PayPal Question: Any risk w/ unconfirmed address if NOT shipping?

We’re running a website that manages annual membership in a nonprofit organization. People pay their annual dues via PayPal, which then automatically updates their status in our member database, and gives them access to certain areas of the web site, etc.

We would like this to be as automated as possible. We don’t want to have to manually confirm anyone’s payment.

But a number of payments have been put on hold because of a PayPal security setting:

Setting this to NO enables the payments to go through automatically. But everywhere I look, this setting seems to be a no-no. In our situation, though, I can’t understand what the risk would be.

Since we’re NOT shipping physical products, is there any danger in setting this to NO?

If you ship to an unconfirmed address you lose in a dispute.

But you have to look at it realistically. If you had a brick and mortar store you would not realistically expect to have no shrinkage (stealing). You have to budget for a certain amount of loss.

If you refuse to take payments from an unconfirmed address you may lose payments from people who don’t want to confirm their address.

I have not confirmed my address and if the seller won’t take it, they lose my business. A lot of people, for various reasons, won’t confirm.

The bottom line: In a dispute if the address isn’t confirmed you lose.

The question to ask: If I only allow confirmed address will I lose more business that way or from disputed charges.

You can’t take disputes personally nor can you prevent them totally. You have to minimize the risk

We don’t ship. That’s the point of my question.

Sorry I thought you were referring in general

For paypal protection

From paypal.com

In order to be covered for Paypal protection:
The item must be a physical, tangible good that can be shipped.

What is not covered

Services, intangible items, and digital goods

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So you have no protection, as you’re selling a service. So you’re just gonna have to hope there are no chargebacks.

You’ve got no real exposure to cash lossses either. Your bandwidth expense due to thievery from a single user are minimal.

One presumes that if there were some dispute to the charge that you would simply cancel the membership that it had been used to pay for. So unless you’re running some sort of service where someone could download a large amount of data between the the time the charge was accepted and when it was disputed I really don’t see a problem

Untrue. Speaking from personal experience as a seller.

From the paypal user agreement:
https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/UserAgreement/ua/USUA

Also see:

No, not at all. Our online members-only offerings are very light—an industry- and locality-specific job postings list that has been compiled mostly from public sources, and the ability to communicate with other members in various ways.