, and Credit Card Fraud

A few years back I was running a little ecommerce service as part of my Magic: The Gathering trading card site Back when I was in the thick of things playing the game I used to win a lot of cards and did a hell of a lot of trading and selling at every tournament. More often I enjoyed the trading and selling more than the tournament itself.

Once my site became huge and I realised that there really wasn’t a good online card shop for Australians I decided to try and be that card shop. I had the audience and that’s usually the hard part. I managed to locate some wholesalers and went to work creating what I called MTGParadise Mail Order. I listed a lot of my personal collection which I had built up over the years from winning, buying and selling. I also listed sealed new product which was sold in boxes and booster packs which I located from the wholesalers. Because I had no wish to expose myself to too much stock investment I would almost “drop ship” before drop shipping became common for the public to do, in the sense that I would buy sealed product as sales came through rather than maintain a new stock inventory. Unfortunately it wasn’t real drop shipping since I had to still order the products, have them shipped to me, and then ship them out to the client which slowed things down.

The service did reasonably well. It was a horribly manual process because I would have to update card lists and inventory counts all by hand and I spent a lot of time running to the post office. I didn’t plan the service to be a proper business so I wasn’t considering systematising my inventory and having an online shopping cart like overseas card stores (which I would for sure do now, manual updates are a pain!). Another problem was that card selling has tiny margins and if it wasn’t for the fact that I managed to win cards I don’t think I would have made much profit. I did enjoy it for the most part though so I kept it going for a good year or so while studying at university.

One day I got a query from a person in Thailand wanting to buy boxes of cards. The profit wouldn’t be much because of the aforementioned tiny margins, but it would be significant enough that I was very keen to get his business.

He wanted to pay with credit card.

I asked my father about taking credit cards since he did for his business. My dad offered use of his “click-clack” manual credit card processor for the order. The customer emailed his credit card number and details and we checked the number against the ‘reported stolen’ list and it was fine. I processed the order, shipped the cards and was pleased with my first big sale.

Over the next few months I continued to have increasingly significant orders from this client which I carefully processed through my father’s credit card processor. Since I was doing such a regular amount I decided to get my own merchant account and after some looking around a bank was willing to provide me with the account. I then started to process orders through my own account.

One day many months after the first Thailand order I got a call from my father’s wife about a chargeback that had been initiated on the first credit card order I had processed from this customer in Thailand. I was worried, but not too worried because I thought that since we had verified the card for every purchase and it checked out that it just must be a mistake. I emailed the client and he told me it was just a mistake at his end so I relaxed a bit.

Unfortunately it wasn’t, the customer was a credit card fraudster and I had been very stupid. Over the next few weeks I came to grips with the fact that many thousands of dollars of sales would be ‘bouncing’. Initially I was angry with the banks that they didn’t offer more protection but as I slowly investigated the whole merchant account system I realised that the merchant is usually always the one taking the risk and that when no signature from the customer is present, which for web based orders is not really feasible, then the customer has all the power. I also read over the communications from the months of dealing with this client and realised that there were plenty of warning signs that I just refused to take notice of. I was caught up in the ‘business’ of it all and being very naive.

It was a lesson learnt. I learnt about credit card fraud, merchant accounts and the risk involved with selling over the Internet. I learnt to be more cautious and not jump with eagerness at every significant order that comes through. Call me paranoid, but it’s from experience. Note that I am complaining from the point of view of a merchant but there are instances where the customer has problems too.

When I then went on to setup credit card payment options for my clients at I was very careful. By this time I had discovered paypal and later I would also learn about Paymate, an Australian version of Paypal. These services were reasonably good solutions to provide online payment options and to this day BetterEdit processes many transactions online through them.

I have not had one problem with credit card fraud for any Betteredit essay editing service order (touch wood) but on many occasions I have been contacted by the staff at Paymate regarding suspect orders. After my experiences I really appreciate the extra layer of protection provided by Paymate. They protect you before an order is processed and offer personalised protection. As an Australian running an Australian based business I can recommend Paymate as one of the safest ways to accept credit cards and I don’t mind paying the fees for that extra level of security. Sure there are features I’d like to see and things I’d like changed at Paymate, but for the moment they offer the best option available.

I would also like to say I feel secure with Paypal but to be honest I do not. I’ve heard a lot of horror stories from other Paypal users. I’ve read through the chargeback policies at Paypal and while they do have a ‘department’ to deal with fraud, they make every effort to argue the case on behalf of their sellers and have an ‘industry leading’ low fraud rate I don’t feel 100% confident. They seem very reactive rather than proactive when dealing with credit card fraud. Their system doesn’t talk much about how they protect you from first taking fraudulent credit card orders, rather they help you to argue your case after a chargeback occurs. I know from experience that for online orders the merchant has little hope because the credit card company almost always is in favour of the cardholder.

The Paypal website seems designed to make it difficult to contact a person. I’ve tried to contact them over the phone and spent an annoyingly long time waiting and trying to navigate a phone system clearly designed so they don’t have to employ too many phone staff. Their web support is much the same. Their whole system tries to avoid providing any personal support. They point you to look for an answer online via their FAQs which is great for the easy questions but often leads to a wild goose chase if you want to find answer to your very particular question. Even just timely and helpful customer service email support would be good but I always seem to find myself waiting a few days for a response that only half answers my question. Paymate on the other hand has a simple ‘Contact’ link which pops up an email that goes direct to a real live person that responds within 24 hours with a good answer. What more could you ask for.

All the problems at Paypal seem symptomatic of a business that got too big too quickly and I hope over time their customer support will improve as it ‘catches up’. All in all though I should note that Paypal has been good for my business and since it is the market leader in online payment processing it will most likely remain as a payment option at

Yaro Starak
BetterEdit Manager

About Yaro Starak

Yaro Starak is the author of the Blog Profits Blueprint, a report you can download instantly to learn how to make $10,000 a month, from only blogging 2 hours per day. You can find Yaro on Facebook, Twitter and .

Follow Yaro

View Yaro Starak's profile on LinkedIn
Follow us on Instagram


  • From a merchant’s point of view, it’s hard to know what is fraud and what isn’t. I had a purchase recently from Slovenia, that had all the signs of fraud. It was from a high fraud country, it was a first-time customer, he used a free email account, it was a large dollar amount purchase, he asked for the most expensive shipping option etc.

    It turned out to be a valid transaction.

    Meanwhile, an order that came through from North Carolina turned out to be fraudulent!

  • very interesting read, fraud can be a very hard thing to prove.

  • Richard Wilson

    I agree, it is hard to tell sometimes…but Paypal does help. While sometimes my own account gets locked down while they make sure I’m legit myself they are great at making my job easy in terms of accepting online payments. Highly recommended.

    – Richard

    • I have to agree about i have had so much problems with Pay pal with them locking my account, I can understand when a payment is recieved for merchandise they want to make sure its legit and the client is satisfied and holding the funds that was deposited into your account for that, however holding all your funds, funds that they have cleared, and not letting you do any transactions till you jump through hopes, now if they asked all the right questions at registration time and took the time to validate it all like paymate does than there would be no hassles. I personally will not use pay pal ever again, paymate is definitely the better source of selling and buying. You can have a personal account with them and a business account with them, different email addresses, different ip addresses when you log on, all that stuff now with paypal you log on from a different ip address and boom your account gets locked and forget talking to a live person never happen.

  • Very similar problems with Paypal as above. They seemed very efficient at first. I then placed a large order with a large company, there were well over sufficient monies to pay the bill however because the order seemed large PayPal just locked the account!!!!! No checking, no call to me to say “Is this O.K” nothing, except an irate supplier saying “where’s our money”. My reputation as a prompt payer was in shreds and business destroyed by their stupidity.
    After much wasted effort trying to contact these people they said “Oh it was a large amount and we thought that someone had hacked into my account and was trying to fraudulently access it”
    They then told me that if I wanted to use Paypal again I had to provide all manner of checks and securities in order to access my account for what was their fault.
    I leave it to your imagination what I told them to do with their service!!!!.

  • Jon

    … glad to hear I’m not the only one who had problems with Paypal… they are good, yes, but if you ever have a problem it is impossible to contact them, no phone, no customer service… guess we have to be glad they just exist and provide us with a payment method.

  • I to have had problems with Paypal, it the past the seemed to be very good but have gone down hill since they became an Ebay company. I recently opened a new Paypal account, after 60 days I applied for the debit card. They locked the account requesting picture ID etc.
    When I spoke to them I asked them what issuing a debit card had to do with locking up my existing funds. The only answer I could get was ” It’s our policy”. I think paymate is the way I will go.

  • Paypal are an absolutely horrible company to deal with! I have a business account with them that has mysteriously been “limited” a couple of weeks ago. This is after I sent a money request for about $600.00 to a client. Mysteriously, the account was then ‘limited due to anti-money laundering laws’. (Heh?!). Until now I have had no problems whatsoever with Paypal, but obviously all that has now changed.

    My particular situation is a bit complicated and means that I need to speak to an actual live person in order to figure out how to resolve it, but despite numerous emails back and forth from Paypal drones, I literally cannot manage to actually speak to someone about this. I have called their 1800 customer service number, which takes you through their recorded answer system, before eventually saying “Thank you for calling Paypal” and basically cutting you off. There is NO WAY of getting through to speak to an actual person! I then tried emailing their customer service dept, and specifically asked for a number to call that was NOT the 1800 number, as I really needed to speak to someone and the automated system was unable to help. The reply I got was to call the 1800 number. Whoever answers their customer service emails does not even read the emails sent to them, it is just a stock standard textbook response that in no way helps solve the specific situation.

    I am SO FRUSTRATED after days of dealing with this, and honestly do not know how I am supposed to have my account restored. This is my business account and until it is is fixed I am unable to process transactions with my clients… I am of course paying Paypal fees, and they are making money from me, yet I am not even entitled to speak to an actual PERSON so I can ask a simple question. They are basically holding $1200 of my money hostage, and who knows how or what I am supposed to do to get my money out. One thing is for sure – I am going to persevere in dealing with these #@$!%@# and when I do finally get my account access restored, I will be withdrawing every penny in my account, and I will NEVER deal with Paypal again. I plan to open an account with Paymate, which is the next best thing I can find (until Google Checkout becomes available to Australian sellers). I will never put another dollar through Paypal, because frankly, I am horrified and appalled at how bad – or in fact non-existent – their customer service is. They are clearly an unethical, uncaring and nasty company, and I do not wish to have anything more to do with them. They cannot be trusted.

    So… sellers beware!! I wish I had known about all the problems others have had with Paypal before I opened my account. Never again!! Paypal SUCKS! I am amazed that the way they do business is actually legal. How can it be legal to hold someone’s money for no apparent reason and make it impossible for them to actually rectify the situation??! Paypal… I hate you so very, very much.

    • I have been in the same situation with my account. However, as much as PayPal can be a pain, I would like you to be educated before you just rant aimlessly.

      The Anti-Money Laundering laws you are speaking about is something that is true and in affect in Australia. In fact, it is called the Anti-Money Laundering and Counter Terrorism act of 2006. Under this act, all banking institutions, gambling associations, PayPal, and basically any business that holds money for people are required to submit documents to AUSTRAC regarding the identity of the customer once their balance reaches or exceeds $1,000.

      That law has nothing to do with PayPal as they are required to gather your details for the government. Since PayPal is an online company, they do not have a branch location. The fact of the matter is, if you go to PayMate and you sell some items totaling you into that amount of money or higher, you will be subject to the same thing with PayMate.

      Another fact, PayPal NEVER holds your money WITHOUT reason (whether they give you the exact reason behind the hold is another story). There is always a reason behind it, and whether you beleive it or not, the last thing PayPal wants to do is hold your money. PayPal wants you to receive money, wants you to spend money, and wants you to move it from point a to point b. This is because that is how PayPal makes money.

      Also, one more word of advice. I just called the PayPal 1-800-073-263 number to get to a customer service representative. You are absolutely right in one respect. Once you choose something, the lady goes on a recording ramble and ends it with Thanks for calling PayPal.. ONE to THREE Seconds later, it says “Press 1 to repeat, Press 2 for main menu, or Press 3 for an Agent” I pressed three and, WALLA! I got an agent! THEY DO EXIST IN PAYPAL! This agent was also extremely polite and was actually American… A far strecth from the India call centers I have reached in the past.

      Heres some more facts: PayMate is a third rate brand and a rip off of an existing PayPal Business Model. They have their own tweaks and fees to be an “independent business” but without PayPal, there would be no PayMate. And those of you thinking that all your problems will go away by switching to PayMate, heres some more truth for you. They won’t. You will simply run into different problems (as I have read on negative PayMate reviews).

      Now lets weight negative reviews vs negative reviews. You can obviously find THOUSANDS of more negative reviews on PayPal online then you can on PayMate. And lets realisticly attribute that to what it is. PayPal is A HUGE company, some 100 million Active PayPal accounts at this very moment. More then even some credit card providers. PayPal has also been around and in the mainstream for years. PayMate is relatively new and does not have the fraction of customers that PayPal has. If I can find negative reviews on PayMate and their VP of Customer Service Mr. Quinn with their relatively small customer base. Just wait until their base reaches even 20% of PayPal’s active users. Watch the complaints begin to fly.

      The point to this reply is to educated on the reality of your situation. While I too have my problems with PayPal, I just ask that if you hate PayPal; Do so for the right reasons. And not out of ignorance to the way things work.

    • I agree with you. I am now having this problem with PayPal and this has got me so down ( I need to pay my bills) and I contacted the Secretary of State and filed a complaint against them. PayPal has helped ruin my life and I hate them and ebay !!

  • I also have the same problem with my Australian PayPal account. They put a limitation on it (because of the same reason – >$1000 balance) 4 days ago, I since have uploaded all the required my business ID documents, but there’s still no positive result – I can no use my finds there. After numerous email I have sent and phone calls I have made, PayPal just keeps replying that they are reviewing our case and will be back to me within the next 24-48 hrs. Today is the 5th day, and I received one more email from them saying that since such cases can be difficult (?! – I sell garden products on eBay, for crying out loud), they do not have a time frame for me. This is totally unacceptable. Orders keep coming in, we have to continue shipping the goods ordered, but will not be able to do that for ever without getting the frozen funds into our bank account.

    Does anyone have a solution for this? What can be done? It’s really embarrassing – I’m feeling like a criminal or something.

    Irmantas/ Kiwi Collars Ltd

  • I think many of you guys have not had much experience with Paymate, so i should warn you, they make Paypal look like angels.

    I have been with Paymate for approx 8 years, it use to be an excellent company, but not since about 2 months ago. Here is my latest experience with them
    1. 6 months after purchase i get a charge back, i refuse to allow Paymate to issue a refund and ask them to explain. First email stated that security system is very good and it did not pick up on any problems. I did not accept that, hence if there was no problems, and items were posted with proof then too bad. In response i was then told that the details do not match to the bank. So Paymate accepted payment even when personal info did not match card holder.
    2. I asked paymate to issue partial refund. 2 weeks later i get email, they have debited my account and will refund within 24 hours. 4 weeks later customer still has not received a refund. Customer and myself both sent emails-all gone un-answered.
    3. With that same chargeback, i advised Paymate that i do not authorize them to debit my account. Same night my account was debited. Had to contact the bank and bank took back the money
    4. Got payment which i asked to cancel about 30 mins after getting it, sent email asking to cancel and refund. Few hours later received email from Paymate confirming the receipt of email and matter has been escalated to refunds. 24 hours later get email, confirmation of payment into my account. 7 days later refund still not processed.
    5. On that same day(chargeback story) was meant to get some money into my account, but none came through. Called Paymate and was told they had bank connectivity issues. So there was no issue to debit money, only to credit money.

    Now filed complaint with the Ombudsman and still nothing is fixed and not even an apology or refunds to the customers.

    So be aware and if anything stay away from Paymate

  • Your Message – PayMate, use at your own risk. If someone steals money from you through Paymate, you’ll never see it again.

Follow Yaro: Email | RSS | Facebook | Twitter | Google+ | LinkedIn | Instagram | YouTube