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August 13, 2014
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UPDATE - OCTOBER 2, 2014:
Paypal has changed their layout, you can still send invoices but you can no longer select digital goods. 
I haven't had time to really look into it and come up with a solution. 
but you pretty much HAVE to send out something physical now if you want to be fully protected. There's still main points in this journal that describe how to go about that. 

This Journal is currently Under Revision. 
Points have been brought to my attention that have caused me to need to revise this journal. 
I am still digging around on my free time to see if I can find a way around this. I will update daily. 
_________________________________________

Please note that this is specifically for Artists who use Paypal to sell digital goods.

OK, so there has been many artists being scammed lately through Paypal with large chargebacks. If you have been hit by a chargeback recently please feel free to note me and I will try my best to help you out. 

The rest of this journal is information on how to better protect yourself against scams, fraud, and/or chargebacks.
 


What is a Chargeback, and How do I protect myself from one?

So first we need to understand what a Chargeback is. 
By filing a chargeback, buyers ask their credit card issuer to reverse an approved transaction.
Common reasons for chargebacks include:
  • An item was paid for but never received.
  • An item received was significantly different than described.
  • An item was damaged in shipping.
  • A credit card number was used fraudulently.

for further information on how to respond to a chargeback please read Paypal's simple tutorial: www.paypal.com/us/cgi-bin/webs…

Now that we know what chargebacks are, let's go over Paypal's policy and how they handle the situation should it arise. 
A Chargeback cannot be stopped from occurring. Paypal does offer seller protection that will cover the costs of your goods should a chargeback happen, however, you will have to fight for it and if you are an artist selling your digital goods (services), you are not covered by that protection. In order to be eligible for the Paypal Seller Protection, what you are selling must meet certain guidelines. If you follow the guidelines then you will be covered by Paypal and you won't lose any funds if someone were to file a chargeback. Please take a moment to read Paypal's Seller Protection Policy: www.paypal.com/us/webapps/mpp/…

How do you Become Eligible for Seller Protection?

PP Seller protection 1 by MDizzle-Designssource

Now, as a digital artist, (or if you live outside of the US) you are out of luck if someone files a chargeback. 
I have talked with other artists and we believe we may have come up with a few helpful solutions.

Step one:
Take a look at your buyer. Look at their page, Have they been buying art for a long time? Are there any negative comments against them? Is it a new account or one that has been established for a while? Does their page look sketchy in any way?
If they seem like a legit, responsible buyer than it is up to you wether or not you need to take the following steps.  

Step Two:
Create an Invoice or Money Request.
I personally feel that you should always use an Invoice or Money Request when receiving payment through paypal. It gives you control over the whole transaction. You get to choose how the transaction is placed and what is said in the message of the transaction (which is especially good when you sell NSFW art. Paypal does not permit the sales of NSFW works or anything of the like. If you are selling NSFW art, then you will not be covered by Seller Protection, I haven't found a way around this.)
Fill out your Money Request, or Invoice to suit your needs. If you are selling digital works then select 'services' instead of 'goods', but note that this will not cover you against a chargeback. 
Add your ToS in the Message if you want, this may help you.

Step Three:
Now, if your buyer/commissioner seems sketchy or if you want the seller protection then we may have figured out a solution.
Take on your commission, but instead sell a full sized print and make it to where it looks like you are selling a print, not just your services.
When writing your policy, be sure to emphasize that they are buying the finalized print from you. This will weight the transaction towards 'goods' instead of 'services', since physical items are being transferred for the funds received. You can better improve your profit if you give the buyer an additional option to buy a frame for an extra fee -- inexpensive, $5-$10 at walmart. Not necessary but further emphasizes that they're buying a final, printed form, not just the service of drawing it. 

You must be able to provide proof of delivery and proof of shipment
PP Proof 1 by MDizzle-DesignsSource

I'm not sure if there is a time limit for when you have to have the Print shipped by. You might be able to add a time frame in the invoice/money request message on when you expect to have the print completed and shipped. If you have insight on this, please feel free to share. 
Respectively, we believe that this has to be one mass payment as well, not multiple payments. 

Personally, I would only use this method if the buyer was sketchy and/or the transaction was large enough to hurt me if a chargeback were ever filed. Also, if I were going to use this method I would charge an extra $10 for the extra time and money I will have to use to get the Print made, but that's all personal preference that I am just tossing out as a suggestion.  

Step Four:
Finish your art, make a print, pack it up, and ship it.
ONLY SHIP IT TO THE VERIFIED ADDRESS THROUGH PAYPAL, if you send it to a different address that they give you then you WILL NOT BE COVERED by Seller Protection.
Make sure you get your proof of shipment and proof of delivery. If you follow these steps and read and follow the Paypal Seller Protection Terms as well as the Paypal User Agreement carefully then you should be covered in case a chargeback were to happen. 



More Info on how to use Invoices and Money Requests 


WHAT TO DO:
Get the buyer's paypal email, go to paypal and click the Request Money tab, You can then click Request Money OR Create Invoice

- If you Click Request Money: 
  • Add the recipient's Paypal email. 
  • Add the amount of money you want them to pay you. 
  • if you are selling digital goods, then select 'Services' (no shipping is required), or if you are selling tangible goods then select 'goods'. 
  • Finally you can add your personal message and include your personal ToS if you want to. 
  • click send. 

- If you click Create Invoice:
It's much more detailed. You can create a professional reusable invoice that you can resend to multiple people multiple times. I have never used this tool myself but if you look at it, you can see just how detailed it gets.

:iconhyanna-natsu: "you can create templates, so when you make a new invoice you can choose which template to use, for example, you can have a template for sketch art, other for flat colors, etc.
The invoice will have a date and you can choose a due date if necessary.
And it comes with the part "Terms and Services" where you can put your ToS in the template, so always you create a new invoice the ToS will be there. Also you can add your "Logo" which make the document more official maybe?
Oh plus, you can choose don't show your real name, email, address, etc. in the invoices, just need go in invoice settings."
 
The invoice will have a date and you can choose a due date if necessary.
And it comes with the part "Terms and Services" where you can put your ToS in the template, so always you create a new invoice the ToS will be there. Also you can add your "Logo" which make the document more official maybe?
Oh plus, you can choose don't show your real name, email, address, etc. in the invoices, just need go in invoice settings."
 
So it's worth looking at. Go play with it.  :)


Other Safer Methods of Receiving Payment

If you feel that Paypal may not be the best choice for you, there is other ways to be paid. 
the safest method is a Money Order through the USPS or any Western Unions. These are can be insured in case of loss in the shipping process, they are easy to send, and all payments are final; no worries of scams or chargebacks. 
Just have your buyer go to the USPS or Western Union and buy a Money Order, have them ship it to your address, go cash it at a bank and then start drawing! Easy as that! It just takes a couple days to receive it, depending on how long it takes your buyer send it. 


How To Protect Yourself as a Buyer:

If you are buying art, don't ever send payment as a "gift"; this pretty much gives the artist the right to run off with your money.
If the artist insists on sending payment as a gift because they don't want to pay the 2% fee, offer to pay the extra 2%, or don't buy their art, or convince them otherwise. 
Make sure you carefully read the details of the transaction and the artist's Terms of Service (if they have one.)
Save all conversations between you and the artist in case you never get your art. 
If you never get your art and it seems like they have no intentions of giving art to you, then you should be able to file a chargeback through Paypal.

-This Buyer protection section will be revised shortly-


I apologize for the multiple revisions on this journal. I write these after I get home from a long night at work and I'm pretty work out and ready for sleep. I really hope that I didn't forget anything and I hope that you guys find this helpful. I know it's a lot of reading, but it's worth it if you plan on making large Paypal sales in the future. Best of wishes to you all! <3
Add a Comment:
 
:iconjuneau-88:
Juneau-88 Featured By Owner 6 days ago  Hobbyist Digital Artist
this is a nightmare... Just when I started thinking about opening comissions this happened :/ well at least we are aware of such issue and we can try to protect ourselves against those scammers.. But I also think that before they'll figure out a way for artists to be legitimately protected while selling digital goods through paypal they'll try to rob as much as possible. Plus the chargebacks were not so widely known so I figure more people will get an idea on how not-to-pay for the digital art:/
Reply
:iconaveneline:
Aveneline Featured By Owner 6 days ago  Hobbyist General Artist
This is brilliant! Thank you so much for taking the time to make and revise a guide ;w;
Reply
:iconangelicsmana:
AngelicsMana Featured By Owner Jan 8, 2015  Hobbyist General Artist
Can they still chargeback you if the commissioner and the artist's paypal arent verified?
Reply
:iconneoinu:
neoinu Featured By Owner Sep 26, 2014  Hobbyist Digital Artist
What about adopts? Someone paid for an adopt over paypal, now a month later they charged a chargeback.
What can I do to prove that they bought it?
Reply
:icondannums:
Dannums Featured By Owner Sep 15, 2014  Hobbyist Writer
If I ended up picking the wrong option and ended up sending as gift, can I still invoke a chargeback through paypal? 
Reply
:iconmiiddori:
Miiddori Featured By Owner Sep 2, 2014  Hobbyist Digital Artist
When I try to make a invoice template I can't find anywhere it says to select services or goods. Idk if paypal changed. Same when I request money it just asks for e-mail and amount. Anyone please help.
Reply
:iconasheskyler:
AsheSkyler Featured By Owner Sep 2, 2014  Professional Traditional Artist
Very thorough! And brought something to my attention. Paypal's "bah, First Class International" clause. That REALLY sucks, the USPS international Priority Mail for me is $25 that more than doubles what I charge for some items. Forget about the ridiculous shipping costs for UPS or Fedex! Nothing bad's happened yet... *knock on wood*
I think you kinda went over it in the Step Two part or it may even be in the pending revisions, but a contract or "statement of work" tends to be the other favorite method. You write a document saying what you're creating, how many revisions you'll allow if you and by who (some people have issues with the whole family having an opinion), when you expect to be paid, and how much in addition to the invoice shipped with it. It's supposed to be a pretty solid defense for both artist and patron.

Checks and money orders are much easier. The only hard part is finding a buyer patient enough to let it clear the bank, especially around the holiday rush. 3% really is no reason for an artist to get fussy about using Paypal, that seems sketchy to me. eBay charges 10% of what you're paid (for the item AND shipping, bit of a ripoff), A&C charges 15% (but no Paypal fees later, yay!), and Etsy charges around 3% for the item and not the shipping (unlike eBay *grumble*). Nobody I've talked to likes the Amazon thing. Oo, I have an idea for the digital goods! Stick the high-res copy on a CD and mail it to the buyer's address. Therefore you can't say you DIDN'T ship something tangible to them. A lot of email systems have a limit on how much data can be sent anyway. Maybe it'll work? :3
Reply
:iconroothragon:
roothragon Featured By Owner Aug 30, 2014
Pretty good document!  *bookmarks!*  I would add to the buyer protection section that paying as a 'gift' also puts the artist's account at risk of suspension, because selling products (digital or otherwise) using the 'gift' method is forbidden by PayPal.  I have a write-up on it here: www.furaffinity.net/journal/52…

Since that write-up, the Federal law preventing credit card companies from passing fees on to customers was repealed.  However, some states still have protections for buyers in those states, so PayPal still doesn't want sellers passing this fee to buyers (I've heard that you're allowed to charge less for cash/money-order, but you can't charge more for PayPal).  My write-up has links to and excerpts from the relevant sections of rules, and a link to Visa's list of states that continue to protect buyers from the fee dance.
Reply
:iconroothragon:
roothragon Featured By Owner Aug 30, 2014
Actually, that bit about not being allowed to use 'gift' for sales should probably go into the Seller section(s) as well as the Buyer section.
Reply
:iconwanabenightfury:
wanabenightfury Featured By Owner Aug 18, 2014
bo no  no not you
Reply
:iconwanabenightfury:
wanabenightfury Featured By Owner Aug 18, 2014
CURSE YOU NERDS FRADS
Reply
:iconmaybeno123:
maybeno123 Featured By Owner Aug 18, 2014  Hobbyist General Artist
Thank you for this.
Reply
:iconpassin:
Passin Featured By Owner Aug 18, 2014
Fascinating. A most helpful document
Reply
:iconfablerhythm:
Fablerhythm Featured By Owner Aug 18, 2014  Hobbyist General Artist
This is a bit of a stretch, but is there any idea at all about alternative payment methods to Paypal? I have only once run into a commissioner that used a service called Square Cash to send me my payment, as they do not personally support Paypal - but I was able to accept it very easily into MY Paypal account.
I am not 100% on this, but since the payment does not come from PP it might offer less of an ability for thieves to do chargebacks...? I suggest this in lieu of money orders because that is a lot of trouble that would probably serve to turn away a lot of commissioners - since an extra purchase/shipping cost and subsequent gas it would take to buy a physical money order would all be less than ideal factors. (For me the nearest place that sells money orders is a 15 minute drive that I do not much like taking/that I only take when I also need to get groceries.)

Just a suggestion! Even if this case of abuse is recent it's always good to encourage people to take a day and try and sift through all of the legalese in the services they use if they are as important as Paypal. When money is involved the time is well invested. *puts on reading glasses*
Reply
:iconadrienne87:
Adrienne87 Featured By Owner Aug 28, 2014  Hobbyist General Artist
I agree. PayPal kind of isn't that great, but I was always under the impression that it was the only way... Going to look into "Square Cash". Thanks!
Reply
:iconfablerhythm:
Fablerhythm Featured By Owner Aug 18, 2014  Hobbyist General Artist
(OH and thank you for writing the guide! I'll be checking it now and again for updates.)
Reply
:iconcrystal-chrome:
Crystal-Chrome Featured By Owner Aug 17, 2014
Thank you!
Reply
:iconaristia:
Aristia Featured By Owner Aug 17, 2014
Thank you, even for those not selling on DA this is very useful information.
Reply
:iconevejones6:
Evejones6 Featured By Owner Aug 17, 2014  Hobbyist General Artist
Thank you this was helpful
Reply
:iconlaughbutts:
LaughButts Featured By Owner Aug 17, 2014  Hobbyist Digital Artist
you dda coolest chick in town!
Reply
:icondonnabarr:
DonnaBarr Featured By Owner Aug 17, 2014  Professional General Artist
Excellent advice. Thank you for your time and trouble in helping all digital artist, especially when you need the rest! What is the Graphic Artists Guild's stand on this? www.gag.org
Reply
:iconlamplighter1968:
Lamplighter1968 Featured By Owner Aug 17, 2014
I find it very sad that we have to even be thinking about this topic, but I, as a regular commissioner of custom created art, have been subjected to scams. The unfortunate truth is that a large percentage of art commissions involve "fanart", and since the whole transaction is technically a violation of copyright laws, neither party can be completely safe from people who wish to take advantage of the situation.
Your advice to check out the potential business partner works both ways and is probably the most helpful single piece of advice possible. Now, more than ever, reputation matters, so it's absolutely vital to expose fraudsters whenever possible. The DA community is large, but not so big that word doesn't spread, so if you get scammed, name the culprit and smear their name as far and wide as possible. Even this is no guarantee, since it's not that hard to create a new identity, but this makes brand new accounts much more suspect. As an artist, encourage your clients to post the work you do for them on their own site. This not only offers you more exposure, but also allows others to "check references" as it were....drop a line to other artists who have worked for them before.
Another trick that will help safeguard both clients and artists is to start small. Don't take on a commission (or hire a commission) for a large amount of money when dealing with a new artist or client. While no one likes to be scammed for $100, or put hours of work into something and not be compensated, but it's a lot better than shelling out hundreds or thousands of dollars, or invest weeks worth of work, only to find out the hard way that a person can't be trusted.
The best way to protect ourselves from fraud is to protect each other. Pass on the info when we hear about a scammer, and make sure we have the names of people we trust in our friends list to be viewed by others. It's a nice and easy way to provide a reference without going through the hassle of noting and waiting for a reply.
 
Reply
:iconmxhl:
mxhl Featured By Owner Aug 17, 2014  Hobbyist
All this because pixlett...
Reply
:iconsouiwave:
souIwave Featured By Owner Aug 19, 2014
pixlett aint the first person to do this, and they won't be the last, either.
Reply
:iconsparkysama:
SparkySama Featured By Owner Aug 17, 2014  Hobbyist General Artist
PayPal needs rules for people who sell digital art, it's very unfair how they run it now.
Lots of people sell digital art and adoptables through PayPal now, so why are they so unfair in protecting those people?
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
I agree... 
Reply
:iconmadcom13:
madcom13 Featured By Owner Aug 17, 2014  Hobbyist General Artist
Maan, Economic reality are sure though.. O.o
Reply
:iconstorm-wolf-artist:
Storm-Wolf-Artist Featured By Owner Aug 17, 2014  Student Digital Artist
Thank you
Reply
:iconshintari:
Shintari Featured By Owner Aug 17, 2014  Student General Artist
Just an idea, but what if you were to sell your digital product via burning it to a CD/DVD instead of uploading it online?
It would protect the customer's product from being copied/stolen without their consent and it should count as tangible product as well, no?
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
I cant say for sure, but yeah that may work
Reply
:iconto-ka-ro:
To-Ka-Ro Featured By Owner Aug 17, 2014  Professional General Artist
Thank-you for the information! I'm about to start selling commissions online, and I really need to learn these types of details about PayPal :nod: 
Reply
:iconkarniz:
karniz Featured By Owner Aug 17, 2014  Hobbyist Digital Artist
This is excellent! /claps
Thank you for writing this up!
Reply
:icontelelia:
Telelia Featured By Owner Aug 16, 2014  Hobbyist Traditional Artist
I thought it was against Paypal's TOS to tell buyers to send money as a gift.
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
it probably is, but people don't know any better, which is why I am saying to NEVER send payment as a gift
Reply
:iconimonox:
iMonox Featured By Owner Aug 16, 2014  Hobbyist General Artist
You can still be chargebacked with invoices though?
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
it looks that way
Reply
:iconrainbownote:
rainbownote Featured By Owner Aug 18, 2014  Hobbyist General Artist
Sorry to interrupt! Then the only way to not be chargebacked is if you Request Money?
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 18, 2014  Hobbyist General Artist
no, there is no way to stop a chargeback through paypal
Reply
:iconimonox:
iMonox Featured By Owner Aug 17, 2014  Hobbyist General Artist
I do believe Google Wallet covers Digital Goods and you can use it to pay for stuff using Paypal though?
I made an in game purchase in a game and Google Wallet took it off of my Paypal ;o
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
I'm gonna have to take a look at it when I have time
Reply
:iconimonox:
iMonox Featured By Owner Aug 17, 2014  Hobbyist General Artist
No problem!
Reply
:icontheycallmesage:
TheyCallMeSage Featured By Owner Aug 16, 2014  Hobbyist General Artist
Very useful information. Thank you for sharing :meow:

What about sending a hard copy of digital media (i.e. a CD or flash drive) through the mail (specifically certified mail such that the recipient has to sign for the received goods)? Do you think that would be a good option as well?
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
that could probably work, but I cant guarantee that it would
Reply
:icontheycallmesage:
TheyCallMeSage Featured By Owner Aug 17, 2014  Hobbyist General Artist
Well, it's just a thought. It's probably cheaper than mailing off a proper print.
Reply
:iconh-falcon:
H-Falcon Featured By Owner Aug 16, 2014
Just a correction on the step two part. I have seen other journals and people trying to give out this information and saying to use "Invoice" and or "Request Payment" and that it gives the seller full control of what is being said so that the client/buyer cannot put anything like "Sex picture" in the message fields etc. This is incorrect. Although you will be able to control what it is that is being paid for and therefore control the message field for the title, it doesn't stop them from being able to add a note and say the same thing they would have put in the message field. ANYTHING you send payment for (even gifted) has the option to "add note" so this is completely moot because you can fill out all the message fields properly and they can still end up adding a note....

Just wanted to clear that up for people who are thinking that by going the route of "Invoice" or "Request Money" it is not as fool proof as people are claiming.
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
I have never seen the option for a buyer to add a note to an invoice that was sent to them, I'm not saying that this is not true, I'm just unsure. However, the likelihood of your buyer sending an extra note after they receive the request is unlikely unless they are purposely trying to get you in trouble, whereas if they sent you a payment they just put "from JohnDoe for the butt sex porn" out of sheer negligence, or just not knowing any better. If what you say is true, then you're right, but it's still improving your chances of getting screwed.
Reply
:iconh-falcon:
H-Falcon Featured By Owner Aug 17, 2014
No I understand that it helps a bit and makes it less likely they will just be like "Here is payment for pron pic". But it still does leave the option unfortunately.

It's also possible that the options are different for different regions. For example since Paypal has changed their "Look" and interface now in the US it's all different. When you try to send "Request Money" you no longer have the option to select "Goods" or "Services". It's just sent out automatically as for goods because when they send payment you will have their address and it will say "Now ready to ship". There is no longer the option to choose. Invoice is not affected though. You can still choose Services but now you have to  fill out how many hours and what amount per hour."

Yet here in Canada since we have the older interface still when requesting money you can select goods or services.

The whole setup is just bullshit... Paypal really should learn that in this day and age there are such things as "Digital" transactions and they should be covered. (under reason). And if you can prove the client got the service and the "art" sent to them or whatever then it should be covered.

But yes. Before the last step of "confirm" to pay there is the option to "Add note to Seller". So yeah... never totally covered.

It's too bad people can't use the gifted feature because this would cover the artist. As if you send gifted you can't ask for a refund and I don't think you can do chargebacks either on gifted. (not sure on that though).

Anyways didn't mean to go on a long response. Sorry.
Reply
:iconmdizzle-designs:
MDizzle-Designs Featured By Owner Aug 17, 2014  Hobbyist General Artist
I believe they can still file chargebacks with it being sent as a gift. It's all through their credit card company, so any charge can be reversed, all they have to say is "my credit card was stolen" and the bank decides if it's legit or not.
but if it was gifted then there's no chance of you getting the paypal seller protection. 

And I'm not sure what you are talking about... I'm in the US and I can still select 'goods' or 'services" when I send money requests.
Or do you mean that you can't select those if you are outside of the US?

And yes, it's a shame that Paypal doesn't cover digital transactions... it's a shame that we have to go to extreme measures just to protect ourselves from things like this, but unfortunately we just have to deal and try to make the best of it... 

But at least I can say that I haven't been scammed since I was first scammed 2 years ago. I was in the same situation, someone bought thousands of dollars of custom artwork from multiple artists, including myself, and then filed a chargeback.

I've been careful ever since, following these same steps, mostly just checking out the people I take on as clients before taking their money. 
We just gotta be careful cause some people really suck... 
Reply
:iconh-falcon:
H-Falcon Featured By Owner Aug 17, 2014
Yeah they probably can which is why I said I didn't know. Since chargebacks are handled through the CC company. However gifted does stop them from requesting refunds via paypal. Any other payments they can request it up to like 45 days.

Do you have the newer interface of Paypal? The newer "look" to it they rolled out back in July? If you don't and still have the older version then yes you can send Goods or Services. In the newer version the way it's done is different. That window that comes up giving those options is no longer there. It just lets you "Request Money" and you put the persons name and then you confirm and send it off. There is no longer an option in the newer way they do it. Unless for some reason there is an issue at the time and they fixed it. I don't know. Also if you try to go back to "Classic" look it just reverts back to the newer look at that point again.

I agree. I'm also wondering if there is a way not to accept credit card payments. Might be worth looking into and would solve at least the chargeback stuff.
Reply
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