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Membership site owners, watch for this PayPal issue

by Dennis Becker
12 replies
I just got off the phone with PayPal, after around an hour. There's a known bug with their recurring billing transactions that has been open for at least a month now, and they didn't have enough affected accounts evidently to collect enough information, or reason to assign it a priority.

Here's the deal. If someone attempts to subscribe to your site, and their initial payment fails, a subscription record will be created internally, even though you, as the person they're attempting to pay, aren't notified of a new subscriber. Of course you shouldn't be, since the customer's payment failed.

Then, even though the person isn't officially subscribed, on the date the next payment would have been taken out, PayPal bills the customer.

And worse yet, if the customer tried to subscribe multiple times, PayPal bills them multiple times on what would be their next payment date.

Because of a recent flurry of activity of people joining my site, the situation is becoming very frustrating, to say the least. Imagine someone not joining and being billed twice, not at the time they joined, but a month later. Or someone trying 3 times to initiate a $1 trial offer, finally getting the 3rd attempt to go through, canceling the trial, and then being billed twice for something they've canceled.

That's what I'm going through right now, and the PayPal rep has no estimate as to how long the problem will take to be resolved.
#issue #membership #owners #paypal #site #watch
  • Profile picture of the author Tyrus Antas
    Subscription problems again? This seems like routine for Paypal now. Ever since Ebay bought them they haven't really done anything relevant technology wise, which goes to show how incompetent Ebay really is.

    Tyrus
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    • Profile picture of the author Michele Miller
      That totally sucks, especially as I'm about to launch a large membershp site and need to use them for recurring billing.
      I could have tried Clickbank, but they can't guarantee they will
      approve my high price point.

      Michele
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      • Profile picture of the author InfoAcademy
        Michele,

        Have you thought about a regular merchant account? I've been using Practice Pay Solutions and the rate is better than Paypal.

        Best,
        Julie
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        • Profile picture of the author jonb
          Originally Posted by InfoAcademy View Post

          Michele,

          Have you thought about a regular merchant account? I've been using Practice Pay Solutions and the rate is better than Paypal.

          Best,
          Julie
          I'll second that. I've been using PPS for years. No problems at all -- very solid service.
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          .

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      • Profile picture of the author Dennis Becker
        Originally Posted by Michele Miller View Post

        That totally sucks, especially as I'm about to launch a large membershp site and need to use them for recurring billing.
        I could have tried Clickbank, but they can't guarantee they will
        approve my high price point.

        Michele
        I use Clickbank also to provide an affiliate program option. That has its problems as well.

        I've been auditing and cleaning up my member database and have found dozens of members who subscribed, that I never received cancel notices from Clickbank for, that haven't paid well past their due date.

        My theory is that the person signed up with PayPal through Clickbank, then later just went into their PayPal account to cancel, without informing either Clickbank or myself that they were canceling. What a mess.

        I wish I would have been using aMember from the beginning, or some other software that integrates with the payment processor as well as locks someone out after the ending date of their last payment expires.
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  • Profile picture of the author SolomonHuey
    ouch, hopefully that one doesn't hit me too =X

    Sorry to hear about your situation, hopefully it gets resolved soon. thanks for the info dennis
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  • Profile picture of the author TheRichJerksNet
    Thanks for the information ....

    Another thing that many do not know, if you have a bank account and then change banks and update your paypal then everything is fine .. Until you cancel/remove the old bank account because if any subscriptions are added when you had the old bank account they will automatically be cancelled even though you use your paypal funds to pay.. Yeah how stupid is that ...

    I found out when I changed bank accounts and removed the old one, all my hosting subscriptions was cancelled automatically... No hrm as the bills was already paid.. Problem is with hostgator you can can start a new subscription until your bill comes due... So when my due date was here, I login hostgator billing click on subscribe to start the subscription again and guess what ???? I can't subscribe because it wants to force a echeck and take the funds from my bank and not my paypal..

    So I call paypal and ask them why if I have 10 times the amount in my paypal than what my hosting cost, why can I not start the subscription up again using paypal funds .. Paypal had no answer, they did not know what to tell me..

    Since I do not want hostgator in my bank account, I am forced now to login hostgator every month and click on the pay now button... I pay for 2 servers, both on different dates, so its a huge pain logining in twice a month now.

    Lesson learned: Never remove an old bank account from paypal ... Even if it is dead.

    James
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    • Profile picture of the author Jeff Henshaw
      This is a short but interesting and informative thread.

      If someone attempts to subscribe to your site, and their initial payment fails, a subscription record will be created internally, even though you, as the person they're attempting to pay, aren't notified of a new subscriber. Of course you shouldn't be, since the customer's payment failed.

      Then, even though the person isn't officially subscribed, on the date the next payment would have been taken out, PayPal bills the customer.
      I am grateful for being made aware of that.

      Lesson learned: Never remove an old bank account from paypal ... Even if it is dead.
      Thank you for pointing this out.

      So if I am reading your post correctly James, even though one has cancelled the actual bank account itself, if one leaves the details as they are in the PayPal database and then adds a new bank account, all will be well.

      That is extremely useful to know.

      Regards,
      Jeff.
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      • Profile picture of the author TheRichJerksNet
        Originally Posted by Jeff Henshaw View Post

        This is a short but interesting and informative thread.

        I am grateful for being made aware of that.

        Thank you for pointing this out.

        So if I am reading your post correctly James, even though one has cancelled the actual bank account itself, if one leaves the details as they are in the PayPal database and then adds a new bank account, all will be well.

        That is extremely useful to know.

        Regards,
        Jeff.
        Hi Jeff,
        Yeah that is correct .. Kinda stupid if you ask me, I would never code a system that would force attach your "2nd payment option" to your subscription.

        I did actually learn one more thing as I normally just trash hostgators invoices since both servers was on subscription. I logged into billing to make a payment and just one server I have paid them thus far over $12,000 and I am thinking ... "Wow! I wish I had $12,000..lol"

        James
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        • Profile picture of the author Jeff Henshaw
          My theory is that the person signed up with PayPal through Clickbank, then later just went into their PayPal account to cancel, without informing either Clickbank or myself that they were canceling. What a mess.
          Thanks for more useful information. As you say - "What a mess" - and that's taking it lightly!

          Yeah that is correct .. Kinda stupid if you ask me, I would never code a system that would force attach your "2nd payment option" to your subscription.
          Thanks for confirming, James.

          I did actually learn one more thing as I normally just trash hostgators invoices since both servers was on subscription. I logged into billing to make a payment and just one server I have paid them thus far over $12,000 and I am thinking ... "Wow! I wish I had $12,000..lol"
          You and me both - $12,000 would certainly help with my cash flow problems at the moment!

          Regards,
          Jeff.
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  • Profile picture of the author Josh Anderson
    Years ago when I saw a major internet marketer loose a 30k a month subscriber base in one PayPal burp I decided that NEVER using paypal for recurring was a great idea.

    Ever since then I have used Authorize.net integrated with whatever system I am using. It is also important to note that I use the AIM (Advanced Integration Method) with Authorize.net to submit recurring transactions now in our own memership site management service.

    The reason being that we can control any of these issues externally so that the issues illustrated in this thread with third party processing are not something we ever have to worry about.

    It's just too much to risk to put all your assets into a service that can burp and kill your subscriber base or freeze your account at will.

    Never ever ever use paypal for recurring management... unless of course you have no other choice.
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  • Profile picture of the author thedataexpert
    Dennis, thanks for the heads up I am setting up a membership site for a client now so I will be sure to take this into mind.

    Originally Posted by Dennis Becker View Post

    I just got off the phone with PayPal, after around an hour. There's a known bug with their recurring billing transactions that has been open for at least a month now, and they didn't have enough affected accounts evidently to collect enough information, or reason to assign it a priority.

    Here's the deal. If someone attempts to subscribe to your site, and their initial payment fails, a subscription record will be created internally, even though you, as the person they're attempting to pay, aren't notified of a new subscriber. Of course you shouldn't be, since the customer's payment failed.

    Then, even though the person isn't officially subscribed, on the date the next payment would have been taken out, PayPal bills the customer.

    And worse yet, if the customer tried to subscribe multiple times, PayPal bills them multiple times on what would be their next payment date.

    Because of a recent flurry of activity of people joining my site, the situation is becoming very frustrating, to say the least. Imagine someone not joining and being billed twice, not at the time they joined, but a month later. Or someone trying 3 times to initiate a $1 trial offer, finally getting the 3rd attempt to go through, canceling the trial, and then being billed twice for something they've canceled.

    That's what I'm going through right now, and the PayPal rep has no estimate as to how long the problem will take to be resolved.
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