Intro In an ideal world, you'd send me money with PayPal, and I'd hand over the virtual goods. Then we'd both go our merry way. But if you've had any experience with PayPal, you know there are people out there breaking the PayPal system and trying to steal your PayPal funds or virtual goods. So if you haven't experienced this frustration, I'll do my best to make sure you don't. Scammers quickly figured out that it was very difficult for PayPal to verify whether buyers received virtual goods. Hacking PayPal accounts and chargebacks are just some of the strategies these scammers used to steal your virtual goods. After your virtual goods are stolen, the scammers drfit away with no trace. Leaving you with no way to catch them or just the name of another victim whose account was #. PlayerUp is here to empower the virtual trader and to make sure you don’t get scammed. I spent hours of research making sure this PayPal Virtual FAQ is your 1 stop for everything related to PayPal. If there's anything relevant to using PayPal for purchasing intangible goods then let me know, and you will be doing the community a big favor. So we will cover buyer techniques and seller techniques at decreasing your chance of being scammed. It should be noted that every tactic has an inverse relationship between buyer and seller. This means that if a technique is good for the seller than it's bad for the buyer. PayPal disputes are your biggest nightmare. Typical scenario is buyer opens up a unauthorized transaction dispute. PayPal sides with the buyer 90+% of the time. Even winning a dispute as a buyer does not guarantee you will get your money back. Even if you win the dispute as a seller, you still have to deal with chargebacks. Remember the typical PayPal scammer knows all about this. Let's try our best to not get in this situation in the first place. Here's a quick excerpt from the PayPal Terms of Service. Items/transactions not eligible for seller protection. The following are examples of items/ transactions not eligible for seller protection. * Intangible items, licenses for digital content, and services. * Items that are not shipped to the recipient address. Here's how the FAQ is going to be ordered. 1. Account Security for your own account. 2. Verifying your virtual trader's PayPal account. 3. Ways to send and receive money. 4. Potential problems after receiving money. 5. Miscellaneous info you need to know. PayPal Authenticator(Security Key) With a PayPal Security key, you will be required to enter in a 6 digit "random" code after entering your password. This will probably prevent 99.99% unauthorized users. If you don't want to buy this for yourself, then do it for the thousands of sellers scammed because your PayPal account was compromised. You have the option between a tangible key that outputs your 6 digit password or your password can be sent to a mobile phone number by text message. Uses the same system as WoW and Final Fantasy 11 Security Tokens. All this for $5 There is no way to know if your buyer has one of these activated. If that was possible this would end the majority of unauthorized disputes. As you could choose not to do a transaction with people who don't use these. PayPal Verified This doesn't mean much these days. It's still a good idea not to do a transaction with someone who is not verified. From the PayPal Verification FAQ: Verification increases the security of the PayPal network. Verified members have successfully completed PayPal's Verification system to establish their identity with us. The Verification process varies by country or region. For example, in the U.S., a Verified member has added and confirmed a bank account with PayPal. In Germany, a Verified member has completed a bank transfer or the Expanded Use Process. In most countries and regions where PayPal is available, a Verified member has added a credit card and completed the Expanded Use process. Use this link to see if a PayPal account is verified. You must login for this link to work. paypal.com/us/verified/pal=email paypal.com/us/verified/pal=[email protected] Quick Tip: This is great, however, this will not protect you from unauthorized transactions or # accounts. PayPal Membership Info - Reputation Overview To see someone's Membership Info Click "Send Money" or "Request Money" Enter the email if the PayPal account you'd like to see. Enter the Amount like $1. Click "Continue." Now click on "Verified Premier Member (0)" on the screen and a window should pop up. Seller or BuyerReputation: (xx) Verified Buyers or Sellers - (xx) is number of successful PayPal payments from buyers and sellers. Account Status: Verified - Shows whether account is verified or not verified. Account Type - Shows the country and PayPal account type like Business, Premier or Free Account Creation date - date account was created. PayPal Member For: xx years - how long the PayPal account was created. Notice: PayPal Reputation Number is currently not updating. I'll let you know you know if this changes in the future. Quick Tip: Although we get any idea of how reliable this PayPal user is, this is meaningless if the PayPal account is #. Email verification Lot of scammers are able to # PayPal accounts, but not the victim's email. Send a email with a random 6 digit code to your buyer and ask them to reply to it. Do not accept any emails that are sent by the buyer first since email addresses can be faked as I stated before. If you're not sure if the email you received is legit, you can check the email headers for the IP address and other critical email info. This is not foolproof since lot of people use the same password for their email as their PayPal. Confirmed Shipping Address and IP Address Confirmed shipping address means the buyer has verified their address to PayPal. If the address is not confirmed it will show an unconfirmed status meaning the buyer could have typed in anything. Even if unconfirmed, it's still possible to see the account type of the buyer and can get idea of where they are from by checking the Buyer reputation for more info. The buyer must pay as "Goods" for the option to give you their confirmed shipping address. Quick tip: As a buyer, ask the seller send to you a $1 payment with a confirmed shipping address. This way you have a confirmed shipping address if the seller runs off on you. One of PayPay's major faults is there's no warning when the Confirmed Address doesn't match the IP address. So you have to watch out for scammers in China hacking US accounts. Ask the buyer to send you an email. Look up the IP address and make sure the confirmed shipping address and IP address are in the same region. Although this is a good test, it's not 100% accurate. For example some legit users can be in California and the IP address could show Arizona. This technique is great for making sure someone from China is not paying you with a # US account. PayPal Shipping intangible goods as tangible goods. The seller sends a tangible item to the buyer's confirmed shipping address and tries to qualify under the Seller Protection Policy. This is also the only legit way to sell intangible goods on eBay assuming there are no rules against selling the intangible goods. The seller sends you a piece of paper with account info. Quick Tip: This trick protects the seller from PayPal dispute: Goods not Received. e-Check An eCheck is a payment like an intangible check. Unlike normal checks who release some funds to you before your check is verified, eChecks must be fully cleared before you get any funds. This usually take 3 days to 2 weeks for them to verify a eCheck. If the buyer has no funds by the end of that verification period, the seller gets nothing. It's age-old check fraud. Quick Tip: Sellers do not deliver your virtual goods until the eCheck has cleared. Credit Card vs Bank Transfer payments If you don't have a PayPal balance, you are better off paying with credit card than bank funds simply because PayPal does not offer any protection for intangible goods. Selecting Goods or Services When sending payments, do you select "goods" or "services?" Unlike tangible goods, this is not so clear cut since virtual goods and services could fall into both categories. For more buyer protection: Select goods because sellers will need to provide tracking info if the buyer opens a dispute. For more seller protection: Select services because PayPal does not cover intangible goods. PayPal comments (Paypal Message) When sending a payment, the buyer is allowed to leave a note to the seller. This is commonly known as "Comments." Email to recipient Subject: Message: There are a couple statements here that can be written to influence a PayPal investigation. If the transaction is for virtual goods, the buyer can write: "Virtual goods" This is good for the seller because there's no PayPal protection for virtual goods. If the virtual goods have been delivered, the buyer can write: "Goods received" This is good for the seller because it shows PayPal the buyer already received the goods so they can't open a dispute for "Goods not received." If the virtual goods have been delivered and the buyer is satisfied, the buyer can write: "Goods just as described " This is good for the seller because it shows PayPal the buyer already received the goods and was described so they can't open a dispute for "Goods not as described." No comment is good for the buyer. Quick Tip: These statements basically give the same protection as a personal payment. However it will not stop an unauthorized dispute. PayPal Personal Payments e.g. Gifts, Payment owed... Gifts, Payment owed, Living Expense, Other This is commonly known as a gift payment. Personal Payments is a way to send money without paying fees. So this is not supposed to be used for commercial transactions and should only be used among friends or close associates. It's not possible to open a dispute for Goods not as described or not received. Buyer picks between using credit card or bank account for their personal payment. There are no fees if the buyer chooses to pay with bank or PayPal funds. If the buyer chooses to pay with credit card, then normal PayPal fees apply. The buyer can pay for the fees or forward them to the seller. There's no way to tell if you were paid by credit card or bank funds. So Mass Pay is still more secure than a Gift Payment. Contrary to popular belief, it's still possible to open an unauthorized dispute on a personal payment. Multiple Payments 13.3 PayPal Buyer Protection. To be eligible for PayPal Buyer Protection you must pay for the full amount of the item with one payment. Items purchased with multiple payments – like a deposit followed by a final payment – are not eligible. PayPal International Payments It is possible to receive payments from other currencies with PayPal. US PayPal accounts receiving foreign payments will be charged 1% to convert payments to US dollars. Lot of sellers don't pay attention to this. 1% fees can add up fast. Make sure to negotiate with buyer and seller to cover the conversion fee. Mass Pay Mass Pay gives the payer the ability to send multiple PayPal payments at once for a tiny fee. The person sending money pays 2% but no more than $1 per person. Yes that includes payments of $50 to $3000. $1 fee for sending $3000 by PayPal. You are not required to send to multiple people and only need to send to one. Setting up Mass Pay A. Your PayPal Balance must be sufficient for the entire transaction. If you don't have enough, it takes 3-5 days to transfer from your bank account to your PayPal account or someone else can send you the funds plus a little bit to cover the fees. B. Open Notepad C. Type the following information: Type Receiver's PayPal email. Press Tab. Type amount. Press Tab. Type in monetary currency. For example: [email protected] 500 USD D. Save the textfile. E. This file will be uploaded to PayPal and $500 US Dollars will be deducted from your PayPal balance and sent to [email protected] G. Log in to your PayPal. Click "Send Money" -> Click "Make a Mass Payment" H. Click "Upload" Find the text file & upload it. I. Enter a subject and message if you want. Here's an automated script to help you easily produce PayPal Mass Pay files. Benefits to seller: PayPal Balance and bank transfers means you won't have to deal with credit card chargebacks down the road!! Also worst scenario is dealing with unauthorized bank transfers which usually expires in 60 days. So if you receive a Mass Pay, t's guaranteed not from credit card and and no PP fees. This should qualify a # to the buyer. This is also good for sellers who are unsure about buyers who don't use Western Union and only use PayPal. If the funds are not in the account when the buyer requests a bank transfer, an email will be sent to the buyer which means if the account was # there's now 3-5 days for the real PayPal account holder to stop the transaction. This method would most definitely decrease your chances of getting scammed by normal PayPal payments.Drawbacks: It's risky to be holding $1000 in your PayPal account. However a $1000 Mass Pay transaction can save around $30 in fees. Also most people don't have $1000 PP balance so you're looking at 3-5 days waiting period for large & probably even small amounts. It's almost standard practice to withdraw PayPal funds asap so this changes things. Also you will be unable to pay with credit cards as long as you have a PP balance.International Mass Pay: Buyers using a foreign currency will have to pay an additional 1% when sending to the seller.Quick Tip: Ask sellers to give you a 3% # when using Mass Pay. Green Dot Green Dot is a special prepaid debit card. Someone can go to most major retailers to buy Money Paks for $4.95 and have ability to store $1-$500 on it. The Money Pak can then be transferred to any Green Dot card or PAYPAL. Here's a brief tutorial on how to add funds to your PayPal account using Green Dot Money Pak. Now why is this significant? This is the first possible way to add funds to your PayPal account without the source being from a bank account, credit card or another buyer and means NO CHARGEBACKS. Even Mass Pay doesn't have this kind of security because of bank chargebacks. Someone can correct me if this is wrong. Unfortunately, it's not possible for the buyer to prove theirs funds are from Green Dot which is lame. Buyers are limited up to $250 of Green Dot funding for per year unless they provide a social security number. For buyers who deal in 200 transactions or more than $200K in sales, this wont' be a problem starting in 2011 since you'll be required to give your social security number anyways. Check Tax and Reporting section for more info. Temporary Holds PayPal may sometimes hold your funds because these funds tripped their security system and they'd like to do a little more investigation. If this happens, do not give your virtual goods to the buyer. There's a chance PayPal might reverse the funds. Sometimes this means the buyer is using a # PayPal account or the transaction is not typical of the Paypal account user. If your buyer is getting annoyed because you're holding out, then just refund the buyer and move on. PayPal Disputes and Claims It should be noted that PayPal will take no action in the case of intangible goods. Intangible goods is not covered by Seller's Protection Policy or Buyer's Protection Policy. This was discussed in the Intro section. As stated in the Buyer complaint Policy, 'The Buyer Complaint Policy only applies to payments for tangible, physical goods which can be shipped, and excludes all other payments, including but not limited to payments for intangibles, for services or for licenses and other access to digital content.' As per the PayPal Buyer complaint policy intangible goods are not covered by this policy. Generally PayPal does not get involved in intangible disputes so the seller wins the majority of the time if the item is not elible for Buyer Protection and PayPal Message (comments) state: "virtual goods." Now I know what you're going to say, I'm a seller and I lose all the time. Well keep reading. There's 2 types of buyer scams on PayPal. 1. # Account. The scammer is paying you with a # PayPal account. This means that the real owner did not authorize the transaction. It's almost the same as using a stolen credit card to pay. When this happens, 2 scenarios can occur. If the payment is flagged by PayPal, then the money is put on hold, and no longer accessible until after the investigation which can take from 1 day to 1 month. If the investigation is found in your favor, you can keep the funds. Otherwise the money is subtracted from your account and returned to the buyer's PayPal account. If you hand over your virtual good and you lose the investigation then, then you just got scammed. Be sure to make sure the person paying you is the actual owner of the PayPal account. Check my verification section for some help. 2. Fraudulent Purchase. This is paying and after delivery of your virtual goods, the payee opens a PayPal dispute saying the goods were not received or not as described. Usually if PayPal knows it's virtual goods, they will rule in the seller's favor as I stated above. However if the buyer lies and says it's an unauthorized dispute then they'll most likely win regardless of evidence you have. Excuses can run from a minor ended up buying it to someone hacking their account. PayPal will then check IP address and any details you sent. So prevention is the best technique here. Since in 90%+ disputes you will lose unless the buyer is ignorant. Even after losing a dispute, a buyer can still place a chargeback or they may do it if they think they'll lose. Please read Chargeback section for more info. Quick Tip: Even if you win a PayPal dispute as a buyer, you may not necessarily get your money back. If the seller has withdrawn the funds to his bank account already, then PayPal will not be able to recover any funds. PayPal will chase after the seller with credit collection agencies but that's it. Until the seller sends PayPal the funds, you will not receive any reimbursement. Quick Tip: Don't hold funds that you believe are from a # account. PP will freeze your account for their investigation. Refund the money. Then try to contact the PayPal account owner or notify PayPal. Chargebacks Buyers will win intangible goods chargebacks 95% of the time and in some rare circumstances can file after 1 year. Sure you will have a chance to submit evidence, but the person doing the investigations probably has never even touched a MMO. This pretty much means your PayPal buyer has to be as trustworthy as a good friend before you deliver any virtual goods to him. Quick tip: There is a difference between a chargeback and a disputes. Please do not call them the same thing because it is confusing. It should be noted that sellers will not only lose their funds to a chargeback but will be charged $10 for each chargeback. Starting in October, chargebacks will be $15. Refunds will be 30 cents non-refundable. Auto-Sweep Function When this option is on it automatically withdraws your PayPal funds to your bank account every 24 hours. It's great if you don't use PayPal Mass Pay. If you manually withdraw, then this option automatically turns off. Sometimes the auto-sweep option stops working so you have to check on it. Quick Tip: This option is not available until you call PayPal to enable it. Subscriptions A lot of people know how to subscribe for recurring payments using PayPal, but don't know how to cancel. To Unsubscribe From A PayPal Subscription Vist PayPal.com And Click: 1. My Account 2. History 3. Sort by Subscriptions 4. Chose the time period for when you first subscribed 5. Click “cancel subscription” Taxes and Income Reporting You might have heard that Congress recently passed the Housing and Economic Recovery Act of 2008, a major housing bill that the President signed into law on July 30. Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who: receive more than $20,000 in payment volume in a single year; and receive more than 200 payments in a single year. This legislation applies to all payment providers including PayPal and takes effect in 2011, so the first reports will go to the IRS in January 2012.
