Technology

Chargeback: A Common and Hardly Catch-able PayPal Scam


Internet is not only a way of connecting people worldwide but also an open way for scams and Scammers. The web has opened several manners of on-line transactions that in-terms increasing the Scams. These scams are of such type that victim keeps unaware about scam. When we deal with internet, we remain unknown who we are dealing with.

What is Chargeback?

Understand Chargeback
Understand Chargeback

A Chargeback is also known as reversal, a reverse of payment to the buyer by the credit card issuer after the transaction has completed. If the buyer has some problems with the transaction like:

  1. He/she has not received the purchased item.

  2. The item he/she has received is totally different with the publicized one.

  3. The unauthorized access has been done with his/her credit card.

If the buyer found any one of such problems or other problems with online Transactions with Credit card or debit card, then he/she is make a request to the credit card issuer bank for the Chargeback.

The issuer bank/MasterCard Institution make an investigation regarding this scam/complaint. Now the bank, if found scam, ask the PayPal’s merchant bank about this. Now the PayPal acquire the Chargeback form the seller’s fund by informing the seller through mail and hold seller’s fund. Now the issuer bank refund the buyer’s fund with original value and also with additional fee.

Why Chargeback?

Why Chargeback
Why Chargeback

Chargeback is done by the buyer as sometimes he/she is not satisfied with the purchase. This chargeback has some following factors that should be known for the merchant.

  1. Unauthorized Transaction: The fraudulent transaction is much common reason for Chargeback. The credit card is access Unauthorized and merchant is responsible solely for this.

  2. Credit Problem: Once customer receives totally different product what is expecting from, then he/she request merchant/bourgeois to urge his/her refund by returning the purchased item, however the bourgeois refused to refund the payment by saying that payment not received.

  3. Item not received: Once the payment is created by the buyer/customer however he/she doesn’t receive the purchased item from merchant.

  1. Transaction failure: An awfully common reason for Chargeback is the transaction failure. This typically happens as a result of technical downside. As a result of technical problem, some times the buyer is charged doubly for the same transaction.

These are the main reasons that cause for Chargeback. Some more reasons are also there however they’re not so much effective. These are error made by human during transaction and payment process.

What is the Process?

The-Chargeback-Process
The-Chargeback-Process
  1. When a buyer has the problem with the transaction, he complaints the credit card issuer bank about this.

  1. The issuer bank makes an investigation about this complaint/criticism, and if the complaint is found untrue, then the complaint is declined and also the buyer is charge some process fee.

  1. If the complaint is found true, then the buyer is supplied with the initial cash with some additional fee

  1. Bank starts the Chargeback process by informing the merchant’s bank through PayPal.

  1. Now the merchant bank makes some investigation against this Chargeback. If the Chargeback claim is invalid then it is declined and card issuer bank is informed. But if the Chargeback claim is found true, then Chargeback money is deduced from the merchant’s account, and merchant is informed about this.

  1. Merchant is asked for the proper documentation regarding this Chargeback. If the merchant provides all the documents and if they’re satisfactory, Chargeback claim is declined and buyer is once more charged.

As this PayPal scam is touch to detect and catch so you just need to follow some points that may keep you out of this Chargeback. These are:

payback prevention
payback prevention
  1. Keep the buyer in touch: If the buyer is provided with the merchant contact details so that buyer can directly contact a merchant.

  1. Quick Responsive: if you are a merchant, you should be a quick res-ponder to any buyer.

  1. Dispute Resolution: if the buyer is not satisfied with the transaction, you should suggest to open a dispute in Resolution center of PayPal. With this, you can solve out the problems with the buyer.

  1. Clear all the Term and Condition: If you are clear about all the terms and conditions with the buyer and all the necessary information is provided on your website, then there may be less chances of Chargeback.

  1. Confirm the buyer’s PayPal address: Before mercantilism something to buyer, you must confirm the PayPal address of the buyer.

  1. Keep record of all the Transaction steps: if you have got all the records and documents regarding the merchandise and alternative things associated with dealing, you can prove yourself true in case of Chargeback.

  1. Confirm the Transaction: After transaction, do confirm the buyer about the product and other things related to transaction. Also avoid third party transactions.

Problems with Chargeback?

Problem with Chargeback
Problem with Chargeback

The main problem with the Chargeback is that you just got to keep all the records for years as if buyer has the problem with anyone of the transaction then he/she will build a Chargeback request until two years. The Chargeback process is too complicated as it has several steps and need to verify through various parties.

Conclusion: The Chargeback is the return of money by the credit card issuer bank to the buyer for a complaint made against an online PayPal transaction. In this Chargeback claim, the verification take place and then Chargeback claim with some additional fee is deduced from the merchant account and the buyer’s account is credited with that amount.

Posted by: Vijay Kumar Goyal

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