Fiverr Forum

Some Info and Opinion on Chargebacks


#1

As the issue of Paypal chargebacks has been discussed a lot recently including the horrible situation of a large chargeback for one Forum regular, I decided to spend a bit of time looking into them to see what I can find out, what other freelance platforms do and to try and put together some advice on how to avoid them as much as possible.
Brace yourself, it’s a long one!

In this post I will be summarizing and clarifying some of the content of other websites and their terms and conditions, for ease of reading I will use “Fiverr language” such as “Seller”, “Buyer” etc. The information is for basic guidance only and of course you should decide for yourself what is right or wrong about my post and if in doubt, do your own research. Opinion and advice is my own and not necessarily the views of any company or other individuals.

Firstly, it should be noted that chargebacks are issued either through Paypal (up to 6 months after the purchase is made) or through a credit card company or bank.
The reasons that are most common are:
- Failure of seller to deliver - this is unlikely on Fiverr since the dispute system is easy to use, especially in this case. If you don’t deliver, CS will refund the buyer.
- Delivery did not match description - This is possible as a chargeback reason on Fiverr because CS does not simply refund an order if a delivery has been made. Buyers may then seek to get their money back through a chargeback.
- Stolen credit card - This can happen to any business, online or offline. A payment made with a stolen credit card will be refunded to the owner of the card almost every time.
I actually had a €5000 sale refunded when I worked in retail due to the card having been stolen. The thief had done their homework and planned it over the course of 3 months! Police said there was nothing they could do.

So, Irish police are basically powerless against a well planned thief. But what about freelance platforms, surely they must have a way of dealing with it.

I checked out the T’s & C’s of 3 of the main freelance platforms as well as their forums if they have one. The situation on all of them was almost exactly the same as Fiverr!
The T’s and C’s basically give no guarantee against chargebacks and essentially, by signing up to them you are accepting that you cannot hold the platform responsible if a chargeback occurs.
(Did you know: Some sites charge a fee in the event of a normal dispute arising! If you don’t pay the fee then you lose the dispute!)
WOW!
The forums of other platforms have many posts similar to those on this forum, with complaints, horrible stories, petitions, demands etc all asking the platform to do something.
While each platform does seem to have CS that can act on behalf of the sellers in the case of chargebacks, it appears that they are seldom successful. Similarly, there have been cases on Fiverr where people have received their money although we don’t know the full story behind the scenes. No site gives guarantees and no site has a clear policy laying out how they approach the issue.

With the above in mind, I think the best way to approach the issue is to look at how we can avoid them in the first place, or at least minimize our risk. While the above is all partially digested information that I have gathered, the following is my opinion based on experience and common sense. You may have other ideas or you may believe the risk to be worth taking in some cases.

To avoid/minimize the risk of chargebacks for “Alleged bad delivery”

  • The most obvious, deliver good quality work.
  • Communicate with the buyer, it is more difficult to steal from someone you like
  • Keep the amounts low, at least in the beginning. If the buyer has a huge project to do, ask them to first place a smaller order so that you both know that you are right for each other ie. before accepting a marriage proposal, ask them to take you to dinner first (at least)
    If you are to have any chance of having a chargeback awarded in your favor then the most important thing is a track record. Being clear in communication and having a couple of successful orders with a buyer is a way to establish a track record. If it is clear that the buyer liked your quality of work initially then a chargeback is less likely to be successful - unfortunately there are still no guarantees.

To avoid/minimize the risk of chargebacks for "Stolen credit cards"
Here is the thing. A thief wants it to be simple, straight forward and as quick as possible. A credit card thief will have a maximum of one month before the card owner receives a bill and cancels the card. They will also be aware that large transactions may trigger the card company calling the owner to check it - not always, but sometimes.

  • Watch out for a buyer who places multiple small orders when a big one would make sense
  • Watch your total in a month with a buyer. If it seems high then do some risk assessment.
  • If you sell services that do not require you to get any information about the client you should be extra vigilant about amounts. For example, it is highly unlikely that someone will buy a logo or website for their company with a stolen card, they would be found immediately!
  • Be aware of buyers who are pushing for a delivery before the end of a calendar month (so the card owner does not get a bill before the delivery is finalized)
  • Friendliness does not necessarily mean the person is nice! The best con men come across as lovely people. Maintain the same standards of vigilance for the nice people as the nasty people.

What to do if it happens

  • Take a deep breath.
  • Contact CS and ask what happened.
  • Check the order and create a case for your defense. Use screenshots etc to make it clear that the work you delivered was good and what the buyer wanted.
  • Follow the instructions of CS
  • Try not to let it take your focus from your work. You may have lost money to one bad buyer but there is no point in allowing yourself to lose more from your good buyers!
  • Check your local tax laws and with your accountant if you have one. Some countries/jurisdictions may allow you to write off a chargeback as a bad debt against your taxes.

I hope that this helps and that you manage to avoid chargebacks as much as possible. From talking to different sellers, it is clear that these are relatively rare and that the vast majority of orders do not have chargebacks. Remember that this is not limited to Fiverr, freelancing or self employment and that it can happen anywhere, to any business.
It is not a nice part but it is part of running a business, be as vigilant about your online work as you would be about locking the doors of a bricks and mortar business.


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#2

Thank you! This information really is essential!

My kindly regards and happy sales!


#3

Those information is okay. But it’s bit critical to understanding. Thank you for mentioned those highlights and discus. This tips may help sellers and it’s follow. Cheers :slight_smile:


#4

Is there anything I said that is not clear? Please ask if there is.


#5

#6

Great info. I needed this to relax after the horrible cases!:ok_hand:


#7

Thank you, this is good to know! I actually didn’t know this could even be a problem. What a nightmare!


#8

very good info…thanks


#9

Thanks for this great information​:raised_hands::raised_hands::raised_hands:
@eoinfinnegan


#10

it’s really very useful to access fiverr.com It’s helpful to more professional on fiverr.com Thank you for this type of helping articles.


#11

This awesome, I have been concerned about this for a while since I came on Fiverr. This info is a relieve


#12

Thank you for such a good information. :+1:


#13

Very helpful. Thanks!


#14

How does everybody judge who to sell to and who not to? I have been on here for a month yesterday, already I have had 10 canceled orders with charge back. Their accounts have dissapeared and last month Jan has cost me $80 in revenue. again today I have had one cancel which fiverr made me aware that it was a paypal dispute and to stop selling to this seller. I have just had a new userorder that has only been a member since this month. I have previously requested cs take a look at one order but have heard nothing back from them and the customer messages me every day. How woul you experienced sellers approach these?

It also states this customer that has just placed an order is a repeat customer but they have never ordered from me?


#15

Dear Nathan:

Here’s a thread with more information about troublesome buyers: Warning Signs of a Potentially Troublesome Buyer.

Unfortunately, dealing with dishonest people is a fact of life.

I suggest you edit your post because I don’t understand this question:

It also this customer that has just ordered is a repeat customer but they have never ordered from me?

Good luck,
Blaise

P.S. My guess in response to your revised question: Maybe they mean the Buyer is a repeat Fiverr customer, not necessarily your repeat Buyer.

If they’ve never bought from you before, you’d probably be able to demonstrate that by cross-referencing your sales…


#16

Have just edited the message


#17

10 separate chargebacks is a lot and I think I know why you are facing this.
I think you may be experiencing the same kind of problems that I had when I had a website which sold traffic. I did this through my own website and faced chargebacks quite regularly. A lot of people who buy traffic (and email lists) really do not know what they are doing. So many people had ridiculously bad websites that were an assault on the eyes with affiliate links, popups etc everywhere. They expected to buy 10,000 visitors from me for $50 and to make thousands of dollars from all these people clicking their links. That is obviously not going to work as any real person will simply close that site asap.
The same kind of people will buy your email lists and just send out bulk emails with affiliate links etc. When it doesn’t work because of spam filters etc, they will blame your list! They will know they can’t go back to you as you delivered what was asked for so instead they do a chargeback.
As the chargebacks I got from my traffic site were against my own Paypal account I could respond and dispute it and I never lost any revenue as a result. I explained clearly to paypal exactly what had happened (including my suggestions to them to improve their sites) and Paypal ruled in my favor.
You cant do that here and so you will have to ask CS to help every time but it is unlikely to be successful. I eventually sold that site because what was supposed to be a half hour/week project was taking up hours and hours of responding to emails and chargebacks. It was not worth my time.


#19

Hi, thank you for the info. I have checked through all my previous salesand that buyer is not among them. So maybe the green circle saying repeat buyer just means they have purchased from another buyer, but does seem a bit silly if that is all repeat buyer icon means? Im sure there are tons of buyers that have made oter purchases from other sellers so it doesn’t really ake any sense.


#20

The green circle saying repeat buyer seems to appear as soon as the buyer places an order with you.


#21

Thanks for this valuable information