Hack 26 Avoid Chargebacks on Digital Goods 
Make purchases of digital goods eligible for
PayPal's Seller Protection by mailing physical
goods.
PayPal's Seller
Protection Policy [Hack #25]
limits your exposure to fraud, provided that you follow its
guidelines to the letter. The problem is that the policy applies
"only to the sale of physical goods, and not to any
services, intangible goods or sales or licenses of digital
content." So what's a digital-goods
merchant to do?
3.14.1 Shipping a Physical Version
The solution is to sell physical goods. Ship media, such as a CD-ROM,
containing your software or e-book. You can still grant your
customers immediate download privileges for the material they will be
receiving on CD or floppy, but ship a physical product as well. Be
sure to offer tracking of the package.
3.14.2 Thinking Outside the Disk
If you want to avoid the cost of a disk, mailer, and added postage
every time you ship a CD, use paper instead. Encode your digital item
with base64, and then print it with a small font on
both sides of plain letter-sized paper. Half a megabyte of data can
easily be stored on 15 pages, which should weigh no more than three
ounces.
Your customer can then scan the sheets with a scanner, convert them
back into digital data with OCR software, and then decode the base64
code to recreate the original product. Obviously,
it's unlikely that any customer will bother doing
this, but since it's technically possible, your
shipment will qualify for the Seller Protection Policy.
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Be careful what you end up shipping. For instance, the User Agreement
specifically states that "this protection applies
only to the sale of physical goods, and not to any services,
intangible goods or sales or licenses of digital
content." This means that sending only a paper
license or certificate of ownership would be
insufficient for eligibility.
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