I had talked about this before and every seller should be able to pay an additional fee of 1% to prevent all unauthorized transactions. This will solve 99% of all chargebacks. PayPal then calls up the buyer and verifies the buyer made the transaction. Seller has absolutely no responsibility for unauthorized transactions. Seller still has to deal with "not sending disputes" and "description not matches."
But the majority of scams are the unauthorized.
I would say that unauthorized scams are that way because it is simply the easiest. It requires the least amount of proof and the least amount of work. If this kind of feature were to be implemented then we would likely see other types of dispute scams.
I would also argue that paypal would likely charge more then 1% for this kind of feature. They would need to keep an audit-able log of each time they talk to someone. I would say that it would take, at minimum 5 mines for the agent to verify that they are in fact speaking to the customer and verify that the customer authorizes the transaction. I think that most paypal transactions are relatively small (<$100) so I don't think that paypal would want to be making this little on something that cannot be done with automation.
Another issue is that I believe that the FCRA (fair credit reporting act) allows people to dispute credit transactions after the fact. If a customer was to successfully dispute a transaction that could not be reversed to the seller then paypal would have to take the loss.
You're right. It would definitely be more than 1%. I'd think of it more like Unauthorized Protection - But like you said other disputes require more work and don't have as high chance of winning. I'd say the system would be better overall.
Whole process can be automated pretty easily.
1. Email verification can be automated. Lots of scammers don't have access to PayPal email.
2. Phone verification. Text to phone. Done.
3. Security questions. The ones you need to pass when signing up for Coinbase. If they fail, seller can make decision whether to proceed.
Coinbase already does all these and I never spoke to Coinbase once on the phone.
TADA! All automated and much safer. After "authorization" is established it's actually pretty easy if they have eBay username. You can just go by feedback.
Regarding the whole unauthorized transaction situation, I think it's ridiculous the seller should ever be liable for unauthorized transactions because PayPal has all the information to do this verification not the seller. (Including IP addresses.)
1 and 2 - This would not stop people from saying that their account was hacked and an attacker was able to access the email and 2FA device.
1 - If someone were to hack into someone's paypal email then they could perform a password reset on the paypal account (AFAIK), making this option moot.
2 - This would work, but how would paypal verify your identity when you change phone numbers, or if your phone were to be shutoff because of non-payment? You could potentially be shut out from your money because of this. Another issue is that this would need to be opted in by the buyer, so if the buyer does not opt in then the seller would not benefit from the feature. AFAIK paypal does not offer a way to only do business with accounts with certain security features (they would likely not do this either due to, among other things, security concerns).
2 and 3 - Paypal would have the issue of fake paypal sites that could pretend to be paypal, get your login credentials, then ask for your 2fa and/or security questions then forward you to the actual paypal site. This is what the fake blockchain.info sites do when they try to trick users into putting their identifier and password into the fake site, they actually open their wallet but the coins are transferred out shortly thereafter.
3 - You have the same issue of the buyer needing to opt in but is protecting the seller as above. Having these questions would also not resolve the issue of the fact that paypal would likely not force users to answer these security questions prior to every transaction, it would likely be only once to verify one's identity.
1, 2, and 3 - The current system generally works for paypal as the majority of paypal transactions go through without any issue. It is only with bitcoin related transactions that paypal is not good for (not "only" but it is one of the larger struggles). With a shipped good, it is easy to document that the item was actually shipped to the customer's house, and if so then even if the transaction was unauthorized, paypal could have the customer ship the goods back to the merchant to be reimbursed. It is much more difficult to prove that the customer received any kind of digital goods, and the fact that bitcoin cannot be reversed makes it even more complicated (in theory a digital license could be revoked in the event of a chargeback).
