We hired a third party firm - Verecom
in NYC to do some upgrades to our magento site. Usually, with other firms, this goes without a hitch. Verecom
decided to change the PayPal payment acceptance preferences so it would only authorize accounts, opposed to auto authorize & capture funds. This isn't something we check after upgrades since no other firm but Verecom
has ever messed with payment preferences(or not put them back where they were before they messed with them)
This only occurred for a short period of time, luckily. It resulted in over $30,000 of lost funds as people were buying items but their money was given back to them. Luckily we caught on before we were too badly screwed by this.
I was very surprised at the average good will of our customers. We are down to about $10,100 owed to us. Simply emailing & calling customers to explain the problem & promptly sending a revised PayPal invoice really did the trick.
What makes this difficult is that people do not actually realize they owe something. They paid - the money was taken from their PayPal account. If they paid by bank transfer or credit card, PayPal debited their bank account or charged their credit card. However, within 3-30 days, the charge would be dropped since it was not auto-captured. Since it was not captured, it would return to their PayPal account and the debit would remain on their online bank statement and/or credit card because PayPal debited their bank account or credit card when they purchased. This is terrible, since very few people if any actually reconcile/balance their PayPal account at the end of the month to see if it all adds up. We literally had one customer - yes, one customer out of all of them actually contact us concerned that his PayPal account had more money in it than it did.
Think of it like a bagel shop. You buy breakfast, and at the end of the month check your CC statement and notice they did not charge your card. How many people actually go back to the bagel shop and ask them to charge them?
Most people will notice if a charge is not on their CC or bank account history anymore. However, if it is still there, they will believe they WERE charged. The only way to get them to see that they weren't is for them to log in to their PayPal account and enter the transaction ID that we provide them, where it will tell them in plain English $0 were ever captured from them.
This worked for a lot of people, because we have collected back over 60% of the debt. However, for a lot of people, it did not work. Here is why.
The best case scenario here is that we are wrong. They wait to log into a very slow website, paste a number string in, wait more, and see they owe no money. I've wasted 90-180 seconds of their time and they do not gain anything.
The worst case scenario for them is that we are right, and they owe us money.
b) They already have the part they ordered from us. Why bother paying now? They already have it. It's not like the order won't ship out if they don't pay. They have what they need - what does it matter what WE need?
c) The overall screw you factor of hah hah, we got it for free.
Some people legitimately believe A to be true,and require some convincing. Some people lean towards B or C, but keep repeating A as if it is actually true if they continue to say it is true. As much as I read about how when it comes to shopping/chargebacks/merchant customer relations most customers are good, it just doesn't work that way. These customers are 60/40 consumer/business. The parts they were purchasing were at below market rates by about 20%-50%, so most do like to take care of any issue that could potentially damage future business.
We have contacted everyone by phone or email. We have mailed a personalized letter to each customer explaining the issue at hand, along with a printout of their order invoice and a printout of the PayPal transaction ID where they can see on the paper(and cross reference within their own Paypal account) that their money was given back to them. I cannot think of what else we can do short of handing this off to a collections agency to recover the debt from the other customers.
Again, a lot of the uphill battle here isn't actually collecting the debt. Most of the time it is simply about threats of garnished wages or bad credit to people who KNOW they owe, which means you just have to guilt them or threaten them hard enough. Here, these regular collections tactics will likely not work because a good portion of these people legitimately believe that they have paid.