February 12th, 2010, 08:46 AM
Paypal fraud - who is liable?
Hi there, i am launching a website for a client using cubecart. To start with i am going to be redirecting customers to paypal. This will be the only payment option. My questions is: if somebody pays with a stolen credit card, who is liable... do paypal cover it or does my client have to absorb the loss...
Thanks in advance.
February 12th, 2010, 11:20 AM
Paypal will not cover it. If someone reverses a credit card transaction that was made through Paypal it will open a dispute case, if the case is found in favor of the person holding the credit card then you have to absorb the loss, otherwise the person holding the credit card has to absorb the loss. In case of fraud you will usually lose the dispute because the credit card issue has the ability, and usually will, reverse fraudulent transactions without input from Paypal or the person receiving the transaction.
Last edited by E-Oreo; February 12th, 2010 at 11:22 AM.
February 13th, 2010, 06:09 PM
OK, what about the seller protection policy? It states that you are protected as long as the card address matches the delivery address...
Thanks for responding.
February 13th, 2010, 09:46 PM
If the business and the transactions the business are conducting are covered under the seller protection policy then it will go a long way towards helping you win a dispute, however it's not guaranteed. You will still need to enter into the dispute process and provide certain documents as proof. If Paypal determines that you are protected under the seller protection policy then you should win the dispute and the transaction will be covered.
Additionally, having matching addresses is far from the only requirement for the seller protection policy. Most significantly, in order for a payment to qualify under the seller protection policy is must be a shipped, physical good and you must be able to produce proof that is was shipped (and in some cases, proof that it was delivered). There are also special conditions depending on the value of the goods and the location of the business, however all of those details are available on the Paypal site.
If you determine that all of the transactions the client performs should be covered by the seller protection policy then you are far more likely to win any disputes that come up and are therefore less likely to need to absorb a loss.
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