BEWARE paypal GIFT chargeback fraud that will defraud SELLERS
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  1. #1
    Member halfapie's Avatar
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    Exclamation BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Many of you know that sending paypal GIFT payments offer little to no buyer protection.

    HOWEVER, there is a loophole where paypal gift can be used to defraud THE SELLER.

    I hesitate to share this info, but I think people should know and protect themselves.

    Here's the scenario:


    1. The seller asks for the funds to be paid as GIFT, thinking this offers protection for the seller.
    2. The buyer sends a paypal gift using a credit card by clicking on the pay the associated paypal fees option. (I am paraphrasing the exact option here.)
    3. The recipient of the payment (seller) receives the GIFT payment and the full amount shows up in their account as a gift.
    4. Everything looks okay so the seller ships the watch.
    5. Days or weeks later, the fraudster buyer will issue a chargeback with their credit card company by claiming that their credit card was stolen, etc. The lies are easy.
    6. Credit card company will issue a chargeback, and in response, Paypal will hold the associated funds--which are now in the seller's account.
    7. Because this was a GIFT transaction, as far as Paypal is concerned, there was no sale or exchange of goods.
    8. Because there was no sale, the seller cannot use shipment confirmation to argue a legitimate transaction. Evidence of shipment means nothing when there was no official exchange of goods.*
    9. Seller's funds are held/retracted and buyer gets a free watch.



    LESSON: DO NOT ACCEPT PAYPAL "GIFT" PAYMENTS IF YOU ARE A SELLER.


    *NOTE: If the PayPal transaction occurred using the "item or service" option, then the seller can at least try to fight chargeback fraud by submitting proof of shipping and/or delivery.
    Last edited by halfapie; December 5th, 2012 at 04:43. Reason: typo
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  2. #2
    Member mleok's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Interesting, I wasn't even aware that one could use a credit card to fund a Paypal gift payment.


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  3. #3
    Member halfapie's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Quote Originally Posted by mleok View Post
    Interesting, I wasn't even aware that one could use a credit card to fund a Paypal gift payment.
    I did not know about the option until I ran across a seller who insisted that I had to pay using the GIFT option. I didn't have enough money in my checking account so I had to use my credit card for the GIFT payment and pay the fees myself.

    Any seller who thinks that the gift option protects them from charge-back fraud is mistaken!
    Last edited by halfapie; December 5th, 2012 at 01:44.
    My Rotation:
    Hamilton Khaki (2804), Khaki (2824) x3, Linwood (2824), Khaki (7750), Vintage (7750), Vintage Khaki King (2824)
    Fortis Flieger (2824)
    Seiko SCVS015 (6R15), SARB031 (6R15), SKX013 (7S26), SSB003 (6T63), 5M22-6C20, 5M22-6C30
    Tissot Carson (2824), T-Touch Titanium
    Many Self-assembled pieces
    about 100 Casio watches from the 70~90's.

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  5. #4
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Thanks for the post and info halfapie. For all of us potential or practicing sellers it's important to know.
    You can always earn more money, but you can't earn more time.



  6. #5
    Member gaijin's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Quote Originally Posted by marlowe55 View Post
    Thanks for the post and info halfapie. For all of us potential or practicing sellers it's important to know.
    What may be even more important to know is that using the PayPal gift option for payment violates WUS rules and may result in suspension of one's account.

    Extract from Rule 4:

    By describing a sales transaction as a "gift" to avoid legitimate fees (i.e. Paypal), violates WUS rules and is subject to thread deletion or account suspension.

    HTH
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    -Andrew Breitbart 1969-2012

  7. #6
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    BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Because of the lack of buyer protection, I would never use the gift option. I'd sooner pay the 3% on top of the sales price. A seller insisting on the gift option to avoid PayPal fees smacks of scam to me anyway. If you want to sell the watch, then price it 3% higher and give everyone a better feeling about the transaction.

  8. #7
    Member wuyeah's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Same thing happen to me I am as seller. The item was purchased through CC. I got scammed. Item shipped out and it was told CC is stolen. Paypal did NOT THING to recover my lost.
    That was roughly over 5 years ago. You really don't have much protection if people purposely try to scam you. Not sure if Paypal today is better.

  9. #8
    Member 440saw's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    I was not aware of this and thanks to the OP for the info. I've been asked for Gift payments and complied thinking I was helping out the seller; no more. Just not good business.
    Obviously, it was meant to send money to someone as a gift.
    Nice that you brought this to our attention.

  10. #9
    Member halfapie's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Quote Originally Posted by gaijin View Post
    What may be even more important to know is that using the PayPal gift option for payment violates WUS rules and may result in suspension of one's account.

    Extract from Rule 4:

    By describing a sales transaction as a "gift" to avoid legitimate fees (i.e. Paypal), violates WUS rules and is subject to thread deletion or account suspension.

    HTH
    I agree. If we all followed the rules here we would be better protected.
    My Rotation:
    Hamilton Khaki (2804), Khaki (2824) x3, Linwood (2824), Khaki (7750), Vintage (7750), Vintage Khaki King (2824)
    Fortis Flieger (2824)
    Seiko SCVS015 (6R15), SARB031 (6R15), SKX013 (7S26), SSB003 (6T63), 5M22-6C20, 5M22-6C30
    Tissot Carson (2824), T-Touch Titanium
    Many Self-assembled pieces
    about 100 Casio watches from the 70~90's.

  11. #10
    Member dbakiva's Avatar
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    Re: BEWARE paypal GIFT chargeback fraud that will defraud SELLERS

    Good advice. There is no reason to expect Paypal to assist you when you have intentionally subverted their policies in order to avoid paying their fees. I only use the gift option to send money to my kids. By the way, you can send a gift using a credit card as a funding source, but Paypal will charge fees for that. They will send money free from a linked bank account or from money in your Paypal account.
    Last edited by dbakiva; December 5th, 2012 at 19:39.
    Over a half century of "just the right amount of odd."


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