PayPal Refund - How To Handle This?

[GetShitDone]

I've just received an email from PayPal that a client from 3 months ago has opened a dispute for around $1.2K USD on me.

I run a digital marketing agency and honestly we didn't get him good results (he only stayed for 1 month, so it was hard to achieve results in that timeframe for the nature of our service)

With that said, we didn't guarantee any concrete numbers.

His reasoning in the Paypal dispute (all I can see) is that they didn't receive the service which is a lie.

It says he opened a dispute with his financial institution about this.

1) I now have a "-$1,200 USD" balance in my PayPal (I rarely use it and don't use it as a processor to accept payments anymore). Does this mean they can reach into my bank account and take $1,200 USD out? If so, can I just detach the bank account?

2) What's the best way to approach this situation? I don't want to give the money back as we delivered the service as promised, we just didn't deliver results due to the timeframe and we didn't offer any guarantees either.

I've heard horror stories about PayPal when it comes to this, so please give me some advice if any.

PS: We also have a no refund clause in our contract that we signed. Again, not sure if PayPal will even care about this as I've heard bad stories about them siding with the buyer no matter what.

 

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[fridge]

I've just received an email from PayPal that a client from 3 months ago has opened a dispute for around $1.2K USD on me.

I run a digital marketing agency and honestly we didn't get him good results (he only stayed for 1 month, so it was hard to achieve results in that timeframe for the nature of our service)

With that said, we didn't guarantee any concrete numbers.

His reasoning in the Paypal dispute (all I can see) is that they didn't receive the service which is a lie.

It says he opened a dispute with his financial institution about this.

1) I now have a "-$1,200 USD" balance in my PayPal (I rarely use it and don't use it as a processor to accept payments anymore). Does this mean they can reach into my bank account and take $1,200 USD out? If so, can I just detach the bank account?

2) What's the best way to approach this situation? I don't want to give the money back as we delivered the service as promised, we just didn't deliver results due to the timeframe and we didn't offer any guarantees either.

I've heard horror stories about PayPal when it comes to this, so please give me some advice if any.

PS: We also have a no refund clause in our contract that we signed. Again, not sure if PayPal will even care about this as I've heard bad stories about them siding with the buyer no matter what.

PayPal will side with the buyer no matter what. What I would personally do is decide how much that 1.2k means to you. If it means a lot, you can call the buyer and tell them look the service was delivered and if you're not happy with it we can offer a partial refund (I would shoot for $300 then go up to as high as $500 in this case.). You will lose the PayPal claim. PayPal sides with the buyer 99% of the time, and if its a service you delivered, I am going to tell you with certainty that you will likely lose this case.

 

[MJ DeMarco]

Show PayPal the contract the guy signed. That should put the dispute in your favor. If not, not sure what else you can do.

 

[GetShitDone]

PayPal will side with the buyer no matter what. What I would personally do is decide how much that 1.2k means to you. If it means a lot, you can call the buyer and tell them look the service was delivered and if you're not happy with it we can offer a partial refund (I would shoot for $300 then go up to as high as $500 in this case.). You will lose the PayPal claim. PayPal sides with the buyer 99% of the time, and if its a service you delivered, I am going to tell you with certainty that you will likely lose this case.

Even if I show the contract though I would lose? I'm aware that everyone says that PP always sides with the buyer, but even if there's literal proof?

Show PayPal the contract the guy signed. That should put the dispute in your favor. If not, not sure what else you can do.

True, I'll do that.

I'm also going to detach my bank account from PP + transfer all $ in that bank account to another account just in case.

Not sure if that would prevent them from taking $ out, but worth a shot.

 

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[biophase]

Definitely detach your back account ASAP.

 

[B_Mac]

Even if I show the contract though I would lose? I'm aware that everyone says that PP always sides with the buyer, but even if there's literal proof?



True, I'll do that.

I'm also going to detach my bank account from PP + transfer all $ in that bank account to another account just in case.

Not sure if that would prevent them from taking $ out, but worth a shot.

Removing the account doesn’t suddenly cause PayPal to lose the card info. They’ll still have a record of the account.
And transferring all the cash out when they can still potentially charge the account seems like a bad idea due to overdraft possibilities.
As far as I know, you can’t even instantly close a bank account, they leave it open for so many days to make sure everything clears. I’d personally fight it but also wait for PayPal’s decision. If you lose, chalk it up to cost of business and move on.

 

[MJ DeMarco]

I've had success with PayPal disuputes, so I think if you show the contract you have a decent chance to win the dispute. And yes, I'd detach your bank account.

 

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[fridge]

Even if I show the contract though I would lose? I'm aware that everyone says that PP always sides with the buyer, but even if there's literal proof?

Here's the thing my friend, PayPal does not always consider real proof in disputes. This may have changed, and you SHOULD call PayPal and explain the situation, but let me tell you about my experience with PayPal disputes. They would not accept any images/emails as proof during a PayPal dispute between me and a buyer (used to sell on eBay). PayPal may have changed, but before, they literally only took the word as "proof". I'm very wary about receiving any funds through PayPal nowadays. I'd suggest calling PayPal first, see if they'll accept the contract. If not, you're going to lose the dispute, so if they won't accept the contract get in contact with the buyer and push hard for a partial refund.

 

[socaldude]

Removing your bank account info from your account doesnt do anything, they keep a permanent record of it.

If you are a small service based company, paypal or the institution wont put so much weight on your contract as say a bigger reputable company.

Paypal can make a decision on the disputes in whatever way they want and they usually side with the buyer.

Sometimes these institutions dont make fair decisions. I think a lot of these services have arbitration clauses if you wanna fight it in court.

 

[justindircksen]

I've just received an email from PayPal that a client from 3 months ago has opened a dispute for around $1.2K USD on me.

I run a digital marketing agency and honestly we didn't get him good results (he only stayed for 1 month, so it was hard to achieve results in that timeframe for the nature of our service)

With that said, we didn't guarantee any concrete numbers.

His reasoning in the Paypal dispute (all I can see) is that they didn't receive the service which is a lie.

It says he opened a dispute with his financial institution about this.

1) I now have a "-$1,200 USD" balance in my PayPal (I rarely use it and don't use it as a processor to accept payments anymore). Does this mean they can reach into my bank account and take $1,200 USD out? If so, can I just detach the bank account?

2) What's the best way to approach this situation? I don't want to give the money back as we delivered the service as promised, we just didn't deliver results due to the timeframe and we didn't offer any guarantees either.

I've heard horror stories about PayPal when it comes to this, so please give me some advice if any.

PS: We also have a no refund clause in our contract that we signed. Again, not sure if PayPal will even care about this as I've heard bad stories about them siding with the buyer no matter what.

Ive read all the replies and they all sound reasonable. Here’s my view, and you’re prolly not gonna like it.

Take a deep breath and Pay the $1200. Bring your balance to zero and keep the paypal account. You did say yourself that the quality wasn’t quite up to standard. I say this for 2 reasons...

1: No, you may not use paypal anymore, but you never know... you might just be glad you still have it in the future.
Yes it sucks. Yes that customer can kiss your a$$. But that’s not the point.
Let me ask you something. What kind of business do you want to run? One that tries to scrounge and save every last penny or one that provides top customer service even when it hurts?
Now I have no idea your financial situation and I understand sometimes you gotta do what you gotta do.

2: Where do you see yourself in 5 years financially? If you had, lets just say $10,000. Would this even be a blip on the radar? $1 million? I think its safe to say that if the future you thinks this is no big deal... neither should the present you.

 

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[Sanj Modha]

Paypal will refund most digital services - no questions asked.

 

[biophase]

Removing your bank account info from your account doesnt do anything, they keep a permanent record of it.

If you are a small service based company, paypal or the institution wont put so much weight on your contract as say a bigger reputable company.

Paypal can make a decision on the disputes in whatever way they want and they usually side with the buyer.

Sometimes these institutions dont make fair decisions. I think a lot of these services have arbitration clauses if you wanna fight it in court.

If paypal hasn't already taken back the money, removing your bank account will stop them from doing so. You won't be able to use paypal again after, but that decision is up to you.

This is why many scammers will use paypal, because they get the money and detach their accounts so you can't get the money back. I have no idea if paypal will come out of pocket to give you your money back.

 

[socaldude]

If paypal hasn't already taken back the money, removing your bank account will stop them from doing so. You won't be able to use paypal again after, but that decision is up to you.

Wow, is that what they do now?

Back in the day they would go back and reverse any transfer to a bank account if they wanted to. My guess is they must have gotten sued for that.

 

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[GetShitDone]

I've had success with PayPal disuputes, so I think if you show the contract you have a decent chance to win the dispute. And yes, I'd detach your bank account.

If paypal hasn't already taken back the money, removing your bank account will stop them from doing so. You won't be able to use paypal again after, but that decision is up to you.

This is why many scammers will use paypal, because they get the money and detach their accounts so you can't get the money back. I have no idea if paypal will come out of pocket to give you your money back.

Wow, is that what they do now?

Back in the day they would go back and reverse any transfer to a bank account if they wanted to. My guess is they must have gotten sued for that.

Update: PayPal won't let me detach the bank account (I'm guessing because I'm in a dispute, so they already know what's going on).

Should I just cancel that bank account all together? (I don't really need it anymore as I have other bank accounts and biz bank accounts too).

I'm guessing that way, there's no way they can take $ out lol.

PS: It looks like PayPal instantly took out $1,075 USD which put my balance now at -$1,075 USD. And they are saying:

Please add money to your account to resolve the negative balance. Otherwise, the case will be referred to collections and your account will be limited.

Huh? I didn't even lose/win the dispute yet, yet they take out that $ in my PayPal balance and threaten to refer me to a collections agency?

 

[fridge]

Update: PayPal won't let me detach the bank account (I'm guessing because I'm in a dispute, so they already know what's going on).

Should I just cancel that bank account all together? (I don't really need it anymore as I have other bank accounts and biz bank accounts too).

I'm guessing that way, there's no way they can take $ out lol.

PS: It looks like PayPal instantly took out $1,075 USD which put my balance now at -$1,075 USD. And they are saying:

Please add money to your account to resolve the negative balance. Otherwise, the case will be referred to collections and your account will be limited.

Huh? I didn't even lose/win the dispute yet, yet they take out that $ in my PayPal balance and threaten to refer me to a collections agency?

They will take you to collections if you try and skate them, lol. Any advice in the thread that tells you to try and bounce out will just get PayPal to send you to collections. Like I said, I'd try and work with the buyer on this one for a partial or just stomach the loss.

 

[Equilibrium]

Paypal CSR here. (I used to work for them years ago)
Point 1:
Closing your account with Paypal.
Paypal will consider you removing your bank account fraud.
Furthermore removing your bank account does not stop PayPal from using it if there is an ongoing investigation.

I now have a "-$1,200 USD" balance in my PayPal (I rarely use it and don't use it as a processor to accept payments anymore). Does this mean they can reach into my bank account and take $1,200 USD out? If so, can I just detach the bank account?

Yes IF there was a secondary transaction.
If you had another customer who also called Paypal and states the same thing, Paypal would withdraw $1,200 USD from your account. However in this case since Paypal has already retracted that 1,200 USD the investigation is closed. In other words, there should not be any more withdraws as long as you don't have repeat customers.

Now, here's the bad news. Paypal was not in the wrong here.
a client contacted their payment service due to the online business not fulfilling their terms.
You agreed that ''honestly we didn't get him good results '' and I can promise you the agent of PayPal was most likely given a more detailed version.

In this case the''correct'' resolution was to refund the money as the service was a scam (in the viewpoint of Paypal)
You removing your card will validate that decision.
Furthermore, you removing your card may result in your account being closed for fraud.

Now with that said here's what you should do next.
Download every email with this customer, save every transcription of text and email into .PDF files, and open a Complaint

Log in to your PayPal account

Transfer money online in seconds with PayPal money transfer. All you need is an email address.

www.paypal.com

Remember that at this point Paypal considers your company to be fraud.
it's up to you to provide documentation for the person reviewing your complaint to look at everything and realize this is an instance of an unhappy customer who is simply trying to get their cash back.
with luck, they have done this before and it will be easy to see. Regardless you should have enough paperwork on your side to convince them otherwise.

Do NOT start a chargeback your account will be closed and banned.
use the message center and drown them in the paperwork you should already have.
in the future, use Docusign for all new clients and make it clear they are paying for any work performed.
Best of luck.

 

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