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Bobby
Joined:
12 Jul 2003
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764
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Posted: Sat Dec 20, 2003 5:12 am
Post subject: Caution about PayPal
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I often see websites selling ebooks, subscriptions, and other virtual products using PayPal as a payment processor. I thought I'd post this word of caution - especially because I fell victim to it again today.
First, let me say that this post is not intended to bash PayPal, but rather to inform. I use PayPal as a buyer and as a merchant on almost a daily basis.
The caution is this - PayPal only extends seller protection to you as a merchant if you ship a tangible product and if you ship it via a trackable source, such as UPS, FedEx, etc. If you sell virtual products such as ebooks, subscriptions, etc., you have no such protection afforded by PayPal.
If you sell a virtual product and the buyer complains to PayPal the item was not received or the payment was not authorized, PayPal will contact you for information. They give you two options.
Option 1 is to prove the date and method by which you have issued a refund to the buyer.
Option 2 is to provide a trackable shipping ID for the shipment you sent to the buyer.
Since you're selling a virtual product, Option 2 is not available, and your only choice is to issue a refund or wait until PayPal does it for you.
I've talked with PayPal about this by telephone and by email and the result is the same.
This is not anything to lose sleep over for most people, just keep in mind that a dishonest buyer can get your virtual product for free by buying through PayPal and then claiming it wasn't received. Be prepared to be a victim occasionally over time.
Just a word of caution,
Bobby |
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Guest
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Posted: Sat Dec 20, 2003 6:36 am
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| Buyers can also get ebooks for free if you use clickbank. All they have to do is request a refund. So, I guess it isn't really a Paypal problem, it's a dishonest buyer problem. Having said that, maybe Paypal should disallow transactions involving electronic products like ebooks if they aren't willing to protect the seller as well as the buyer. |
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Debs
Joined:
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4296
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Posted: Sat Dec 20, 2003 6:58 am
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How can you protect a seller when delivering digital goods from dishonest buyers?
Incorporate protection within the digital document is the only way that I see. Dishonest buyers are a part of the digital delivery business, you won't avoid it unfortunately.
How can you put protection in the digital document? I am not even sure it can be done, but I will bet it can be  Programmers are awesome people and love challenges lol
My thoughts are each download causes an incremental change within the document for the next download so each downloaded document has a "unique digital signature." This digital signature must access an authorization script on the seller sites in order to run. It is automatically turned on when downloaded. Check your sales against your "authorized unique digital signatures" (AUDS) and disallow the AUDS for refunded items, and unpaid items (stolen copies).
Now, is this possible? I don't know but hey, I like thinking of solutions to problems, I just have a problem on implementation sometimes
Debs
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Bobby
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Posted: Sat Dec 20, 2003 7:37 am
Post subject:
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| Anonymous wrote: | | Buyers can also get ebooks for free if you use clickbank. All they have to do is request a refund. So, I guess it isn't really a Paypal problem, it's a dishonest buyer problem. |
I've never encountered this type of dishonest buyer via Clickbank (knock on wood) so I don't have experience with their process.
But I would think they have a better system in place than PayPal.
First of all, Clickbank checks your links to download page, subscribe page, or whatever before they activate your merchant account.
I would think they have an electronic record to know when someone clicks on the "Complete Order" link after submitting payment. If someone complained to Clickbank they never got the ebook, Clickbank would just refer them back to the download page - the buyer really wouldn't have an excuse.
PayPal doesn't have any such system in place. You just grab a payment button and slap it on your site and "presto" you're in business. They don't verify your product in any way.
| Quote: | | Having said that, maybe Paypal should disallow transactions involving electronic products like ebooks if they aren't willing to protect the seller as well as the buyer. |
PayPal actively promotes subscription payments, among other "virtual" product offerings.
Plus, PayPal has no process in place to review what you're selling. As I said above, you just grab a payment button and you're in business.
Bobby |
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Debs
Joined:
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Posted: Sat Dec 20, 2003 9:11 am
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Besides the problem you run into here, is there any benefit to using Paypal for digital services instead of Clickbank or one of the other companies that offer referral to download links?
Debs
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Charlie
Joined:
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3305
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Posted: Sat Dec 20, 2003 10:57 am
Post subject:
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| Bobby wrote: | | If someone complained to Clickbank they never got the ebook, Clickbank would just refer them back to the download page - the buyer really wouldn't have an excuse. |
The problem is, the buyer doesn't need an excuse. They can read the book, ask for a refund (saying simply "I didn't like it as much as I'd hoped") and still keep the book.
This is the price you pay for the increase in sales that having an unconditional refund guarantee ensures.
Two ways to help minimise returns are...
1. Include a (paper) registration card that it is posted at the time of the purchase. State in the returns policy that this must be returned for a refund. This will drastically reduce "whim" refunds by email, but unfortunately strays into a grey area for merchants like ClickBank who only handle digital products and handle refunds for you (under their terms).
2. The second approach is to offer bonuses that extend beyond the refund cut off date as a sort of lock in. For example support, "updates" (everyone's favourite) or the promise of not-yet-published follow on bonus products.
Hope this helps,
Charlie.
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- Groucho Marx |
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Bobby
Joined:
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Posted: Sat Dec 20, 2003 7:17 pm
Post subject:
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| Charlie wrote: | | The problem is, the buyer doesn't need an excuse. They can read the book, ask for a refund (saying simply "I didn't like it as much as I'd hoped") and still keep the book. |
That's true.
My comments concerned the person who claimed to have never received the product or the payment was unauthorized.
| Charlie wrote: | | 1. Include a (paper) registration card that it is posted at the time of the purchase. State in the returns policy that this must be returned for a refund. This will drastically reduce "whim" refunds by email, but unfortunately strays into a grey area for merchants like ClickBank who only handle digital products and handle refunds for you (under their terms). |
If you sold via Clickbank, they wouldn't honor your paper card procedure/policy.
If you sold via PayPal, the only proof of shipment they accept is some type of shipping service with a tracking ID number - a simple postcard won't have that. The time, expense, & effort involved in that is probably not practical.
Like you indicated, dealing with dishonest people is a cost of doing business. Everyone should expect to deal with it from time to time.
Bobby |
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Bobby
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Posted: Sat Dec 20, 2003 7:27 pm
Post subject:
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| Debs wrote: | Besides the problem you run into here, is there any benefit to using Paypal for digital services instead of Clickbank or one of the other companies that offer referral to download links?
Debs |
I haven't used any others, so I can only speak for PayPal and Clickbank.
With PayPal you have the money immediately in your account. If you have a PayPal debit card, you can immediately spend that money or get it from an ATM.
Other than that, for digitial products, Clickbank is superior for a number of reasons:
1. The payment process is easier for the buyer - PayPal requires new buyers to establish a PayPal account complete with password. Clickbank is just a simple credit card transaction from the buyer's perspective.
2. Clickbank has the built-in affiliate program
3. Clickbank has the directory of merchants
4. After the buyer makes a purchase at Clickbank, it is obvious to the buyer he/she needs to click on the link provided on the Clickbank completed payment page in order for the buyer to complete the transaction/receive the download.
With PayPal, their "Continue" button is not obvious. People will frequently close their browser after submitting payment via PayPal and then contact you a couple of days later wanting to know why they didn't get the download you promised.
There may be other reasons - those are just 4 from my perspective.
Bobby |
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Debs
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Posted: Sat Dec 20, 2003 7:51 pm
Post subject:
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What about setup and sales fees for sellers? Compare?
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Charlie
Joined:
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3305
Location:
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Posted: Sun Dec 21, 2003 3:29 pm
Post subject:
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Hello again Bobby.
| Bobby wrote: | | Like you indicated, dealing with dishonest people is a cost of doing business. Everyone should expect to deal with it from time to time. |
Unfortunately there is little to be done against the determined dishonest (especially when using third party payment solutions), but the "just email for a refund" approach can be a little too convenient...
Many people will not phone, or even return a post card, and in certain circumstances that is all the deterrant you need. Fortunately, in cases where these methods aren't suitable, the lock in method can be employed quite easily - even by affiliates.
Perhaps the best approach is to try and make people not want a refund after all (even if they bought with that in mind), rather than put obstacles in their way.
All the best,
Charlie.
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"Before I speak, I have something important to say."
- Groucho Marx |
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Guest
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Posted: Mon Jan 12, 2004 8:57 pm
Post subject:
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| As for paypal requiring a tracking ID you could always send a bonus report in the mail with delivery confermation. I think this would be sufficient. |
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