Defending against chargebacks

[edmazur]

You can buy what are called "stars" in my game for $10 each. These give you certain in-game perks and can be traded to other players. I allow them to be bought/sold in this manner as well, so you can recover some of your investment as a player if you're quitting or something. A player that had purchased a couple dozen stars in October recently scammed me by selling them to another player and then filing a PayPal chargeback against the transactions. I lost the dispute, so I guess I'm wondering about two things:

1. How can I properly defend against chargebacks? I linked to the sale thread where the scammer sold them off, but that wasn't enough. I suppose they thought it could have been doctored because it is on my own domain after all. It just seems tricky to come up with a proof of sale for a virtual good.

2. Any thoughts on structuring my system to avoid this kind of scam? The obvious solution is to not allow new stars to be traded between players, but this is something players have come to expect and I'd probably take a lot of heat for doing it. I was hoping there was a maximum time range in which you could file a chargeback and then I could just puts stars in a sort of lockdown state during this period, but since this involves lots of different banks around the world, this doesn't seem to exist.

[darwolia]

My first idea would be:
Separate the "stars" from a tradeable good.
For each $10 a player gets something permanent - a medal or points for a "donator-highscore". Additionally he gets a "star" which is tradeable.
The important point is: The player gets something permanent for $10 that he cannot trade.

But I think if Paypal doesn't believe you, it doesn't matter what you do :/ That's one of the main problems with Paypal...

[Chris]

What do you mean by "selling"? Do they sent the stars to someone in exchange of a real money payment from that player?

"so you can recover some of your investment as a player if you're quitting or something" - ?? That's a very strange way of thinking They played your game and had fun. What kind of investment they should be refunded? Next you might start paying them to play your game if you follow that way of thinking

[hiigara]

I don't think this problem is worth your time. The guy who did it, can only do it once. He cannot pull another like that with paypal unless he steals someone else's identity, which is not easy.
If the losses from fraud outweigh the losses of not allowing reselling do not allow reselling.
People who wish to resell their stars must pay you in means such that they cannot claim the money back. Like a direct deposit in your bank account. Of course this is only doable for people who live in your country.

[MystressNyx]

We actually have clauses in our TOS that tell you flat out that there is no chance you're getting a refund ever for any reason and to make any purchases with that knowledge in mind lol Over the years, we've had our share of chargebacks. Thankfully, not that many considering how many transactions we've made.

We get 2 kinds of chargebacks, one of which we always win and the other we always lose.  In the beginning, if a person was merely claiming they did not get the item they purchased, I would send them tons of documentation, such as screen shots of the panel that show the points being issued and of places in the game where the player spent those points.

After winning a couple of those, we randomly lost one. So I called and asked for an explanation of why that one was different. The woman looked over the details of the case and admitted that the chargeback should have been denied almost immediately. The biggest reason? PayPal does not give buyer protection to intangible goods. With the decision already being made and carried out, we didn't get that one back, but now we just call one of the reps on our case, explain the way it works (completely automated) and that they ALWAYS get them as soon as they pay, and they handle it from there, in our favor.

Now the ones that REALLY suck are when the person claims that someone else used their credit card or account to make the purchase and the chargeback is initiated by their bank. I have sent sooo much data, including messages and chat excerpts where the player has blatantly said that they were pissed and therefore going to go file for a chargeback, but because the bank makes the ultimate decision on who wins, obviously it usually falls to their customer. If I see that it's that type of chargeback, I don't even bother to dispute anymore. As was said before, I take some solace in at least knowing it can only happen once.

So I guess my advice would be to actually call PayPal and speak to someone about it, get all the details on the outcome, and let them tell you what caused them to find in the player's favor. I always get better responses via phone contact than e-mail.