Contemporary Handmade Alliance: PayPal Chargebacks

Personally I haven't had any issues with fraudulent buyers nor have I had any major postage wows, sure I've had the odd parcel get delayed in the Australia Post system, but then again who hasn't! {touch wood}

Source: e-commercefacts.com

via Christine Percy on Pinterest

I have heard many horror stories about Fraudsters using chargebacks to commit credit card fraud. They do this by completing a legitimate transaction using PayPal, they receive the goods and then they dishonestly request a chargeback from their credit card company by either:

Claiming that someone has illegally used their credit card; or
That the item was not received or that the item was does not meet their expectations or arrives damaged.

To learn more about this I've spent today reading through PayPal's Business section and other online resources. Its been an enlightening experience and I have shared my findings below:

Safeguarding your business

If you are using PayPal to sell your handmade items I strongly suggest that you review their Business section and if you want to safeguard your business from these evil doers, take on board the following tips:

In your product descriptions describe your item in as much detail as possible and as accurately as possible. Include pictures, measurements (if applicable), and other relevant specifics.
Make every effort to know your customer including their feedback from other ecommerce sites. If your gut says 'don't deal with this person' after looking at their feedback, then walk away.
Respond promptly to any customer service requests and get answers to any question you may have by emailing the buyer directly or via your third party selling platform aka Etsy, Madeit, hand-made etc. Keep copies of this correspondence.
Keep as much information as you can about the transaction and your customer, including email correspondence.
Be aware of unusual requests such as rush shipments at any cost, partial payments from multiple PayPal accounts and Payments not received in full.
Be extra cautious with high-priced items - it is fairly common for shipping addresses to differ from billing addresses. However, be extra cautious when sending high-priced items, especially if payment is received from one country and sent to another. From my research this is a very common way for Fraudsters to commit their crimes.
Publish your return policy in your listings or on your website. Also include your return policy in email correspondence with your customers. Please note that certain laws and credit card issuer policies provide that buyers may have chargeback rights for merchandise that is not delivered or is defective, even if your policy indicates that all sales are final and that you do not allow returns.
Keep your buyer up-to-date with the delivery of their item - make it clear to the buyer what the estimated delivery time is (its always best to overstate delivery times) and if for some reason you are unable to send the item in time, then tell the buyer. Honesty is the best policy.
A buyer is less likely to report a dispute if you have been clear about expectations and have been upfront with the buyer.
Always send orders to the buyer's address listed on the Transaction Details Page and retain proof of postage. This can be difficult when you are using Australia Posts regular delivery service, simply providing a receipt from Australia Post may not be enough as it does not state the delivery address of the buyer.
Ideally only send to 'confirmed' PayPal postal addresses. According to PayPal a confirmed address is an address that has been verified by PayPal, that is the buyer’s credit card billing and postal addresses are the same or in some cases, when PayPal has examined the buyer’s PayPal account history.
Confirmed address help to guard against stolen credit cards, Prevent identity theft and decrease the chances of receiving a chargeback.
Track your packages and provide the buyer with this tracking number. If there is a dispute with the delivery of your order you will need to provide PayPal with proof that the item as sent and received.
It is also a good idea to send items via registered post and that you keep the proof of delivery notification and that you insure your packages so that you are protected in the event that the item has been lost or the user claims that is was never delivered.

PayPal's Confirmed addresses

As stated above confirmed addresses are ones that have passed PayPal's confirmation process. PayPal admits that most unconfirmed addresses are not fraudulent, and sellers don’t usually experience problems with them. To check that they are 'confirmed' simply check the transaction details page by:

Log into your Paypal account
Click "Details" next to the payment received in the section labeled "My recent activity." This is on the default "My Account" tab.
Find the shipping address on the details page, and look for "Confirmed" or "Unconfirmed" for the address' status.

Or simply review the email confirmation you received. It will state in green if the seller is confirmed or unconfirmed. Its always a good idea to make your buyer aware that their address is not confirmed and direct them to log into their PayPal account and go through the simple process of confirming their address.

Sending to Unconfirmed addresses

If you decide to send items to an unconfirmed address PayPal recommends that you are alert and minimise risk by following their Security Tips for Sellers.

Also make sure that the value of your item is no more than you are willing to lose and its always best to track these orders and obtain a signature confirmation.