Digital Downloads and Chargebacks

[StevenE]

Hey all!

I was recently involved in an incident where someone purchased some digital downloads from my website and then 15+ days later the card holder initiated a charge-back for whatever reason. This matter resulted in the Credit Card company being refunded and me being charged a fee for their retrieval of the funds. When all was said and done, Paypal responded by saying: "we are disputing this with the Credit Card company and we'll let you know what they say..."

Am I the only one that feels that going about it this way removes the Credit Card companies' interest in getting to the bottom of the issue?

 But wait, let me get this straight...

1.  The credit card company was refunded before a thorough investigation was conducted?
2. I was charged a fee (giving the Card Holder the benefit of doubt here)  because the Card Holder's Credit Card was compromised? <== Why is that my fault?

Unfortunately this "loophole" in the system leaves Paypal and its digital download sellers wide open to abuse and really should be fixed. Advising sellers to "change the way they do business" is unrealistic and furthermore, forwarding the seller the Cardholder's email after Paypal has lost the dispute and saying basically "Contact them to figure it out" is really a poor method of resolution don't you think?

Plus,  why would I want to contact them if they've denied making the purchase anyways?

 With that said, I do understand refunding the payment if the purchase(s) were made illegally through no fault of the cardholders' but is it really my fault that the Cardholder's Credit card was compromised?

Am I wrong to think that the Cardholder / Credit card company should assume some responsibility in this matter?

(eg: placing the charge-back fee on the card holder's account)

Also, In my transaction ( for example ) I noticed some similarities in the email's and was able to trace the IPback to a region, mobile device, etc and so if the CC company really looked into this transaction they would have probably came to a different conclusion and ruled in my favor, but because no physical product was delivered and they already received their funds their is no interest whatsoever for them to pursue this matter any further.

At any rate, I've been a Paypal member for years now and have always resolved any issues that arose (regarding the delivery of digital downloads) professionally and with high regard.

I trust that going forward, Paypal will do the same...

Sincerely,

StevenE.

[kernowlass]

As it clearly states that there is no seller protection for digital goods then you will always lose any dispute.

Paypal only covers you for items sent trackable in the post. If the buyer then filed for unauthorised use and was refunded you would not lose out.

If you had provided paypal with a tracking number that proved delivery of the item to the address on paypal at that time paypal would reimburse you.

You are of course allowed to sell digital items and use paypal but AT YOUR OWN RISK.

[StevenE]

Thanks for your wonderful insight.

[kernowlass]

I can only give you the facts as they stand, I don't make their policies. 

[StevenE]

So after this unfortunate situation I've been thinking of a few (non intrusive) ways that would work to help remedy this flaw in the system.

So, with that said,  I have 2 suggestions:

1: The card holder must supply the credit card billing address zipcode before a payment is completed.

and / or

2. They must enter a phone number to receive a "key" via text (sms) that must be entered to complete the checkout.

I feel that these suggestions (or something similar) can be implemented and this in turn will reduce the chargeback abuse.

Please pass these suggestions on (if possible)

Thanks

[viamarisol]

My advice is to not sell any virtual goods or tickets using PayPal. You have very little protection from chargebacks.

I sold $550 for some event tickets, which were then charged back. I checked with the show promoter/agency and confirmed the tickets were scanned/used. No luck so far.

[dg93]

A buyer purchased tickets for a sporting event from me on March 12, 2015. Tickets were given in person and sent via email, to which the buyer acknowledged receipt.  Now 3 weeks after the event the buyer indicates that they did not authorize the charge despite being handed the tickets in person and by email.  Tickets were used for the event.   I uploaded documents supporting this fact. 

Thus, I have been issued a chargeback of $650 to my account despite me being with paypal under this ID since 2000 and have NEVER once received a chargeback in over 15,000 transactions under my 2 paypal accounts. I have been selling on Ebay since 1998 and have never felt this violated by this company for this OBVIOUS erroneous error.

Simply they can say it's their policy but how does Ebay allow tickets to offer a delivery option of local pickup or email delivery ? There is no ADVISORY on EBay during the listing process that alerts you to not being covered by Seller Protection thur paypal.

I've appealed to paypal once again, however, do state attorney general's handle these types of issues ?