same bank account, social security number, anything to link them... he would have to settle all those claims first. They'll always be on file.

          Sorry story is for you and the guy that went so far as to let his credit rating drop over a package (you know collections agencies can do that) is that you contractually agreed to those policies, so legally, you're in the wrong, even if you may feel you're in the right ethically.
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          • Profile picture of the author grumpyjacksa
            As a buyer i also got my share , with a transaction that "never happened", regardless of the printout.

            As a seller, they do not allow me to do business from south africa, claiming legal limitations with our reserve bank.

            Yet, other players like setcom, alertpay, 2CO, etc, are more than willing to do business with us.

            The 900 lbs gorilla does not need to look for food any more. So it does not care to waste what is on the table.

            BUT : The market acknowledges only two things : Service and innovation. Paypal's period of innovation has passed, and if their service is not up to scratch, it will slowly but surely start costing them money........

            And some of it will be big accounts.....
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          • Profile picture of the author dbh
            Originally Posted by Dan Grossman View Post

            Sorry story is for you and the guy that went so far as to let his credit rating drop over a package (you know collections agencies can do that) is that you contractually agreed to those policies, so legally, you're in the wrong, even if you may feel you're in the right ethically.
            Which is exactly why nobody who is really serious about their online business should have PayPal as their only form of payment, or even as their main payment processor.

            In my case, I really don't care what their contract says, I'm still right and they know it. And they really have no recourse because the amount is so small and I have no credit to damage - everything I own is paid for including my house and I have no need for credit at present.
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            • Profile picture of the author Dan Grossman
              You agreed that the final word in a dispute about a physical package is trackable delivery confirmation, but you admit your tracking ended before the package left the country, and doesn't show it was actually delivered.

              For all you know, the mail carrier lost it, or it got stuck in customs, and he never did get his package, right?

              I know it doesn't make me popular, but I strongly believe that contracts need to be upheld even when that doesn't work in your favor. If we don't accept that, then how can we expect our customers to do the same?
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              • Profile picture of the author dbh
                Originally Posted by Dan Grossman View Post

                You agreed that the final word in a dispute about a physical package is trackable delivery confirmation, but you admit your tracking ended before the package left the country, and doesn't show it was actually delivered.

                For all you know, the mail carrier lost it, or it got stuck in customs, and he never did get his package, right?
                Yes sir, that is correct. But If I can't determine whether or not he actually received it, then what makes PayPal think that they can?

                For all I know also, maybe it did arrive and the guy wants his money too because he really couldn't afford it anyway....

                Most reasonable people are aware that there is risk involved when they order anything which involves shipping, be it online or mailorder.

                As stated above, once I tendered it for transport, it then became the responsibility of the postal system to insure safe arrival; thats supposedly what they do.

                If PayPal really wants me to personally hand deliver each shipment to insure that it arrives, then I suppose I could but its gonna get mighty expensive.....
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                • Profile picture of the author Dan Grossman
                  Originally Posted by dbh View Post

                  Yes sir, that is correct. But If I can't determine whether or not he actually received it, then what makes PayPal think that they can?
                  They don't think they can. That's why they put in the contract that you need proof of delivery to dispute a claim otherwise. They want someone that can determine if it was received (a shipper with tracking) to determine it.

                  Originally Posted by dbh View Post

                  As stated above, once I tendered it for transport, it then became the responsibility of the postal system to insure safe arrival; thats supposedly what they do.
                  That has no relevance to your interaction with PayPal, unfortunately. If you want, you can sue the US government for not fulfilling their obligation, although the federal government can't actually be sued except when they allow themselves to be...

                  Originally Posted by dbh View Post

                  If PayPal really wants me to personally hand deliver each shipment to insure that it arrives, then I suppose I could but its gonna get mighty expensive.....
                  They don't want that, they just want you to always buy shipping that has delivery receipt tracking. And you should probably insure the packages too
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                  • Profile picture of the author dbh
                    Originally Posted by Dan Grossman View Post

                    They don't think they can. That's why they put in the contract that you need proof of delivery to dispute a claim otherwise. They want someone that can determine if it was received (a shipper with tracking) to determine it.



                    That has no relevance to your interaction with PayPal, unfortunately. If you want, you can sue the US government for not fulfilling their obligation, although the federal government can't actually be sued except when they allow themselves to be...



                    They don't want that, they just want you to always buy shipping that has delivery receipt tracking. And you should probably insure the packages too
                    USPS does have tracking, and I gave the buyer the option to buy insurance which he did not do. I explained this to PayPal. They didn't care.

                    I really do understand your thoughts on this but I still must disagree about my case.

                    But I suppose that eventually I'll get off my soapbox and pay it and life goes on. That's likely what they're waiting for.....

                    BTW, I now sell only in the USA, and require shipping insurance on all transactions.
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                  • Profile picture of the author dbh
                    Not sure why I keep making duplicate posts. Maybe something's stuck?
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                    • Profile picture of the author Dan Grossman
                      Originally Posted by dbh View Post

                      Not sure why I keep making duplicate posts. Maybe something's stuck?
                      No problems here, you can delete them by clicking edit then the delete button on the edit screen.

                      Originally Posted by sachibhat

                      I'm planning to shift to 2CO as it accepts payments from paypal funds
                      Their $0.45 + 5.5% transaction fee is way, way higher than PayPal's, especially if you qualify for merchant rates (lower fee tiers). And 2CO has a much worse reputation -- the only people that voluntarily process with them are those that can't get accounts elsewhere.
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                      • Profile picture of the author johntanyishin
                        how about moneybooker or egold? Paypal is definitely going to be gaining a huge market share. We need it to be better, for the good of everyone.

                        We can probably send this thread to paypal or let one of the paypal high ranking officer take a look at all our feedbacks.

                        JTYS
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                        • Profile picture of the author Dan Grossman
                          Originally Posted by johntanyishin View Post

                          how about moneybooker or egold?
                          Egold almost dropped off the face of the earth... last month the company and its three directors pled guilty to money laundering charges and agreed to pay a $3.7 million fine. There's a plea bargain with the government that will probably keep them out of jail, but it's not the most stable company right now...
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                    • Profile picture of the author Chipt
                      A few quick points and opinions for your consideration...

                      1. I use 2CO as my main processor, but close my eyes and clinch up my butt cheeks REAL tight every time someone uses the PP button instead. [You know why I'm clinching... I have online scars...]

                      2. It is always an extra risk shipping internationally. I just shipped a hard copy of FCS to France, and the USPS here still tells me that their tracking stops at the customs entry point in foreign countries, so the tracking service is at best marginal...

                      3. ClickBank has many of the same issues / problems [I'm clinching again.]

                      4. There are thieves who will steal and/or knock-off your stuff as soon as you put it online [just ask my friend Marlon Sanders for his war stories]... and the thieves somehow manage to bend us all over from time to time and get away with it... [I'm clinching again.]...

                      5. Refunds are just another line item in your cost of sales metric

                      6. An unhappy customer [whether justified or not] can poison your reputation you took years to build... in an afternoon with a cup of coffee and an Internet connection.]

                      7. Is the drama and stress on you really worth it? Is it worth risking your merchant and other processing accounts? This rip-off crap really boils my blood because it's just wrong, but again it is Marlon who explained it all to me one day on the phone and basically said, "Get over it. It's gonna happen."

                      IMO, bad things happen to good people. This is just one of those examples...

                      Just food for thought -

                      Chip Tarver
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              • Profile picture of the author dbh
                oops, duplicate post....

                I agree that most contracts should be upheld. But some terms are simply stupid. Period.
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                • Ok, So let me get this right?

                  Your cracking a shit because you have
                  to give your buyer a refund after they
                  requested it.

                  I dont think that even paypal has
                  the right to refuse refunds to a
                  buyer of anything.

                  And while we are on the subject of refunds,
                  you are goingt to get them no matter what
                  payment processor you have...and you will
                  still have to give refunds to the people
                  that ask for them.

                  Dude...Just give them the refund!

                  Is it unfair that they ask for a refund
                  right after buying? Yes!

                  But it part of doing business on the internet!

                  Take care,

                  Michael Silvester
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                  • Profile picture of the author WinsonYeung
                    Even thought i hate it, but i have to use it.
                    because it's the best proccessor so far, plus easilest to use
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                  • Profile picture of the author Dan Grossman
                    I dont think that even paypal has
                    the right to refuse refunds to a
                    buyer of anything.
                    Of course they do. When you go to a website, add a product to your cart, check out, and pay, you've actually entered into a contract. Unless there's a refund policy presented during checkout that becomes part of that contract, you have no right to request, less demand a refund. PayPal closes disputes in favor of the seller when their policies say it's appropriate to; it is not totally buyer-sided. If you then perform a chargeback or bank reversal against PayPal, they turn you over to a collections agency. If the amount is substantial enough, they'll bring you to court.
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                    • Profile picture of the author sachibhat
                      paypal is getting more n more strict and unpredictable with their shitty TOS.
                      I'm planning to shift to 2CO as it accepts payments from paypal funds
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            • Profile picture of the author mindvalley
              What is the big deal here? If a customer wants a refund just give it to him or her even if they are ripping you off (i.e. stealing your content - esp. when it is digital).

              Not issuing a refund might just result in having a super unhappy customer who can spread negative word of mouth about your products / services or business. So, I would always issue a refund no matter what. Yes, your refund rate is going to be higher that way but I think in the long-term it pays off to keep your customers happy and to always minimize negative word of mouth.
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              • Profile picture of the author olympian
                Banned
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