About Chargebacks for Donations

I've found a rather interesting reddit post about chargebacks that I think is a good read. Chargebacks is a horrible thing that can happen for a streamer. Especially ones that do it as a full time job.
Basically it's when someone donates but they don't have enough in the account or they say they didn't make the payment and it get's refunded to the person who made the donation.
This is from a user on Reddit called TheNetbug: (we're not allowed links so I'll copy and paste it)

u/TheNetbug299d, 19h
I am by no means sponsored or affiliated with the programs mentioned in this post, they are solely used as examples since they are most commonly used. Some credits go to Sodapoppin, Towelliee and Summit1G as this post is inspired by them talking about it on stream. This post is a reflection of my own interpretation and they are in no way responsible for this post

What is a chargeback?

A chargeback (also known as a reversal) is a form of customer protection provided by the issuing organization or bank, which allows cardholders to file a complaint regarding fraudulent transactions on their statement. Once the cardholder files a dispute, the issuing bank or organization makes an investigation into the complaint.

This protection allows cardholders to dispute a charge made on their credit cards for one of three reasons depending on the cardholder's policy:

• unauthorized access/payment.
• purchased goods or services not received.
• goods or services failed to meet reasonable expectations and the merchant/seller or service provider refuses to attempt to make good on the transaction. (such as wrong a product being the wrong item/color or a service call to fix a dryer that keeps breaking for the same reason)

The second and third reason are not important from a streamer point of view, most (if not all) chargebacks will be issued as unauthorized access/payment.

Chargebacks and streamers

Chargebacks are a plague in the streaming world. Viewers can charge back donations for up to 6 months after the initial donation, leaving streamers who are counting on the subscription and donation money to pay their bills theoretically unable to use their donation money for up to 6 months.

Most chargebacks are either donations through a fraudulent credit card without funds, or issued as unauthorized.

There’s 2 options right off the bat, first you can choose to simply agree to the chargeback and let them have their money back right away, no further investigation will be necessary and no additional fees are applied. Or you can choose to fight the dispute and in this case you are guilty unless proven otherwise. The burden is on you to convince PayPal that the donation was made willingly.

If you choose to fight the chargeback, there’s 2 different possibilities again. If you lose and the donation was made through a credit card, you will be charged an additional 15$-20$, this has nothing to do with PayPal and is charged by the credit issuing bank organization. These fees do not apply when the donation is made through PayPal or bank funds.

So how do you know if the donation is made through a credit card or funds? A credit card donation chargeback will be listed as unauthorized payment, while a bank or PayPal funds donation will be listed as unauthorized access.

How to deal with chargebacks?

You have to provide PayPal with the appropriate information to fight the chargeback, this is everything I found so far:

• Provide them with a transaction ID and e-mail from stream tip (if you use stream tip, I assume twitch alerts and other varieties provide the same info)
  
  
• Add a disclaimer on your stream page or stream tip page saying something along the lines of you not providing any goods in return for the tips. (A few examples taken directly from other streamers, full credits to them; This Tip the Towel is for those wish to drop me a tip for the work I do. I am amazed and happy that my viewers and fans even THINK to tip me for the work I put in. (Towelliee); I do this as my full time job so donations are very much appreciated, but will never be asked for. If you do decide to donate, please remember that they are non-refundable. Thanks for the support my dudes. (Summit1G))
  
  
• If your donations show up on stream you can use your VOD’s when you thank them for their donation, if your VOD is muted for using copyrighted music they are useless. Thanks to twitch’s “new” system since August 2014 VOD’s are now saved for up to 60 days for partners and 14 for non-partners. The 60 days is Ideal, since the vast majority of your donations will be charged back before the 60 days are over. (I couldn’t find a trustworthy Mb/Hr on the size of twitch VOD’s so I’m not sure if this is even viable but I’m going to mention it either way. If your VOD’s regularly get muted due to music you could consider downloading them before they get muted and save them on external drives.)

Don’t take out your donations right off the bat. This is a personal opinion but from everything I’ve read over the past weeks on this topic ideally you delay taking out any donations for up to 60 days and it will not impact you at all after the first 2 months of receiving donations. Allow me to elaborate: Let’s say for examples sake that you started receiving donations on the first of January.

At the end of January you have, let’s say 150$ in donation money in your PayPal. You do not touch it. When February ends, you grew a little and now received 200$ in donation money, leaving you with 350$ total in your PayPal. At the end of March you made 250$, now leaving you with 600$ in your PayPal, at this point the latest of donations received in January were left untouched for at least 2 months while the first donations were in there for almost 3 months. At this point you can assume that the donation will not be charged back and take out the first 150$ you made from donations. From this point forward, you can take out any donations from the following months.

When April ends, you can take out the 200$ from February and so on, this leaves you with a safety net of 2-3 months, which is your VOD AutoSaving time and assuming you grow every month you will never get in trouble if chargebacks occur after 2 months.

Take note of bigger donations, if you receive a big donation, that’s awesome and all but I would suggest leaving it in your PayPal for more than 2 months unless you are absolutely sure you will be able to handle the chargeback or won’t get your balance in trouble if you lost it.

I understand that this is a hassle and takes a lot of extra work that shouldn’t be necessary, but I would rather put in the extra work than get in trouble with money.

This sums up almost everything I could find about the subject and if there are mistakes or misleading information in this post I will change it right away.

-Netbug / Monkey