PAYPAL Credit Card Processing

mat1234

Hi, Sorry if this is posted in the wrong section, please move if needed.

We elected to use PAYPAL for our creditcard processing ( through our website) some 4yrs ago. We put a very large amount of business through them with an average transaction value of about £ 1000.00

Several months ago we where hit for just over 20k of credit card fraud. We contacted paypal as they handled the credit card processing, to be told we where receiving charge backs from the real card owners. We had dispatched the goods so are now 20k out of pockect. The only benefit was that as each transaction goes through we moved the funds to our own bank acount . This means we have been paid but paypal want the money back to cover the deficicept where they are having to repay the true card owners.

The problem is PAYPAL sercruity did not do an AVS check on each card, which is why this fraud occured. They have told us this check was turned off. The thing is we never asked them to turn this sercurity off, nor do we have any method of doing it, as it is controlled at their end.

We have deduced that during their software upgrade they turned off the AVS check on cards, leaving us exposed to this fraud. We have corrospondance with them going back 4yrs when the website was set up asking them to never turn off the AVS check, as they advised this might help us at the time.

Being that we have always maintained to never turn off the AVS check, and we have no control to do this ( either intentionally or not ) how can we be responsible for the end result of a £ 20k fraud

Paypal have frozen our business account, frozen a directors personal account ( payapl not our bank ) and now sent a debt collection firm on to us. Until this point we have had an impectible record with them and Ebay as a power seller

We have telephoned and emailled them on numerous occasions but with no responce to the question " WHY WAS THE AVS CHECK TURNED OFF"

For those who dont know, the AVS check is an address verication check. It means the card number is checked against the registered address. We have a policy of only sending goods to the card holders registered address. So if somebody uses a card from poland but types in a British delivery address, then normally the payment would be refused. We pay Paypal to do this for us, as a website card processing service. With the AVS check turned off, you can type in any legit card number, and send it to a totally unrelated address( say a rented property) This is business suicide.

I would welcome any advice or if any one knows a high profile lawfirm who wishes to take on the might of PAYPAL with a strong case.

Thanks

Matt

Optimist

I thought about this and decided the best advice I could give you given that you are talking a substantial amount of money is to visit a local solicitor.

Whilst this will cost you money you will get better advice than you will get on here, as they will be able to look into the full facts of your case

pmduk

I agree with optimist. however the devil will be in the detail of your contract with paypal. Inparticular who bears the requirement to conduct avs.

mat1234

Thanks for the replies

I was interested in any other individuals who had similar problems with Paypal. I am also keen to see if Paypal has ever refused a chargeback to the card issuer as there seems to be no record out thier in Google land

vikingaero

For the directors personal account, make a complaint via PayPals complaints procedure and escalate it to deadlock; then make a complaint via the Financial Ombudsman Service.

Ivory_Tinkler

Assuming you have business insurance you may have some sort of legal protection there where you can ring for free legal advice. Paypal are notoriously difficult when it comes to chargebacks but as they did not perform the AVS checks you could argue that your decision to ship goods was based on their flawed information. As others have said, seek legal advice and quickly.