PayPal: The risks

Before you continue, keep in mind I have over 5 years experience in e-commerce with dealing with PayPal, Alertpay, mobile payment methods, and other payment methods.

PayPal
Honestly, one of the worst merchant services online. They are simply there to make money, and do not care about their customers or merchants. Only use if you have to, stay away.

If you choose to do business with them, here are a few things to keep in mind:

• Dispelling common a myth: Sending a payment as a donation will NOT protect you from chargebacks. Chargebacks are initiated by calling your credit card company, which has NO bearing on what kind of transaction you do through PayPal. The credit card company choses who wins in the case of a chargeback. While sending a payment as a donation does not stop chargebacks, they may or may not stop disputes on PayPal's website.
• Anyone who offers an offer too good to be true is normally a scammer.
• If you sell any intangible (digital) goods and recieve a chargebacks, the credit card company will normally side with the customer.
• Paypal has a bad chargeback policy, you will lose your money and be charged a $20 settlement fee.
• Paypal also does not deal with chargeback situations properly. Each chargeback has a code, which you have to look up as they don't provide any relavent information. The chargeback information is extremely broad, and does not give any specifics that it should (like exact problem and why the are requesting a chargeback). They should also give you a change to respond to those claims and respond (which they generally chose not to, and still charge you a settlement fee).
• If its too good to be true, don't do it. You have more to lose by not selling to a reputable buyer.
• If you receive funds from anyone, make sure its from their PayPal balance (this is the money in your account) and not a credit card/bank account. That significantly reduces your risk. The only real issue you have is with disputes, but if you well document your purchase, keep screenshots, chat logs, email logs, IP's and other information, you can pretty much sideline any dispute (granted you h ave a good PayPal history). This however, won't change anything if they are using a stolen PayPal.

More to come soon.