posted on August 14, 2001 07:31:07 AM new
Ahhhhhh katiyana, Thank you for shedding the light on this!
I did not know/realize that the Buyer attempted to return the purse to the Seller but it was refused. Ok, so returning merchandise to PP is not going to be the norm, rather just in special circumstances as this case?
posted on August 14, 2001 07:42:25 AM new
Sorry, I couldn't see the sarcasm. I get so many emails from folks blaming PP for every silly thing the buyers or sellers have done. A seller recently wrote to me angry at PP for charging back something within 2 months. It's not her fault that she threw away the proof of shipping. PP should just take her word for it that it was sent. If people just used common sense in their dealings, a lot of the complaints would go away.
What happened in this case is:
Buyer made an expensive purchase and then had buyer's remorse. Buyer tried to force seller to give a substantial "rebate", but seller properly refused. Buyer tried to return the bag to the seller, but seller refused (which is seller's right). Buyer then made a charge back probably claiming "quality of goods." PP didn't do too much to fight it, so buyer won. Having lost the charge back, PP then took the money from the seller's account. In order to protect seller against a total loss, PP invited buyer to return the item to them so they could send it to the seller.
Accepting the bag from the buyer was the right move under the circumstances. Otherwise, seller would be out the money and the bag. But allowing it to get to a situation where the charge back was allowed was the wrong move. I have spoken to the CC companies at three different banks and all of them said the buyer would have lost if the seller had defended herself. The buyer only won because PP didn't put up a defense.
CC rules state that the seller should put their terms of sale, including returns and exchange policies, on their site and on their sales receipts. So for those who believe that buyers can send back anything for any reason, what would be the point of this rule? I once had a customer try to charge something back simply because he found it cheaper elsewhere. He wanted to return the item at my expense for a full refund, including shipping both ways. He tried to make a "quality of goods" issue by stating that the item was defective. I offered to replace it with another and he kept insisting he wanted his money back. The CC company asked me to send them my terms of sale about returns. They then denied the charge back. So vendors DO have the right to set the terms and say things like "restocking fee of 20%."
In this particular case, buyer sent the seller an extortion letter basically saying "lower the price or I'll charge it back." If not for PP's involvement (or non-involvement) seller would have won.
But the real problem is that now the news is spreading among the scammers. I think there will be a real drop in PP customer service (though it might not be noticeable) as employees are assigned to stock the shelves with returned merchandise. Maybe next month PP stores will all be PP employees selling the returned stuff. This set a real dangerous precedent.
posted on August 14, 2001 09:37:37 AM newThe real problem here is that thanks to this new policy, buyers can now get free upgrades to anything they own. Buy a new one, return the old one to Paypal and do a charge back. Seller protection doesnt apply, even if seller has proof of shipping to the confirmed address.
Yisgood, you know the underlying problem very well. The buyer is entitled, by credit card law, to return the disappointing merchandise and get the charge removed from the credit card.
How do you suggest that PayPal should handle such cases? Seriously.
posted on August 14, 2001 09:55:17 AM newHow do you suggest that PayPal should handle such cases?
Seems to me, yisgood suggested (indirectly) in his post above:
I have spoken to the CC companies at three different banks and all of them said the buyer would have lost if the seller had defended herself. The buyer only won because PP didn't put up a defense.
that PayPal at least give the seller an opportunity to defend herself against the chargeback.
After all, they're currently on record as having assisted buyers in returning items to sellers for which chargebacks have been issued- the least they could do is allow the seller the chance to present their case for disallowing the chargeback.
posted on August 14, 2001 10:03:10 AM new
Yes, I responded to the first posting before seeing the 2nd.
The problem with Yisgood's suggestion is that it doesn't match reality. Once the buyer returns the merchandise, and submits the chargeback request, there is only one defense: show where buyer's card was refunded.
If the card was refunded 80%, the chargeback will succeed for the other 20%. The bank making the decision is buyer's bank. Buyers have more political clout than sellers.
No, I'm not suggesting that Yisgood's reports of his own experiences are fabrications, anything can happen once. However, the reality is, a persistent, disappointed buyer can succeed in a credit card chargeback, very close to 100% of the time.
Seller has a weak hand, and there is nothing PayPal can do to stengthen that hand, as much as PayPal would like to.
The purse seller overplayed his hand, perhaps emboldened by an expectation that PayPal would cover the chargeback.
posted on August 14, 2001 10:17:19 AM newSeller has a weak hand, and there is nothing PayPal can do to stengthen that hand, as much as PayPal would like to.
Made even weaker, by PayPal's refusal to even allow a chance to defend against the chargeback.
I'm not even beginning to suggest thay PayPal advocate for the seller, but as they are assisting the buyer (in however limited fashion) in returning items and thus facilitating the chargeback, providing the seller with an opportunity to present their side of the story is the least they can do.
posted on August 14, 2001 11:08:03 AM newproviding the seller with an opportunity to present their side of the story is the least they can do.
Everyone wants life to be fair, but sometimes it just is not fair. That's reality.
Try this one in the abstract. Not the real case, here or anywhere else.
A company cannot do anything about some complaint. Ever. The way to handle this is to:
1. Explain that there is nothing which can be done, and offer no way to do anyting.
2. Staff a position which politely listens to the complaint, politely explains that nothing can be done. Over and over and over again. Raise fees on everyone to cover the staffing.
3. Provide an email address for complaints, which are never read.
posted on August 14, 2001 11:14:20 AM newBuyer tried to return the bag to the seller, but seller refused (which is seller's right).
This is the core of the issue.
A credit card merchant has the "right" to refuse such a return, but such a "right" is no defense against a chargeback.
When considering the transaction on an economic basis only, a credit card merchant seller has no right to refuse to refund a credit card purchase when the merchandise is returned in the condition it was received. Seller has no right to charge a restocking fee, no right to not refund shipping, nor any other reduction in the amount charged to buyer's card.
posted on August 14, 2001 11:27:49 AM newWhen considering the transaction on an economic basis only, a credit card merchant seller has no right to refuse to refund a credit card purchase when the merchandise is returned in the condition it was received. Seller has no right to charge a restocking fee, no right to not refund shipping, nor any other reduction in the amount charged to buyer's card.
Maybe in the abstract, but reality seems to show otherwise.
I have read posts from numerous sellers on various boards who claim that they have had buyers attempt a chargeback, but were denied once the seller was able to present their side of the case.
I suppose there's always the possiblity that they were all lying, but I think that is unlikely.
posted on August 14, 2001 11:36:09 AM new
MrP I think the problem is that while people will take the time and effort to fight for their own money, Paypal has nothing at stake. Where's the incentive for them to spend time and money fighting bogus chargebacks?
posted on August 14, 2001 11:37:01 AM newI have read posts from numerous sellers on various boards who claim that they have had buyers attempt a chargeback, but were denied once the seller was able to present their side of the case.
posted on August 14, 2001 03:21:36 PM new
"The buyer is entitled, by credit card law, to return the disappointing merchandise and get the charge removed from the credit card. How do you suggest that PayPal should handle such cases?"
While buyers may have chargeback rights under credit card regulations, they have no rights of guaranteed PayPal membership. PayPal could vigorously enforce a policy of suspending the account of any member that issues a chargeback through their credit card.
- Dan
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posted on August 14, 2001 04:37:18 PM new
Chargebacks for merchants having their own merchant accounts work this way:
> buyer disputes charge, claiming she didn't make the purchase, merchandise was not as expected, whatever
>buyers' card issuer sends a "retrieval" (usually) asking for the merchants' documentation on the transaction to the merchant account processor; sometimes, there's no retrieval, only the chargeback. Processor forwards retrieval to the merchant, asking for the documentation. This is a "Type I" chargeback in the industry lingo.
> merchant forwards documentation as requested, which is sent on to the issuer. If the issuer accepts the documentation, that's the end of the process. This is a "Type II" chargeback.
> If the issuer doesn't accept the documentation, or if the cardholder again files a chargeback, this can't be disputed in the same way by the merchant. This is a "Type III" chargeback.
> If the merchant and his processor feel he has a solid case, and the amount involved is significant, there's still another step possible: Arbitration by Visa/MC. Arbitration has to be filed within 45 days of the "Type III" notification, and the loser in this arbitration pays fees of $400, so it's not something undertaken lightly. Many merchants do still win at this stage, though.
"Quality of merchandise" is not recognized by all card issuers as a reason for chargeback, and those issuers who do recognize it often place limits, such as it has to be to a seller in the same state. The buyer has to return the merchandise to the seller for this kind of chargeback to succeed.
I'm posting a link to an Electronic Clearing House (major credit card processor) discussion for their merchant account holders. Choose "chargeback" from the menu, and click on the "more info" link at the end of the chargeback discussion as well.
posted on August 15, 2001 11:04:20 AM new
Credit Card merchant accounts, the basics.
There are two tiers of merchant accounts. Tier one is done with a bank. Tier two is done with a financial services company who itself has a relationship with a bank.
Tier two accounts exist basically because the banks do not aggressively pursue small accounts.
The financial services companies aggressively market merchant accounts, and they often substitute required reserve amounts or other forms of holdback in lieu of the stringent creditworthyness requirement of banks.
Echo is one such financial services company.
Part of the marketing is to cover the issue of chargebacks. The prospective merchant wants to feel reassured that they are in control of chargebacks. Since this cannot occur, Echo has selected a crafty tiptoe around the issues. Consider this line:
If the issuing bank accepts your documentation, the chargeback will be reversed and the amount of the disputed transaction will be credited to your account.
This is true, but has nothing to do with internet quality of merchandise disputes. Nothing.
Echo does in fact get around to having some accurate advice in their tutorial:
There is a limited amount that a processor can do to protect a merchant from chargebacks.
There are four reasons why you should honor requests for refunds promptly.
Are you fulfilling your shipment dates and quality commitments according to the expectations you have set in the mind of your credit card customers?
The reason why sorting this out is confusing is that the discussion of "chargebacks" has many contexts, and in each context things work a bit differently.
The context under discussion is "eBay credit card buyer displeased with purchase and seeks return and refund". Yes, seller can try to talk buyer out of the chargeback, perhaps by compromise, perhaps by intimidation. Seller can hope that buyer gives up, or that buyer states the case so badly that the chargeback is denied. But the bottom line remains, if the buyer returns the merchandise in the condition it was received, buyer will always succeed in a chargeback request unless the charge has already been refunded.
Indeed, PayPal could play more of an advocate for seller. PayPal could threaten buyers with immediate ejection from PayPal. PayPal could even threaten to send such buyers a bill. However, this kind of preference for seller and against buyer would inevitably result in a furor by buyers.
As it is, PayPal does not involve itself at all in quality of merchandise disputes. The credit card company makes the decision, and PayPal passes the decision (along with an occasional piece of merchandise) on.
Bottom line: buyers have more political clout than sellers.
posted on August 15, 2001 11:52:03 AM newThe context under discussion is "eBay credit card buyer displeased with purchase and seeks return and refund". Yes, seller can try to talk buyer out of the chargeback, perhaps by compromise, perhaps by intimidation.
Actually, this thread began with a discussion concerning "an eBay credit card buyer with a documented case of buyer's remorse, who, after a failed attempt at getting a reduction in the sale price, perhaps by compromise, perhaps by intimidation, changed her story to being displeased with purchase and seeks return and refund".
posted on August 15, 2001 03:09:21 PM new
The purse transaction occurred in May, when Paypal (and Damon) were still claiming that its Seller Protection Policy protected sellers against ALL chargebacks.
Rather than screwing over the seller, Paypal should have honored its promises, protected the seller, and kept the purse if it wanted to reduce its losses.
But, as we all know, honor is not a word in Paypal's vocabulary.
posted on August 15, 2001 03:20:38 PM new
Roofguy wrote: The buyer is entitled, by credit card law, to return the disappointing merchandise and get the charge removed from the credit card.
Still wrong. It hasn't become true, even as you continue to post this. Try calling the FTC at 1-877-FTC-HELP for a better understanding of the regulations.
Yisgood wrote: In order to protect seller against a total loss, PP invited buyer to return the item to them so they could send it to the seller.
I'm not sure why you accept this explanation, considering the seller had to publicly embarrass PayPal on another board to get absolutely anyone at PayPal to acknowledge that they had the merchandise. All the while PayPal had the seller's money and merchandise.
No, I don't believe PayPal is trying to collect merchandise, but I don't believe there was any thought on PayPal's part in terms of "in order to protect the seller..."
posted on August 15, 2001 06:08:50 PM new
This is the FTC's summary of rights under the Fair Credit Billing Act. Note especially the comments under "important caveat". Federal law gives the disappointed buyer in a quality of merchandise dispute a right against **the credit card issuer**, not against the seller. And the legal right only exists for specified situations - where the charge is $50 or more, the purchase was made within the same state or within 100 miles of the buyers' billing address, and the buyer has tried unsuccessfully to resolve the dispute with the seller. Since these are the only "quality" transactions **the issuers** can get hit with, they're the only ones covered by most card issuers who do quality of merchandise chargebacks. A minority of issuers will allow chargeback dispute rights for any claim of "merchandise not as described". American Express (the credit card, not the charge card) will simply reimburse the cardholder up to $300 without going through the chargeback procedure, if the merchant has a "no refunds" policy..
posted on August 15, 2001 06:23:29 PM new
mcherry: This proves nothing. After all, the BBB lied, the Wall St Journal lied, Salon Magazine lied, Bankrate lied, sellers who reported winning charge backs lied, New York Newday lied, the consumer lawyer who was quoted in the article lied, the officers of three different banks who told me this seller would have won the charge back lied, hundreds of posters who had Paypal complaints all lied and now it is obvious that the FTC is lying too. Only Paypal and its cheerleaders are telling the truth. I hope no one here is fooled by this giant worldwide conspiracy to make Paypal look bad.
Incidentally, when a customer of mine tried to make a false "quality of goods" complaint to force me to give a "rebate" and I won, it was American Express which denied his claim.
posted on August 16, 2001 09:46:13 AM newFederal law gives the disappointed buyer in a quality of merchandise dispute a right against **the credit card issuer**, not against the seller.
There are very few cases where the bank loses. The story in question is not among them. The chargeback is passed directly to the seller.
The other thing to not be confused about: there are NO laws protecting a credit card merchant. The laws cited do not give the merchant some basis to protest a chargeback, they purely protect buyers, and specify the minimum protection a credit card company must provide a buyer.
The problem is that the credit card company is making the decision in the context of three forces:
-the disappointed buyer
-the law
-VISA/MC/AMEX (who have some interest in protecting sellers)
Sellers are consulted as to their side of the
story, which is presented back to buyer. Indeed, sometimes buyers back off on their request. Sometimes buyers have presented their story badly, and the chargeback is denied. However, a buyer, disappointed in the merchandise quality, who returns the merchandise in the condition it was received, will always prevail. A credit card company who decides against a merchant may face an appeal to VISA, but this is very rare (particularly in cases where the merchant gets the merchandise back). A credit card company who decides against a buyer may face an inquiry by a congressperson, or other public agency. Such inquiries are expensive regardless of their merit.
It DOES seem unfair to sellers, and it DOES interfere with arrangements which might include seller accepting a lower price in favor of an agreement by buyer to forgo the right to return the merchandise. However, this is life as a credit card merchant.
posted on August 16, 2001 10:31:16 AM newIncidentally, when a customer of mine tried to make a false "quality of goods" complaint to force me to give a "rebate" and I won, it was American Express which denied his claim.
It's reassuring that the system works to protect sellers from false claims.
posted on August 16, 2001 08:45:58 PM new
Are you all saying that a buyer can make a false claim to get a refund, a charge back is made against the seller’s account, and the seller does not get the chance to give his or her side of the story.
Why didn’t PayPal request the seller’s side of the story to prove that it is buyer’s remorse and not quality of the product? We have had buyers try the same trick with us on our website. They got the product, liked it but later complained that they got one as a present so they wanted to return the item for a refund. We refused.
The bank got our side of the story and denied the buyer’s claim of defective product. If it were of any interest to PayPal they would have asked the issuing bank to get the seller’s side of the story before issuing a charge back.
Apparently, in high price items it is safer for the seller not to accept PayPal, but to request cashier’s checks or go through an escrow service and let the buyer pay the fees.
posted on August 16, 2001 09:00:44 PM newWhy didn’t PayPal request the seller’s side of the story to prove that it is buyer’s remorse and not quality of the product?
Why would they? Investigating the transaction in order to determine what happened would cost them time and money. When the buyer makes a chargeback, it's much easier to just recover the money from the seller's account, and be done with it.
posted on August 17, 2001 08:22:43 AM new
>>The bank got our side of the story and denied the buyer’s claim of defective product.<<
Obviously lying as is everyone who says you can fight a charge back. Paypal and its cheerleaders have stated that you can't so they have to be telling the truth. After all, they stood behind their "always free," "we won't force you to upgrade" and "buyer/seller protection" didn't they? And after posting here and explaining why they can't protect sellers against charge backs for "quality" claims, they sent out a letter saying "just follow these steps and you will be charge back free." How much more proof do we need that if everyone says one thing and Paypal says another, it must be Paypal who's telling the truth and everyone else who's lying?
posted on August 17, 2001 08:34:38 AM newAre you all saying that a buyer can make a false claim to get a refund,
No, of course not.
This is not a discussion over false claims. Don't confuse "buyer went back on agreement not to return" with "false claim".
Again, I'm very please to hear that when encountering false claims, the system works fine.
The elements of a true quality-of-merchandise claim:
-buyer is disappointed in the quality of the merchandise
-buyer tries to work it out with merchant
-buyer returns the merchandise to merchant in the condition it was received (or tries to return it)
-buyer files written form documenting these steps and demanding the charge be removed from the credit card bill.
-buyer follows up as required in response to any communication
You'll see the problem that PayPal faces. There are an fact a few ways for PayPal (and seller) to fight the chargeback, but they are very few and generally not at all under PayPal's control.
In particular, and repeating here, a credit card merchant cannot refuse to accept a return and expect to defend against a quality of merchandise chargeback. THIS is the message which PayPal must communicate to its sellers. Offering sellers the opportunity to tell the other side of the story compromises this message severely, creating situations where sellers who don't understand reality are constructing elaborate defenses which are utterly ineffective, but cost everyone lots of money.
[ edited by roofguy on Aug 17, 2001 08:39 AM ]
posted on August 17, 2001 08:52:30 AM newApparently, in high price items it is safer for the seller not to accept PayPal, but to request cashier’s checks or go through an escrow service and let the buyer pay the fees.
Yes and no.
If "must accept returns" seems like a hefty risk, one might reconsider one's business plan. Honestly, if this seems like a big risk, I'm not sure a whole lot of people would want to do business with you.
There are risks with credit card transactions, particularly online.
For sellers who follow the rules, PayPal covers nearly all risk, including the crucial risk of unauthorized use of credit card, and claims of non-receipt. This covers all cases of buyer fraud.
When a buyer wants to return the merchandise, this is not a case of fraud. Yes, the seller assumes risk in this case. The risk that the effort and cost of the transaction will be lost, but not the merchandise itself.
posted on August 17, 2001 09:08:46 AM new
>>If "must accept returns" seems like a hefty risk, one might reconsider one's business plan. Honestly, if this seems like a big risk, I'm not sure a whole lot of people would want to do business with you. <<
If buyers can just buy anything, send back anything and expect a full refund, then sellers are in a whole lot of trouble. I get a lot of my cameras from Toshiba as refurbs. Most of them were in perfect condition. Toshiba told me that folks buy cameras, go on vacation, take all their photos and then return the cameras for refund. Or they find another one on sale and return the one they already bought. I am a small seller. I can't afford to be in the business of providing free digital camera "loaners." And we haven't even gotten into the folks who buy the new one and return the old, broken one. A seller has to be able to decide what returns will be accepted. A seller has to be able to say "20% restocking fee." For Paypal or anyone to try to pretend that sellers don't have this option is just plain wrong. And for Paypal to send out email that says "follow these steps and you will be charge back free" when they know darn well that this is a lie, is also wrong.
>>For sellers who follow the rules, PayPal covers nearly all risk, including the crucial risk of unauthorized use of credit card, and claims of non-receipt. This covers all cases of buyer fraud. When a buyer wants to return the merchandise, this is not a case of fraud. <<
When buyer tries to extort the seller by saying "lower the price or I'll charge it back" you don't consider this fraud? When a buyer uses an expensive item like a digital camera on his vacation and returns a used camera for full refund, this is not fraud? When buyer receives a new item and then substitutes an old or broken one for a refund, you don't consider this fraud? Any scammer (including 12 year old kids) learns very quickly that if he uses a credit card and makes a "quality of goods" claim through Paypal, it's an automatic win. This is not the case if the transaction were done through direct credit card purchase. It is PP's miserable CS which allows this. I will grant them this: Paydirect and Billpoint are even worse.
>>Yes, the seller assumes risk in this case. The risk that the effort and cost of the transaction will be lost, but not the merchandise itself.<<
Yes, the merchandise itself. Even if he gets the exact same item back, it has usually lost a good deal of value.
