PayPal fraud prevention recommendations

• Low payment acceptance rate
• Increased processing fees
• Dispute fees
• Account suspension

How PayPal distributes chargeback rates

List of recommendations to reduce fraud on a PayPal account

Blocking transactions in the most fraudulent geos

• Description
  Certain countries and Tier 3 regions may have higher levels of fraud.
• Example
  If statistics indicate that certain countries are responsible for a significant number of fraudulent transactions (e.g., some countries in Africa, Latin America, or Southeast Asia), you can consider completely blocking traffic from these regions.

Mandatory implementation of “unsubscribe” flow

• Enhanced visibility
  Ensure the "Unsubscribe" button is prominently displayed on all user communication channels, including emails and account settings pages.
• Instant confirmation
  Provide an immediate confirmation message and email once a user cancels a subscription, detailing the effective date of cancellation and refund information.
• Self-service portal
  Develop a self-service portal where users can manage their subscriptions, view billing history, and process refunds without needing to contact support.
• Clear policies
  Clearly outline the cancellation and refund policies on your website.

Handling pre-escalation dispute alerts within 20 hours

• Description
  Handle internal disputes directly with the customer within 20 hours after receiving the alert to either deflect fraudulent disputes with pre-dispute compelling evidence or, if the request is found valid, issue refunds before it becomes a formal claim.
• Why
  Immediately communicating with the customer to resolve internal disputes prevents them from filing an official dispute with PayPal. This not only saves you from chargeback fees but also increases customer trust in the company.
• Example
  When customer support receives a pre-chargeback alert, immediately communicate with the customer, investigate the transaction, and, if the request is valid, issue a refund within 20 hours.

De-prioritization of PayPal in the payment flow

• Description
  Place PayPal lower in the list of payment methods to encourage customers to use less risky methods.
• Why
  This can reduce the number of transactions through PayPal, thereby lowering the risk of fraud.
• Precautions
  This approach should be used cautiously to avoid decreasing overall sales conversion, as some customers prefer to use PayPal.
• Example
  In the payment form, offer card payments, GooglePay, and ApplePay first, followed by PayPal.
• Recommendation
  Keep the volume of PayPal transactions below 25% in the structure of payments.

Client risk scoring to enable/disable PayPal button

• Description
  Use a risk scoring system to determine if a customer can use PayPal for payment.
• Why
  This helps reduce fraud by accurately predicting high-risk transactions and disabling the PayPal option for those customers.
• Example
  Develop a model that assesses the likelihood of fraud based on user behavior, geographical location, transaction history, and other factors. If the risk is high, the PayPal button may be disabled for that customer.

Obligatory notifications before re-bill

• Description
  Notify the customer a certain time before re-billing for automatic subscriptions and payments.
• Why
  This helps reduce the number of unexpected transactions, thereby decreasing the likelihood of disputes and refunds.
• Example
  Send a notification via email 7-10 days before the subscription renewal, so the customer is aware of the upcoming charge and can cancel it if necessary.

Matching your business name across all documents and payment descriptors

• Description
  Ensure your website, doing business as (DBA), and statement descriptor names match.
• Why
  Seeing different business names pop up across your documents and platforms confuses customers who, not recognizing the purchase, start requesting chargebacks en masse.
• Example
  If your legal entity name is "Tech Solutions LLC," it should match your DBA name "TechGadgets," your descriptor "PayPal*TechGadgets," and your website www.techgadgets.com.