[asterisk-users] How to deal with PayPal frauds?

[Eric Chamberlain]

On Aug 30, 2009, at 7:45 PM, Zeeshan Zakaria wrote:

> I charge my customers through PayPal, but recently faced a fraud  
> which previously had only heard about. Somebody registered a few  
> accounts, paid online with paypal (as my service is only prepaid)  
> and started making expensive long distance calls. In fact the IP  
> registering the accounts was from Florida, and IPs making calls were  
> from Africa. After about 20 minutes the first payment was reversed.  
> Then a few times more payments were made, and every payment was  
> reversed almost as soon as it was made. Payments were made from  
> different PayPal accounts. And then I started getting emails from  
> PayPal resolution center that some payments were made by users who  
> didn't authorize them.
>
> Obviously either somebody was using stolen paypal accounts, or  
> somebody knows that he can pay and reverse the payment and in the  
> meanwhile make enough long distance calls. What is really fishy that  
> reversals were made almost as soon as the payments were made, one  
> after another.
>
> Those who are more experienced in this business, please advise how  
> to avoid this type of fraud, and which service to use in place of  
> PayPal, because PayPal doesn't seem the right payment solution for a  
> prepaid VoIP service. Also now that they have all the payments put  
> on hold and asking for a resolution, their resolution center is good  
> only for shipped merchendise, not for online services. How would I  
> prove to them that the buyer who is asking his money back has  
> already utilized my service by making lot of international calls,  
> which I now have to pay for to the carrier.

Despite what PayPal and any of the other processors tell you in their  
marketing material, there is very little protection for online  
merchants.  The only way to be mostly sure, is to accept cash or wire  
transfers.

Having said that, you might want to look into MasterCard's SecureCard  
program (http://www.mastercard.com/us/merchant/solutions/mastercard_securecode.html 
).  I don't remember the exact details when a physical product is not  
involved, but the general idea is that if you enroll in the securecard  
program, you will be covered from cardholder unauthorized  
chargebacks,  Visa has something similar.  AmEx has a number you can  
call and they will verify transactions over $250 with the card holder.

You might also want to consider shipping a welcome packet to the  
customer, that may cover you under PayPal's physical goods terms.

--
Eric Chamberlain, Founder
RF.com - http://RF.com/