Creators cope with chilling charge-backs
When doing business with an individual over the internet, things can be quite precarious. A lot of trust is being put forth by both parties. The one buying is trusting that they are putting their money toward a quality person and in turn their product. The one selling their service and skill is putting faith in their customer to not yank their money under false pretenses.
Furry sellers as of late have been dealing with some unscrupulous customers. These tend to be those that are younger and may not have their own credit-line or PayPal account as of yet, and so they utilize their parents' accounts to acquire money to purchase what they wish. Some scamps may decide to do this without their parents knowledge. In these cases the odds of an unpleasant surprise for the seller is almost inevitable as the irate parent flags their offspring’s charge as fraudulent. This can leave the seller in the cold as money is taken from them and their product is kept by the little thief.
Today we look at some options that crafty crafters can use in order to deal with these issues, and other options that may show themselves in the future.
Advice from Creator - @SarahcatFursuit
Fursuit creator SarahCat took the time to describe to me the personal experiences they had in dealing with charge-back situations. Most of them involved minors, whether the parent was a knowing participant in the transaction or not. When asked about how others can help combat these headaches, she advises contacting PayPal over the phone directly. In order to expedite the procedure you will want to gather some documentation before doing so.
- The claim number and document given to you by PayPal in relation to the dispute.
- Tracking Number of any mailed product sent to the customer.
- Screenshots of communications with the customer.
It should be noted that you will want to avoid revealing too much information on the communications if the product sold is explicit in nature. Selling such items on PayPal could have an adverse affect on your standing with the site. Remember, selling explicit material is not within PayPal’s code of conduct for sellers. This also should rare since you should be age screening those who purchase mature items anyway and adults are less likely to pull a charge-back. It can happen though, so be aware.
Also remember that pointing out whether a customer violated your own personal terms of service is not in their interest. The only thing you should be trying to prove is that they abused PayPal’s claims system. There are two particular words that you should focus on if they apply to the transaction in question.
- “Minor” - Persons under 18 cannot legally use PayPal. If they used their parent's account indicate just indicate that it was the account used to make the purchase. Don’t claim that it was an accidental purchase or that the account was compromised, as such phrasing works in the favor of the purchasing account. Make sure that PayPal knows that the user allowed a minor to access their account, intentionally or unintentionally.
- “Custom” - Products that are hand created, not mass produced, are more likely to result in reimbursement to you since PayPal's terms are mostly penned around mass produced items at this time. It’s not a guarantee, but it is more likely to work in your favor.
Once you begin the review process be sure to call for update every once in awhile. No more than once per business day. By being actively engaged, it will make it more likely that they will take action in your favor. Be polite, persistent, patient, and precise.
SarahCat notes that even if you do win the claim on PayPal’s end, the irate customer may up the ante by doing a charge-back through their payment service provider directly. She states that while you can follow the same process you did with PayPal, the playing field is far less level as the financial institutions will typically side with their customer if they claim a purchase to be fraudulent. You should keep PayPal in the loop if the customer takes this action. She had an experience where the site had offered her compensation in the amount of the order since the buyer had retaliated in such a manner that they found unjust.
Safer sites on the horizon?
Another issue that could work for some creators is a system that creates a safety buffer between them and their customers. This would be done on sites that utilize an escrow style method. Two sites that offer these kind of services are trying to appeal to the furry audience: Furry Network and Artconomy. The concept is that your customer pays the website, the website puts the money aside, and once you deliver your product that money is forwarded to you. It mixes the insurance that your paying customer is paying, and your customer that you won’t take their money and run.
Related Content: Review of Furry Network Commission system from 2017
These kind of sites would not be without its drawback to the entrepreneur. Unlike the PayPal method you would not receive your money right away and would have to wait until you are done with you product and the customer either approves, or the time runs out for them to file a dispute after you are finished, to have their money to be forwarded to you. This means that as the creator transfers to this system there will be a moment of overhead where they are doing work without cash-flow incoming.
This may just be worth it though as it would prune away unpleasant surprises, such as charge-backs after the entire creation process is complete. This would be because the dispute with the customer would occur when the money is in escrow, that lag time gives a unwary parent time to notice unscrupulous charges on their card and pull back before the artist completed their commitments.
Also as noted earlier, PayPal will act against those using their services to sell adult works. These particular services are doing what they can to ensure their services can be used to sell furry adult works. In that way you don't risk losing your account due to the content you product.
If you planned things out, the creator could take two weeks to a month to gather materials and wait to see if the escrow account is charged back. If no flags are raised during the grace period, then work can begin so that labor time would not be at a loss. Once a process flow is going you could be working on one commission while waiting for the other’s money not to bounce and rotate in that fashion.
About the authorSonious (Tantroo McNally) — read stories — contact (login required)
a project coordinator and Kangaroo from CheektRoowaga, NY, interested in video games, current events, politics, writing and finance
Maybe if furries didn’t sell rubbish like this then there’d not be problems such as these.
Oh wait... yiff toys ... hormone fueled teens, old creepy furfags that haven’t been laid in decades...
TLDR: I would be very surprised if Artconomy is operating within the law. It appears to be offering an illegal escrow service, and you're likely to lose your money. (I don't see any escrow offering on Furry Network's site: Where did you see it, Sonious?)
Escrow services are highly regulated, with very good reason: They're hotbeds for fraud and theft. Here's how it works: (1) Start an escrow service. (2) Collect money. (3) Act normally for a while to build trust. (4) Once people are sending you serious coin, disappear. It's an absurdly common con.
Even escrow companies that are acting in good faith can fail. Regulations ensure that they carry enough reserves to make their customers whole, instead of spending the escrowed money on servers and rent.
I suspect that Artconomy is in this category: Not scammers per se, just incompetent to legally run the businesses they've started. They don't know what they don't know. I went through the site and found (1) no mention of how monies are held; (2) no mentions of reserves; (3) no mentions of compliance with relevant laws (such as licenses); (5) no real-world names or addresses; and (5) no other real legal notices. (I didn't find any of these on Furry Network, either.)
This is a timely article for me, for I recently looked (pretty seriously) into starting an escrow service for furry artists. The simplest path is to use an established partner for the actual escrow. Escrow.com looked pretty good, but didn't have the kind of integration I wanted. (It's hard to find prospective escrow service providers that work with such small transaction sizes.)
I am not a lawyer, this is not legal advice. I am, however, a former processor at a title & escrow company in California. I'm also a former California real-estate broker, a position that required studying escrow law.
The article explains their commission system in depth. You basically go to an artists commission page and once the scope of work is settled the money goes into their reserves until either the artist is paid or the commissioner is refunded.
Since Varka has a lot of other skin in the furry game with several businesses and sites tied to the fandom (Bad Dragon, e621, etc), I don't think it'd be in his best interest to take the money and run. I don't know if he sees it as an 'escrow service' and hasn't used such phrasing himself. He might call it more 'payment processing'. I'm not a lawyer either, so I have no idea which it would turn out to be seen as if it was tested in courts.
Thanks for the link. I'm surprised I hadn't seen this before: My own ideas were coincidentally pretty similar to theirs. Simultaneous invention in the face of an emerging need!
Anyway. The last thing anyone wants is for their business model to be "tested in courts". And as I said, I'd be more worried about Artconomy than Furry Network. (They're already started offering "Artconomy Shield" escrow and "dispute resolution" services; FN hasn't.) I want to see FN succeed: I hope my note moves them to seriously investigate their legal obligations, regardless of whether I'm proven right or wrong.
Hello there! My name's Fox, and I'm CEO of Artconomy. We saw these comments and decided to write up a bit about our escrow system to make it clear how we handle the money involved.
We have sought council on the matter and believe we meet legal requirements to operate our site and its services. There is not a licensing system in our jurisdiction that we know of or our council knew of which applies to us. So the above link goes into detail about how we handle server and monetary security.
I'd like to add that Fox reached out to me via Twitter, leading to a productive and courteous exchange. I'm greatly encouraged that they're following up with people who know more about the subject than some internet commenter. ;) No matter what happens, this shows good faith.
Those interested should definitely read their blog post, linked above. It's short on specifics ("security through obscurity"), but quite convincing. They really do appear to be sweating the details.
(P.S. I regret that I can't edit my post above: I used inappropriately strong language in some parts. Sorry.)
I just hope these services protect the customer as much as the artist. For every artist who's had issues with chargebacks and the like, there are also customers who comission, pay all or part up front, and then hear nothing. So in order not to be left with no recourse, they do a chargeback before the time to do so runs out. In a number of cases, the artist then complains that they'd started the piece. I hope there is a provision to include specified deadlines in the commission and if those aren't met, the customer can then be refunded regardless of the artist's wishes.
Deadlines are things agreed to on the scope of work I do believe, the commissioner would be able to withdraw their money from holding should that scope of work not be met (or an extension would be negotiated).
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