Here's my proposal. It's really simple.
Summary: Under Authorized Payment Protection, PayPal conducts an investigation on the buyer when payment is sent. PayPal verifies the buyer authorized the transaction. Then PayPal notifies the seller this payment is authorized. Afterwards, there are no PayPal payment holds, reversals or unauthorized disputes allowed by PayPal. This protection would not protect against disputes for goods not received, goods not as described or credit cards and bank chargebacks.
Seeing as PayPal does this investigation for free anyways when a buyer dispute is opened, I don't see how they couldn't do it ahead of time. The investigation would be much easier. All they would have to do is contact the buyer, verify their ID, and confirm the buyer authorized payment. It's no different than what they would do with an open claim. Who would do a better job of verifying the payment was authorized then PayPal themselves?
This can be done probably within 24 hours because if payment is authorized, the buyer is ready to verify his/her ID. If it's not authorized, then a refund is automatically issued. (minus $0.30 I suppose.) Paypal can tack on a 1-5% and $10 fee paid by the seller or just make it free.
It's beneficial to every party involved.
1. Buyer won't have to deal with an unauthorized payment or hacked.
2. Seller doesn't lose his goods to unauthorized payments.
3. PayPal doesn't have to give a verdict over a dispute they know little about. They'd make a little money over an investigation they might have to do anyways. Consumers are still protected by their credit card and banks and able to open disputes on certain transactions.
I'm going to invite people from different websites to give input on this proposal. Then try to push PayPal to make the change. The discussion will be held at Virtual FAQs here.
