So I am in the process of developing an online game (it'll remain nameless for now), and I have a growing concern about how Paypal handles chargebacks on digital items. I have heard a few horror stories and I was wondering if there is any kind of way to protect against this? The idea, in the game, is to have a cash shop where a player can purchase in-game items/enhancements for real money (etc etc). What kind of precautions should I take? A colleague of mine from the same college got hit pretty bad with a lot of Chargebacks not too long ago and I do not want the same kind of headache. I mean, the players who buy will obviously know what the item is or what it does prior to buying it (not to mention, selling it and THEN trying to get a chargeback set up). How would most MMORPG's deal with these chargebacks? (aside from the obvious kick in the butt with the almighty ban tactic). I heard that its a hassle setting up a proper certificate of ownership for digital items, would that even help? (or is that even possible?) Should I just stay away from Paypal? I am just cautious. I did spend quite a bit of money trying to get this game off the ground with the people that I work with and I want to minimize the amount of damage chargebacks could cause. Edit: I also understand that paypal isn't 100% the culprit but banks/credit card companies are, in a way, (and paypal just listens to them) but is there anything to protect against this?
Online transactions are always considered "high-risk" by processing companies. I have had problems with chargebacks in the past and its a huge headache. Normally, you will be unable to have the chargeback over-turned. Ive also noticed that if a client states the transaction is "fraud" then you are always out of luck. You may want to setup some verification process as it will help significantly.
Thanks for the quick reply. Is there anything else? I kind of just want to get all my bases covered, so to speak. I like paypal and want to use paypal with this, but if I have to I will switch to other methods.
@ Divine: Yeah, thanks for the advice. What I intend to do is try to add a means of verification and ip tracking (and the others you mentioned) incase if there is a dispute. I was also thinking of using things like moneybrokers and others that seem to be a bit more favorable to the seller than not. If anything, I figured with Paypal, they'd have to become trusted members of the game which would mean they'd need to be a certain level or played a certain amount of active hours. Perhaps spent previous money on the game for their own means (to a certain point) before they could exchange the item in the in-game marketplace (while logging all in-game transactions of cash shop items so we know where it goes and on that note the IP it goes to.) Is there anything that is safe against Digital Services?
Here's my little story: Someone tried to do a chargeback, however they used a proxy to send the money and then claimed 'fraud' I had the ORIGINAL person's IP, and I provided this to Paypal, along with variations of the IP (since it wasn't a static IP). I also told paypal he used a proxy service (tor) to do all this scamming. Paypal favored it in my case, and I got the money. This was for a game membership too.