Unathorized transactions as fraudalent chargebacks

[Tralax]

Dear everyone,

I'm a seller of digital goods, in which I do not have shipping address this reason I do not have Seller Protection.

Recently one of our customer has chargebacked 12 transaction, total of 1260€ after the services has been completed for him.

I would like to know how I can avoid, that Paypal do not give them back the money in such cases, as I have clear proof that he was the original owner of the credit card which he has used.

Since 14 September 2019 PSD2 obliges payment service providers to apply so-called “strong customer authentication” (SCA) when a payer initiates an electronic payment transaction.
Whenever a payer initiates an online transaction above 30 EUR, the SCA will be applicable.
In order to make a payment over 30 EUR, the payer has to provide two or more of the following elements when making payment:
- Knowledge: something only the user knows, e.g. a password or a PIN code
- Possession: something only the user possesses, e.g. a mobile phone, and
- Inherence: something the user is, e.g. the use of a fingerprint or voice recognition.
(Information from : ec.europa.eu (European Commision) - t.ly/PrGB8)

Also he has made 12 orders during a long period of time (Between 22nd of October and 12th of November), real unauthorized transactions are unlikely to be unnoticed for so long.
Which he reported 8 days after we have completed all of his orders, which also confirms that he was well aware of the transactions.
We tried to resolve this issue by contacting customer via Discord pointing out that we have all necessary evidence to prove that order was completed. However, he did not respond to our messages.

Additionally on the checkout page of our website he has ACCEPTED our Terms of Use, which includes the following terms:

1.3. All products and services available on the Site are delivered via digital delivery means such as email or in-game (online) services. We deliver the service only through players that posses high skill in the game.

1.4. The Site does not offer any physical products or property, therefore is not obligated to send any goods to addresses of its customers.

4.8. Customers, accept that if you start a chargeback or open a claim after the order has gone through our system or the service has started or been completed you are in direct breach of Fragile Boost terms of use, and are bound to either close the chargeback/claim or pay back the same amount in addition to a fee determined by Fragile Boost, no less than $20 and no more than twice the original amount. Should you fail to abide by either option, you, the customer, accept full liability in a court of law as determined by the European Laws.

4.1.1. All disputes directly issued by the customer to the Bank that manages his bank account are in direct breach of these Terms of Use. Disputes can be resolved only by claims by the system used for payment on our site – paypal. All other attempts to violating this rule or evading it will result in direct claim towards the violator.

Thanks for reading!

[sharpiemarker]

@Tralax 

1) There's been reports here of scam transactions with Discord site. The word means disagreement amongst others. I sure wouldn't do business transactions from a site called that either or transactions as a result from communication from that site. When I see Discord site mentioned here, its just bad news.

2) Read PayPal seller protection terms to see how you are (or not) protected and decide if PayPal is the right fit for your business model. For some countries, transactions involving digital goods are simply not covered. Supply all the proof you want...not covered. Click "Legal", then select your country and click the PayPal User Agreement. Your business model has to conform to those terms. Can't avoid it if using PayPal and may have to make certain concessions/own your safeguards to protect yourself to have access to millions of users that have nothing to do with relying on PayPal protecting you, such as taking a percentage of sales aside as self-insurance to cover the disputes/liability.

3) Doing business, you're bound to have risks of unsuccessful transactions. It comes with the territory. Some business model are more riskier than others. High value digital goods and services are easy pickings for scams. Use a reputable marketplace that has buyer feedback and can ban users and is able to provide proof of labor/service. Honestly, virtual stuff can be gamed. Someone will always find a way.

4) Accept that there will be fraudulent transactions in general because who you sell to, may not be who paid. If you do not accept liability and keep racking up these types of disputes, you can potentially get your account closed down due to being high risk to PayPal.

5) PayPal knows that digital goods are too risky so you sell at your own risk if you want. But what's digital goods, they can be duplicated and duplicated to infinity, its not like its a rare thing. Is it? Focus on the next sale. Sell more than you lose or you will make yourself crazy over these scammers. Or find something else that's safe to sell and that PayPal protection covers.

6) I believe PayPal already employs strong customer authentication. PayPal does ask folks for info only they know. Some don't even remember! LOL Like the last for digits of some old invalid credit card or some old residential address they lived at 10 years ago. There is fingerprint and voice recognition. People do put in PIN/password only they know. Using a device only they have in possession. But info itself goes through the air and can be grabbed if you know how. How can you possibly stop that sort of thing, I ask you??? People put these pressures on companies but our own cyber hygiene is bad or have no knowledge of. Could be the law applies between PayPal and its users but not between PayPal users amongst themselves. Maybe you as a seller have to do your own strong customer authentication.

[Tralax]

Even if not the original owner did the payment from his credit card and did it without his authorization. How come it got reported as “unathorized” 3 weeks after the first purchase was made and right after the last of the service was completed. He paid for 12 services within a 3 week period. I’m pretty sure anyone who looses his credit card reports it right away and not 3 weeks later... I am also aware that he did the same chargeback with another company approximately in the same time frame, with them he did 7 service. I believe PayPal should take these proofs in consideration too and not just simply check if I have “seller protection” or not. I am using Paypal for my business since 2012, for basicly 90% of my purchases and sales but makes me wants to change, since I have zero protection. Don’t think it’s should my job to try to make my website more stronger and try to authenticate frauds. Every single payment gateway I have checked lately, has 3D security and Strong Fraud Monitoring. Meaning if the address, phone number or any kind of details he has provided on my website is not the same with the one he provided to paypal at verification or registration, the customer is marked as “riskier”. I can see that PayPal has basicly zero protection when it’s comes to frauds, there are guides on multiple platforms how to do such chargebacks. But tell me if I’m wrong.