When you use PayPal as your credit card processing merchant you are protected in many different ways. Standard protection such as Address Verification System (AVS) and Credit Card Security Digits (CVV2) are provided and in most cases should be enough to avoid any problems. However, mistakes happen and sometimes merchandise can be shipped when it should not have been. PayPal’s Dispute Resolution Center can help insure that you will not lose your product in the event of a charge-back due to fraudulant activity. Here’s one example…

The only ATM machine near my home for my bank is located inside a local Price Chopper grocery store. I stopped by to get some cash out of my account one day and while in a rush made a very stupid mistake and left my debit card in the ATM machine. I got back home just about 30 minutes later and I realized what I had done. I immediately went back up to the Price Chopper and went to the customer service desk. They had my debit card there for me and gave it back. Whew!

The next day I logged into my online banking just to make sure nothing funny had happened. Sure enough, I discovered a $3,000 charge to a kitchen and bath web site for a bunch of cabinets that was NOT mine! I immediately called my bank and submitted a dispute on the transaction. They gave me a temporary refund of the funds, explained that an investigation would ensue and that it could take up to 90 days before it was completely settled. I asked “What about this kitchen and bath company? Is anybody going to notify them that this was a fraudulant charge?” I was insured that yes, they would indeed be informed, but it might not be for weeks.

Well, at this point I was feeling pretty stupid about leaving my debit card in the ATM machine and I was also curious about the seller and who might have done this with my card. I personally called the kitchen & bath company and informed them of the fraudulant transaction. Now, even though I made a dumb mistake and left my card in the machine, this is where the seller messed up. They proceeded to ship the merchandise to an address in New Jersey even though the billing address on the credit card (which was included in the order, apparently) was in the Kansas City area, where I’m from. This was a big mistake. Had I not personally called to inform the seller that the fraudulant transaction had taken place the merchandie would have reached its destination and the fraudsters could have very well have gotten away with the product. By the time the bank’s investigation made it back to the seller it would have been too late. The credit card company would then take the funds back from the seller to cover what they put back into my account. Because of the fact that the seller had shipped to an address other than the billing address on the credit card (an AVS mis-match, or as PayPal would call it, and Unconfirmed address) they would not have been covered by any type of seller protection from that credit card merchant. At this point they would have been out their product and the $3,000. Needless to say, they were very pleased that I called and informed them of the problem in time for them to put a stop-shipment on the merchandise and get it routed back to their warehouse. Again, had I not called and informed the seller of this problem they would have had no idea it was fraudulant until the bank contacted them up to 90 days later. With PayPal’s Dispute Resolution Center this would not have been a problem.

The Dispute Resolution Center is an area of your PayPal account where you can easily manage any disputes/chargebacks that might occur from transactions you have processed. In the example above, if the seller had used PayPal to process the credit card they would have received a new dispute notification when I initially filed the charge-back with my bank. Then, even if I hadn’t called them to inform them of the problem they would have gotten notification from the PayPal dispute area and would have still had time to put a stop-shipment on the goods. Also, with PayPal’s new Expanded Seller Protection program the seller may have been eligble even after shipping to the Unconfirmed address. If not, there would have been red flags in the transaction details page within the PayPal account warning the seller not to ship the merchandise without further investigation.

This is just one example of how using PayPal as your merchant processor can save valuable time and keep dispute losses to a minimum.