The Problem With PayPal and Digital Products Sales

frustrated dude
PayPal makes me crazy!

I have a couple or three sites that sell some digital products that I created. I have had these sites for several years now and they earn me a nice amount of income with pretty much zero work.

The only real frustration with these sites is dealing with PayPal. That is who I use for the payment processing on the site. I’ve tried to use Google Checkout in the past, but that just did not work out. They actually closed my account because they said that they expected high numbers of chargebacks. Le sigh. So, PayPal it is. And I hate those wankers.

Why PayPal Sucks for Online Digital Product Sales

For as long as I can remember, PayPal has had this total bullshit policy in regards to online digital product sales. Those items are not covered under their seller protection policy. So, even if you have a download access log with their I.P address (via e-junkie), and you can prove that they rec’d the item – PayPal just don’t care.

So, someone files a claim with PayPal to get their money back after downloading your product. You’re out of luck.

Someone files a chargeback with their credit card company after downloading your product. You’re out of luck as well as an additional fee for the chargeback (normally around $30).

Sometimes, PayPal just decides to pick a random transaction and say that they suspect it may be unauthorized. If it is a digital download, guess what? You lose money!

To make matters worse, if you try to get PayPal to explain the reasons that they are keeping your money or charging you a fee, you will get zero helpful answers! Mostly, just a runaround and a copy and past of the seller’s agreement.

How I Get Seller Protection for Digital Products on PayPal

I have all of my PayPal “buy” links to require a mailing address from the buyer. In most cases, this is a confirmed address, which is the only one that matters in the event of a dispute or chargeback on PayPal.

When I get a dispute or a chargeback, I use that address. I take the digital file that the person already downloaded and I burn it onto a blank CD. Then, I take it to the post office.

I do NOT put a return address on the package because I do not want the scammer to be able to show PayPal that they returned the item. Of course, if you go to the counter at the post office to get your postage, this will not fly. So, you have to use one of the automated postal machines. And, you have to select that the item is a package instead of a padded envelope or you will not get the option to add tracking to the package.

On the mailing label, I usually write the buyer’s first initial and late name along with “or current resident.” I do this because sometimes it really is a hardcore scammer who uses a special name in order to refuse any package that shows up with that name.

What about legit fraud chargebacks?

Well, doing this still covers your ass from the PayPal chargeback fee and it does not hurt the person who had the card that was used fraudulently.

Image courtesy of geww /