First of all, I wanted to increase visibility of my situation while I file police reports against the scammer and appeal PayPal’s decision against me.
Most importantly, however, I wanted to expose the complete lack of protection that PayPal’s Seller Protection offers against fraudulent SNAD (Significantly Not As Described) chargebacks, even when multiple people are defrauded by the same scammer.
I certainly did not expect this story to go viral, but it managed to strike a chord in the community of fellow geeks who were as shocked as I was by the absurdity of PayPal’s resolution process that ignored all the evidence of fraud. So what was the outcome of this ordeal?
Virality
I wrote the story over the weekend, waited until Monday noon Pacific Time to post it in order to reach the casual audience that reads HN at lunch. When I got back from lunch at around 1pm, the HackerNews post had around 9 comments which due to time-decay/activity-based popularity formula got to the front page of HN. This was the beginning of the viral success of the story.
Timing was certainly important, but I doubt the story would get so many responses and so much visibility had it not struck a chord with the community for a number of reasons, which were becoming more clear with every new comment.
- There is a considerable amount of people that were disappointed by their experiences dealing with eBay/PayPal disputes where most would be unable to break through the brick walls of templated responses engineered to inconvenience customers away from support.
- A large number of commenters have very little faith in a safety of eBay’s marketplace especially with regards to SNAD chargebacks.
- Some commenters are still reeling from relatively recent PayPal PR blunders
- And most importantly, most commenters on HackerNews, Twitter, and my blog’s comments were shocked at the absurdity of PayPal’s decision in face of documentation of serial fraud.
By Tuesday evening, the article has been seen by over 75,000 unique visitors. My post has been on top of HackerNews through Tuesday with nearly 400 comments. There have been waves after waves of twitter support so that a twitter search for ‘eBay PayPal’ on Monday and Tuesday would result in tweets that are linking to my story. And of course over a hundred Disquss comments on my blog.
The story was a success on number of grounds: Not only did it bring visibility to how worthless PayPal’s Seller protection can be in hands of anyone claiming “merchandise not as described”, but also it did elicit responses from both PayPal and eBay where my countless non-public attempts have failed.
PayPal
Once my post gathered steam, I reached out to a number of not-so-easy-to-find PayPal’s email addresses hoping that visibility of the post would at the very least have somebody competent look over my case and over 20 documents that I submitted(fraud report outlining my case, proof of delivery, responses from other fraud victims, suspicious buyer feedback activity, etc). I wasn’t sure if these email addresses are live or even monitored.
To my surprise at around 4pm, I got reached out by someone in the Executive Office of PayPal(which was one of the emails i contacted) with good news:
“To thank you for your continued loyalty, it should be noted that I have issued you a credit for the full chargeback amount of $849.99 USD, and reimbursed you for the $20 USD chargeback fee.”
But then I read on
“On July XX, 2008, you created a PayPal account, currently registered to XXX@XXX.com (“Account”), at which time you agreed to PayPal’s online user agreement (“User Agreement”).
On September 20, 2012, you received a payment of $849.99 USD from your buyer (the “Buyer”) for an iPhone 5. This was a credit card funded payment, meaning the Buyer sent the payment to your PayPal Account, but funded the payment using a credit card.
On October 17, 2012, PayPal received a chargeback from the Buyer’s credit card company after the Buyer reported to their credit card company that the merchandise received was significantly different than what was described by you. We notified you that the Buyer filed a chargeback and gave you an opportunity to respond. You provided additional information about the merchandise and what was described in the listing to help refute the chargeback. On November 5, 2012, PayPal disputed the chargeback with the Buyer’s credit card company submitting the information you provided.
On November 29, 2012, the credit card company found in favor of the Buyer and notified us that you lost the chargeback.
As set forth in the User Agreement, if you lose a chargeback you will be liable for the full amount of the payment unless you meet our eligibility requirements for PayPal Seller Protection. User Agreement at section 10.1a. Unfortunately, you were not covered because this chargeback type is not covered under PayPal Seller Protection.
Consistent with the User Agreement on November 5, 2012, we debited you for $869.99 USD which equals the amount of the original transaction(s) that were charged back plus a $20.00 USD chargeback settlement fee. As mentioned previously, we have nonetheless issued a credit to your account in the amount of $849.99 USD.
The User Agreement places the liability for chargebacks on you and contains a clear and conspicuous disclosure to this fact including links to other website content that explains all of this further. It is worth noting that you can navigate to and find this content in many ways not just from the User Agreement.””
At this point my feelings about the matter were conflicted: On one hand I was happy to have this issue resolved and be absolved of the financial liability for the fraudsters actions. On another hand I realized that I would no longer be able to sell ANYTHING OF VALUE on eBay using PayPal, because not only its Seller Protection doesnt cover obviously fraudulent chargebacks, it places the liability for these chargebacks on me while denying me a chance to dispute it with credit card directly.
Talk about taxation without representation…
The economies of scale
Once the emotional stress of being defrauded wore off, i switched back to my natural state of mind – that of a realist. As a realist, I don’t share some people blanket opinions associating PayPal with all that is evil(Ive actually had people bring up Hitler in comments which would be laughable if it wasn’t offensive to those whose families have suffered from fascism). What I do realize is that its a company with a responsibility to its shareholders to maximize profits while minimizing costs.
Unfortunately for average joe PayPal user, the costs that PayPal is minimizing are those of customer service. Any company that has to deal with customer support has multiple layers of customer support designed to filter out basic issues before more knowledgeable and higher paid personal is involved. The way both eBay and PayPal cut support costs it to make it very inconvenient and difficult to break through these layers of support while maintaining an illusion of providing an answer. In spite of me being fairly successful in both trying to correlate and document the fraudulent activities of the buyer, I wasn’t able to break through these layers of support and get in touch with anyone that was part of a fraud investigation department. Every phone call I ended up restating my story again and again to a new customer service rep who seemed powerless to act upon it.
This, I now realize, is a side effect of PayPal being the 800 pound financial gorilla that it is, as it probably handles hundreds of thousands of support requests. While it is trying to succeed in making itself more presentable to regular Joe the Buyer(judging by TV commercials starring Hollywood stars that they are paying for), they are failing to support regular Joe the Seller. And this recent PR failure made it visible to nearly 100,000 of concerned individuals.
eBay
I also got a phone call from somebody in eBay’s investigative department informing me that they are working on this particular case and the higher-ups are aware of this. Certain aspects of the conversation lead me to believe that the information sharing between investigative teams at PayPal and eBay throughout the regular resolution process is minimal.
Whats next
First of all, Id like to thank Jonathan LeBlanc of PayPal, whose open and understanding comments in the original article were like a breath of fresh air. Both him and the person from eBay hinted at the fact the buyer is now being more thoroughly investigated and in all likelihood will be pursued further. That alone was worth the price of admission to this ride of an ordeal.
Im very happy how it worked out, but in the end, like I said, I wont be able to risk selling anything of value on eBay until PayPal Seller Protection would protect sellers from fraudulent “NOT AS DESCRIBED” claims.
In the meanwhile, for my hi-tech spring cleaning needs, I will turn to CraigsList or the new guys trying to break into person-to-person marketplaces, such as YardSale.
Fun stats
My decision of going with a statically generated blog courtesy of Octopress and Github Pages while using Disqus for comments definitely paid off. Not only did survive being on top of HackerNews front page for nearly 2 days with over 75,000 unique page loads, it did so without a hickup and best of all - for FREE. Im also pretty happy that I decided to go with Google’s PicasaWeb for image hosting instead of using S3’s paid bandwidth.
Im definitely looking forward to customizing Octopress to my heart’s desire. Being a Rails developer, publishing your blog with ‘rake deploy’ brings unexplainable sense of joy to geek’s heart.
Discuss this on HackerNews
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