5 Ways to Protect Your Business from PayPal Chargeback Fraud

Today’s world is all about digital payments. People have almost stopped carrying cash with them as most of their transactions are online. However, with the increase in the use of digital payments, the chargeback and fraud are also increasing. Merchants are usually the victims of these friendly frauds, and hence they have become really very careful about the same these days. PayPal is one of the most trusted and old payment methods which is used by the merchants to buy and sell any services or products online.

As people are more inclined toward digital payments after the pandemic situation, PayPal is one platform that got almost 21.3 million new users onboarded. This is definitely a trendsetter in the history of digital payments. But with these high volumes of users, there come some drawbacks. The frauds have also started using PayPal to make fraudulent claims, and you can visit chargebacks911 to know more about it.  For example, these frauds place an order from a merchant and pay him via PayPal. Once the payment is made, they raise a dispute with the resolution center of PayPal. And this is how they claim their PayPal chargebacks. This is something crucial to look into, and hence, there is a major need for the merchants to be aware of this.

Scams Are Also Normal with PayPal

PayPal has become a reliable choice among people these days. With a lot of advantages, PayPal also comes with a risk of scam attempts. It is pretty normal to fall victim to PayPal scams if you don’t know how to protect your business. When someone makes a purchase through PayPal while purchasing your product, the scammers can connect with you to get the product delivered to a false address. There are overpayment scams as well as email scams. Therefore, PayPal scams are not new to businesses.

Common PayPal Chargeback Frauds

Even if PayPal is renowned for being the most secure platform, businesses or sellers may face issues related to PayPal chargeback frauds. You can easily fall prey to PayPal frauds. Before you know how to stay protected against such frauds, you should understand how many types of frauds are there. Let’s have a look at some most common PayPal chargeback frauds.

  • Shipping Address Scams

Scams are not just limited to consumers when it comes to making payments through PayPal. Shipping address scams are the most common ones for sellers these days. Once the customer makes the payment, the scammers can connect with you and ask to change the shipping address. When the product is delivered to a fake address, the seller will have no proof. This is because their transaction shows the original address, not the updated one. Shipping address scams are the most common type of fraud that sellers experience.

  • Overpayment Scams

Scammers make a payment that is higher than the cost of the item they are buying. After making the payment, they contact the seller and report the complaint of overpayment and ask for an extra to refund. After that, scammers also contact PayPal and report that their accounts are compromised, and they don’t want to make payment to the seller. This is another most common practice that fraud considers.

  • Fake Email Scams

Some scammers also send fake emails to sellers that look real. The seller will also believe that it is sent by PayPal. The email states that the customer has made the payment to your account. However, PayPal has held it and won’t release it until you send a shipment tracking number. Therefore, you should be sure that emails are real and not fake before taking further steps.

  • Hacked PayPal Scams

Some scammers target PayPal accounts and make a payment that you receive and ship the product. Later, PayPal would report that the account was hacked, and you have to reverse the amount. In such a case, you have to repay the amount, and scammers will get the products for free.

These are some common frauds. However, PayPal chargeback frauds are not limited to the above-listed ones only. In fact, many ways are there through which scammers can get benefits from sellers. Therefore, you should be aware of all and avoid scams.

Wondering how to avoid scams?

Well, this is an obvious question one has in mind when it comes to dealing with PayPal chargeback scams. This is the concern for most people who are running a business online. If you are worried about how to overcome such situations, then here is the answer. Here are a few easy tips that will help you deal with PayPal scams.

Let’s quickly check how merchants can protect their businesses from any such frauds.

#1. Follow Seller Protection Program sent by PayPal

PayPal provides you with a manual that has all the terms and conditions written on it, and this is majorly focused on the seller’s protection. The Seller protection program by PayPal is designed, keeping in mind of the frauds, especially in online sales, and prevent them. There are tips on how you can minimize claims and also retain the total purchase cost and waive off the chargeback fee paid, if any. If you follow this program, this is going to be really helpful for you as a merchant.

#2. Say no to risky transactions

In case there are any risky transactions, such as selling any kind of high-tech equipment online on the PayPal Platform, then you must totally avoid them. Every transaction is not protected by the PayPal team. Such as the PayPal gift cards, which are no longer protected by PayPal. So, it is very easy for these fraudsters to make the transactions through a gift third and then file a claim. In these cases, you won’t be able to blame PayPal for the fraud as they already mentioned that the transaction is unprotected, and hence, you have no recourse. So, prefer avoiding it.

#3. Work to minimize unauthorized transactions

There are sometimes slight miscommunications that lead to issues during the transaction. When the customer gets a notification with a new name, a company name that they have never heard of, they usually believe that their account is used by someone else and hence claim an unauthorized transaction. Therefore, to avoid or minimize such cases, it is recommended to clearly communicate the business name from which the notification is going to arrive at the customers. Keep it as simple as your website name. You can also call the customers before you dispatch it and confirm the order.

#4. Minimize the claims of “item not received”

This is one of the common ways these fraudsters raise a claim, and they claim that they haven’t received the order. If you want to avoid these claims, you should provide a particular date of order arrival. Keep updating the customer on different stages like dispatched, on the way, or out for delivery. Also, make the signature upon delivery compulsory for online orders. Using the above hacks, you will be somehow able to reduce these fraud claims.

#5. Clear all “not as described” claims

It is really important to avoid these “significantly not as described” claims as there is nothing written about the protection regarding this in the Seller Protection Program manual. To reduce these issues, you can clearly include the description of the article with all the measurements, color, and defects, if any. You must include different product photos from all possible angles. Answer your customers promptly if they have any questions. This might help you to reduce such unnecessary claims.

Bottom Line

Keeping your business protected against PayPal chargeback fraud is solely your responsibility. The above-mentioned tips will surely work for you and protect your business from PayPal chargeback fraud. Now, know all the ways scammers can take advantage of online sellers. And follow all the tips to make sure you keep your business protected against such frauds.

Interesting Related Article: “2021 Ultimate Guide to High Risk Merchant Accounts