[erangalp]

I am the author of the article - thanks for the positive overall comment. I agree with you to a point regarding "buyer's remorse" - perhaps I didn't word it strongly enough.

For some products, what you say makes perfect sense, but for us, since what we sell are code licenses, you can't 'undo' what you learned by using the code. Regardless, we offer 14-day money-back guarantee, and people still sometimes choose to take this approach - issuing a chargeback on their transaction, when it's obviously not regular fraud.

We usually try to communicate with the buyer to understand why he issued a chargeback, and in a few cases we managed to resolve it (so I would never suggest going with your first approach - always try and contact them first). Otherwise we just "eat" the cost and get on with it.

[jib]

Loved the write-up. If you expand outside paypal/ccs into other methods like direct debits (common for Germany) I would be curious to hear similar stories. Accidental chargeback rates are way up on direct debits so any stories for dealing with that efficiently would be very interesting.

One thing I didn't really see was "previous successful purchase" - that should be a strong indicator of "not fraud". Even if other details look dodgy.

[erangalp]

Not sure if "previous successful purchase" is enough of an indicator. If someone can hijack a Paypal account or obtain sensitive credit-card details, you should assume he can also hijack an account on your service.

Glad you liked it, we had to learn most of this stuff the hard way :)

[jib]

Yeah they for sure can. They just don't tend to bother I think. Hijacking an account and the payment method used to pay on that account to go with it is a lot of work to do something you can do with less work.

May be business dependent tho. I guess selling source code means the people interested in defrauding you are fairly tech savvy too.

And yes, really liked it :)

[Silhouette]

If you expand outside paypal/ccs into other methods like direct debits (common for Germany) I would be curious to hear similar stories. Accidental chargeback rates are way up on direct debits so any stories for dealing with that efficiently would be very interesting.

Would you mind expanding on this, please? We're looking at different payment possibilities for a start-up and direct debits is one method that we are considering. This is the first time I've heard of a much higher chargeback rate on such transactions, though.

[jib]

If you are using direct debits you have no way of pulling the money directly from the account - you will always have some serious lag (day or two at least, often more). In that time you don't have a hold or similar on the funds, so either you delay giving product to customer or you have a few days where you trust him to actually have the funds available when your claim hits his bank. If he doesn't actually have funds at that time you effectively have a chargeback (no funds were actually available to take in the first place). Usually these are honest mistakes, especially if you do recurring billing that the customer may forget, but it's costly and time consuming to explain what happened and have the customers pay you again for something they actually want.

[Silhouette]

Thanks, that makes a lot of sense. Innocent mistakes we can deal with. I was more worried about a high rate of formal disputes where customers might claim we took money fraudulently. It sounds like a track record full of that sort of thing can make it harder to get good terms in the future, and I didn't see why that should be significantly higher with one form of payment than another.