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  #1  
Old 01-09-2018
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Default Victim of Fraud through Paypal

I need help with a fraud situation... I live in Toronto... please see story below. Any help/advice is greatly appreciated <3

I am an artist who sells artwork using paypal's service.
A buyer from Kazakhstan contacted me to purchase artwork. He requested to use a specific shipping company and asked me to use multiple cards for the transaction due to his credit limits, and he also asked me to use PayPal's virtual terminal, which is a payment processing service that requires me to input the card information from my computer.

When I processed the payments I noticed the names on the credit cards didn't match his. I brought this to his attention and he said it was ok, he confirmed the names with me and told they are the curators of his store. I then called the bank that issued the credit cards and asked them verify that the cardholders approved of the payments. They said they would call back. A few days later, not having received a call, I called them back and was told that they can't check if the card holders approve they can only wait for a complaint. I do not have written statements of this, just a note that was made on one of the cardholder's accounts and an e-mail I had sent to VISA checkout asking if they could help.
I decided to request authorization letters written and signed by the card holders sent through their personal e-mail accounts, which I received. The fact that it had been a week and the cardholders hadn't complained seemed promising. I proceeded with the payments. I then transferred the money from Paypal to my bank account. I then got in touch with the shipping company that the buyer requested and sent them a wire transfer of their payment.
After making the first transfer to the shipping company the buyer requested to purchase more artworks. I sent him another invoice, he sent me new card information, I requested authorization letters, I got them, got in touch with shipping, transferred the funds to my bank and sent the wire transfer to shipping.

About a week after the transfers to shipping were made and a day before the shipping company was supposed to pick up the work the card holders complained to their banks saying they did not authorize the payments, chargebacks were requested and made, the money was withdrawn from my paypal account...
Paypal cases were opened, which I lost because I used a virtual terminal to process the payments. Seller's protection insurance does not cover virtual terminals.

When the date came for the artwork to be picked up the shipping company didn't show up. I assume they are the scam, I also assume that the cardholders are not real people, that the scammers created accounts under ⊗⊗⊗⊗ people. After receiving the wire transfer they called their banks and complained and got refunds on their cards.

Paypal has now sent my bill to collection so now a collections agency is calling me for money.

This whole ordeal has taken about 3 months...

I have read the terms of service with paypal... I didn't find a loophole, sadly. They clearly state that I am not covered by seller's protection because I used the virtual terminal. They also warn against sending product to addresses that don't match the card holders addresses.

I thought to send it for arbitration, which they say in the terms they will do for claims under $10,000.00 but I am not sure if I trust it or know how to request it. Can I still request that if the bill has been sent to collections?
The contract also states that "if a sender of a payment files a Chargeback, the credit card issuer, not PayPal, will determine who wins the Chargeback." I tried to contact the card issuer on multiple occasions before sending the wires and they could not help me...

My Questions:

Collections will most likely send my file to small claims when I tell them that I am disputing the amount.. is this considered me taking Paypal to court?
Should I take Paypal to court?
Should I pay back the remainder of the money to paypal or collections? Do I do this before taking any other action?
Thank you in advance for your help. I look forward to your response.

Please help if you can. Thank you!
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  #2  
Old 01-10-2018
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Default Re: Victim of Fraud through Paypal

Not sure what's the point for whole story

You not sent the goods PayPal refunded the money then what's the issue?

You can't win against PayPal it's your fault you can't blame to anyone
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Old 01-10-2018
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Default Re: Victim of Fraud through Paypal

Iím asking if I eligible for a form of relief because of shipping. Or if there are any consumer contract laws I can look into that anyone knows of.
Thanks for taking the time to respond but I didnít ask for commentary. I asked for help.
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Old 01-10-2018
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Default Re: Victim of Fraud through Paypal

As much as I don't like his initial attitude about your story, what he said is correct.

He just said it in a straight and blunt way.

Also, if you want more people to read your situation, I suggest you cut down on the long story.

I don't see the issue with you not losing the goods since you didn't ship. So paypal has the right to take it back from you. There's no such thing as a relief in this kind of situation.

Rather I suggest you re-organize your business model so this doesn't happen anymore in the future.

About the charge back, I can tell you that their bank will 90% of the time side with their customer. Also if you are doing 4-5 figures of sales and specially in the artwork industry, don't use paypal, there's a much better way of doing business like using LOI or LoC from your bank.
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Old 01-11-2018
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Default Re: Victim of Fraud through Paypal

We ask for all the details, then we complain when the post is like a novel. Sometimes the OP can't win...

Firstly, I'm sorry this happened to you. Hopefully after this you'll be a little less naive and keep from making this kind of mistake in the future.

In any case, here's the thing. You didn't deliver a product to a legitimate customer, so you don't get paid. End of story.

You say they didn't pick it up. Get your artwork back and resell it.

I'm guessing you withdrew the PP funds and spent them so you can't refund. That's bad on you.

It's not PP's fault you didn't take due care and diligence on the transaction and got charged back. You even knew something fishy was going on when you saw all the cards with different names.

Once again, I'm sorry this happened, but if you don't learn from it this was a very expensive lesson indeed.
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Old 01-11-2018
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Default Re: Victim of Fraud through Paypal

I'm sorry to hear this happened to you, billing fraud knows no bounds.

That said, it's really up to YOU to manage risk, and vet your customers. You can't rely on your Merchant Processor or PayPal to protect you from chargebacks. Consider this a lesson of doing business.
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Old 01-11-2018
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Default Re: Victim of Fraud through Paypal

Quote:
Originally Posted by SamH View Post

My Questions:

Collections will most likely send my file to small claims when I tell them that I am disputing the amount.. is this considered me taking Paypal to court?
Should I take Paypal to court?
Should I pay back the remainder of the money to paypal or collections? Do I do this before taking any other action?
Thank you in advance for your help. I look forward to your response.

Please help if you can. Thank you!
Welcome to the forums - all the best as you master stealth

Speak to a financial professional.
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Old 01-15-2018
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Default Re: Victim of Fraud through Paypal

Quote:
Originally Posted by SamH View Post
I need help with a fraud situation... I live in Toronto... please see story below. Any help/advice is greatly appreciated <3

I am an artist who sells artwork using paypal's service.
A buyer from Kazakhstan contacted me to purchase artwork. He requested to use a specific shipping company and asked me to use multiple cards for the transaction due to his credit limits, and he also asked me to use PayPal's virtual terminal, which is a payment processing service that requires me to input the card information from my computer.

When I processed the payments I noticed the names on the credit cards didn't match his. I brought this to his attention and he said it was ok, he confirmed the names with me and told they are the curators of his store. I then called the bank that issued the credit cards and asked them verify that the cardholders approved of the payments. They said they would call back. A few days later, not having received a call, I called them back and was told that they can't check if the card holders approve they can only wait for a complaint. I do not have written statements of this, just a note that was made on one of the cardholder's accounts and an e-mail I had sent to VISA checkout asking if they could help.
I decided to request authorization letters written and signed by the card holders sent through their personal e-mail accounts, which I received. The fact that it had been a week and the cardholders hadn't complained seemed promising. I proceeded with the payments. I then transferred the money from Paypal to my bank account. I then got in touch with the shipping company that the buyer requested and sent them a wire transfer of their payment.
After making the first transfer to the shipping company the buyer requested to purchase more artworks. I sent him another invoice, he sent me new card information, I requested authorization letters, I got them, got in touch with shipping, transferred the funds to my bank and sent the wire transfer to shipping.

About a week after the transfers to shipping were made and a day before the shipping company was supposed to pick up the work the card holders complained to their banks saying they did not authorize the payments, chargebacks were requested and made, the money was withdrawn from my paypal account...
Paypal cases were opened, which I lost because I used a virtual terminal to process the payments. Seller's protection insurance does not cover virtual terminals.

When the date came for the artwork to be picked up the shipping company didn't show up. I assume they are the scam, I also assume that the cardholders are not real people, that the scammers created accounts under ⊗⊗⊗⊗ people. After receiving the wire transfer they called their banks and complained and got refunds on their cards.

Paypal has now sent my bill to collection so now a collections agency is calling me for money.

This whole ordeal has taken about 3 months...

I have read the terms of service with paypal... I didn't find a loophole, sadly. They clearly state that I am not covered by seller's protection because I used the virtual terminal. They also warn against sending product to addresses that don't match the card holders addresses.

I thought to send it for arbitration, which they say in the terms they will do for claims under $10,000.00 but I am not sure if I trust it or know how to request it. Can I still request that if the bill has been sent to collections?
The contract also states that "if a sender of a payment files a Chargeback, the credit card issuer, not PayPal, will determine who wins the Chargeback." I tried to contact the card issuer on multiple occasions before sending the wires and they could not help me...

My Questions:

Collections will most likely send my file to small claims when I tell them that I am disputing the amount.. is this considered me taking Paypal to court?
Should I take Paypal to court?
Should I pay back the remainder of the money to paypal or collections? Do I do this before taking any other action?
Thank you in advance for your help. I look forward to your response.

Please help if you can. Thank you!
Unfortunately, not even matching names, etc. would really help. They could use any card outside of the AVS program
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  #9  
Old 01-16-2018
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Default Re: Victim of Fraud through Paypal

They bought it with multiple stolen cards and many small payments, none of which matched.

The guy got greedy, the package was impounded or held at some point, he withdrew the money and when he got charged back he doesn't want to pay.

He's worried PP will come after their money, and if it's big enough they will try.
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  #10  
Old 01-16-2018
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Default Re: Victim of Fraud through Paypal

How much did you pay this shipping company?

I would be chasing that string, its the only money the fraudtser has actually pocketed and perhaps the only funds you can try to reclaim.
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  #11  
Old 01-16-2018
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Default Re: Victim of Fraud through Paypal

You cant expect pp to force this transaction in your favor...
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  #12  
Old 01-17-2018
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Default Re: Victim of Fraud through Paypal

He should be trying to get his package back from where it is held and resell it, but he just wants to wash his hands of the whole thing and walk away if PP won't chase him.
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  #13  
Old 01-17-2018
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Default Re: Victim of Fraud through Paypal

yea well if that's what he's after, none of us here can condone it.

we're here to be successful and to help each other do that... not ruin the market place.
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