Sunday 18 April 2010

Starwars: Stars vs. PayPal

The life of an indie seller is no rose bed, we all know that.
Lots of work, lots of taxes, and some difficult customers are things that we deal daily with; they are the price we pay for being outside the corporate world, doing the work we love.

But there are other things that we have not taken into account, but happen to us, nevertheless. I’m talking about the phenomenon of the chargeback’s.

You know, somebody buys from you, pays promptly, you send the package, and sometimes even receive feedback and than weeks or months later, PayPal takes back the money with a cryptical message about ‘unauthorized transaction’. This can happen up till six months after the transaction.

What the f*** is this? I’ll tell you: it more often than not it concerns buyers with lots of feedback, in fact ‘buy crazy’ buyers that are finally so overextended on their credit cards that the only way out that they see is to tell their banks that their credit card or credit card info has been stolen, and so have the charges reversed through PayPal. Never mind that you have proof of shipping, that you sent to a confirmed address, that the buyer is an Etsy user of long, that she even gave you feedback before she thought the stratagem. Typically, this buyer keeps her silence and no communication is possible.

If you email PayPal about it, you receive a standard answer telling you that they do that to ‘keep you safe’ (???) and thanks you for using PayPal. Etsy usually discontinues the buyers account but can not do anything else.

What can be done?
In fact all the information that you need is somewhere there buried in the tons of small print of PayPal’s User Agreement.
First, you have to contact PayPal in writing. Weird enough, PayPal settles in Singapore and this is the address:

PayPal Pte.Ltd.
Attn: Legal Department
89 Neil Road, #03-01
Singapore 088849

You just tell them your story and include all that you can think that can be of use. If you have proof of shipping that is traceable on line, make a screen shot asap, this info is only traceable on line for three months. Also copies of feedback or emails with the buyer are helpful.

Most probably PayPal will again refuse your petition. Also if you don’t get an answer in four weeks you can proceed like if it was, in fact, denied. It seems a waste of time, but you have to go through the motions.

And when you have your petition denied, than you have to write again your story to two different controlling entities, the English Ombudsman and the Commission de Surveillance in Luxemburg.

The addresses are:

Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London E14 9SR
United Kingdom


Commission de Surveillance du Secteur Financier
110, route d’Arlon
L-2991 Luxemburg

This last one you can write in English as well.

And you will see, it works miracles. It happened to us in two different occasions and both times we got our money back. It may seem a lot of hassle when the amount involved is not large, and it is a lot of hassle, but every year it happens to thousands of sellers and the total amount is staggering.

Here is a copy of the letter we sent to both entities after PayPal had reimbursed us the second time. We have won two battles, but we (we all) still have to win the war. PayPal should not be able to realize those charge back’s.


Dear sir, madam,

Referring to your letter dated 15 march 2010, I can tell you now that PayPal has credited me (again) for the disputed amount .

It is thus not for my own interest only that I write you this letter, but to ask once more your attention for the issue of the chargeback’s. You refer to the PayPal Users Agreement; I’m sure that nobody ever agrees to be treated without fair play.

In my case –and many others- is obvious to anyone that cares to look into it, that the buyer is committing fraud, but even is it wasn’t that way, even in the case that somebody abused the buyers credit card, in the long chain of entities involved, the bank, the credit card issuer, the insurance company, PayPal and finally the seller, why is the weakest link in the chain, the seller, the one that has to carry the risk?

The seller has no possibility of verifying the identity of the buyer or the person that has access to the buyers logging information. The task of verifying the safety of the transaction lays with PayPal, the ‘safest way of sending and receiving money’. PayPal knows that very well and carries the risk of the chargebacks when eBay is the venue involved, but not for Etsy sellers or others. This is also why PayPal has issued me in two occasions a ‘courtesy credit’ , and not out the goodness of its corporate heart.

I would very much like you to look in the matter and try to make an end to this unfair course of things. You have my authorization to contact the bank with my correspondence and any other entity that may be needed. It is a very transparent kind of fraud that should not be allowed to continue but happens to all sellers at any time.

If changing the terms and conditions in which PayPal operates lays outside your power, please do send forward this letter or refer me to the relevant authority, so that the legislation may change to protect all bona fide sellers and not only those assertive enough to make work of it.

Yours sincerely,

If it happens to you, take the trouble to act upon it. It cost time and a couple of stamps, but nothing else. In a brick and mortar shop, theft occurs, but when the theft is ‘corporate’, it is extra sour, I think.

Feel free to copy and divulge any part of this post (the most boring post ever, I know). Together we can change this course of things.

May the force be with you :)


  1. Bookmark it!! very very useful Esther! Thank you so much for sharing your experience wih us.

  2. What a great post with advice to handle this incredible situation.
    This havn´t happen to me jet, but very god to have in mind.

  3. this is unbelievable we have to keep paying taxes and then PayPal takes back the money...this is not fair!! but i am going to save your post so i will know what to do in this case! thanks a lot

  4. wow! thank you for the explanation :)

  5. Thanks for this excellent article! Well done for persevering in your fight and congrats for managing to win back your money!

  6. OMG, what a battle! Shame on them. Glad to hear you won it twice already. Thanks for sharing!

  7. oh god!
    hope it won't happen to me butthanks fr the tip!

  8. Great post! I had that happen too already, it's crazy!

  9. Thank you so very much for sharing!

  10. Incredible!

    Thank you so much for this information so useful!

    I am happy you could win the battle this time! Brave girls ! Ha! :D

  11. Thanks for sharing, this sounds terrible!

  12. I get so angry when I read this. It is scary that they can do like that with our money :( This is a great post and I am sure this will help people who get into this situation. thanks for sharing!

  13. Hey, Stars. Sorry it happened to you and a million thanks for posting the letter and addresses in case it will happen to me. Hugs too...

  14. Thank you for this Star! Never happened to me too, but this sounds so scary!

  15. Wow, you had to go through A LOT, I'm so glad everything worked out! It seems much easier to deal with from the US, all I had to do was provide a delivery confirmation number and my money was released within a week.

  16. Thank you so much for writing this. I have bookmarked it, but hope I never need to use it.

  17. KnotOriginal,
    Actually, the procedure if you are in the States is exactly the same. I think that in your case the situation was somehow different, maybe a bonafide buyer who lost her credit card and had it temporarely blocked ?

  18. this is an extremely helpful post ether and estella-- what a incredible amount of red tape in order to recover your losses! i hope not to have to go through this but it certainly will be a huge help if i do!!

    so glad you were able to get reimbursed!

  19. On the contrary! This is one of the interesting posts ever! Thank you for sharing!

  20. Thanks so much for this write up! I gave up when it happened to me! The amount was only little though and I just couldn't be bothered! Next time I WILL continue and come back to this article for your fab advise!!! :)

  21. Wow, thanks Estella and Esther- this is an article I'm going to cut and paste into my folder for Paypal. Haven't had this happen yet, but good to know about the solution. Very generous of you to share all this info!


  22. WOW! Stars, thank you so much for sharing your experience with us! Bookmarked and Tweeted about this post!

  23. thank you! very useful information!

  24. Thank you so much for taking the time to post about this problem. I have been warned about it. It seems completely unfair. Bravo to you that you took the time to complain and finally got your money back!

  25. Thank you for taking the time writing this incredible useful post. I´m sorry that it happened to you. Well, that it happens to anybody. It shouldn´t!

  26. wow, I admire you for all these efforts!

    Thanks so much for sharing, this is very valuable!

  27. Thank you very much for sharing! Great post!

  28. Thank you so much !!! I'm not sure i'll be able to do it like you did but certainly going to keep it if it will happen to me
    May the force be with you

  29. I'm adding it to my Delicious bookmarks, thank you so much for sharing!

  30. I'm happy you didn't give up the battle. It's crazy what kind of unfotunate things can happen in online business!

  31. Well done, Star(s), thank you for posting this issue, I had no idea it could happen!

    Do you have to send all your packages with registred tracked mail so you have the proof that the item has been sent?

  32. Loddelina: Yes there has to be proof of that you have sent the package, the only way for that is registered mail.
    Registered mail also is much safer, as th seller is responcable for lost packages it makes life much easier :)

  33. Thank you so much for posting this! You have what is necessary to be in the business world: guts!

    This post goes straight to my favorites, you never know the future

    Thanks again for sharing your experience!

  34. Thank you! I've saved your advice as a pdf. You're a righteous activist on behalf of decent artisans every where. I always tell my family, "Do more than whine or complain. Be heard, then work to make a change."

    Good for you, and congrats! Appreciate you sharing.

  35. I knew a little bit about chargebacks but its good to know how to try and get your money back. Thank you!

  36. Interesting post, thanks for sharing.
    I've had to deal with a chargeback once before, luckily, I dealt with it all on-line via the paypal website, sending them links to the buyers feedback, where she'd done this to other buyers within the last few months, I got a positive return of funds within a few days from paypal. Sadly the customer wasn't happy, and went on to report the garment lost in the post, so I had to send her a replacement. She clearly wanted something for nothing. But this episode taught me a good few lessons.

  37. Very useful info, thank you Esther - I've bookmarked!

  38. great info ~ thank you for sharing

  39. Thank you, thank you, thank you. I have been dealing with this for a few weeks now on a sale for almost $2000. (that can make or break my year) The buyer is in China and it's driving me insane. Your post made me feel a little bit better about things. I really appreciate you taking the time to do that.

  40. This is a really great post
    Sure this will help people who get into this situation.
    Many thanks for sharing!
    Bookmark it!!

  41. very very helpful. i bookmarked it. merci so much for sharing.

  42. Very helpful, thanks so much for sharing it with us you really are a star!

  43. a super huge thank you for sharing!!
    I hope i'll never ever need to go through this, but now I know where to find help in case I happens to me too :(

  44. Excellent information ! Thank you very much for sharing :)

  45. i had no idea this could happen - thank you so much for posting this. and yes.. they should never be allowed to get away with it.
    I shall bookmark this

  46. Good piece - I knew this was a possibility from the small print - but really appreciate your sharing how you negotiated the system and successed.

  47. I had no idea this could happen, it's almost unbelievable - daylight robbery by PP!!! Thanks ever so much for the useful info Star - I've bookmarked it in case it ever happens to me or anyone I know.

  48. I heard you 'talk' about this some time ago on the thread, but didn't know it happened more than once AND can happen again and again and again, until Paypal does something about this.

  49. Wow I haven't had this happen to me yet, bookmarking just in case!