Q: "I have a buyer who wants me to ship goods and services to him first before he will pay for them. My eBay listing requires payment via PayPal, but he does not want to pay me through PayPal. Instead, he prefers to use Western Union, only when he receives the goods and inspects them. Should I go along with this?"

A: No way. Any buyer who wants to inspect the goods prior to buying is violating the terms of your eBay listing (which he accepted by bidding on the item) and should be reported promptly to eBay. Western Union is a favorite tool of eBay fraudsters, as amounts and senders often cannot be traced. Insist on payment via PayPal if that's what your listing required; if the buyer doesn't pay within seven days, report it as an unpaid item and either relist the item or make a second chance offer to the underbidders.

Q: "I have several eBay listings up right now that require payment via PayPal, but I've just received notice that my PayPal account has been suspended. I think I can solve the problem with PayPal but not before several of these auctions close. What should I do?"

A: You have two choices here. You can terminate each listing (by cancelling the bids on each one) and send an e-mail to each bidder explaining why you are doing that. Or, if time permits, you can amend the listing to change your accepted forms of payment (for example, by adding checks and money orders and deleting PayPal) until such time as your PayPal dispute is resolved. Otherwise, a nasty eBay buyer can report you to eBay for a listing violation if his PayPal payment bounces.

Q: "I sold an item on eBay a couple of months ago. The buyer paid with PayPal and left positive feedback. Now, more than two months later, I have received a notice from PayPal saying this buyer has charged back the transaction on her credit card, and PayPal wants a refund. Do I have to give it after all this time?"

A: Buyers using PayPal generally have sixty days in which to request a refund from a seller. Most of the major credit card companies, however, allow their members a longer period of time. If buyers have paid by credit card using PayPal, they can avail themselves of the longer period of time allowed by their credit card company to challenge what they perceive to be unauthorized or fraudulent transactions.

Because PayPal is not a bank, only an intermediary or payment conduit, PayPal often has no choice but to reverse the transaction and reimburse the credit card company upon demand. Once they reimburse the credit card company, PayPal will want to reimburse itself by debiting or suspending the amount from your PayPal account. Because you want to continue doing business with PayPal, you will have to reimburse PayPal and challenge the chargeback with the buyer's credit card company. This is hard to do, because when you receive payment via PayPal you do not know whether the buyer is paying by credit card or by automatic debit (ACH) from his checking account. You also do not know which credit card the buyer used—PayPal will not give you this information, in order to safeguard the buyer's privacy (after all, there's always the chance you are an identity thief trolling the Web for credit card numbers).

When PayPal is notified of a credit card chargeback, they notify you immediately via e-mail and suspend the amount of the chargeback in your account.

Whenever you receive such a notice, you are prompted to notify the PayPal Resolution Center immediately. The PayPal Resolution Center will provide you with transaction details (such as the reason the buyer gave for charging back the purchase, but not—again for reasons of privacy—the type of credit card the buyer used) and instructions on submitting additional information for the chargeback dispute. If you begin this process promptly, PayPal will leave the amount in suspension until the dispute is resolved.

PayPal has a team of chargeback specialists who, if you choose to fight back through PayPal's Resolution Center, help you build a case that they will then take to the buyer's credit card company. But don't hold your breath— even a successful dispute takes seventy-five to one hundred days, on average, to resolve, there is no assurance you will be successful, and the decision is entirely up to the buyer's credit card company no matter what the PayPal chargeback specialist (or you) tells them. Most credit card companies view the buyer, not you, as their customer and will resolve any close disputes in the buyer's favor. If your transaction qualifies for PayPal's Seller Protection Policy, you are entitled to a refund, even if the buyer's credit card company rules against you.

Also, let's face it, the law in this area tends to lean heavily in favor of consumers, and for good reason. Many credit card chargebacks are legitimate, either because:

• The buyer's credit card was stolen and the identity thief is buying stuff on eBay.


• The seller or merchant is a nincompoop who doesn't know what he's selling, doesn't know what he's doing, is trying to cheat buyers, or all three.

If you have ever had your credit card or your identity stolen, you thank heaven every day that your exposure was limited by federal law to $50 per card! You don't want to deal with angry phone calls from eBay sellers who were cheated out of merchandise by the fraudsters, no matter how much you may sympathize with their plight. You certainly do not want to make up their losses under any circumstances. You just want to get the fraudulent charges removed from your monthly statement, get a new card, and get on with your life.

In situations involving credit card or identity theft, there are two victims: the person whose credit card or identity is stolen and the merchants who unwittingly sell merchandise to the thieves, thinking they are honest buyers. In our legal system, disputes between two "good guys" (where an innocent person is going to suffer no matter which way the court rules) are usually resolved in the way that would best ensure the stability of our commercial system. In credit card chargeback cases, the law takes the view that merchants are better able to absorb these losses than consumers are, so close cases tend to be resolved in favor of the buyer. You shouldn't expect the credit card companies—or PayPal—to act any differently.

The only protections against credit card chargebacks when you sell on eBay are to:

• State clearly in your listing Terms and Conditions section exactly when you consider a transaction to be final and will no longer accept returns or process refunds.

• Do everything you can to keep fraudsters from bidding on your listings (for example, by excluding buyers from countries known to engage in massive Internet fraud, buyers using "free" e-mail accounts, and buyers with extremely low feedback scores).

• Make sure that all your transactions on eBay qualify for PayPal's Seller Protection Policy, and be sure to use PayPal's Resolution Center whenever credit card chargebacks occur.

• Not use PayPal as your sole source of payment; maintain other merchant and online payment accounts (or be willing to accept checks and money orders), so that if PayPal suspends your account due to chargeback activity you can continue to function and process your successful transactions without interruption.

• Like all online and offline merchants, accept the fact that not all of your transactions will go smoothly on eBay or PayPal no matter what you do, and maintain a reserve for bad debts accordingly. Remember that you can deduct bad debts from your eBay income when preparing next year's tax return.

For two excellent articles on what online sellers can do when buyers charge back their credit card purchases (when the seller has established merchant accounts directly with the buyer's credit card company), see sitepoint.com/article/chargeback-challenge and www .merchant-account-services.org/article/chargeback-challenge/1.

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