Protecting yourself from Paypal chargebacks
|8 min read
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toripng's avatar
By toripng   |   Watch
623 65 16K (2 Today)
Published: September 18, 2016
I decided I'd write something on this since it seems to be affecting a lot of my friends and artists I'm close to. I'll start with a few disclaimers.

Disclaimer 1:
I am not a finance expert. I have never filed a chargeback nor have I been in a chargeback dispute (fortunately). I have done some research out of both curiosity and out of desire to help out the community a bit. This is going to be quick(ish) and summarized. I'm also going to be changing some things to the way I sell as well (obviously).

Disclaimer 2:
This journal isn't about what to do in a chargeback dispute but rather, how to set up your sales so that you'll have the upper hand when having to deal with a dispute. I've included some useful links at the bottom for further information!

Regular Payments / ABs

Some believe that Paypal does not help in disputes over digital goods but a policy change last year says otherwise.
To understand what will help you in a dispute objectively, Paypal has a page of information here which I'm going to try to summarize and go into.

The primary reason for a Paypal chargeback is that the buyer did not receive the purchased item.
When people are selling digital goods on deviantArt, or any platform for that matter, having proof that your customer received their item is essential. Here are some examples of what you can do post-purchase to have that sort of proof.

1. When sending a file, include a message asking for the customer to confirm that they have received or downloaded the file. An extra step would be to remind them that they are abiding by a TOS if you have one or that they are confirming the end of the transaction. An example:

"I have received your payment! Here is the unmarked file/art/design/etc: [link or file]
Please respond to this message confirming that you have saved the file and that you agree to the TOS/approve of this transaction."

*Remember that you can search sent notes by user and you can check if they read the note as well!

2. The second option is somewhat of a hassle but if you host the files on an external sharing website (privately of course) you may have the option to track the number of downloads and have that archived in the submission itself as opposed to a screenshot but Paypal does accept screenshots when you are contesting a chargeback!

The second reason for a Paypal chargeback is a significant difference in the advertised good and the good that the customer received.
There's really only one solution to this and that is to be very clear about what you're selling and to stay as close to that statement as possible. I've actually had issues with this in the past (on my end) that could have landed me in a lot of trouble. I've only recently started outlining what you receive with the commissions I do. I include something like a "what you will receive" section. 

Example from my commissions journal:
"What you receive:
- One flat color version of the design
- One shaded version of the design
- One full ref sheet including both versions and a pallet"

As for adopts, I just leave the information in my TOS (as the first section of course) and include a link in the description of the deviation. If you have a TOS, be sure to include a statement like "by purchasing, you are agreeing to the Terms of Service for my designs."
For commissions and customs, including examples of your work will also help in making it clear what the customer will receive!

The third reason for a Paypal chargeback is unauthorized transactions.
There's not too much that I know of that can help you if the account filing a chargeback uses this reason. However there is one thing you can do.

If using invoices (which you should definitely do for larger sums of money), when the customer pays the invoice, have them include their deviantArt username in the notes. This should be done in any case for both organizational reasons as well as helping you link the deviantArt account to the Paypal account when contesting the chargeback.

Other Notes
In general, it is good to have a written, accessible Terms of Service linked to any commissions listing or design sale.
Including a note in the description that by [action] user is agreeing to [rules or TOS] can help.
Keeping up with screenshots is a hassle but you are able to "save/archive" deviantArt notes. No one can really delete them except you (and not even then I don't think).

Payment Plans

This is definitely a much different section. The most chargeback incidents that I've seen have to do with an incomplete payment via payment plan.
Most designers I've seen that offer payment plans have used a down payment system, usually with a non-refundable portion, which is understandable since someone backing out would considerably inconvenience an independent artist. Like the above, here are a few things you can do to protect yourself in this scenario.

Since a payment plan does not guarantee an item being delivered to the customer immediately after partial payment, terms need to be clearly defined and agreed to.

1. Always try to have users note or message you before purchasing using a payment plan. This gives you the upper hand because with their initiation, they have already agreed to their proposal.

2. Define what the user receives for their partial payment. This could be anything so long as it is in writing. Something like "you have a claim on this design until the payment is completed or until the deadline." You could even go the extra mile and create a "ticket" for them, some sort of visible confirmation like a stash file that would be updated with the file/item once payment is completed.

3. If you have a non-refundable down payment, make that clear. This can either be in the description or in message etc.

Send Money vs. Request Money

Invoices can take a bit longer than the "send money for goods and services" option of Paypal but it does so much more for you in the long run.
When you request money from another account via invoice, you have the upper hand in a chargeback dispute. By sending an invoice, you are the one essentially laying out a platform for the customer to agree to your own terms. Invoicing is the same thing as billing except it is usually done prior to completing or sending art/digital goods.
Invoices will show you more information about the account that is paying (includes things such as name/shipping address etc. some of which you can view from "send money" but a few which you cannot). Scammers (from what I've seen) are more likely to coerce you into going with "send money for goods and services" but do not go for this option unless the customer is trusted.

DO NOT USE "SEND MONEY TO FRIENDS AND FAMILY" FOR COMMISSIONS, CUSTOMS, DESIGNS, OR ANYTHING THAT YOU ARE SELLING.
In a dispute, not only will you have a disadvantage but you will be in risk of consequences for tax evasion.

Invoices do not protect you from chargebacks. A chargeback can be filed for any transaction. Invoices just help in contesting.

Image and Post-chargeback Protection

On Paypal's page about understanding disputes, the first bullets talk about being proactive. In a situation in which a user informs you that they are filing a chargeback, respond to them in a timely manner with a respectful attitude (even if their's isn't so much). Restate your terms, it never hurts to remind your customer about what they agreed to. Offer to fix the situation if they make a complaint that falls outside of the transaction itself (another hassle, I know, but whatever you can do to make yourself look helpful and proactive will help).
Proof of negligence is the biggest advantage that a scammer can have when filing a chargeback even if the reason is absolutely ridiculous.

For awareness purposes, save the email address of the account for reference. You can save other information but so far I have only seen business accounts used in these disputes with names unrelated to a person or the username on dA.
Sharing someone's address or even just their name makes it much easier for them to report you for harassment (since it is definitely an invasion of privacy at that point). Generally you want to stay away from anything that has to do with the physical.

To conclude, here's a helpful link on how to best set up a preventive transaction for digital goods.

If I have any incorrect or incomplete information above, please let me know in the comments and I will update this journal promptly!
Feel free to share this journal as well if you'd like!


Recommended Journals
Commission Chargeback- The situation and solutions
Hey everyone. I'm making a new journal as the other one is messy. So, for this journal, I'm first going to go into details on what happened to me (I realize that I told some of you already in detail on what happened, in the comments, but not all of you), and then I'm just going to share some helpful journals and advice on how to avoid chargeback situations and what to do if you fall victim to it. It's a stressful situation and it's even worse when you don't have any idea what to do, so for the sake of the community and other artists, I'm making this journal. If you already know the real details about my situation, then feel free to skip down
How to avoid chargebacks
No new info added. Just revamping this because I've seen a couple of chargeback cases lately, and since I've gained watchers since the last time I updated the journal I don't want anybody to miss this helpful info. ---Scroll down for the english version, please--- SPANISH EDIT: Puede que haya gente que ya conociera esto pero yo acabo de enterarme y quiero compartirlo con vosotros. El uso de facturas no nos protege al 100% contra estos fraudes porque como siempre Paypal se excusará en que no hemos enviado nada y somos nosotros lo que intentamos robarle el dinero a la otra persona. Pues esto se acabó. Desde los Detalles de la factu
DO NOT HOLD THINGS FOR THIS USER
Edit 6: They said they'll take all adopts off hold and make a public apology. Again, please do not harass this person. Edit 5: They admitted to wanting to have all of the characters for themselves and is attempting to guilt trip me for posting this journal, read other comments below for more examples of them guilt tripping people Edit 4: please do not harass this person; just hide/ignore offers they make on your characters Edit 3: Big red flag, this was brought to my attention: Edit 2: due to the mass amounts of people commenting on this and having to deal with this, and getting ripped off, this is now officially a callout journal. :devf
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Comments (61)
Poltergeist-Life's avatar
Poltergeist-Life|Hobbyist General Artist
Really needed this. Looking to make some extra money after getting a car and insurance and having other expenses fall on top of that.
Reply  ·  
SchwiftyBurito's avatar
SchwiftyBurito|Hobbyist General Artist
 Tumbleweed:toyhou.se/1983984.50#6993385 is so cute do you see anyone here?: 
toyhou.se/SchwiftyBurito/chara…

I might consider someone from here but I'm tent. Shin is Off-Limits: toyhou.se/SchwiftyBurito/chara…
Reply  ·  
disasterconsole's avatar
Protecting yourself from Paypal chargebacks
Reply  ·  
RMZERO's avatar
Use Cryptocurrencies like Bitcoin are better for digital works.
Reply  ·  
avverine's avatar
avverine|Hobbyist General Artist
aaaa!! thank you so much!! ;000; !!!!!
Reply  ·  
toripng's avatar
toripng|Professional Digital Artist
Comment Featured By Owner
Idk how this keeps getting spikes in activity but this journal is really old and might be inaccurate and I'm not working on editing it.
Reply  ·  
lewdmon's avatar
No, no, this is good advice for Paypal merchants in general, even if Paypal's policies have changed to be more neutral, rather than obnoxiously skewed to the buyer's benefit. I'd go so far as to say Paypal itself doesn't make it this clear, and sellers really need to be informed as to the fickle nature of some buyers and what they can do to prevent themselves being taken advantage of. I wager this is getting spikes from people who probably don't even sell pictures, because I found it.
Reply  ·  
1Unicorn-on-the-cob's avatar
1Unicorn-on-the-cobEdited |Hobbyist Traditional Artist
So this journal is still basically accurate then? Because a friend of mine's posted to dA's forum a while ago asking about Paypal alternatives because she'd heard shady things about them, and people just dog-piled her with this "HOW DARE YOU SAY ANYTHING BAD ABOUT PAYPAL!!!!!" attitude. I was actually curious to learn more myself, because that was my first time hearing anything negative about Paypal (because forewarned is forearmed, right?), but nobody had anything helpful to say and I've seen nothing about the issue online until now.
Reply  ·  
lewdmon's avatar
I'm simply saying, as a matter of opinion, that these seem to be reasonable guidelines for sellers to protect themselves against those who would manipulate Paypal's refund policies, because most of these steps are not in practice restricted to Paypal and could easily be applied elsewhere. I'm neither a commercial lawyer nor a business seller. I have a law degree, although that certainly doesn't make me an authority on this specific issue.

On your second point, I would also say, that because groups of people are saying something, does not always make them right. Paypal is a company made of people. They are therefore not infallible.
Reply  ·  
Kiamsoda's avatar
Kiamsoda|Student Digital Artist
Am I the only one that uses paypal button links? Am I doing something wrong?
Reply  ·  
Ulfeid3's avatar
Ulfeid3Edited |Professional Digital Artist
No, is not 'wrong' ( unless you're not using the 'family and friend' option to let people pay you for services!)
But if you are an artist and you are selling something, and you incur in a scam/chargeback, it will be more difficult for you to solve the situation since you don't use invoices. That's all :)
Reply  ·  
Kiamsoda's avatar
Kiamsoda|Student Digital Artist
Thank you for answering :) I appreciate it
Reply  ·  
Ulfeid3's avatar
Ulfeid3|Professional Digital Artist
:hug: Happy to help!
Reply  ·  
pawpaul's avatar
pawpaul|Hobbyist Digital Artist
I'm new to paypal so this helps a lot, thank you :D
still, that means we should ask for our client's pay pal account to send invoice?
Reply  ·  
angellikeart777's avatar
angellikeart777|Hobbyist Traditional Artist
Thank you 
Reply  ·  
Kuri-Darkie's avatar
Thanks a lot for this ;; 
Bless u
Reply  ·  
trace-memory's avatar
hey! could i add something to this?
payment plans can be completed via invoices! all the seller has to do is tick the box for "allow partial payment" :D also that anyone being faced with a chargeback for a character or custom design absolutely gets to keep the character or custom to resell if they do not get the money.
Reply  ·  
ruefion's avatar
ruefion|Hobbyist General Artist
as someone new to paypal and being somewhat anxious to use it, this is a huge helping hand. thank you for this! ^^
Reply  ·  1
Nintendomain's avatar
Nintendomain|Hobbyist Traditional Artist
Thank you for making this! Super helpful :)
Reply  ·  
DanielRavits's avatar
DanielRavits|Student Digital Artist
A friend of mine was chargedback by a client who after sometime of buying art, just didnt want the drawing anymore, what can one do when that happens?
Reply  ·  
toripng's avatar
toripng|Professional Digital Artist
I would say gather evidence of like- hours worked on commission etc. and also evidence of the customer originally agreeing to buy the art and contact Paypal to refute the chargeback.
Reply  ·  
DanielRavits's avatar
DanielRavits|Student Digital Artist
alright, noted thanks :)
Reply  ·  
coras-adoptables's avatar
coras-adoptables|Professional Digital Artist
Thanks a lot for his post! It's really helpful.
Reply  ·  
kirionek's avatar
kirionek|Hobbyist Digital Artist
oh dam I need this so much right now!
Reply  ·  
anonymous's avatar
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