Google Checkout: Protection from 'Buyer Fraud'

Many online sellers know all too well the perils of "buyer fraud." eBay'sonline payment service PayPal has implemented policies to try to reducesellers' exposure to this kind of fraud, which can include false claims ofnon-delivery and credit-card chargebacks. And when Google launched acheckout service for online merchants, it too tackled the problem of buyerfraud through its Chargeback Resolution Policy. (Note that as of thiswriting, eBay bans sellers from using Google Checkout on eBay transactions.)Google's Chargeback Resolution Policy is quite short and states, "As part ofGoogle's Chargeback Resolution Policy, Google will evaluate all chargebacksyou receive and, whenever possible, fight them on your behalf.

If thechargeback is successfully disputed, Google will reimburse you. In additionto our Chargeback Resolution Policy, Google also offers the PaymentGuarantee Policy, which extends even more chargeback protection to you foreligible transactions."<http://checkout.google.com/support/sell/bin/answer.py?answer=38147 >.It's well worth reading the Seller Terms of Service if you want more detailson Google's Chargeback Resolution Policy(<https://checkout.google.com/termsOfService?type=Seller >). According tothe terms, sellers acknowledge and agree that Google is not responsible fordisputes with buyers, though Google does provide tools to assist buyers andsellers to communicate with each other. If buyers and sellers are unable toresolve a dispute, Google may mediate disputes upon either party's requestfor assistance.

Google will then review the dispute and propose anon-binding solution, if appropriate (see Section 4.5 of Terms of Service).Google requires that sellers disclose their return/cancellation policy tobuyers. However, if a seller's refund policy prohibits returns under certaincircumstances, the seller may still receive a chargeback on the transaction(see Section 6.4 of Terms of Service). And in Exhibit A in the sectiontitled "Refunds and Adjustments," Google explains that Card Associationsrequire sellers to maintain a fair policy with regard to returns andcancellation of merchandise or services.Google uses standard credit-card industry AVS and CVS practices to avoidfraudulent activity, and utilizes fraud detection techniques, which you canread more about on its FAQs page<http://checkout.google.com/support/sell/bin/answer.py?answer=38145&topic=8666 >.

Google Checkout merchants can view AVS and CVS information themselves.(PayPal sellers don't have access to AVS and CVS unless they are WebsitePayment Pro or Virtual Terminal customers.)**Google's Payment Guarantee Policy**Google's Payment Guarantee Policy extends additional chargeback protectionto sellers for certain, eligible transactions, and is in many ways similarto protections offered sellers by PayPal in its Seller Protection Policy.The accompanying chart compares the two policies:http://auctionbytes.com/cab/abu/y206/m08/abu0172/s02Google Payment Guarantee Policyhttp://checkout.google.com/support/sell/bin/answer.py?answer=42863PayPal Seller Protection Policy:http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/ua/policy_spp-outside

** Google Checkout Integration**Google will share buyer credit verification information for each orderreceived and will indicate whether it is eligible for Google's PaymentGuarantee Policy protection. Sellers must sign in, click the order in theorder inbox, and the buyer credit verification information will appearunderneath the buyer's shipping information. If "Covered by PaymentGuarantee" appears, then the order is eligible for such protection.Sellers can use Level 1 or Level 2 integration when signing up for GoogleCheckout. With Level 1 integration, sellers receive new order notificationsby email, then use the Merchant Center (which they sign into over theInternet) to manage the orders.

With Level 2, sellers create a "web service"to handle new-order notifications and all other order communications"programmatically." Level 2 has advanced order-processing features includingthe ability to handle complex shipping and coupon processing.** Summing Up**Both PayPal and Google say they do their best to detect fraud in advance andshare information with sellers. PayPal points to its fraud management systemand the "2,000 people devoted to keeping fraud out of the system,"proprietary tools, and the PayPal Dispute Resolution, a communicationsmechanism that brings buyers and sellers together. Google points toadvanced risk-modeling, automatic fraud-detection and supplemental manualreview.Sellers who have their own credit-card merchant accounts may be moreknowledgeable about the risks of accepting credit-card payments fortransactions, but smaller sellers may not.

So readers should make sure theyfully understand their responsibilities and potential liabilities when usingservices that facilitate credit-card payments, including Google Checkout andPayPal.