PayPal Payment Issues for Private Investigation Services

Over the last few weeks there has been an ongoing discussion on a couple groups regarding payments via PayPal or Credit Card where the client indivertibly requests a charge back after the investigation is complete.

Unfortunately, chargebacks happen, there is simply no way to avoid them or keep them from happening.  There are, however, ways to minimize your risk to a charge back.

If you are looking for a 100% sure fire way to avoid a charge back, you can work in Cash Transactions only. But doing so is going to make your job harder and will often times result in less clients over the long term. Cash transactions are simply “Shady” business regardless of what type of industry you work in. More so when people already think private investigators are shady to begin with.

What is a client going to do? Walk into a coffee shop with $2,500 in cash to hand off to a person claiming to be a private investigator?

A Cash Transaction completely removes checks and balances from the equation. You are stating to the client – you are giving me this money. Whether I do good or bad on the case, the money is lost. Meanwhile, Trustify is offering them a solution of “work first pay later” which is what most attorneys offer too – “we don’t charge you unless we win”. So, rather than taking a step forward and making it easy on the client, we’re making it harder to get their work by requesting a Moneygram or cash in hand.

Which would you rather do? – Meet a client at a Coffee shop with a card reader and taking a retainer on the spot? Or tell the client to go by Kroger, take out a money order, then come back to the coffee shop and hand it to you?

Here are a few problems with Cash Transactions and Money Grams/Western Union.

Cash Transactions

The chances are that you’ll be requesting a down payment of $1,500+ to get started on the case and have enough padding in case the subject is active. After you hit the limit, you are going to have to make a decision – either stop the case (which is unacceptable), have the client meet you and pay for more hours (which is risky), or hope that the client is going to pay you the extra money at the end of the surveillance (which puts you right back to where you started).

Money Grams or Western Union

This is the same thing as taking on a case with crash transactions. If you don’t have results with a cash transaction at the end of your retainer, you are going to have a very difficult actually getting people to pay you for more hours.

I understand that chargebacks are scary, and they quite literally suck when a client submits the charge back. However, if you have a solid contract or retainer agreement in place, you are going to win the case 95+% of the time.

Taking money with PayPal

PayPal is probably the easiest company to use and integrate into your business sales funnel. Assuming that you have a contract/retainer agreement, you’ll probably win the cases 95% of the time. The other 5% is for whenever you royally ***** up the case – which happens. In that case, could you blame the client from requesting their money back?

If you don’t want to take on the risk, PayPal does offer a “bill-me-later” feature which is a program that works directly through PayPal itself. You can have the client request to “pay later” via PayPal. PayPal will actually pay their fees to you in advance and it will give the client a type of “credit line” so they can pay PayPal at a later time.

You take your money, and PayPal handles the risk.

How to avoid charge backs

The best way to avoid charge backs is to give your clients an honest consultation and give them realistic expectations. In 2014, I called a few private investigators and pretended that my wife was cheating on me. I explained to them that she was a private investigator, stayed up all night, talked with random people at all hours, and traveled all the time. (That’s what a PI does).

Every investigator I called wanted a $2,500 retainer to “get down to the bottom of it.” They gave me fake expectations and promised me the world.

Observation: She’s a private investigator.
Conclusion: She’s cheating on you.

I knew damn well that they were not going to obtain any evidence – she’s not a PI and spends most of her days cheating on me with book characters anyways. The “free” consultation was nothing more than a 20 minute sales pitch on their technology, capabilities, and empty promises.

If you want to avoid charge backs, be honest with your clients and explain to them exactly what you will provide to them and what they can expect from you at the end of the investigation. Don’t give them false expectations. Provide them with a written contract and retainer agreement. (click here to get our retainer agreement template)

If they do file a charge back, you will be able to provide the information to PayPal – or whomever you decide to use – and win the charge back dispute. It’s not a PayPal problem, it’s a problem with the way we handle our investigations. Yes, I am aware of the clients that request charge backs, but if you protect your assets and have a solid retainer/contract agreement, you’ll win them more often than not.