In this blog entry, I talked about the subject of PayPal fraud, but today I have an actual instance to talk about. We sustained fraudulent PayPal activity last month (about the time I wrote that post) and now I can finally talk about it since it’s been resolved.
It involved someone who tried to buy an extraordinary amount of goods over the period of about a week. There were 6 orders totaling about $3,500. Only the first order was actually shipped because the subsequent orders began to look suspicious. While the PayPal user was a verified member and had a confirmed address, the unusual size of the orders made us reluctant to ship any more. We tried to call the customer, but the phone number went to some unidentified voice mailbox. We emailed the customer and waited – no response.
Finally our worst suspicions were confirmed when PayPal placed a hold on all the funds associated with the orders. (They do this while they investigate something). The money at stake here for us was the order that we actually shipped; the remaining orders were never shipped and the money simply was refunded back through Paypal.
You hear a lot of horror stories about PayPal. If you Google “paypal”, you’ll get results for a lot of Anti-PayPal sites as well as the actual site. But I have to say this problem was handled very professionally by their staff and I have no complaints. They do have a number you can call and actually speak with a live person (888-221-1161) who will be able to brief you on what’s going in instances like this.
Naturally the agents I spoke with could not divulge too much information about the actual case, but I did conclude that it was some bozo who set up a bank account with little or no money it in, attached a PayPal account to it, became PayPal verified, and then went to town ordering stuff!
In the end, we got our money back by way of the PayPal Seller Protection policy. As long as you ship to verified PayPal users AND ship to their confirmed address (no matter what’s going on with them), you will be covered by that policy.
However, this exposes a basic issue with PayPal versus regular merchant accounts doesn’t it? In addition to credit cards, PayPal accounts are often connected to bank accounts where merchant accounts deal with only with credit card accounts (which are easier to verify and validate). Bank accounts are more difficult to monitor in real time.
After this incident, we have changed our policy to state that we will only ship to verified PayPal members for those customers choosing to pay with PayPal. Even then, we will be keeping a close eye on those orders. What about you? Do you have a PayPal story – bad or good? Feel free to comment.