Chargebacks Refunds Flaws

Let’s say one of my US sellers sells and item to someone in the UK. They send the item but it arrived damaged. The customer paid the money into my PayPal account making me liable. The customer contacts the seller to ask for a refund, the seller does not respond. I have to refund the customer, even after I have already paid the seller.

Another scenario. Let’s say the seller does allow a return. It will cost the customer a lot of money to send back an item from the UK to the USA. The seller has already been paid by me. I would the have to refund the buyer the initial sale price and the cost of postage. I have no way of getting that money back from the seller.

In conclusion, because I’m receiving payment directly into my PayPal account, I am liable for refunds, returns and chargebacks for items that I never even sold. That is not logical.

Let’s say a Uk customer purchases a product from a USA seller on my site. The customer pays me directly into PayPal. I pay the seller. Let’s then say the customer wants to return the item because it arrived damaged. Either I or the customer has to contact the seller for the return address. We then need to await a response from the seller. The customer then sends the item back to the seller. I then refund the buyer the original cost plus the postage cost. This money cannot be deducted from the sellers account as the seller has already withdrawn the money and I have paid them. In other words, the sellers has got the item back, the customer has received a refund and I have been left out of pocket. Furthermore, there is nothing stopping that seller from selling more items.

Even if the sellers balance went into negative and they sold some more items taking it back up to a positive balance. I would still be out of pocket because I had to pay the return postage. If the seller does not sell any more items, I’m left out of pocket.

The most frustrating part is that when a seller has sold an item and withdrawn that money but a customer then claims a refund, there is absolutely no way for the seller to pay back the refund if their account went to minus. They cannot add funds to their account to cover refunds. This would be through no fault of the sellers, it would simply be because I have no way of retrieving that money.

Another scenario. Let’s say a seller sells an item to a customer. The customer pays me, I pay the seller. The seller then does not send the item in the first place and simply keeps the money. The customer then contacts me to say they have not received the item. By that time, the seller could have sold 100 more items and I would end up having to refund every single one of them.

These are just a few scenarios that show how dangerous and unsafe it is when I am the one liable for refunds and chargebacks. What makes it even worse is not having the ability to recover funds for returns/chargebacks, it leaves the doors wide open for sellers to abuse the system.

Sellers can literally set a refund policy that I will be responsible for.

Hey Paul, I already argued this fact here: http://wedevs.com/support/topic/chain-payments-not-good-for-this-theme/ and here: http://wedevs.com/support/topic/paypal-adaptive-payments-4/

I’ve also had this custom coded and fixed. Here’s how mines work. The seller receives the money + the user’s shipping address to cover them both for PayPal buyer/seller protection, it also makes printing shipping labels easier for the seller. The 10% fee I charge comes out of the sellers account and into my account. That way the seller is 100% responsible. The seller should be the only merchant listed on record to help protect you. I can sell you the fix but its going to cost you $350.

Hey Mike,

I’m not surprised that someone else has pointed out the issue. Ok that’s very interesting, I have actually started taking steps to hire a web developer. I’m shopping around to get some quotes. However, I like your set up. I’ll have a think about it and get back to you.

Thanks Mike, appreciate it.

Paul

No problem. It’s funny you say no one else pointed out the issue… I believe its because a lot of Dokan customers don’t understand how hard a marketplace can be to get established. They might not ever sell an item on the site, so the problems me and you have they will never experience them.

Well just let me know, or we can wait till they release the dokan plugin which will make this theme 100 times better.

Yes, that’s very true Mike, I completely agree. It’s very complex. I have been in long talks all day with some web developers trying to agree on the best option. I’m a bit of a perfectionist when it comes to my websites. I’ll get there eventually haha.

Ok sure thing. Yeah, the release of the plugin is something to look forward to.

Paul

Hi paul,

We are also struggling with logics here!

We found only one solution that, When using Paypal Adaptive payments – force buyers to buy from only one seller. That way, you can make that seller as primary receiver and take your commission from the seller. (this solution already implement on paypal adaptive payments add-on)

what else we can do here? idea?

@mike – we would like to know your solution as well 🙂
If possible, please email me directly – mahi at wedevs.com with your website login details to test it out how it is working.

ha, that access would cost you.

But, your on the right track. Switch the primary in chained payments to sellers, only checkout from one store at a time. Remove the 6 item limit , which is kinda silly.

To get PayPal to set the buyers address you have to go with embedded chained payments, which caused me some headaches to implement .

Hey Mike,

What is the 6 item limit? So by setting it up your way Mike, when a customer purchases an item from the seller, the money goes directly into the sellers PP account and the fee % into yours? Would that be accurate to say?

Thanks
Paul

Dokan has an extension call PayPal adaptive payments which allows you to use paypal’s parallel payments. It was a quick fix for me until I found out that it only allows a max of 6 items. The reasoning behind it was PayPal only allows a max of 6 recipients to receive a payment in one order.BUT what if you only check out items in two stores (2 recipients + you for your fee) with 14 items? It doesn’t work because they limited to 6 items with no type of logic or whatif.. So I had to custom code it.

But yes, that is accurate to say.

Ahh ok, I understand, thanks for explaining Mike. I think anyone who is really going to use this theme to build an established website with lots of buyers and lots of sellers will quickly realise the issues. It makes absolutely no logical sense to accept all payments into your own PP account making you liable for refunds and chargebacks when you have no power or way to retrieve those funds once the seller has had a successful withdrawal. You’re basically left liable for chargebacks and refunds for products you never personally sold. That’s quickly going to stack up to a lot of losses if you have to refund customers when the seller has already been paid. Furthermore, the whole process of refunds makes no logical sense. Lets say a seller has been paid the withdrawal but then the customer contacts the seller to ask for a refund. Even if the seller wants to refund the customer, they have no way of getting the funds to them. they cannot refund them. They would have to contact me to ask me to refund the customer but then how would I get the money from the seller. It’s a major flaw. I’m responsible for refunds that I have no way of clawing back from sellers, even if they wanted to pay it. That’s ludicrous.

I think it’s clear to me that I’m going to have to hire a web developer to make the necessary changes to ensure that everything runs smoothly, efficiently and logically.

I’m also having issues with parent pages. I also have error messages in my back office which is affecting the functionality.

I have set up another thread in this forum but have been waiting 4 days for a response from admin. I run several websites, I’m on a tight schedule. Going back and forth with messages and waiting 4 days for a reply is not good enough. The ”support” from WeDevs has not been good for me so far. I’ll probably have to hire someone to fix that too.

What about using Stripe instead?

Via Stripe:

Refunds, Disputes
With Stripe Connect, the responsibility for refunds or disputes lies with your users and not with the platform (though, through the API, you have the power to take refund and dispute actions on behalf of your user). Your users should also have a direct relationship with their customers: their business name will appear on the credit card statements, and they’ll be ultimately responsible for refunds or disputes.

If you’re taking all of the payments into a single Stripe account, your platform will handle and is ultimately responsible for all refunds, disputes and customer support. It should be clear to your user that they’re paying you directly, and your business name will appear on your customers’ credit card statements.

The compromise is vendors will be required to have a Stripe Connect account. Anyone want to crowd fund this? Would you be filling to pay for the plugin if I paid a developer?

The most logical solution is to using PayPal Adaptive Payment add-on by us. But right now it has some limitations and we are going to fix it this week.

In a nutshell, there will be two options.
1) The current features + send the buyers shipping address to PayPal for protection.
2) Add a new option to make the primary receiver to the buyer and secondary to the seller. For that, you won’t be able to add products from different seller on the cart. Your cart must have a single sellers item. The explanation is: if you have multiple sellers product in the same cart, we can’t make any individual seller as primary.

So by choosing the 2nd option, you will have the refund problem fixed as the seller will be liable for the refund.

About the 6 items issue: Accidentally instead of limiting 6 sellers, we put a limitation on 6 items. We already fixed that.