Most online merchants are now using Paypal as one of their preferred type of online payments. The reason why they choose Paypal is due to its various features that are helpful enough for both the merchant and their customers. Some of these features is that Paypal has the flexibility to make transactions via your Account Balance, Credit Cards and Bank Accounts.
According to Paypal, they now have a total of 128 million active accounts in 193 markets with 25 different currencies around the world. This number are currently growing since Paypal is now commonly recognized by huge markets making it the most trusted e-currency payment processor technology of our time.
Unfortunately, regardless of Paypal's reputation in the world of online market - it still do have flaws that are currently being abused by some professional scammers. And the most common issue these days is the 'Chargeback'.
What is a chargeback and how do they abuse it?
A chargeback occurs when a payment that has been made was reversed by Paypal due to the complaint issued by the sender. There can only be two main reason for a chargeback. First reason is, 'Did not received goods'. This means that the seller has failed to send the product to the buyer. Fraud occurs when the buyer had received the goods but yet claimed that he or she didn't received the product. If the seller has failed to provide enough evidence of the delivery of the product then the payment he had received will be reversed.
Second reason is, 'Unauthorized Payment'. This means that the Paypal account owner was not aware about the transaction has been made. Most of this type of issues are encountered from payments that came from stolen Credit Cards. As for the downside, payers can file a claim into their Credit Card company that they did not authorized the payment even they did. This will cause Paypal to reverse the payment.
There's actually a third issue that a payment can be chargeback. This is when you traded an unverified Paypal account that had reached its limit. When you do, there are chances that all payments that has been made by that limited account are to be refunded back into his or her account.
Now, how do we protect our account against fraudulent chargeback?
We can prevent fraudulent chargeback by gathering proof or evidences that you have delivered your product. This is done by letting your buyer confirm his information such as Name, Address and Telephone Number. Calling your customer and recording your conversation is also a strong evidence that you can provide in case of a chargeback.
Dealing with 'Did not received goods' and 'Unauthorized Chargeback'
'Did not received goods' is the easiest type of chargeback that can be solved and won provided that you have gathered enough evidences. If your product is a virtual good then simply letting Paypal know that it's an intangible product gives you the edge of winning the dispute. You have to know that Paypal's protection program only covers tangible type of products.
The type of chargeback that you don't want to received is 'Unauthorized Chargeback'. When you have been issued by Paypal an unauthorized chargeback then sad to say that this type of issue are the hardest to deal with. Some may just consider it a loss that they end up refunding the payment.
Receiving unauthorized chargeback is the worst type of payment that will be put on-hold in your account. This kind of chargeback are the hardest issues to deal with and your chances of winning is very slim. Some merchants immediately dismiss this issue once encountered on their account. This is for them to avoid headache and to save their precious time rather than telling their valid reasons to Paypal that will get them nowhere.
Unauthorized Paypal chargeback occurs when the sender of the money called their credit card company or bank that they did not authorized the payment. They will give reasons that somebody stole their credit card or somebody got an access into their bank account. The credit card company or bank will then reverse the payment from Paypal and Paypal will do the same on your account. Thus, the payment that has been sent will be deducted from your account.
Paypal will give you a certain period of time to provide your evidence and it must be good enough to prove that you have dealt with the real owner of the sender's account. We will cover on this post on how you can obtain a solid evidence as proofs. If you couldn't provide such a solid evidence then you might just want to dismiss the issue by refunding the payment.
Provided that you had given a strong evidence proving that the sender was actually pretending that somebody had stolen his account, the money will be refunded back into your account if the sender's Paypal account does have enough Paypal Balance on his account to cover the amount. If the sender's balance is zero then he will incur a negative balance on his account. However, the money he owes you will not yet be refunded until he places or deposit a fund into his Paypal Balance.
If the sender thinks that he can get away with his actions by simply creating another Paypal account then he's wrong. Every credit card account number are being recorded into Paypal's database and it can only be used once per account. Thus, he wouldn't be able to add his credit card on his newly created Paypal account unless he is to use another different credit card number.
How do we prevent Unauthorized Chargeback?
To avoid unauthorized chargeback, you will need to ask some of your customer's personal information. Most of them wouldn't like providing their personal info online but its currently the only possible means of protecting your business against unauthorized chargeback. It's actually better to have a few legitimate customers that will let you earn $100 in one week rather than to have a risky profit of $500 a week with high chances of getting chargebacked.
Confirming your Customer's Physical Address
You can confirm your buyer's physical address by asking him to send you an invoice. He can do it by going into the 'Request Money' tab then 'Create an Invoice'. You should ask him that he should include his address and phone number on the Invoice Form. If he makes a lot of excuses such as errors are occurring and etc... then abort the trade. Most likely, he has a stolen Paypal account.
The good thing about asking for an invoice is that you don't have to accept the payment as a seller. But the point is, you need to confirm your buyer's address and phone number which can be done by clicking on the 'Details' from the payment receipt sent by Paypal. If your customer didn't include his own address and phone number then you can ask him again for the second time. Failure to send you the required information means that you are dealing with a stolen Paypal account. Thus, call off the trade since you are just wasting your time.
If you managed to obtain your customer's phone number, call him to verify that you are currently trading him online. Otherwise, inform him that someone had access into his Paypal account and he needs to call Paypal to block his account.
Finally, you have to ask an email as a final verification from your buyer. Make sure that he is to use his Paypal email account and not any other random email account. On the message, your customer should have a statement which include his complete name and the amount of goods that he is about to purchase.
If in any case that your customer filed an unauthorized chargeback, you can provide all the evidences above and your chances will be at a hundred-percent winning rate.
It is highly advised that you are to take every possible type of evidence that you can have when dealing with a certain transaction on Paypal. The reason is that you will be needing such evidences in case that you are to open a dispute or your account has been filed a dispute from your previous transactions.
Let's say for example that you are the seller and you are selling a virtual product. To be more specific on our example, you are selling a virtual in-game cash.
After discussing the amount of items willing to be bought by your buyer, you can now start with the payment procedure. Always ask your buyer to include on the note a statement that they are purchasing virtual or in-tangible type of goods. Below is an example of the statement:
"This is my payment for the virtual goods that I already received wherein any attempts of filing a chargeback will be considered as fraud."
Some buyers will disagree on the statement above because they haven't actually received their goods yet. Thus, the short statement below can also be used:
"Payment for Virtual Goods."
Simply adding 'Virtual or Digital' goods on the note is already good enough as proof for Paypal.
Taking a screenshots as proof for the delivery of the items purchased are the most important part of evidence that you need you have. Still on our example above, login on the game and trade with your customer's in-game account. When trading between two parties has been established, make sure that the items are shown on the trading table before you capture a screenshot.
On the image shown below, it clearly shows that the trade composes of 27 Million worth of coins, 1 Fishing bait and 1 Thread.
Accept the trade and you have to take another screenshot which confirms on the game that the trade has been completed. Below is the completed trade confirmation.
Finalizing your Screenshots
On your Paypal account, click on the details on the payment that you have just recently received from your customer. This will show some of your customer's information which includes the note, amount of payment, fees and other details about the transaction. You will have to take a screenshot of this page as well.
If you made contact with your buyer from an IM (Internet Messaging) services such as Skype, Yahoo Messenger and etc... You may also have to take a screenshot on all of your conversation from the start to the end. Take note that a conversation simply copied in the form of 'text' is not recognized as evidence.
How do you exactly take a Screenshot?
On your keyboard, look for the key that says 'Print Screen'. But before you do that, open any image editing tools that you have on your PC. For windows users, you can just simply use 'Paint'.
Once you hit the Print Screen button, this will automatically capture the entire screen shown on your monitor. Thus, it requires a few editing on the image if there are some info that you do not want to be shown.
To paste the captured image, simply press 'CTRL + V' on your keyboard at the same time. The long method is to click on the 'Edit' tab on your image editing tool then choose the option 'Paste'.
When it comes to evidences, recorded videos are more recognized as legitimate and solid proofs as compared to image screenshots. The reason is that, images can be easily edited with powerful image-editing tools such as the Adobe Photoshop. Editing simply takes a few and easy simple steps that almost anyone can actually do it.
Videos are a lot much harder to be edited and the edits can be easily spotted. Thus for larger amount of Paypal transactions, it is highly advised to capture the whole transaction process on a video recording tool.
The only problem presenting your evidence in the form of a video is that all personal information captured on your screen can also be viewed by the Moderator. For this reason, you can upload your video on YouTube and make it private then share the link to Paypal/Moderator.
Newly released video-recording tools does have the functionality to block or censor a certain part on your video. You can use this feature if you wish to present your evidence out on the public. However, videos without any edits of any kind are a lot more recognized as a solid proof of evidence.
Here's a list of free video recording software that you might want to check:
CamStudio
First on the list is the 'CamStudio'. You can download the tool at camstudio.org which is completely free to use for both personal or commercial projects. One of its best feature is its functionality to capture audio activity and save your files in AVI format. On this type of format, the tool has a built-in SWF file converter to turn those AVI files into a bandwidth-friendly Streaming Flash Videos (SWF).
Ezvid
Second on our list is Ezvid which is another video-maker tool which are free to use. It's best feature is its functionality that allows you to split your recordings and add text on them. The only downside of this tool is that there is no possible way to export the video that you have recorded on your PC. However, the tool has a function that allows you to upload your video on YouTube.
Blueberry FlashBack Express Recorder
This is a two-in-one video-recording tool since it has the functionality to capture video recording from your webcam and desktop at the same time. If you just simply want to capture the screen from your desktop then disable your webcam then skip the video-editor program. Otherwise, you might want to re-position and re-size your webcam box before exporting it into the output file. AVI is the output file format.
Screenr
Here comes another interesting video-recording tool where it features an interesting way to share your recording without installing an application on your PC. All what you need to have is to install the required Java version on your computer.
Screenr allows you to record a video with a maximum time-duration of 5 minutes. Your videos are automatically saved on your account and you can share it to your friends via links. Exporting can also be done wherein you can export your video in MP4 file format and upload it on YouTube.
Rylstim Screen Recorder
For those people who doesn't want to configure anything on the settings then you might want to use Rylstim. This is a very simple and basic recording tool wherein you can immediately start capturing videos on your screen by hitting the 'Start Record' button.
The only available options on this simple tool is whether you want your left or right mouse click buttons to be shown on your videos. Enabling this function will cause a red ripple for left click and green ripple for right click on your videos. Take note that these mouse effects are only visible when viewing your recordings.
More of these video-recording tools are being released online competing for the best features to offer into their users. Regardless of what tool you are currently using, it is important that you are able to capture a good quality of video particularly for your Paypal transaction. Presenting good quality of video as evidence gives you the edge of winning Paypal Chargeback issues.
Why Sending Your Payments As Gift Is Bad?
The good positive side of sending your payment as gift is that you won't get deducted from the transaction fee. Thus, most small-time merchants would prefer accepting payments via gift method not knowing that it has a very bad effect when issues arise between sender and the receiver.
To explain gift payments, this is a type of payment with the sole purpose of sending money to whom you trust such as your family and friends. It has never been meant to be used for paying products.
Paypal actually discourages any merchant from accepting gift payments that when found out, the penalty is a direct ban on their account. This often occurs when the merchant suddenly encountered a customer that was not satisfied with their services or products. At some point, some of these customer will directly contact Paypal instead of settling the issue first with the merchant.
Once that Paypal has been informed, they will investigate the merchant's account and when it has been found out that owner has been using it to accept payment via gift then this will get their account banned.
For the senders, you need to be aware that sending your money via gift-payment method does not allow you to open or file a dispute. This means that you won't get refunded incase that something went wrong on your trades. Thus, you really have to make sure that you trust the person whom you are sending your payment when you prefer to pay via this method.
Buyer's Protection
When you sent your money via gift then there is no way you can get your money back incase you dealt with a fraud. Its final and there's nothing else that you can do since it has been stated on Paypal's policy not to use this method when sending payment to someone whom you do not trust.
Sending your payment as goods allows you to get refunded because you can always file a dispute within 45 days starting from the date that you have sent your payment.
Better than Nothing
Merchants should also accept payments via goods. It's better to pay for those fees rather than avoiding it by accepting gift payments that could put your account at risk of getting banned. Anyway, you are using Paypal's services so they deserve a small amount of commission for every successful transaction done.
Buyer and Seller Accounts
Either you are the sender or receiver of the cash via gift, both accounts are at the risk of getting banned. This is because both accounts had broken Paypal rules and termination of account is the penalty.
For the sake of both parties, always use the correct form of payment method. If you are the merchant and your reason is to protect yourself from chargeback, please read the previous posts which explains you how to deal with them correctly. Paypal dispute are actually easy to be won.
Finally, avoid dealing with a merchant or seller that accepts gift as payment since most likely they are just fraud or scammers.
Here are the following summarized basic methods on how to gather evidences that you can use in case of a chargeback:
1. Take a Screen Shot
It is highly advised that you should take a screen shot of the entire transaction procedure with your customer. This includes your chat conversation, emails and other form of media-communication.
2. Capture a Video
If you are dealing a virtual product directly online with your customer, you can capture the whole transaction with a video recorder. This proof is a lot more recognized as stronger evidence than taking a screen shot as mentioned above.
3. Call your Customer
We all know that calling your customer might annoy them that they could even end up not buying your product. However, this is the strongest evidence that you can obtain by letting him confirm his information on the phone.
Finally, you have now known that your best protection against Paypal fraud chargeback starts by the time that you are going to deal with your customer.
According to Paypal, they now have a total of 128 million active accounts in 193 markets with 25 different currencies around the world. This number are currently growing since Paypal is now commonly recognized by huge markets making it the most trusted e-currency payment processor technology of our time.
Unfortunately, regardless of Paypal's reputation in the world of online market - it still do have flaws that are currently being abused by some professional scammers. And the most common issue these days is the 'Chargeback'.
What is a chargeback and how do they abuse it?
A chargeback occurs when a payment that has been made was reversed by Paypal due to the complaint issued by the sender. There can only be two main reason for a chargeback. First reason is, 'Did not received goods'. This means that the seller has failed to send the product to the buyer. Fraud occurs when the buyer had received the goods but yet claimed that he or she didn't received the product. If the seller has failed to provide enough evidence of the delivery of the product then the payment he had received will be reversed.
Second reason is, 'Unauthorized Payment'. This means that the Paypal account owner was not aware about the transaction has been made. Most of this type of issues are encountered from payments that came from stolen Credit Cards. As for the downside, payers can file a claim into their Credit Card company that they did not authorized the payment even they did. This will cause Paypal to reverse the payment.
There's actually a third issue that a payment can be chargeback. This is when you traded an unverified Paypal account that had reached its limit. When you do, there are chances that all payments that has been made by that limited account are to be refunded back into his or her account.
Now, how do we protect our account against fraudulent chargeback?
We can prevent fraudulent chargeback by gathering proof or evidences that you have delivered your product. This is done by letting your buyer confirm his information such as Name, Address and Telephone Number. Calling your customer and recording your conversation is also a strong evidence that you can provide in case of a chargeback.
Dealing with 'Did not received goods' and 'Unauthorized Chargeback'
'Did not received goods' is the easiest type of chargeback that can be solved and won provided that you have gathered enough evidences. If your product is a virtual good then simply letting Paypal know that it's an intangible product gives you the edge of winning the dispute. You have to know that Paypal's protection program only covers tangible type of products.
The type of chargeback that you don't want to received is 'Unauthorized Chargeback'. When you have been issued by Paypal an unauthorized chargeback then sad to say that this type of issue are the hardest to deal with. Some may just consider it a loss that they end up refunding the payment.
Unauthorized Paypal Chargeback
Receiving unauthorized chargeback is the worst type of payment that will be put on-hold in your account. This kind of chargeback are the hardest issues to deal with and your chances of winning is very slim. Some merchants immediately dismiss this issue once encountered on their account. This is for them to avoid headache and to save their precious time rather than telling their valid reasons to Paypal that will get them nowhere.
Unauthorized Paypal chargeback occurs when the sender of the money called their credit card company or bank that they did not authorized the payment. They will give reasons that somebody stole their credit card or somebody got an access into their bank account. The credit card company or bank will then reverse the payment from Paypal and Paypal will do the same on your account. Thus, the payment that has been sent will be deducted from your account.
Paypal will give you a certain period of time to provide your evidence and it must be good enough to prove that you have dealt with the real owner of the sender's account. We will cover on this post on how you can obtain a solid evidence as proofs. If you couldn't provide such a solid evidence then you might just want to dismiss the issue by refunding the payment.
Provided that you had given a strong evidence proving that the sender was actually pretending that somebody had stolen his account, the money will be refunded back into your account if the sender's Paypal account does have enough Paypal Balance on his account to cover the amount. If the sender's balance is zero then he will incur a negative balance on his account. However, the money he owes you will not yet be refunded until he places or deposit a fund into his Paypal Balance.
If the sender thinks that he can get away with his actions by simply creating another Paypal account then he's wrong. Every credit card account number are being recorded into Paypal's database and it can only be used once per account. Thus, he wouldn't be able to add his credit card on his newly created Paypal account unless he is to use another different credit card number.
How do we prevent Unauthorized Chargeback?
To avoid unauthorized chargeback, you will need to ask some of your customer's personal information. Most of them wouldn't like providing their personal info online but its currently the only possible means of protecting your business against unauthorized chargeback. It's actually better to have a few legitimate customers that will let you earn $100 in one week rather than to have a risky profit of $500 a week with high chances of getting chargebacked.
Confirming your Customer's Physical Address
You can confirm your buyer's physical address by asking him to send you an invoice. He can do it by going into the 'Request Money' tab then 'Create an Invoice'. You should ask him that he should include his address and phone number on the Invoice Form. If he makes a lot of excuses such as errors are occurring and etc... then abort the trade. Most likely, he has a stolen Paypal account.
The good thing about asking for an invoice is that you don't have to accept the payment as a seller. But the point is, you need to confirm your buyer's address and phone number which can be done by clicking on the 'Details' from the payment receipt sent by Paypal. If your customer didn't include his own address and phone number then you can ask him again for the second time. Failure to send you the required information means that you are dealing with a stolen Paypal account. Thus, call off the trade since you are just wasting your time.
If you managed to obtain your customer's phone number, call him to verify that you are currently trading him online. Otherwise, inform him that someone had access into his Paypal account and he needs to call Paypal to block his account.
Finally, you have to ask an email as a final verification from your buyer. Make sure that he is to use his Paypal email account and not any other random email account. On the message, your customer should have a statement which include his complete name and the amount of goods that he is about to purchase.
If in any case that your customer filed an unauthorized chargeback, you can provide all the evidences above and your chances will be at a hundred-percent winning rate.
Capturing Screenshots for Evidence
It is highly advised that you are to take every possible type of evidence that you can have when dealing with a certain transaction on Paypal. The reason is that you will be needing such evidences in case that you are to open a dispute or your account has been filed a dispute from your previous transactions.
Let's say for example that you are the seller and you are selling a virtual product. To be more specific on our example, you are selling a virtual in-game cash.
After discussing the amount of items willing to be bought by your buyer, you can now start with the payment procedure. Always ask your buyer to include on the note a statement that they are purchasing virtual or in-tangible type of goods. Below is an example of the statement:
"This is my payment for the virtual goods that I already received wherein any attempts of filing a chargeback will be considered as fraud."
Some buyers will disagree on the statement above because they haven't actually received their goods yet. Thus, the short statement below can also be used:
"Payment for Virtual Goods."
Simply adding 'Virtual or Digital' goods on the note is already good enough as proof for Paypal.
Screenshots of the Items Delivered
Taking a screenshots as proof for the delivery of the items purchased are the most important part of evidence that you need you have. Still on our example above, login on the game and trade with your customer's in-game account. When trading between two parties has been established, make sure that the items are shown on the trading table before you capture a screenshot.
On the image shown below, it clearly shows that the trade composes of 27 Million worth of coins, 1 Fishing bait and 1 Thread.
Accept the trade and you have to take another screenshot which confirms on the game that the trade has been completed. Below is the completed trade confirmation.
Finalizing your Screenshots
On your Paypal account, click on the details on the payment that you have just recently received from your customer. This will show some of your customer's information which includes the note, amount of payment, fees and other details about the transaction. You will have to take a screenshot of this page as well.
If you made contact with your buyer from an IM (Internet Messaging) services such as Skype, Yahoo Messenger and etc... You may also have to take a screenshot on all of your conversation from the start to the end. Take note that a conversation simply copied in the form of 'text' is not recognized as evidence.
How do you exactly take a Screenshot?
On your keyboard, look for the key that says 'Print Screen'. But before you do that, open any image editing tools that you have on your PC. For windows users, you can just simply use 'Paint'.
Once you hit the Print Screen button, this will automatically capture the entire screen shown on your monitor. Thus, it requires a few editing on the image if there are some info that you do not want to be shown.
To paste the captured image, simply press 'CTRL + V' on your keyboard at the same time. The long method is to click on the 'Edit' tab on your image editing tool then choose the option 'Paste'.
Recorded Videos As Solid Proof
When it comes to evidences, recorded videos are more recognized as legitimate and solid proofs as compared to image screenshots. The reason is that, images can be easily edited with powerful image-editing tools such as the Adobe Photoshop. Editing simply takes a few and easy simple steps that almost anyone can actually do it.
Videos are a lot much harder to be edited and the edits can be easily spotted. Thus for larger amount of Paypal transactions, it is highly advised to capture the whole transaction process on a video recording tool.
The only problem presenting your evidence in the form of a video is that all personal information captured on your screen can also be viewed by the Moderator. For this reason, you can upload your video on YouTube and make it private then share the link to Paypal/Moderator.
Newly released video-recording tools does have the functionality to block or censor a certain part on your video. You can use this feature if you wish to present your evidence out on the public. However, videos without any edits of any kind are a lot more recognized as a solid proof of evidence.
Recommended Free Video Recording Software
Here's a list of free video recording software that you might want to check:
CamStudio
First on the list is the 'CamStudio'. You can download the tool at camstudio.org which is completely free to use for both personal or commercial projects. One of its best feature is its functionality to capture audio activity and save your files in AVI format. On this type of format, the tool has a built-in SWF file converter to turn those AVI files into a bandwidth-friendly Streaming Flash Videos (SWF).
Ezvid
Second on our list is Ezvid which is another video-maker tool which are free to use. It's best feature is its functionality that allows you to split your recordings and add text on them. The only downside of this tool is that there is no possible way to export the video that you have recorded on your PC. However, the tool has a function that allows you to upload your video on YouTube.
Blueberry FlashBack Express Recorder
This is a two-in-one video-recording tool since it has the functionality to capture video recording from your webcam and desktop at the same time. If you just simply want to capture the screen from your desktop then disable your webcam then skip the video-editor program. Otherwise, you might want to re-position and re-size your webcam box before exporting it into the output file. AVI is the output file format.
Screenr
Here comes another interesting video-recording tool where it features an interesting way to share your recording without installing an application on your PC. All what you need to have is to install the required Java version on your computer.
Screenr allows you to record a video with a maximum time-duration of 5 minutes. Your videos are automatically saved on your account and you can share it to your friends via links. Exporting can also be done wherein you can export your video in MP4 file format and upload it on YouTube.
Rylstim Screen Recorder
For those people who doesn't want to configure anything on the settings then you might want to use Rylstim. This is a very simple and basic recording tool wherein you can immediately start capturing videos on your screen by hitting the 'Start Record' button.
The only available options on this simple tool is whether you want your left or right mouse click buttons to be shown on your videos. Enabling this function will cause a red ripple for left click and green ripple for right click on your videos. Take note that these mouse effects are only visible when viewing your recordings.
More of these video-recording tools are being released online competing for the best features to offer into their users. Regardless of what tool you are currently using, it is important that you are able to capture a good quality of video particularly for your Paypal transaction. Presenting good quality of video as evidence gives you the edge of winning Paypal Chargeback issues.
Why Sending Your Payments As Gift Is Bad?
The good positive side of sending your payment as gift is that you won't get deducted from the transaction fee. Thus, most small-time merchants would prefer accepting payments via gift method not knowing that it has a very bad effect when issues arise between sender and the receiver.
To explain gift payments, this is a type of payment with the sole purpose of sending money to whom you trust such as your family and friends. It has never been meant to be used for paying products.
Paypal actually discourages any merchant from accepting gift payments that when found out, the penalty is a direct ban on their account. This often occurs when the merchant suddenly encountered a customer that was not satisfied with their services or products. At some point, some of these customer will directly contact Paypal instead of settling the issue first with the merchant.
Once that Paypal has been informed, they will investigate the merchant's account and when it has been found out that owner has been using it to accept payment via gift then this will get their account banned.
For the senders, you need to be aware that sending your money via gift-payment method does not allow you to open or file a dispute. This means that you won't get refunded incase that something went wrong on your trades. Thus, you really have to make sure that you trust the person whom you are sending your payment when you prefer to pay via this method.
Reasons Why Send your Payment as Goods
Buyer's Protection
When you sent your money via gift then there is no way you can get your money back incase you dealt with a fraud. Its final and there's nothing else that you can do since it has been stated on Paypal's policy not to use this method when sending payment to someone whom you do not trust.
Sending your payment as goods allows you to get refunded because you can always file a dispute within 45 days starting from the date that you have sent your payment.
Better than Nothing
Merchants should also accept payments via goods. It's better to pay for those fees rather than avoiding it by accepting gift payments that could put your account at risk of getting banned. Anyway, you are using Paypal's services so they deserve a small amount of commission for every successful transaction done.
Buyer and Seller Accounts
Either you are the sender or receiver of the cash via gift, both accounts are at the risk of getting banned. This is because both accounts had broken Paypal rules and termination of account is the penalty.
For the sake of both parties, always use the correct form of payment method. If you are the merchant and your reason is to protect yourself from chargeback, please read the previous posts which explains you how to deal with them correctly. Paypal dispute are actually easy to be won.
Finally, avoid dealing with a merchant or seller that accepts gift as payment since most likely they are just fraud or scammers.
Here are the following summarized basic methods on how to gather evidences that you can use in case of a chargeback:
1. Take a Screen Shot
It is highly advised that you should take a screen shot of the entire transaction procedure with your customer. This includes your chat conversation, emails and other form of media-communication.
2. Capture a Video
If you are dealing a virtual product directly online with your customer, you can capture the whole transaction with a video recorder. This proof is a lot more recognized as stronger evidence than taking a screen shot as mentioned above.
3. Call your Customer
We all know that calling your customer might annoy them that they could even end up not buying your product. However, this is the strongest evidence that you can obtain by letting him confirm his information on the phone.
Finally, you have now known that your best protection against Paypal fraud chargeback starts by the time that you are going to deal with your customer.
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