How do chargebacks work?

jimmyrambo

I want to know what happens when my credit card company raises a chargeback against paypal, after the seller has deleted their account? Let's say Mr Scammer has set up a fake paypal account, with fake bank details etc, does the chargeback then get filed against paypal themselves? Surely they are going to put up a fight if my credit card company wants money off Paypal and not the scammer!

Also, I was informed by my credit card company that they are raising the chargeback under section 75, which seems strange as Ive read everywhere that Paypal is not covered under this law?

InsideInsurance

jimmyrambo wrote: »

Also, I was informed by my credit card company that they are raising the chargeback under section 75, which seems strange as Ive read everywhere that Paypal is not covered under this law?

Whoever you spoke to unfortunately doesnt know what they are talking about.

S75 is psrt of the Consumer Credit Act (CCA) and does apply to PayPal however you have to remember that PayPal is actually the merchant/ intermediary in these cases and not the card processor. You give them the money and they provide the service of passing it to someone else for you. You do not pay the end merchant directly hence you dont get the normal S75 protection against the end merchant. If paypal failed in their contractual obligations to you though, ie the end merchant didnt receive the money, then you could make a S75 claim.

Chargebacks are part of the scheme rules of Visa, Mastercard etc and not part of statute and are totally independent to the CCA

Ccarter

What are the deatils of the claim? Did you recieve your goods?

jimmyrambo

So from what you say it's clear that paypal will dispute this, as they will not have breached any rules, as the scammer received the money… I just cant see anyway in which I will win this chargeback claim if its up against paypal themselves! I only ever read chargebacks made against sellers themselves, not paypal. I'd be interested to know if anyone has ever wont a case against them.

Ive read horror stories of buyers who didnt recieve their goods, actually having funds taken from their paypal accounts after chargebacks have been made against sellers with no funds to cover them?!

And for reference, I was scammed and the seller did a runner who was supposed to send a laptop.

Ccarter

When the CC does a chargeback against Paypal for not receiving the goods, they have up to 45 days if they are going to reject it. Largely, Paypal will have to prove that you received the laptop. So something like it being signed for by you yourself..

jimmyrambo

But I dont get it? Im filing a chargeback against paypal who provide a service to transfer money from one person to another. They will be able to prove that. Why would they be responsible for whether I recieve the goods or not? There is no way I will receive anything, or anyway to prove I have, and on top of that, the scammer posted a fake tracking number!

BMN

I have made a successful chargeback for something I bought of Ebay and paid for via PayPal. My circumstances were slightly different because the seller actually agreed to refund me, I returned the item and then the seller made excuses and didn't action anything.

The VISA/MasterCard/AMEX chargeback rules don't have any provisions about a third party being involved. So when PayPal receives notification of the chargeback they ask the seller to produce their evidence too and then decide whether they will challenge it. This is the process which is listed in the PayPal Resolution Centre:

Step 1 - Buyer disputes PayPal payment with credit card company
The buyer files a claim with their credit card company disputing a PayPal payment that was charged to their card. This type of dispute is known as a chargeback. By filing a chargeback, the buyer is requesting that the credit card company dispute a charge with the seller.

Step 2 - Credit card company contacts PayPal
The credit card company notifies PayPal that the buyer filed a chargeback. PayPal contacts the buyer and the seller by email and through the Resolution Centre. Access to the funds associated with a chargeback may be limited while the claim is being investigated.

Step 3 - Seller responds to chargeback (Ten days)
The seller provides relevant information to help PayPal dispute the chargeback. To facilitate a timely resolution, the seller has ten days to respond to the chargeback via the Resolution Centre. The information can be provided by email at chargeback-response@paypal.co.uk or by fax at 08707 303 192

Step 4 - PayPal Specialist reviews seller's response (Up to 30 days)
PayPal reviews the information provided by the seller and receives processing documentation from the credit card company. This may take up to 30 days. During this time, sellers are encouraged to submit any additional information to dispute the chargeback case.

Step 5 - PayPal determines if there is sufficient evidence to dispute chargeback
If there is enough evidence to dispute the chargeback, PayPal will attempt to recover the funds on the seller's behalf. PayPal will make every effort to recover funds but there is no guarantee of recovery.

Step 6 - Case closed
The case is closed because there is insufficient evidence to dispute the chargeback.

jimmyrambo

Thank you for that information.

So if the seller doesnt reply to any of Paypals emails they cant dispute the chargeback? Surely this leaves Paypal liable to pay the fees which I really cant see them being happy with?

As a buyer I now feel very vulnerable and am worried that Paypal will attempt to remove funds from my bank account linked if they dont agree with the chargeback. And just for the record we are talking about £1000.

BMN

jimmyrambo wrote: »

Thank you for that information.

So if the seller doesnt reply to any of Paypals emails they cant dispute the chargeback? Surely this leaves Paypal liable to pay the fees which I really cant see them being happy with?

As a buyer I now feel very vulnerable and am worried that Paypal will attempt to remove funds from my bank account linked if they dont agree with the chargeback. And just for the record we are talking about £1000.

You're welcome.

That's correct and Paypal will just close the case if that happens.
And again you're right, they won't be happy with it so they'll just take the funds from the seller instead.

jimmyrambo

I really hope you're right. I'm not sure if paypal can take funds from a sellers bank if they have already removed themselves and all details possible from paypal. However the Scammer was using someone elses ebay account and someone else's paypal account...

BMN

They would have to use a Direct Debit to recover the funds from the sellers bank account. If they can't do that they will call in debt collectors to chase the amount for them.

How do you know the scammer was using somebody elses Ebay & PayPal account? I've heard that excuse a few times from sellers before to be honest and I've never believed it.