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does that mean if a group of people don't like you they can chargeback-bomb you and get you banned?

danpalmer 3y ago
Yes, although in general this will happen with any payment provider. Stripe for example will decline your business after a certain point, and in a few cases have banned entire product categories that were having significant issues with chargebacks. There are payment providers that specialise in high chargeback rate industries, but they cost a lot more.
Crosseye_Jack 3y ago
Pretty much, and if your avg payment is rather low you could end up owing PayPal money as you don’t just pay for the refund of the order, but you have to pay additional charges for the chargeback. Let’s say your avg payment is $15, one chargeback means that not only have you lost the payment from the customer who charged back but as you now also owe the chargeback fee you technically lost the payment on a sale which wasn’t charged back. Edit: just a quick note. Chargebacks are different than “PayPal Claims”, chargebacks are initiated by the card issuer, claims are initiated by the customer in the PayPal interface, so claims cost less than chargebacks, but PayPal will still ding your account if you get too many of them. Edit the second: the 180 day hold is to cover not only chargebacks (which generally have a shorter period the customer can start one) but also PayPals own “protection program” claims which is 180 days iirc.
jeroenhd 3y ago
If you take credit card payments on any platform: yes. The difference is in how much prior warning you're getting and how expensive paying for the chargebacks is going to be, but every major payment platform will either shut you down or massively increase prices if you incur too many chargebacks. This is one of the practical reasons why credit card processors generally don't take porn sites as customers.
- Crosseye_Jack 3y ago
  > This is one of the practical reasons why credit card processors generally don't take porn sites as customers Yup “buyer’s remorse” kicks in rather quickly when asked “Honey, what’s this transaction for xxx?” once the statement arrives.
  - Symbiote 3y ago
    Does anyone know if this happens in Europe, where stronger authentication is generally required for online purchases? Last year I asked my bank to chargeback a transaction, where I didn't recognize the merchant or the amount. They said it was paid in-person with a PIN, and unlikely to be fraudulent unless I'd lost my card. (It was genuine.) Normally when I purchase on my card I have to authorize the transaction with a smartphone app. I can see the bank being reluctant to reverse an honest purchase authorized this way.
    - Crosseye_Jack 3y ago
      Can't speak for the rest of Europe, but in the UK tech speaking the bank still needs to prove that you still made the transaction even though you say you didn't. While SCA does helps in their claim not every transaction uses SCA. In my experience its less than 10% of my normal transactions, but some companies (my old phone provider being one) required SCA on every transaction I made with them. Strangely enough, when I purchase something via the standard checkout process on Amazon I don't get a SCA prompt, but every time I setup a subscribe and save purchase I need to approve the transaction even though its the same card as my "normal" purchases with them, but I guess that's because I'm creating a automated repetitive charge on S&S orders. Also when I have seen cases in the news (this has been quite a while ago, so don't have sources to hand) where the bank have just told the customer "We know it was a legit payment, claim denied" but when pushed for copies of their proof its later turned out they didn't have any and were basically just saying that to get the customer off the phone. EDIT: Trying to think back to my last few "NSFW" transactions, I think some sites did require SCA but iirc my last SubscribeStar.Adult (think patreon but for NSFW creators) subscription didn't, but that might be because it was just adding a new creator to my existing payments. EDIT 2: For Chip and Pin, while the bank can say "Well the purchase was made with a pin, so you must have auth it", it doesn't prove that your card wasn't pick pocketed and the pin shoulder surfed from the last transaction/cash machine withdrawal.
Dalewyn 3y ago
Keep in mind that chargebacks are considered a nuclear, double-edged option. Yes, you can get your money back as a customer or abuse the system to financially cancel someone, but issue too many chargebacks and the banks will be more than happy to also kick you out too. Chargebacks as they are intended are used only when all other attempts at resolving a dispute have failed, including the merchant refusing to issue a refund. It's the means of last resort and damages the credibility of both sides involved in the transaction.
- piltdownman 3y ago
  The problem here lies not in legitimate chargebacks, but in chargebacks as a result of using fake or stolen credit cards. There's a whole industry of blackhat and greyhat Scamming as a Service, ranging from botnets used to delist AdSense ads, to Eastern European carding forums which offer scripts to run 100s or 1000s of transactions that will be flagged fraudulent within 24hrs.
deleted 3y ago
[deleted]
piltdownman 3y ago
Exactly this. If you want to kill a competitors iOS app it's a well-known blackhat route, and testified to here before: https://news.ycombinator.com/item?id=343060 https://news.ycombinator.com/item?id=343060 In this case a competitor used fake accounts and stolen credit cards to buy a competing app to get it delisted - Apple's apparent policy once the chargeback total hits some arbitrary figure. Edit: Immediately downvoted for no reason. Catching these sort of malfeasant actors was literally one of the USPs of former Irish yCombinator Winter 2014 participant Trustev, which was picked up by TransUnion for €44 million a year later : https://www.siliconrepublic.com/business/transunion-buys-trustev https://www.siliconrepublic.com/business/transunion-buys-tru...
- ClumsyPilot 3y ago
  People want to believe free market has no bad actors, when they are actually inherent in the system
- KomoD 3y ago
  How is that comment from 2008 relevant... I'm confused? This is why I downvoted.
- eeghyrdcg 3y ago
  You linked the wrong comment. I should like to read the right one.
  - piltdownman 3y ago
    Oh apologies, copy/paste ate the last two characters of the posted URL https://news.ycombinator.com/item?id=34306047 https://news.ycombinator.com/item?id=34306047
    - eeghyrdcg 3y ago
      I don’t know, all the comments in that thread seem to think the story is bullshit. So I don’t think I’m too swayed.
reisse 3y ago
It's more complicated. In theory, you should not be able to chargeback any transaction at will, you need to provide a reason for it. But because US banking is stuck in between of 90s and 00s, to pay with the card online it's enough to know what's printed on the one side of it, maybe two sides. Therefore, "fraud" can always be used as a chargeback reason ("Oh, it wasn't me, someone taken a photo of my card! I definitely didn't pay 300$ on that hot mums nearby website!"). In some parts of the world this is solved by mandatory 2FA authenticaton for online payments (3DSecure and similar tech). If the transaction is verified by 3DSecure or some other 2FA, you cannot chargeback because of "fraud", but you still can chargeback for any other verifiable reason (e. g. goods not delivered).
- gambiting 3y ago
  To add to that - it's crazy(but also kinda cool?) that in US you can request an instant chargeback and the bank just does it no questions asked. I tried a chargeback on my British Credit card recently because the goods I ordered were never delivered, but it still took 60 days for the claim to be processed .
  - addandsubtract 3y ago
    I even had a back and forth to get my chargeback accepted. The product I ordered was broken on arrival and return shipping was like 40% of the product, so not worth it. After initially accepting my chargeback, the merchant somehow reopened the case and I had to state my claim again. It really is crazy how easy chargebacks are in the US in comparison.

Yes, although in general this will happen with any payment provider. Stripe for example will decline your business after a certain point, and in a few cases have banned entire product categories that were having significant issues with chargebacks. There are payment providers that specialise in high chargeback rate industries, but they cost a lot more.

Crosseye_Jack 3y ago

Pretty much, and if your avg payment is rather low you could end up owing PayPal money as you don’t just pay for the refund of the order, but you have to pay additional charges for the chargeback. Let’s say your avg payment is $15, one chargeback means that not only have you lost the payment from the customer who charged back but as you now also owe the chargeback fee you technically lost the payment on a sale which wasn’t charged back. Edit: just a quick note. Chargebacks are different than “PayPal Claims”, chargebacks are initiated by the card issuer, claims are initiated by the customer in the PayPal interface, so claims cost less than chargebacks, but PayPal will still ding your account if you get too many of them. Edit the second: the 180 day hold is to cover not only chargebacks (which generally have a shorter period the customer can start one) but also PayPals own “protection program” claims which is 180 days iirc.

jeroenhd 3y ago

If you take credit card payments on any platform: yes. The difference is in how much prior warning you're getting and how expensive paying for the chargebacks is going to be, but every major payment platform will either shut you down or massively increase prices if you incur too many chargebacks. This is one of the practical reasons why credit card processors generally don't take porn sites as customers.

Crosseye_Jack 3y ago
> This is one of the practical reasons why credit card processors generally don't take porn sites as customers Yup “buyer’s remorse” kicks in rather quickly when asked “Honey, what’s this transaction for xxx?” once the statement arrives.
- Symbiote 3y ago
  Does anyone know if this happens in Europe, where stronger authentication is generally required for online purchases? Last year I asked my bank to chargeback a transaction, where I didn't recognize the merchant or the amount. They said it was paid in-person with a PIN, and unlikely to be fraudulent unless I'd lost my card. (It was genuine.) Normally when I purchase on my card I have to authorize the transaction with a smartphone app. I can see the bank being reluctant to reverse an honest purchase authorized this way.
  - Crosseye_Jack 3y ago
    Can't speak for the rest of Europe, but in the UK tech speaking the bank still needs to prove that you still made the transaction even though you say you didn't. While SCA does helps in their claim not every transaction uses SCA. In my experience its less than 10% of my normal transactions, but some companies (my old phone provider being one) required SCA on every transaction I made with them. Strangely enough, when I purchase something via the standard checkout process on Amazon I don't get a SCA prompt, but every time I setup a subscribe and save purchase I need to approve the transaction even though its the same card as my "normal" purchases with them, but I guess that's because I'm creating a automated repetitive charge on S&S orders. Also when I have seen cases in the news (this has been quite a while ago, so don't have sources to hand) where the bank have just told the customer "We know it was a legit payment, claim denied" but when pushed for copies of their proof its later turned out they didn't have any and were basically just saying that to get the customer off the phone. EDIT: Trying to think back to my last few "NSFW" transactions, I think some sites did require SCA but iirc my last SubscribeStar.Adult (think patreon but for NSFW creators) subscription didn't, but that might be because it was just adding a new creator to my existing payments. EDIT 2: For Chip and Pin, while the bank can say "Well the purchase was made with a pin, so you must have auth it", it doesn't prove that your card wasn't pick pocketed and the pin shoulder surfed from the last transaction/cash machine withdrawal.

Dalewyn 3y ago

Keep in mind that chargebacks are considered a nuclear, double-edged option. Yes, you can get your money back as a customer or abuse the system to financially cancel someone, but issue too many chargebacks and the banks will be more than happy to also kick you out too. Chargebacks as they are intended are used only when all other attempts at resolving a dispute have failed, including the merchant refusing to issue a refund. It's the means of last resort and damages the credibility of both sides involved in the transaction.

piltdownman 3y ago
The problem here lies not in legitimate chargebacks, but in chargebacks as a result of using fake or stolen credit cards. There's a whole industry of blackhat and greyhat Scamming as a Service, ranging from botnets used to delist AdSense ads, to Eastern European carding forums which offer scripts to run 100s or 1000s of transactions that will be flagged fraudulent within 24hrs.

deleted 3y ago

[deleted]

piltdownman 3y ago

Exactly this. If you want to kill a competitors iOS app it's a well-known blackhat route, and testified to here before: https://news.ycombinator.com/item?id=343060 https://news.ycombinator.com/item?id=343060 In this case a competitor used fake accounts and stolen credit cards to buy a competing app to get it delisted - Apple's apparent policy once the chargeback total hits some arbitrary figure. Edit: Immediately downvoted for no reason. Catching these sort of malfeasant actors was literally one of the USPs of former Irish yCombinator Winter 2014 participant Trustev, which was picked up by TransUnion for €44 million a year later : https://www.siliconrepublic.com/business/transunion-buys-trustev https://www.siliconrepublic.com/business/transunion-buys-tru...

ClumsyPilot 3y ago
People want to believe free market has no bad actors, when they are actually inherent in the system
KomoD 3y ago
How is that comment from 2008 relevant... I'm confused? This is why I downvoted.
eeghyrdcg 3y ago
You linked the wrong comment. I should like to read the right one.
- piltdownman 3y ago
  Oh apologies, copy/paste ate the last two characters of the posted URL https://news.ycombinator.com/item?id=34306047 https://news.ycombinator.com/item?id=34306047
  - eeghyrdcg 3y ago
    I don’t know, all the comments in that thread seem to think the story is bullshit. So I don’t think I’m too swayed.

reisse 3y ago

It's more complicated. In theory, you should not be able to chargeback any transaction at will, you need to provide a reason for it. But because US banking is stuck in between of 90s and 00s, to pay with the card online it's enough to know what's printed on the one side of it, maybe two sides. Therefore, "fraud" can always be used as a chargeback reason ("Oh, it wasn't me, someone taken a photo of my card! I definitely didn't pay 300$ on that hot mums nearby website!"). In some parts of the world this is solved by mandatory 2FA authenticaton for online payments (3DSecure and similar tech). If the transaction is verified by 3DSecure or some other 2FA, you cannot chargeback because of "fraud", but you still can chargeback for any other verifiable reason (e. g. goods not delivered).

gambiting 3y ago
To add to that - it's crazy(but also kinda cool?) that in US you can request an instant chargeback and the bank just does it no questions asked. I tried a chargeback on my British Credit card recently because the goods I ordered were never delivered, but it still took 60 days for the claim to be processed .
- addandsubtract 3y ago
  I even had a back and forth to get my chargeback accepted. The product I ordered was broken on arrival and return shipping was like 40% of the product, so not worth it. After initially accepting my chargeback, the merchant somehow reopened the case and I had to state my claim again. It really is crazy how easy chargebacks are in the US in comparison.