Common Types of PayPal Chargeback Scams

PayPal is a global payment processor that offers its services in more than 200 countries. As a widely used platform, it has strict policies and security. Nevertheless, many merchants still face PayPal chargeback scams with countless transactions made day-to-day.
To avoid falling victim to PayPal chargeback scams you must first learn to recognize them. In this article, you’ll learn about different types of PayPal chargeback scams to avoid. For the chargebacks you can’t avoid you’ll resort to chargeback mitigation.

It happens when a payment has been placed in the seller’s PayPal account but the scammer provides false delivery address information. The shipping company keeps delivering to the wrong address.
After the product has been marked “undeliverable”, the scammer provides the correct address to the shipping company and complains to PayPal that the product has still not been delivered. In this way, the seller faces the loss of both the product and the money because they will have no record of shipping to the correct address in their database.

The overpayment scam happens when the scammer overpays and contacts the buyer for a refund of the extra amount. After that, the scammer contacts PayPal and makes a friendly fraud chargeback claim, saying for example that their account got hacked, or that they didn’t want to buy the product, etc. PayPal then reimburses the total amount back to the scammer. This way, the scammer gets away with the product, the seller-refunded amount and the total amount they paid that was reversed by PayPal.

The seller requests for funds to be paid as a gift so the buyer sends a PayPal gift using a credit card. After the seller receives the gift payment and sends the item, a couple of days later, the buyer files a chargeback with their card making a false claim that their card got stolen. PayPal then issues a payment reversal, the seller loses the funds and the buyer gets away with the free product. The seller can’t then argue that the buyer received the item since that would mean the original payment wasn’t made as a gift. That is the crux of a PayPal gift chargeback. The seller is left without protection.

Scammers are on eBay as well. A seller reported that they sold their $1350 bag to a lady for $1200 just because she loved it so much and always wanted it. After receiving the bag, she complained about the size and loved the rest of it. She then asked for a partial refund and the seller’s PayPal account went negative.

The following are some tips merchants can follow to avoid PayPal scams:

• Avoid delivery to an address that does not accept the parcel at least twice to minimize “undeliverable items” and mark that location as a fake address.
• Always research a little more on every email you receive from PayPal. In case of confusion, directly contact PayPal for valid information.
• Record everything regarding overpayment transactions so that you can prove your case to PayPal if things go south.
• Get authorized customer signature and confirmed delivery address details about them to fight friendly fraud claims.
• Do not accept PayPal “gift” payments.

You learn from experience, yours and others. Take it from the folks at a leading chargeback mitigation company: When dealing with PayPal chargebacks it is important to keep your instincts sharp. If you are experiencing regular problems with chargebacks on PayPal or with any other payment service provider, contact us today.