Paypal Prepayment: am I being scammed?
November 24, 2013 3:22 PM   Subscribe

I need to know whether I should be refunding a client who prepaid me on PayPal and then cancelled.

I work as a private tutor, and (up until now) have accepted payment through Paypal. I recently had a prospective client with whom I had a long, detailed conversation about her daughter's complex and specific needs, and she prepaid for 10 hours to get a 10% discount.

She told me the night before our intended first session that the daughter's IEP team had decided tutoring would be too much for her right now. She requested a refund less an hour's charge to show "good faith", a phrase that gives me the heebie jeebies.

If this is a scam, it's really well developed. I know to be cautious about PayPal refunds, but how do I confirm that the money is really-really in my account so I can return it? I don't want to drag my heels on a potential future client, but it's *way* too much money for me to go "eh, I'm probably paranoid."
posted by endless_forms to Work & Money (5 answers total)
 
If this was a scam, they wouldn't bother requesting a refund; they'd just go straight to the dispute point and/or chargeback their credit card and say that you lied to them or something equivalent.

It sounds like you made no explicit agreement with your client as to what those prepaid services were. As a result, your client has a reasonable position requesting a refund because as of now, no services have been delivered. The fact that she's offering an hour of your time for your troubles suggests to me that your client realizes this as well and is making the first offer to ensure that she pays as little as possible (in the same way you'd like to get paid as much as possible). Consider offering an 80% refund and see what the response is. Either way, I don't think you have much to stand on should this reach the point of an actual dispute. In particular, I think that if your client pursued a PayPal dispute, you would be forced to refund 100% of her payment rather than 90%, plus you'd have to pay a penalty for the dispute.

In the future, you should have a policy for what prepaying services means. In the future, you should follow that policy, whatever it is.
posted by saeculorum at 3:31 PM on November 24, 2013


Have you called PayPal to ask them if the funds are really-really in your account? That seems like the best course of action here. They've been surprisingly helpful and truthful whenever I've dealt with them in the past.

I think it's wise to be cautious with refunds, especially since this sounds like it's probably a good chunk of change. But FWIW, "good faith" doesn't seem like a phrase that cause you concern.

Also agree with saeculorum's logic, above.
posted by schroedingersgirl at 3:33 PM on November 24, 2013


Best answer: Also, here's how to send a refund. Do not send them a separate payment; that's how you lose money. The scam for refunds is for the buyer to request a separate refund payment. The buyer then finds a way for the original payment to fail (for instance, using a stolen credit card), and then they keep the separate payment.

You can't lose money by refunding a payment (of course, you also don't make money), regardless of if the money is in your account yet.
posted by saeculorum at 3:35 PM on November 24, 2013 [13 favorites]


Response by poster: Thank you, saeculorum, that's exactly what I needed to know.
posted by endless_forms at 4:01 PM on November 24, 2013


Response by poster: FTR, I am totally on board with refunding her money; I've just read so much about prepayment scams that I got nervous.
posted by endless_forms at 4:05 PM on November 24, 2013


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