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Does the term “chargeback fraud” ring a bell?
People might dismiss it as innocuous jokes that aren’t worth getting worked up about. However, according to Juniper research, chargeback fraud cost sellers about $20 billion in 2020. Approximately 75% of eCommerce businesses reported increased fraud attempts, including chargeback fraud!
The truth is, even though Chargebacks were initially created as a vehicle to protect consumers who visit online vendors, several fraudsters have abused them to defraud unsuspecting online vendors. This explains why Chargeback911 reports that 86% of chargebacks are most likely cases of friendly fraud.
Of course, all hope is not lost. There are measures that you can take to prevent chargebacks on PayPal.
Workee not only provides you with the tools you need to run your business, but we also provide you with useful content to help you along the way. In this article, you’ll learn about some of the best ways to avoid fraudulent PayPal chargebacks. Let’s dive in!
What are chargebacks?
To be on the same page, let’s define the term chargeback. It is a process through which customers can dispute a transaction they have made with a merchant and request that their bank reverses the charge.
This may happen if the customer is not satisfied with the purchase, if they did not authorize the transaction, or if the item they purchased did not arrive or was not looking like what was displayed on the website it was gotten.
When a chargeback is initiated, the funds transferred in the original transaction are returned to the customer, and the merchant is usually charged a fee as a punitive measure.
How does PayPal chargeback work?
Does PayPal prevent chargebacks? Not necessarily. However, they facilitate the process to ensure buyers’ interest is covered. Chargebacks can be a real headache, but don’t worry; the process is in place to protect both buyers and sellers. When a buyer requests a chargeback, the credit card company sends a notification to the merchant bank — in this case, it’s PayPal.
PayPal will then take the funds related to the chargeback and put them on hold, temporarily removing them from the seller’s account. The seller will then get an email notification and be allowed to provide relevant information to dispute the chargeback, such as proof of purchase or delivery.
It’s important for the seller to respond promptly to any chargeback notification and to provide any relevant information as soon as possible. Failure to do so can lead to the chargeback being ruled in favor of the buyer by default and the seller losing the funds in question, in addition to a $20 fine.
Furthermore, it is critical to note that sellers can dispute the chargeback with proper evidence, like tracking numbers and delivery proof. Still, it would be up to the credit card company and issuing bank to determine the case. What is the difference between PayPal Chargebacks and PayPal Claims?
A PayPal chargeback and a PayPal claim may seem similar, but they are two different beasts. A chargeback is when a customer contacts their credit card issuer to dispute a transaction they made through PayPal. This prompts the credit card issuer to initiate a chargeback, which means PayPal must give the customer’s money back and takes the funds out of the merchant’s account. The reasons for chargebacks can vary, from fraud to not receiving goods to unauthorized transactions.
On the other hand, A PayPal claim is a little different process; it happens when a customer contacts PayPal directly to request a refund, which PayPal then investigates internally and decides the next steps.
A customer can file a claim if they did not receive the item they purchased or if the item they received was significantly different than what was described. When a claim is filed, PayPal will investigate and decide who should receive the funds. The claim process is typically quicker and less formal than a chargeback process and does not involve the customer’s credit card issuer. PayPal doesn’t prevent chargebacks or claims.
Please note that chargebacks are generally considered more serious than claims, as they indicate that the customer has yet to be able to resolve the issue directly with the merchant and has had to involve their credit card issuer. This can negatively impact the merchant’s account and ability to accept future credit card payments. In the next section, we will review methods to prevent PayPal Chargebacks.
How to prevent chargebacks on PayPal
Read the full article on our blog- https://workee.net/blog/best-tips-on-how-to-prevent-paypal-chargebacks-in-2023
