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collis Envato team says

In May this year we announced on the forums a change in the way we handle the sales reversals we receive from our payment providers. This meant authors would see their statements reflect the reversals. Previously we had lacked the infrastructure to actually process any but the largest reversals. But now we’re in a position to be able to deal with them as we believe we should.

Many authors have raised questions and concerns so I wanted to stop in to explain why we took this decision. We’ve also included in this post some detail from other threads so we can bring all the threads together and answer common questions.

As you know, the Marketplaces exist to help authors reach buyers, showcase their wares, and facilitate the transactions. Every month we help hundreds of thousands of buyers find great authors and files. And we’re really proud to be this important bit of glue between buyers and authors!

We’ve set up the Marketplaces so that when those transactions happen, both we and the authors make money together on each sale. It’s set so that it’s a win-win, and we’re tied at the hip. This helps Envato stay focused on our mission: helping authors earn.

The reversals are the flip side of this. Sometimes a sale will be declared as an unauthorised transaction by the credit card company or the payment provider (e.g. PayPal, Moneybookers). This is a reality of doing business online, and is something that we, and our payment providers, work hard to minimise and reduce.

I believe it’s fair that when a sale is reversed, that it’s reversed the whole way through. In other words that we don’t pay an author for a transaction that was actually reversed. This has always been our intention, and we began processing the larger ones a few years ago. These were very infrequent so hardly anyone would have been affected. Now however we have much improved capacity and authors are seeing more of them as we roll out those reversals properly.

Some authors have asked why we don’t simply continue to absorb this cost for the authors. Especially since that’s what we’ve been doing for almost seven years!

The bottom line for me is that it doesn’t make sense to do that. It’s not a real sale.

All this isn’t to say that we’re not doing anything about these types of reversals. We take our responsibility and part in the transaction seriously, and we never lose sight that authors share a sizable percentage of their revenue with us. Just like real sales are win-win, when a reversal happens it’s a lose-lose. It’s in everyone’s interests for us to make this stuff a priority.

Over the years we have been investing increasingly heavily in this area to keep the Marketplaces safe and secure, and to prevent, wherever possible, transactions such as reversals. We do this through dedicated staff in our teams, working with our payment partners, and engaging external expertise from around the world. Our commitment here is substantial and growing.

I hope this helps clear up why we have taken this course of action. I understand it’s incredibly frustrating, and I wish there was a better solution or message I could give. Please know that we are working hard on the real issues underlying reversals, and that it is a priority for us. But that also to some extent it’s a reality of doing business online.

We’re going to try to contain the discussion to this thread to make sure it’s a useful repository for future questions. So feel free to ask away here, and the team will be all over it!

Below is lots more specific detail about reversals and what causes them, and some answers to questions we’ve received from community feedback so far.

Thanks for reading!

Collis

What is a sale reversal?

A sales reversal occurs when a payment provider such as PayPal or Moneybookers, notifies us of a decision to reverse a transaction due to fraudulent, unauthorised use of a payment account or credit card.

When am I likely to see a sale reversal on my author statement?

If you see a sale reversal on your statement, it’s the direct result of the following circumstances:

  • A purchase has been made on a credit card, PayPal or Moneybookers account.
  • That purchase has been investigated by the relevant payment provider (credit card, PayPal or Moneybookers) and found to be unauthorised. This can be because the account holder has reported unauthorised activity on their account, or because the payment provider has been alerted to the unauthorised activity via their own internal investigation channels.
  • The purchase, once found to be unauthorised, is reversed by the payment provider. This means that Envato is notified that funds have been removed from our accounts. There is no avenue to dispute this action. The payment provider has already determined there has been unauthorised activity on the account and reversed the funds by the time we are notified.
  • Envato updates your author statement to reflect this activity and reverses the portion of the transaction credited to the author.
  • Envato reverses its own portion of the transaction and pays the reversal fee to the payment provider.
  • Additionally the Marketplace account associated with the reversed purchase is disabled so it can no longer be accessed.

What’s the difference between a ‘sale reversal’ and a refund?

A ‘sale reversal’ as it is shown on your statement is not a refund to a buyer, nor is it the result of any kind of dispute process initiated by the purchaser based on the quality of an item. Sale reversals are only reflected on your statement when the payment provider has found there to be grounds for removal of the funds based on unauthorised activity.

When a buyer has a customer satisfaction issue with an item they’ve purchased, they may contact either us or their payment provider, but either way we take steps to mediate the issue, handle disputes, and resolve the situation as best as possible. That process is entirely separate to the issue of sale reversals.

Two knowledgebase articles have been created to answer questions related to this topic

  1. ‘What are sale reversals?’
  2. ‘What information is shown on my statement?’

We will be moderating this thread carefully, please let us know if you have any questions or concerns

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PrimaThemes says

long time no see… thanks Collis for writing this…

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SamBerson says

Thanks for clearing it all up for us.

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collis Envato team says

long time no see… thanks Collis for writing this…

Well you know, I gotta keep up my post count on the forums ;-) It used to seem high, but these days! And you’re most welcome, this is a post I should have thought to write much earlier.

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dtbaker Moderator says

Excellent summary! Love the win-win lose-lose :)

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revaxarts says

Thanks for the head up Collis! One question though:

What’s “other adjustment earnings”?

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collis Envato team says

Thanks for the head up Collis! One question though: What’s “other adjustment earnings”?
Good question, I’ll find out and get back to you. We have a large pool of different codes for various types of transactions, so I’ll need one of the finance team to look it up for me.
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revaxarts says

^ great! one more thing: can you add the purchasecode next to the sales reversal/other adjustment?

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vuzzu says

Thanks for the information however we didn’t face yet a reversal, but its pretty understandable cases like that can occur.

While you guys take care all of these hard works to make Envato marketplaces work really appreciating it.

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GravityDept says

^ great! one more thing: can you add the purchasecode next to the sales reversal/other adjustment?

Agree — authors need to be able to disable licenses for reversed sales in support systems. Will buyer comments and direct messages show the user as a buyer or not after a sales reversal?

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