Seller protection scheme for Digital Content Sellers (with no shipping)

[ShotaMegre]

My question is related to the seller protection.

Running a digital content marketplace with no shipping, we're left without any protection from fraudlent buyers who purchase the content and then create a claim requesting return of money or even marking a transaction as a fraudlent.

For all the cases above, PayPal is protecting a buyer, returning the full amount of transaction after months from transaction date, leaving us completely unprotected.

What is the best practice for seller protection in case of digital content?

The case is even more painful, when a seller has to share the revenue with the contributor leaving fraudlent schemes for swindlers open.

I've emailed PayPal support regarding the time period of buyer's protection, but haven't received comprehensive answer yet.

Thank you for sharing your thoughts!

[Quandary]

Not defending anyone - just some thoughts:

As a seller of digital goods, you don't have Seller Protection, the User Agreement is quite clear about what covered and what is not - digital goods are at the top of the list for "Ineligible items and transactions".  On the other hand, there's no mention of digital goods on the buyer's end so it's quite easy for people to take advantage of the transaction.   PayPal has had this policy in place for years, at least as long I can remember - and it's always been an on going issue for sellers.  Here's the one thing that many sellers don't realize when it comes to buyer protection - a buyer can open a dispute for a refund up to 180 days after the purchase.  That's more than most credit card companies offer - some my help you up to 60 to 90 days.  PayPal does encourage the seller to have a return policy, etc. but, in many cases their policies overrule yours.  For people who sell tangible goods that can be shipped, tracked and insured (if applicable) and limit their sales to US PayPal account only, require a confirmed address and don't accept e-checks, etc. - your chances of better experience is much improved.

[Whac-A-Mole]

if you cant stand the pain of losing a dispute /chargeback as you have no wayto prove delivery,then DO NOT USE PAYPAL.

CHARGEBACK would cost you $20 chargeback fee.

This issue has been discussed to death,if you can afford it,send a hard copy of what you sold by mail,cost is $2.65 with tracking.

Nothing will protect you from item not as described,but the buyer would have to return the hardcopy and pay 2.65 with tracking.

[ShotaMegre]

I'll try to be more detailed:

I'm running a digital content marketplace: I sell the licensed audio files for personal and commercial usage.

The buyer is able to download the file immediately after the purchase.

I share the revenue with the composer of the audio.

The question is how to protect our marketplace from cheating buyers who literally gets the stuff for free by paying, then requesting the reversal or reporting a transaction as fraudulent?  

It makes the issue more painful as leaves a fraud scheme open for a group of cheaters: A group of cheating composer and buyers buying stuff from this composer. We pay the portion of earnings to the composer monthly. After 179 days (**bleep**, a whole half year), the group of buyers altogether initiate chargeback/reversal or report all those transactions as fraudulent transactions. Buyers get 100% of money back with the help of PayPal, the composer already withdrawn the largest portion of the earnings leaving the marketplace in deep negative balance.

I see the only option to remove PayPal gateway completely as a solution, though still hope there is some kind of protection from the group of cheaters.

PayPal transactions are 70% of all transactions on the marketplace at the moment.

Thank you!

[Whac-A-Mole]

I've emailed PayPal support regarding the time period of buyer's protection, but haven't received comprehensive answer yet.

----------------------------

read seller protection,Paypal is not going to make exception for you.

ask for cash,check,mony /postal order/

[ShotaMegre]

I'm not asking such a giant as PayPal to make exceptions for my tiny business.

I'm asking for best-practice for digital content seller protection.

Especially if it's not a single chargeback/reversal request, but a group of cheaters/scammers doing it according to the plan.

[neoacevedo]

From my point of view, you could "proctect" your money with a refund policy and scale directly to PayPal on any dispute made by the buyer.

Now, if PayPal says: "You must refund all the money" I must to say "I'm sorry Elon, but PayPal is the most risk payment gateway that I have knew and I will quit from it"

For instance, Amazon has a strict policy for Digital games or software. In short words they say: Games and software downloads are not returnable or refundable after purchase 

I think a similar policy should be appliable on PayPal and digital stores.

[ShotaMegre]

While we've been discussing this a new type of fraud has just landed to our marketplace I'm eager to share with you:

As the gross sales are increasing, PayPal has decided to keep the coming payments as pending. So, the transactions have Pending status for 21 days after the purchase. Holding those transactions as pending started around 1-2 months ago and remains still yet.

As a marketplace of digital goods, we have to let the buyers download the digital goods at once upon the purchase and not force them wait for 21 days before PayPal clears the payment.

Case of fraud: There was a buyer who purchased goods in 3 transactions for a significant sum and those transactions were marked as Pending similar to other transactions. After 10 days, I've received an email notifications from PayPal that those 3 transactions were cancelled. The reason provided: "Note: A PayPal payment by bank transfer which is still pending after 10 days will be cancelled automatically. A PayPal payment by bank transfer is considered "pending" as long as the transfer amount has not reached PayPal. PayPal has no control of whether or not, or how fast, a sender completes his pending payment."

The scammer was able to download the content and haven't paid a cent for it. As a Seller we didn't have a chance to protect ourself from such a scam as the transactions looks the same as other pending transactions (via the API it has the same "Pending" status).

Unfortunately, more than 75% of all our purchases come via PayPal and we can't simply turn it off. 

Earlier receiving PayPal payments had 1-2 fraud transactions per year, while now it's 1-2 per month and the volume is increasing.

Overall, for last several months we had 10-30% of total received being fraud, it keeps increasing and it really scares. 

Looking forward to Bitcoin/altcoins to penetrate the mass to substitute PayPal with them, but before that any ideas/suggestions will be appreciated.

Emailing PayPal support is like talking to the wall.

[CraftedClicks]

As a Web Designer and Digital Marketer, I recently just discovered the hard way how little I am protected by using Paypal and how little information they give as to how to protect yourself from getting ripped off. 

I designed a website, the buyer is using the design (www.gourdartsouthwest.com) and all she had to do was dispute the payment and got a FULL refund of $600. She stole my work and got a free website, it's as simple as that. She only had to say the "item was not received". I asked Paypal what proof I would need to fight the dispute and they told me "submit anything that proves your work". I sent in 77 emails, time diaries, 6 screenshots of the live website, the initial agreement/invoice with terms clearly stated in black and white, and proof that the website was transferred to her. Apparently, they do not consider that proof.  

SO PAYPAL, WHAT PROOF DO YOU NEED? Is there nothing you can offer us? I can only imagine the amount of money you make off of digital service providers and it's sad you refuse to offer any specific guidance on this matter. 

I'm no longer using Paypal for my business until they even out the protection they give to buyers vs. sellers on goods without shipping information. I encourage everyone to do the same, if enough digital sellers stop using Paypal, they MIGHT modernize their policies.