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Customer Web Experience Derailed by PayPal Fraud: A True Story

Written on
May 3rd 2007
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A few months ago I had the unfortunate experience of being a victim of PayPal fraud. Although very unpleasant and still ongoing, it did highlight several facts:

- Customer experience is #1
- Hubris was the death of many a online operation during the tech boom
- On the web your competition is still just a click away

BACKGROUND:
In March of this year, I listed several pieces of DJ equipment on eBay and the highest bidder won with a bid of $865.99. He called right away and promptly paid using PayPal (a subsidiary of eBay). The buyer mentioned that he was headed home from work in Manhattan to New Jersey via the Port Authority bus terminal, so I agreed to meet him there and drop off the items. He promptly paid using PayPal and the whole deal was completed within 2 hours.

I thought that was the smoothest transaction ever!

WRONG

PROBLEM:
About a month later I got an e-mail from PayPal notifying me that the transaction was ‘reversed’.

Transaction reversed? What do you mean?!

Apparently the buyer used fraudulent funds to purchase my DJ equipment and apparently there was nothing PayPal could or was willing to do about it.

But I thought that PayPal had safeguards built in to prevent this type of fraud?

You thought wrong, tough luck.

But I thought PayPal’s sign-up process, what with the depositing small sums into your bank account, is designed to prevent someone signing up fraudulently.

You thought wrong, tough luck.

But I thought I was protected because the screen explicitly said ‘Eligible for Seller Protection’ in bright green letters?!

You thought wrong, tough luck.

As illustrated by the screenshot above, there was a clear cue on this page indicating that I am eligible for the ‘Seller Protection Policy’ (lower left corner). I clicked on the little question mark next to the word ‘Eligible’ just to make sure. A new page opened with tons of text in legalese (keep in mind that I knew to click on the tiny question mark, many people in the interactive media/tech industry don’t realize that the average person on the web is not very tech savvy and prefers words to symbols).

Like any reasonable human being, I am not fascinated by the technicalities of law PayPal’s lawyers carefully crafted for their Seller Protection Policy page. Like any reasonable human being, I did not take the time take to read through it. On the web, we are faced with user agreements and similar documents on an almost daily basis. We are all used to them and we just hope that the companies we are doing business with have our best interests at hand when we click that ‘I agree…’ checkbox.

Not in this case.

It turns out that buried within that legalese text, there was something about the little fact that in order to be eligible for the ‘Seller Protection Policy’, there has to be a receipt from a shipper. This means that any transaction where the item is not shipped is automatically disqualified.

Let me repeat that and let it sink in: any transaction where the item is not shipped is automatically disqualified from the ‘Seller Protection Policy’, even if there is a receipt and in the lower left corner of the transaction page it says ‘Eligible’ in green letters.

I was selling DJ equipment and it would’ve cost an exorbitant amount to ship it anywhere. I preferred that the customer was local and indicated so in my eBay listing. This was of little significance to PayPal (subsidiary of eBay). There was a hand written receipt. This did not matter to PayPal since their objective was to put the burden on me to find and take action against the perpetrator of the crime.

SOLUTION:
This brings us to the topic of customer experience on the web and why it is critical. The solution to this specific problem, like with most customer experience issues, is fairly simple. I see it on a daily basis, reviewing websites for a living through my company — qau (qa-u.com) (shameless plug).

PayPal can simply put all of the exceptions to the ‘Seller Protection Policy’ in red letters right below the word ‘Eligible’ on the transaction page.

That’s it. End of story.

I, along with countless others selling items locally without shipping, would’ve known that we don’t qualify for ‘Seller Protection’ and would’ve proceeded with more caution, perhaps choosing to pay the shipping fees for the added security.

At the very least, PayPal should change the tiny question mark symbol to a text link that reads something like ‘Exceptions to the Seller Protection Policy’ — again, in red letters.

CONCLUSION:
Since the incident, I’ve learned that there are many other people who feel PayPal doesn’t own up to it’s share of responsibility. There is a growing discontent with PayPal and this brings us back to the subject of hubris and the death of many a dot-com around the year 2000. PayPal is clearly the #1 company in terms of the sheer volume of financial transactions they process on the web. PayPal feels untouchable. However, PayPal is not a bank and does not follow Federal banking regulations, thus it follows its own rules which may or may not always be in the interest of the customer. It is a matter of time before people get wise and a better alternative comes along. Remember, on the web competition is just a click away. Customer experience is #1.



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