In Real Life: What a PayPal scam may look like…

We will start this article out with a situation that happened to an artist (in total affecting 3 artists and 1 scammer) on deviantART. Scammers are everywhere, and with PayPal usually siding with the buyer (the scammer), it is an awful feeling to receive that chargeback notification from PayPal.

In our dA-related incident, an artist was commissioned to draw the character of that dA member. Everything went smoothly until the commissioner stopped contacting the artist, disappeared from dA, and pushed ahead with a PayPal chargeback for an “unauthorized transaction.”

The events were: make commission, pay for commission, receive commission, delete account, two weeks later file chargeback. And this is becoming a more and more common occurrence… With PayPal loopholes making the uneducated an easy target, it is important to familiarize yourself with how you could be scammed, and what to do to avoid being scammed.

Ways the PayPal System can be used against you…

UNAUTHORIZED TRANSACTION: The buyer is essentially stating the purchase is fraudulent. They may be claiming they were hacked, someone stole their card, etc. In this scam, they make up a sob story and PayPal usually gives them their money back.

ITEM NOT RECEIVED: Never EVER send an invoice that requests a shipping address from your customer if you do not intend to ship anything. Scammers often wait for this sort of thing to happen. When they get their digital version of art, they KNOW they won’t get a physical copy, wait a week or two, and then complain to PayPal who will refund their money.

SIGNIFICANTLY NOT AS DESCRIBED: If there is a shipping option (regardless if anything was shipped), sometimes scammers will claim what they bought is not what they got. PayPal, again, will issue a refund.

PayPal is equipped to help both buyers and sellers in a number of ways. We will be focusing on how PayPal helps buyers recover their money from sellers – which in turn translates to how buyers work the system to scam sellers.

For artists, the scam is a little trickier as we often are not selling a physical product. SO the most often used (that we have seen) route is the “unauthorized transaction.” However, for artists who forget to remove the shipping address option when invoicing or accepting money from buyers, the “item not received” claim is born.

For the truly savvy, the “significantly not as described” claim can be used. This one is harder though as it requires more work on the part of the scammer – either on the front or backend… or both!

Protecting Yourself: Time to get PayPal Savvy!

UNAUTHORIZED TRANSACTION
Verify with your commissioner, in writing, what they are getting, what the timeline is, what the cost is, and what you will ship, if anything, and WHERE you will ship to. As a rule, DO NOT SHIP to an address not on the PayPal account.

Screenshot everything.

ITEM NOT RECEIVED
DO NOT issue invoices or allow the buyer to set their own shipping address/shipping company! If you get a payment and it has shipping attached to it, RETURN IT and have the buyer try to pay again. Annoying but necessary.

Screenshot everything.

SIGNIFICANTLY NOT AS DESCRIBED
Like with the unauthorized transaction, verify everything in writing. Keep a copy of the digital product (if any). Take photos of the physical product (with and without the shipping labels/packaging). 

Screenshot everything.

A FEW MORE THINGS TO REMEMBER

  1. Do not select the option for OR allow tips!! Doing so opens the door for the scammer to claim they “accidentally” overpaid you. You refund their overage, then they hit up PayPal for the FULL AMOUNT of sale, and PayPal, if you haven’t dotted all your i’s and crossed all your t’s, will refund the full amount (so you are out almost DOUBLE your money!!!).
  2.  When shipping, be CLEAR on an expected delivery date, USE TRACKING METHODS and include them in your PayPal transactions, and take photos not just of the items you are sending but of the items and the shipping labels, tracking codes, packaging – you CANNOT have too much proof for PayPal!
  3.  Only ship to the PayPal verified address – if you ship to an invalid address, eventually the mail system will contact the buyer for a real address. At which time the buyer (scammer) will give it to them and start a PayPal chargeback for “item not received.” And all your tracking info will show is that it really was not delivered to the initial address.
  4. Do not drop-ship or use the buyer’s shipping company. Use a well known reliable company that has options for insurance and package tracking!
  5.  LOOK FOR RED FLAGS: Requests to rush shipments, accept partial payments, or accept payments split up between multiple PayPal accounts are usually fraudulent activity or good indicators of it! If you get hit with something like one of these, just say no!
  6. Also, as a seller of art, you may get hit with multiple shipments for one commission because your buyer is “so excited” to get their art! As great as that is, spell it out that all shipments go out when all work is completed and make that very clear to your buyer. Multiple shipments mean multiple opportunities for a scam to happen.
  7. Know your terms and rules AND MAKE THEM KNOWN in writing to your buyer. Screenshot their acceptance! Some common terms you may want to implement are: NO REFUNDS, NO physical item will be shipped, items shipped only when ALL items are completed and approved, ship to PayPal verified addresses only by (insert your preferred method of mail delivery service), etc…
  8. Investigate your buyer/commissioner! If someone comes to you with a relatively new account, minimal/no activity (or a lot of HIDDEN activity), or no public trail to follow to see who they are and what they are about, that should send up HUGE RED FLAGS. Not doing business with a person who’s account is that shady is probably in your best interest! (Note that it is always possible that the person is legit with a new account so just beware.)
  9. Finally!!! Screenshot EVERYTHING! No joke! Everything between you and your buyer should be IN WRITING with a time/date stamp of some kind. If you have a call or facetime (etc) with your buyer, message them with the content of that chat and state you need them to confirm that is what is happening. You CANNOT have too much proof for PayPal!

Using PayPal the Smart Way
PayPal isn’t bad, but like any site out there, it is run by humans who make errors. Some of those errors are in loopholes in site policy while others rest in the personal judgement of the human working on your chargeback case.

As a seller, be aware of what you CAN DO to protect yourself:

  • Screenshot everything (cannot be overstated)
  • Accept ONLY the amount due – nothing less and nothing more – and don’t split payments
  • Never accept money attached to a shipping address if you don’t intend to ship anything
  • Use your resources: tracking numbers, smartphone (take lots of pictures), chat/note systems with time and date stamps, PayPal invoicing, etc…
  • Have your terms and rules plainly stated, in plain view, in the invoice, messaged to your commissioner, etc… You can’t go too far here.
  • Use the invoicing system so you CAN customize each invoice to each specific buyer which includes removing addresses, adding in custom terms and conditions, notes to buyers, etc. The PayPal.me is great, but invoices are GREATER.
  • Investigate your buyer – be proactive and get to know them BEFORE you ever talk to them.

The final point of this article is to know there is no limit on what you can or should produce when protecting yourself against a chargeback! 

  • You screencapped everything – sort that stuff out and send it in a logical manner to PayPal to SHOW THEM you are innocent and should get the money you earned back!
  • Be professional and calm – explain the situation in a short paragraph in your own words.
  • Finally, if it happens that a couple weeks go by with no word, CALL PAYPAL and speak with a representative. Ask if they got your information. Ask how the investigation is going. Ask them what YOU can do to help.

Beating a chargeback is NOT easy. But if you are willing to do the work to protect yourself, scammers will have a far more difficult time with PayPal than you will when they try to scam you.