Taking payment and friendly fraud

REK Knives

REK Knives

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Knifemaker / Craftsman / Service Provider
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Apr 3, 2011
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Been a while since there has been any threads on this topic, but I wanted to make other's aware... If you have a customer that purchases a knife from you and pays with a credit card via paypal or another company, after they receive the knife they can call their card company and initiate a chargeback.

When this happens the company through which the payment was received (say, Paypal) will basically transmit the information the customer's card company gave them - that a chargeback has been made and that you can accept or challenge it. The card company will draft Paypal which will in turn seize the money back out of your account immediately (within 1-3 business days). Then the card company (not Paypal) decides if you or their client (your customer) is in the right - who do you think they will likely favor?

Chargebacks, from my research, can be made for up to 120 days after the transaction has been made. I just had one of these occur and almost lost $300.

When a person uses their own card to make a purchase, then initiates a chargeback simply to have the item and the money, this is called friendly fraud (as opposed to criminal fraud where your identity has been stolen).

How do you guys handle transactions and prevent against this? I am considering changing my policy and requiring a money order (seems to be the safest) for work over $200 or something, not sure. Anyone else had experiences w/ these issues?
 
I wonder how often this happens. I don't make that many knives and I try to do a little web research on each of my buyers, which is fairly easy these days with all the social media out there.
A google search of your buyer might even produce a website dedicated to outing fraudsters, so it might be worth a quick search, especially if it's a costly item to someone you don't know.
 
In my limited experience I prefer to be dealing with the CC company than PayPal anyway. While PayPal inevitably sides with the buyer and it incredibly inconsistent with their policy and procedure, every chargeback issue I've been through with a CC company (On both sides) has turned out correctly. It's a pain, but not a huge one. Documentation of the sale (or lack there of) has been the necessary evidence. While PayPal couldn't care less what kind of documentation you provide. IMO any "investigation" they do is just for show.
 
KnuckleDownKnives said:
I have them make payment via paypal friends and family.
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Which is against PayPals Policy and could get you banned/the option of using family and friends for actual family and friends revoked (and simply because a lot of people also do this: charging more for PayPal than other services because of the fees is also prohibited)(yes, I actually report people that ask this from me to PayPal). Don't do it if you like PayPal.

In my experience PayPal sides with the seller as soon as he delivers proof of shipment etc.. Simplest solution would be using registered mail where they have to sign to receive the package.
 
SV-97 said:
Which is against PayPals Policy and could get you banned/the option of using family and friends for actual family and friends revoked (and simply because a lot of people also do this: charging more for PayPal than other services because of the fees is also prohibited)(yes, I actually report people that ask this from me to PayPal). Don't do it if you like PayPal.

In my experience PayPal sides with the seller as soon as he delivers proof of shipment etc.. Simplest solution would be using registered mail where they have to sign to receive the package.
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To each their own. Must feel like reporting a drunk driver.
 
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I'm not a knife maker but this thread caught my attention as I have recently moved to be close and able to take care of my parents easier ... and I have sorted through my collection and have several knives I plan on selling ... but I have put it off many times ...

And with seeing so many threads of this type of behavior or out right theft and fraud ... I have been holding off trying to decide what my best (safest) options for payment are ...

I would sell to anyone I knew or had interactions enough to trust as normal ... but any unknown buyer leaves me wondering ... it sucks this is what things come to but it is what it is ... is there another payment option similiar to PayPal that is safer?

I am leaning towards either a USPS Money Order or a personal or bank check with waiting period to be sure it clears ... PayPals reactions to many of these cases has left a bad taste in my mouth ...

so I am looking at what options may be safest ... I will follow this thread to see what others think ...

It would seem in this day and age there should be a simple solution ... but it's beyond me ...
 
KnuckleDownKnives said:
To each their own. Must feel like reporting a drunk driver.
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So you don't feel like drunk driving is against the law and overall really dumb? Oh well

You gotta see it like this: PayPal's business model relies on those fees(regular banks have transaction fees or account managment fees or something similar). You expect to be protected as a buyer when buying something, so if you're on the other end of the transaction you gotta pay the fees. Simple as that.
 
You would want to get in writing that the buyer is agreeing to pay for something. The CC company will not be able to side with the customer when you present the documents proving they agreed to pay for merchandise. At least that is my plan should this ever come up.
 
timos- said:
You would want to get in writing that the buyer is agreeing to pay for something. The CC company will not be able to side with the customer when you present the documents proving they agreed to pay for merchandise. At least that is my plan should this ever come up.
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Contract to buy isn't going to help much. You need to show them proof of delivery. Signature confirmation is essentially acceptance of "Yes, this is what I purchased and I am accepting it as undamaged and in the condition I paid for."
 
yes, I mean in addition to proof of delivery....that way there can be no question of the amount they should or shouldnt have paid. In my experience (not with knives) this happens when someone orders something and decides they dont want it...or try to "return" a different item/ em,pty box/ etc.
 
Right, I gotcha. In B2B that would be the purchase order. Since our customers don't do POs, I tend to send them an invoice via PayPal which gives me a record of them saying "Yes I agree to pay this invoice for this item" rather than allowing them to just send my PayPal account $xxx out of the blue.
 
SV-97 said:
So you don't feel like drunk driving is against the law and overall really dumb? Oh well

You gotta see it like this: PayPal's business model relies on those fees(regular banks have transaction fees or account managment fees or something similar). You expect to be protected as a buyer when buying something, so if you're on the other end of the transaction you gotta pay the fees. Simple as that.
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You misread what I stated. Reporting someone to paypal for you must feel like reporting a drunk driver. Like you're doing society a service by reporting someone to paypal. Sure it's not exactly an appropriate comparison. I feel it suits considering your tone and total lack of personal knowledge you have to the amount of business I conduct using this method. I do so little business I choose to take as little risk as possible. So little in fact that if they don't feel comfortable sending payment via FF, money order or cashiers check and letting it clear, I have zero problem doing no business with them. I'm not in the market to to put myself at risk as of yet. I clearly state this upfront before I perform any manual work. It's not like it's a big surprise to them when it's time for payment.

Now when I'm the purchaser, sure I want buyer protection and I also have the clear choice to do or not do business with someone who wants me to take the risk as the buyer. As I stated to each their own.

So what is your purpose here? So far you've contributed nothing to the original post and only come at me with your condescending disapproval of how I choose to conduct myself. Do you care to actually contribute to this post or do you just want to talk down to me?
 
KnuckleDownKnives said:
You misread what I stated. Reporting someone to paypal for you must feel like reporting a drunk driver. Like you're doing society a service by reporting someone to paypal. Sure it's not exactly an appropriate comparison. I feel it suits considering your tone and total lack of personal knowledge you have to the amount of business I conduct using this method. I do so little business I choose to take as little risk as possible. So little in fact that if they don't feel comfortable sending payment via FF, money order or cashiers check and letting it clear, I have zero problem doing no business with them. I'm not in the market to to put myself at risk as of yet. I clearly state this upfront before I perform any manual work. It's not like it's a big surprise to them when it's time for payment.

Now when I'm the purchaser, sure I want buyer protection and I also have the clear choice to do or not do business with someone who wants me to take the risk as the buyer. As I stated to each their own.

So what is your purpose here? So far you've contributed nothing to the original post and only come at me with your condescending disapproval of how I choose to conduct myself.
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Ah gotcha, sorry got that wrong.

I don't care about the amount of business you're doing using this method. Doing any business like that could be considered fraud because you're using PayPal's services without paying them for it etc. (You've agreed to their policy in choosing them as a payment service). So in an attempt to not get cheated on you're cheating on PayPal. Not cool. IMO the to each there own really doesn't have any ground here. You're doing your work and want to get paid and so do they.
 
SV-97 said:
You gotta see it like this: PayPal's business model relies on those fees(regular banks have transaction fees or account managment fees or something similar). You expect to be protected as a buyer when buying something, so if you're on the other end of the transaction you gotta pay the fees. Simple as that.
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I apologize if I'm misreading your response here, but unless I've done something wrong, PayPal DOES charge a fee with Friends and Family. I recently sold some scales here for $80 and only $77.38 was deposited into my account. That's a reasonable fee for me to have no guilty feelings that I'm ripping them off.

as always
peace and love
billyO
 
KnuckleDownKnives said:
You misread what I stated. Reporting someone to paypal for you must feel like reporting a drunk driver. Like you're doing society a service by reporting someone to paypal. Sure it's not exactly an appropriate comparison. I feel it suits considering your tone and total lack of personal knowledge you have to the amount of business I conduct using this method. I do so little business I choose to take as little risk as possible. So little in fact that if they don't feel comfortable sending payment via FF, money order or cashiers check and letting it clear, I have zero problem doing no business with them. I'm not in the market to to put myself at risk as of yet. I clearly state this upfront before I perform any manual work. It's not like it's a big surprise to them when it's time for payment.

Now when I'm the purchaser, sure I want buyer protection and I also have the clear choice to do or not do business with someone who wants me to take the risk as the buyer. As I stated to each their own.

So what is your purpose here? So far you've contributed nothing to the original post and only come at me with your condescending disapproval of how I choose to conduct myself. Do you care to actually contribute to this post or do you just want to talk down to me?
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I would not do business with a Craftsman under these conditions/double standards...thanks for the heads up. I'm sure you won't miss my business, but those are my honest feelings.

~Chip
 
PayPal now does charge a fee for use of a credit card at least in some cases I've noticed over no charge for use of your bank account ... that may account for the fee ... it may just be certain online vendors started to charge the CC fees as most pass that 3% or whatever it might be on to the consumer anymore.
 
weo said:
I apologize if I'm misreading your response here, but PayPal DOES charge a fee with Friends and Family. I recently sold some scales here for $80 and only $77.38 was deposited into my account. That's a reasonable fee for me to have no guilty feelings that I'm ripping them off.

as always
peace and love
billyO
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Did you ever use PP F&F for business? If so it's possible they locked it for you so everything is business.
If not they plan on adding fees to non-€ transfers but I don't think that's implemented yet. The fee should still be lower compared to business however.
 
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