1. You can't - you didn't set it up right. If you have emails from the buyers admitting delivery, that might help in a credit card chargeback, but it won't help in a paypal dispute.
Within my website, when a seller/professional submits their work to a Buyer(who is paying for the custom work to be done), the Buyer has the provision to download the work from the website itself without having to wait for a CD to arrive in a mail (if the work was to be put on a CD and mailed it to the Buyer). All the work uploaded by the seller will be available for the Buyer to review and download 24/7 (as long as the website is up and running). So nothing is being sent to the email of the Buyer. Rather the Buyers can download it by logging into their account and visiting the area where the seller has uploaded the work. Also it is possible for an unethical Buyer to simply download the work and yet file a chargeback stating that he is not the one who has actually made the payment in the first place. So what can be done to prevent such or to handle such situation if they occur?
Ewww - that's a licence to steal for a customer.
You really don't have any protection at all there from either a paypal dispute or a chargeback. A buyer can ALWAYS say that it was an unauthorized transaction.
I'm not an expert on this, and I would strongly suggest that you network with other people doing what you're doing and see what they'e done.
I can't see any way that you'll have protection from a Paypal claim for non-delivery - you have no proof that the buyer has received the goods unless something is mailed to them with DC. The "unauthorized transaction" business is only a CC chargeback issue, though - Paypal makes the owner of an account responsible for its use, authorized or not.
You might have some protection against an unauthorized use chargeback if you can confirm that the user used the same computer every time, so an IP identifier might help. It's going to be messy if the guy moves or if his ISP changes the IP on him.
Another option might be to have each user sign an agreement agreeing to be bound by certain rules of the website - you'll have to see a very good lawyer on this, though, I don't know whether such clauses are enforceable.
2. They can't - you didn't follow the rules. They will present whatever information you can muster to the credit card company, but they're not making the decision, the cc company is. The cc company will always rule in favour of the customer provisional;ly, then make a final call within 75 days based on what you provide them with.
The website have agreements, disclaimer & legal documents that support the way the website works. Also one of the legal documents state that the customer cannot file a chargeback if he wishes to get work done. So can I submit those agreements and show the disclaimer to the CC company when they ask me for information? Will this help? The only problem I see is when the Buyer says that it was not him who actually made the payment & it was someone else other than him (other than that, I think, everything else can be handled via the online proof). Now that I mentioned about some of the legal features that the website sports, how do we deal with this situation and what can be the possible out come?
Well, I see we are thinking along the same lines here, referencing my comments for question 1.
You can certainly submit the documents and they may help against everything but an unauthorized use claim ( because, if the buyer didn't authroize the payment, they can argue that they never agreed to the terms).
This type of term is called a "contract of adhesion" and the Courts do not like them if it ever comes to Court. The Court will enforce them ONLY if they specifically prohibit the activity that the buyer is doing - the legal language is that the terms are to be construed strictly against the profferer of the contract ( that's you). In actual practice ( I've seen this work in a bank case), the Courts find a way to find that the language did NOT strictly prohibit the claim.
The credit card company may accept them, but a Court may not, if it comes to that.
3. Depends what it says - the cc company isn't as rule-bound as Paypal is and they're trying to be fair, too. They'll need an admission that the item WAS received that they can believe.
The provision to download the items from the website is available to the Buyers and long as the website is up and running (provided the Buyer is not suspended, banned for doing something really bad on the website). Considering that a Buyer's account is in good standing, there should be nothing that can stop them from downloading the work. Only the website Admins, the Buyer and seller of the work will have access to download the work. Access to Admin to view the work and download it, is given to enable them to review the work in case of Disputes (to resolve them). If a Buyer alleges that he has received the item, then in the first place, he cannot even file for a chargeback as it makes it nonsensical to do so. If an item was not delivered, the Buyer can file a dispute within our website and our staff will intervene to review the case. If the item was really not delivered, then Admin releases the funds back to the Buyer. So as you see, the system is really fair. The only expected problem is that when Buyer tries to file a false chargeback even after he has received the items.
I'm not commenting on whether the system is fair or not - it sounds like it is.
Might be an idea to stick a pop-up in before a download is authorized to the effect that the buyer warrants that he is the person he says he is and that he agrees to not file a chargeback - then you have a specific agreement to cover that particular download. It won't cover you in all cases, but it may tip the balance in some.
4. Exactly what they say they will do - they'll review it, make any suggestions that they think will help, and pass it along to the cc company.
We will be having all the information that they would possibly need about the Buyer account, Transactions, payments, etc. So will this help?
It might - I can say for sure, because I'm not the one making the decision.
You want to be making a straight-line logical argument here, referring to the evidence as needed - don't just dump a pile of info on the CC company and expect them to work it out.
When all is said and done, you're fighting the equivalent of a small claims court action and the cc company reviewer is the Judge. I've found them to be fair in the one case I had - they found in my favour even though the person said that it was an unauthorized use and I actually shipped to a different adress than was on his card. You might get a different guy with a different point of view.
5. If this is a Paypal chargeback, you are out of luck - Paypal does not offer Seller protection for virtual items and especially when those items are sent over the net.
For now, we are not accepting credit card payments directly. We are having payment processors like Paypal, handle that for us. How different is a Paypal chargeback from the chargeback on those credit cards? So if a Buyer pays with the funds in his Paypal account and then falsely files a chargeback with Paypal stating that it was not him who made the payment in the first place, will Paypal simply ignore whatever we have as proof with us on our website, deduct our account of the funds and simply return it to the Buyer?
Once a Buyer releases payment, a seller can request for a withdrawal. Consider that by the time the Buyer has filed a chargeback, that the Seller has withdrawn his share of the money. This is paid from the company's Business account. So in this case, does it mean that Paypal is going to deduct amount from company's Business account, when they receive a chargeback? (which would be completely wrong as the amount held in company's Business account could be the amount unrelated the payment received from the Buyer). Note that the seller has been paid off already. Any funds in the company's Business account is a result of other transactions going on in the website.
I'm going to break this down.
How different is a Paypal chargeback from the chargeback on those credit cards?
Paypal has a different set of rules and they adhere to those rules PRECISELY. No wiggle room at all. The rules are encoded in the User agreement, which is under the "Legal agreements" link at the bottom of this page.
One of their rules is - they don't provide any protection for buyers or seller on virtual items. None at all.
That would suggest to me that any buyer who files a claim should be turned down on the basis that there is no buyer protection - I'd call paypal on this to make sure.
If they allow the buyer claim you'll be out of luck as a seller - the no protection thing again.
So if a Buyer pays with the funds in his Paypal account and then falsely files a chargeback with Paypal stating that it was not him who made the payment in the first place, will Paypal simply ignore whatever we have as proof with us on our website, deduct our account of the funds and simply return it to the Buyer?
Paypal does not assume that a scam is in progress on any dispute, as far as I can tell. If you allege a scam, you'll have to prove it, and I think the bar is set pretty high on that.
I would think a better way to handle it would be to make sure that there is no buyer protection (by calling Paypal) and then rely on that.
6. There are other websites out there who are working on similar principle as our website. How could possibly they be dealing with such similar issues? Please note that they are accepting payments only from "Verified" Buyers. So how is this going to help in avoiding chargebacks?
That's something that you have to ask them or find a lawyer that specializes in that area of the law.
There must be a forum for these guys - there's a forum for everybody these days, it seems - try a Google search.
7. I heard that instead of first going through the dispute in case of chargebacks, Paypal actually reverses the payment made by the Buyer to the receiver (in this case, our company's Paypal Business account). Is this true? If yes, this would impact our business in a negative manner. What can be done in this case to refrain Paypal from deducting our company account of the funds without first finishing the dispute process?
Not actually true, but the result is the same.
First of all, Paypal isn't the decider in cases of chargebacks - the credit cardcompany is. Credit card companies ALWAYS make a provisional decision in favour of the buyer, then they review the case and make their final decision. During this period, the money will be taken out of your account.
There's nothing that you could do to stop this, short of getting a Court Order that Orders the Credit Card company not to take this money out and I don't see a Court making such an Order.
Hope that helps a bit.
You're going to get nailed sooner or later.
