If you sell beats / digital products using PayPal you need to read this!

SFTRAXX

SFTRAXX

West Coast Rap Producer
Whats good FP fam.

I just wanted to put you cats up on to whats goin on just in case you didn't get the memo and are selling beats / music online using Paypal.

Paypal has recently made a change to their terms regarding chargebacks.
In a nutshell, they now allow users up to 6 months to report a chargeback.

This is bad because:

- it leaves a huge window for the buyer to change their mind months later about their purchase.
- if you are dealing in digital products you pretty much have no coverage or insurance and will probably lose in a dispute because of that.
- it burns the seller twice because you will be charged an additional $20 transaction fee for the dispute. (Happened to me a few times recently..smh..)

And, to add insult to injury, the buyer will get his/her money back and still possess your music files.

That said, I am curious to see what other alternative solutions others are using / or are available out there for securely processing transactions.

(All suggestions are welcome.)
 
Just make the terms on your invoice No Refunds or Refund only Within 14 days for ex. You will win any dispute instantly
 
I wish it was that simple.

Unfortunately when you are dealing with intangible goods (eg: files) the odds are not in your favor.
 
SFTRAXX said:
I wish it was that simple.

Unfortunately when you are dealing with intangible goods (eg: files) the odds are not in your favor.
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Ok I see, they wanna clean it up. How bout 'check box confirm' at shopping cart with beat agreement? Will they still charge me for dispute
?
 
it is not just intangible goods with paypal - most vendors do not request that physical goods be returned because they cannot bear the cost of return postage, which is often more than what the customer paid for the item in the first place, they simply ask you to discard it - can lead to all sorts of scamming behaviour on the part of some individuals as a result

as for having a no refunds/returns policy or a limited time limit policy in your sale terms, it does not and cannot trump paypal's consumer protections

the alternative is to get a merchant account with a bank and lose just as much, if not more, on transactions, and still have consumer protection policies imposed by your bank
 
this is the reason I stopped selling on Ebay...they always side with the buyers and the fees wack you
 
Official Papa Joe said:
What if you were selling a beat and you had a contract saying there were no refunds?
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there will always be chancers who will try it on to see if they can get it for free and screw you at the same time

unless you do this as a work for hire (exclusive all rights sale), you have obligations under the various consumer protection laws where you live to allow for returns and refunds.

as always, consult a lawyer for better advice on how to proceed - their entire working life is about payment for services rendered so they should understand how to best go about billing and avoiding refunds when the work done has already been taken advantage of (as beatsmith, your work can be taken advantage of the moment it changes hands, as the copy the customer receives can be duplicated without any problem) - drawing up your terms of sale would be a good place to start with them
 
bandcoach said:
it is not just intangible goods with paypal - most vendors do not request that physical goods be returned because they cannot bear the cost of return postage, which is often more than what the customer paid for the item in the first place, they simply ask you to discard it - can lead to all sorts of scamming behaviour on the part of some individuals as a result

as for having a no refunds/returns policy or a limited time limit policy in your sale terms, it does not and cannot trump paypal's consumer protections

the alternative is to get a merchant account with a bank and lose just as much, if not more, on transactions, and still have consumer protection policies imposed by your bank
Click to expand...

I see probably just best to go with another 3rd party co. Like blkdot I dont think they charge to wire profits to bank account in lump some right? I think PayPal will make a ton of money from this out the gate but not good for vendors scare some of em off like me.
 
This might sound too simple, but I don't charge for "beats"... I charge for my "time" making beats. With this mind frame, haven't had an issue in my 7 years producing music/using PayPal (or anywhere, for that matter).


choose it... CARL DOES MUSIC!
 
that is probably what I was alluding to when suggesting that you talk to a lawyer about how they bill - it is done as billable hours not an invoice for a specific work product

so, yes with that mindset - paypal cannot act to refund money as they have no way to recompense you for the time you have lost in completing the work
 
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fataltone said:
this is the reason I stopped selling on Ebay...they always side with the buyers and the fees wack you
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I hear you. Its an unfortunate byproduct of doing business online. From my experience, typically, most transactions go smooth....
But there are always those bad seeds....

Truthfully though, as much as I hate it, this won't stop my hustle.

I've been doin this for too long to throw in the towel now..


That said, here's a few things I've learned in dealing with these unfortunate scenarios that might help one of you out should you find yourself involved in a chargeback dispute:

1. Before responding to PayPal attempt to contact the buyer. The more you can do on your end to resolve the dispute the better it is for you. Here's a tip: use Facebook's search engine and Google to search for their email address. <== This has actually helped me win one because through Facebook I was able to track one guy down and start a conversation with him where he admitted using my site.

2. Document everything. PayPal will want this. Tip: Screenshots on a pc are (windows key + prt sc) or as in the case with my laptop (windows key + fn + prt sc) in case you need to capture some transaction/conversation info.

3. If you are selling through your own website, equip your website to track the IP addresses of visitors. WordPress has a bunch of plugins that do this. Find one that works for you. (Again, the more info you can provide the better)

4. Remain as professional as possible from the initial transaction all the way through.

5. Be proactive and don't be afraid to get on the phone and call PayPal and express your concerns. Contrary to how you may feel at the time they do value your business and will try to work with you to keep you using their service. (Because when you make money - they do too.)
 
bandcoach said:
that is probably what I was alluding to when suggesting that you took to a lawyer about how they bill - it is done as billable hours not an invoice for a specific work product

so, yes with that mindset - paypal cannot act to refund money as they have no way to recompense you for the time you have lost in completing the work
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Excellent suggestion. I wonder how they handle a chargeback in a "services" scenario...?
 
carlden10 said:
This might sound too simple, but I don't charge for "beats"... I charge for my "time" making beats. With this mind frame, haven't had an issue in my 7 years producing music/using PayPal (or anywhere, for that matter).


choose it... CARL DOES MUSIC!
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Carl,

How would you apply this in a non exclusive licensing scenario though?
 
Non-exclusive: Client asked for something already in existence, not made specifically for them. In my particular experiences, I am taking time to ensure that the beat is tailored to the client (since I work on the premise that "anything I do is custom for you")...but that's just me. Say if you are just sending something you have on your site (unedited, unaltered, etc)... then as I implied, it's not specifically made for the client... it's essentially "what you see is what you get"

Exclusive: You asked for a custom instrumental, I am taking time to make that for you


choose it... CARL DOES MUSIC!
 
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Something else to also consider:

From my experience when someone does a chargeback it's typically them filing a "I didn't make this purchase" claim with their credit card company which then notifies PayPal. Then Paypal debits your account for the amount (plus their $20 transaction fee) until it gets sorted out..

Its not the same as a "I didn't receive what I paid for" claim...
 
carlden10 said:
Non-exclusive: Client asked for something already in existence, not made specifically for them. In my particular experiences, I am taking time to ensure that the beat is tailored to the client (since I work on the premise that "anything I do is custom for you")...but that's just me. Say if you are just sending something you have on your site (unedited, unaltered, etc)... then as I implied, it's not specifically made for the client... it's essentially "what you see is what you get"

Exclusive: You asked for a custom instrumental, I am taking time to make that for you


choose it... CARL DOES MUSIC!
Click to expand...

I think you may have misunderstood my question.

Let me restate my question this way: If you are licensing out instrumentals [non exclusively] to multiple people how would you break that down into a service charge versus a charge for a product?

I understand making a beat / selling a beat to somebody in the studio and them charging them a flat / hourly rate for the time it took you to make the beat. [Work for hire] I know a few cats who go that route which is perfectly fine.

However in this scenario we are discussing selling usage licenses to multiple clients for your work and distributing your work as digital products on the web.
 
Just a few things:

1. I never said its service vs. product.. I was speaking specifically for a CUSTOM beat client who would argue "this isn't what I paid for" (they're paying for your time... exclusive or non-exclusive).
2. When dealing with ALREADY-MADE beats you're licensing a product "as-is" (no matter how many people are licensing the same beat)... so how can anyone say "this isn't what I paid for?"

As for your previous previous point "I didn't make this purchase" that is an interesting one, too. I'd assume that would be up to PayPal to decipher, but how would that even hold up legally? The client has to click buy, enter details, review order, etc... Surely at that point the beat wasn't purchased by accident... maybe their account was compromised though so that's why I say up to PayPal ultimately.


choose it... CARL DOES MUSIC!
 
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carlden10 said:
... maybe their account was compromised though so that's why I say up to PayPal ultimately.

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This is unfortunate part where the seller gets penalized.
The money gets debited from the sellers account and an additional $20 gets withdrawn as well as a "transaction fee" because the buyer's account was compromised.
 
What you can do is counter paypal's t&c regarding refunds, chargebacks in your contract stating clearly if refunds via paypal are requested by Licensee then Licensee will lose any commercial/non-commercial use blah blah blah, contract to such and such beat will be terminated etc...any additional charges due to licensee's request for refund via paypal to licensor will automatically be paid by licensee via licensee's paypal account with full consent by licensee i.e any fees due to refund blah blah blah...bottomline to cover all points to counter the claims (refunds) and loss i.e Chargeback fees etc...of keeping in mind the obvious agreement should look like a give and take to where you do not offend your clients and/or relationship and future reviews/recommendations or anything else that may give you a bad business type reference instead give you referrals

Just my 2cents but as always consult a professional entertainment lawyer to cover paypal's bs haha
 
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