Is there no way to avoid chargeback scams as a seller ?

Hi there all. I'm running a graphic design company and work my butt off nearly 16 hours a day. Due to the existance of sites like 99designs my knowledge and skills have been devaluated which forced me to automatically drop the prices. Not only I spend days next to computer with ignorant and dumb customers but I also work for peanuts.

When I thought that it can't be worser, well guess what... I was wrong... . Around one month ago I had a buyer that bought nearly the most expensive package from me. Upon payment I've started to work on her designs. She was unsure of what she wants as a final design. Well... let's say that she briefly said what she expects. I've spent a lot of time in order to satisfy her needs. I take time brainstorming, sketching, vectorizing the sketches as well as choosing proper fonts and color palettes. I'm not creating cheesy 90's style of logos and certainly nobody can say that my logos are of low quality. I've delivered her order but she wanted some changes on nearly all of the 6 concepts that I've made. As I'm fair towards customers, I offer unlimited minor revisions. I've told her that revisions will take more than 1 day to be done. While changing the concepts to meet her expectations, she've issued a chargeback to her card issuying company and literally ripped me off. Both from the time I've spent to finish her work as well as money of course.

I'm using PayPal as a payment processing platform (as everyone expects nowadays that credit cards are accepted). PayPal have informed me that there is a negative balance of few hundred dollars on my account (as I always have a habit to immedietaly withdraw money from paypal to my normal bank account). There have been also an open case in resolution center. The buyer claimed in it that the product was different from description. I kindly explained to Paypal that I've handled the service and delivered my client what she wanted as well as the fact that she requested revisions and changes. Everything was supported by screenshots and email correspondence between my company and her. After my reply, PayPal informed me that they are reviewing the case. Literally after one day from that information, they've closed the case to the adventage of buyer.

I've contacted PayPal by phone at least 4 times and discussed the whole case. They claim that a proper information was sent to buyer's bank but there is usually a 75 work days period in which bank responds to the information. I also heard from consultants that just because I'm selling virtual goods/services, I cannot be protected by their buyers protection system. Isn't it ridicolous ? And what if you're a programmer and code for your dumb customer day and night, day and night ? Buyer has the full right to chargeback up to 6 months... . You deliver the work and literally get ripped off after some time. I guess PayPal stays with the same stereotype that only sellers cheat and create frauds.

The worst is that it seems that you can't escape from chargebacks. No matter if you accept a wire transfer or you handle the payments through a payment processing platform, you can get ripped off up to 6 months. As simple as that . NOW THAT'S A BLATANT FRAUD ISN'T IT DEAR APPRENTICE PAYPAL CONSULTANT ? "- We believe in honesty of our buyers". Utopia...

I didn't decide to be in this system of extreme consumptionism and degradation of humanity. Work, earn, spend circle which is - let's not be scared to tell that - equivalent of a vegetation for me. Without even thinking deeper about what is the purpose of all this. However, if I spent these years on art studies and with books, I decided to be more independant and not count on my local graphic design job offers then why would I be ripped off by my own customers ? It turnes out that my hard earned money isn't even safe on my own bank account... . Is there a way to by default not allow customers to perform a chargeback while still allowing them a fast payment ? Thanks

Frustrated_Danny

 

The only way is to offer your customers unlimited revisions so that they wont have excuses based on inappropriate work done.

 

The problem is that they had such a benefit. Each customer, even the one that ordered the cheapest package had unlimited revisions option.

 

One option that may help with PayPal is to physically ship a CD to the customer containing the website data. You can try to claim it is physical goods and show proof of delivery. Have the customer agree to your contract that states once the physical copy has been delivered, chargebacks will not be tolerated.

Unfortunately, there is no solid way to prevent this.

 

But this will still not protect me in case as described above where idiot-buyer have issued a chargeback directly in his credit card issuer - bank in this case. I've read cases all over internet simillar to my problem and even worser where seller have lost few thousand dollars/pounds due to blatant fraud. PayPal seems to not care, banks don't care for sure. If I'll show even 500 agreements and buyer's acceptances to my TOS's, it will still mean nothing. I know I'm repeating myself but it's due to the fact that I'm extremely shocked. Pretty much you can cheat, steal and abuse as much as you want. Idylla, Eldorado of covered needs. I say I want a new macbook and perhaps an appartment and upon everything is set up, signed, all rights are transferred, I chargeback the entire amount by saying that someone unauthorized have used my account. Ridicolous... . I don't understand why nobody yet have done anything with this. Also I don't understand how other companies offering services are handling this problem. SEO & SEM companies, analytics companies, web design, web hosting, graphic design companies, freelancers and a whole thousands of others. Of course I can always take a legal action but knowing life it will cost more than the service fee and will take time. Not to mention that I have international buyers as well...

'Be an entrepreneur!', 'be your own boss!' signs are saying somewhere in the public work department. Maybe it's worth mentioning also 'be frustrated and pray for no one issuing chargebacks plus 1:30 h calls staying on waiting line while trying to talk with a IRS representative, issue stupid documents to department of revenue, deal with idiots all the time etc. etc. ocean eden of problems'.

 

I have been looking into Skrill supposedly they are much harder for a client to do a charge back. I am going to use them for my next few transactions.

I hate taking PP for design stuff. When you take PP for digital stuff there is a big risk that you will get ripped off.

Graphic design is hard, so many people have some foggy unclear idea that they tell you to do, then when it doesn't look like they thought it would they get upset and don't want to pay. Many people have a delusion that design is just making something "just a simple logo" "It should only take an hour at most".

Many people are scum. I have had countless people run off with proofs thinking they didn't have to pay. Only to realize the proof won't work and they have to come back and pay for the file, lol

 

Exactly ! They think that if it looks so simple then it's easy to do. Sometimes their requests are ridicolous (like 3 completely different elements being near eachother and a 6 word name of the company right underneath it...) . Too bad that each of the designs I do don't have a hidden pocket for a miniature C4 bomb. Skrill may be a nice idea, thanks for the proposal ! Will definetly look deeper into that. However, I have an additional question. I've met up with hi-end design agencies and for example they don't accept payments right away on their site. Usually you need to contact them first, establish contact, explain what you want, have a price quote, then they generate you an invoice and you can do a wire transfer. But still with a wire transfer, customer can revoke the payment up to 6 months. For sure designers won't wait 6 months to pass the item safely to the customer. Like you see, I'm trying to figure out how bigger fishes are protecting themselves in such a cases. It's better to prevent rather than fight back.

 

I think really big fish use escrows, but usually people don't use that unless there is a 1k or more being dealt with.

 

I guess probably due to high comission rates. I've never used escrow. I have a question. Can ToS serve as an equivalent of a contract ?

 

When I worked in the promotional products industry, we constantly needed vectorized artwork done. The artist who provided us with the designs had a website and each of her customers had a section that they had a password for. That is where she stored their artwork. Could you do something like that (just a pic of the work not the actual art) until they issue signed approval of their designs? Rather than give them the work, I mean. Nope, won't stop determined idiots like the one you're dealing with now but would if someone rips you off, at least they wouldn't have the final product for free.

I didn't know about the six months thing, that makes no sense to me. I don't understand why they would make it so long!

 

I doubt it. But I'm not a lawyer.

I think the key element as a freelancer on a national or global level is getting the money in a place where it cannot be taken back/charge back.

Even if the client signed a contract if they got the money back its not like you can go to international court and retrieve it. You would spend 20k++ just to open a international case.

On a local level things are different because you can just spend $50-$100 and take it to court.

 

Sadly, it's a case of he said/she said and PP is taking the buyer's side without question. Sucks! So does that six months thing, still trying to figure out the logic of that.

 

Recently one guy was selling his hosting business simply to raise funds to cover the chargeback fees. Must have been some sort of co-ordinated attack, where they had a large number of people in one month, signing up for the sole purpose of doing chargebacks. Each one cost him *i think* $25 per chargeback, and he had enough chargebacks within 1 month, that it wiped him out financially.

Going through your comments, I agree with you. Everywhere is "be your own boss" and in addition to "be frustrated and pray for no one issuing chargebacks plus 1:30 h calls staying on waiting line while trying to talk with a IRS representative, issue stupid documents to department of revenue, deal with idiots all the time etc. etc. ocean eden of problems" -> I would also add, that in the chase for being your own boss, you might have to get a second, or third job, simply to pay off the costs involved of running a business and paying for all the chargebacks you get.

To be honest, The entire system is a joke. I have been saying this for ages, Paypal should have a better system to protect against fraud as vendors have little tools. They should have something like 2 factor verification (sms sent to the phone with a code you type in to verify you authorize the transaction) and with this, all of the "credit card fraud" should vanish.

 

I know what you mean! Many people do not appreciate the full design process. Look at yahoo's newest logo which cost a fortune. Yet to most people, it just looks like purple text. But the difference between something that looks nice and something that really is "great, amazing, jaw-dropping" is big $xxxx.
I have always loved the hidden arrow in the fedex logo, so you can tell that I appreciate the work and thought that made that come to life, but for most people, they will never really appreciate it.

With competitions, and crowd sourcing becoming more common, I think there is no hope of educating people. There is even an idiot on this forum in the competition area, making people dance to his every design whim, and they have to jump in the hope that only one of them will be paid for all their time and effort.... and then he has the balls to keep asking for more designers to enter the competition....
but because everytime there is crowdsourcing and people willing to spend 10+ hours designing something without guarantee of any pay at all, is why the majority of people undervalue, and will continue to undervalue the hard work and skills of designers.

I love the work done by nc winters, as I feel these sum up the average person that needs something designed:

 

What you may want to consider is if taking payment via paypal then only accept payments from registered accounts. This won't stop chargebacks but it will help reduce them.

 

When you use PayPal they are not only the payment processor but they also assume the position of mediation if a dispute arises. You need to get a REAL merchant account. Then when a consumer disputes a charge for a SERVICE ALREADY RENDERED 9 out of 10 times the credit card company will refer the consumer to the..............................LEGAL system.

Your next course of action should be suing her to recover your losses. But before that you need to figure out if it will be worth your time and money.

 

I am also face same kind of problem by using PayPal. PayPal never take Seller side

Can anyone Please suggest some alternative payment method where chargeback is not possible or atlease they don't take buyer side all time.

 

Great one ! However, I feel that educating these people is like fighting with windmills. In my opinion it takes time which should be spent on working over the design. In perfect world, one should come, order the service, explain his vision and receive the final product. I had a funny comic as well which fits to all kind of freelancing jobs, especially in web design : http://theoatmeal.com/comics/design_hell

What I don't understand is why every designer, even though he knows that thanks to participating in crowdsourcing contests he's cutting his own plank on which he stands, he's still continuying. Few years more and a graphic designer will be 'that someone with more cash so he could buy that ehh ado..a...ya know that expensive paint'. Yahoo isn't helping in creating an image for graphic designer.

Indeed, that would be a little solution but it doesn't mean a registered account cannot perform a fraud. These snakes know their rights too well and it will be getting only worser with each year. Accepting payments only from paypal funds could be a solution as well but again it wouldn't mean that there would be no chargebacks. Not to mention that probably such an action would cut out 90 % of sales (as I bet most of these idiots paid thru credit card/debit card).

This is what I repeat to everyone all around me. PayPal takes his dime with each transaction right ? So excuse me but if there's a resolution center, there is a customer service, they stand in between me and customer then I think that a number of their obligations should expand from just throwing the money from one to another. I can't agree with a merchant account in PayPal. Just the fact that you're paying them another dime doesn't matter in such cases. I know from case studies of another people that tried such a solution.

PayPal appears to be someone that is there for you when all is going according to their scheme. If only tiniest thing goes wrong, they are like 'I'm outta here' and they leave you with a problem. As they want to stay as far as possible from problems, they don't care if buyer sent back the item, they don't care who's right etc. Visa and Mastercard as well as banks are their gods and sergeants and they would lose everything if they would try to make them problems. They act quick, pretending that nothing happened, not even allowing you to open a case or answer back in that resolution center. I can't understand why main credit card issuers such as Visa or Mastercard are letting their users perform such a serious operations like chargebacks. It should be completely unavaible for a grey John Doe. Maybe for corporate users - yes but not for an idiot that is trying to save money even on peanut butter.

This proceed needs to end, and I say it needs to end right now ! It can't be that in one day someone can take all your money and lead your company to bankruptcy. Imagine a dishonest competition that will order dozens of services in one month and then perform a chargeback. Not necessarily one person but a group of controlled people. Just like matt_62 said, that web hosting company is a perfect example of what I say.

I hereby postulate for different method of sending and receiving quick and small payments, especially for virtual goods and services.

EDIT : I forgot to mention that forcing customers to pay for things through 'PayPal gift' can be a solution to unable them to perform a charge back but only a one issued in PayPal. Bank issued chargeback is still possible I guess. However, User needs to charge his paypal account from his own bank account, right? This means that if he would pay for something through paypal gift (non refundable) and then perform a chargeback issued by bank, he would get his money back to his own bank account but would be left with a negative balance on his PayPal account. Theoretically, this is a solution. Although it leaves me unsatisfied due to the fact that paying for my services through some sort of gift system makes me feel like if someone pooped on my head.

 

Yeah it sums it up pretty good.

I feel like good amount of the clients I deal with are just rat race scum when it comes to business. They are used to dealing with large corporations and their $8 an hour workers. So they think they can just treat people like crap, be aggressive and get refunds and discounts.

Most large companies also have a lot of “policies” to deal with aggressive and abusive customers, I think when many people see a freelancer without structured “policies” they think they can take advantage of them.

When I fist started freelancing I would get so many BS people and offers.. I tried to learn from each situation, work on my professionalism and cut them down in a neat and orderly fashion. Now I don't get that many BS offers they just know. Or figure it out real quick. lol

 

Redesign your contract. Clearly state What is included in your service
Example 1. Concept, 1 Draft, 3 revisions of Draft, 1 Final Image.

At each stage make your the customer signs-off

If the customer does a charge-back sue them in small claims court in your city.