Is PayPal Really Your Pal?

Is PayPal Really Your Pal?

If you are a Seller on Amazon or EBay, while you may also accept credit cards directly, you probably work with the payment application PayPal as well.  PayPal is used globally and many Buyers choose to pay for their transactions exclusively using the PayPal application.  For that reason, most digital Sellers accept PayPal even if it is not their transactional payment support option of choice.

In retrospect, it appears PayPal was initially designed to protect legitimate Buyers from unscrupulous Sellers.  It is logical that as digital marketplaces were being developed on the World Wide Web, the main transactional concerns were focused on protecting the consumer from fraud first.  If consumers were not confident that their purchases were secure and protected, then the success of digital marketplaces would never be assured.  Consumers needed to be confident that their transactions would be legitimate and if their products arrived damaged or not as advertised……they would have acceptable levels of recourse at their disposal.

However, as most digital merchants will attest, many times it is the dishonest Buyer who will attempt to defraud the Seller.  In fact, some sources suggest that as much as 20% of the transactions processed through PayPal end up being at attempt on the Buyer’s (customers) part to defraud the merchant by taking advantage of various PayPal transactional policies and procedures.

In many cases, all the Buyer has to do is claim that the product they purchased was not as advertised or that it was missing from the undamaged packaging and PayPal will refund their full purchase amount.  Thus leaving the Seller to reap the losses associated with that claim.  For that reason, it is important that Sellers in the various digital marketplaces learn how to mitigate those risks by familiarizing themselves with the PayPal Seller Protections available to them.

Seller Protections…Learn or Lose!

To address the issues of Sellers being defrauded, PayPal eventually created a Seller Protection program to help guard against the Seller losing money to unsubstantiated claims and chargebacks.  The Seller Protection program covers two particular types of Buyer complaints.  Namely, “Unauthorized Transactions and the claim of “Item’s Not Received,” are the main issues covered.   These types of complaints can affect your merchant PayPal balance.  However, if the transaction meets PayPal’s program requirements, such claims will not negatively impact your PayPal balance.  There is no charge for using this service, but, there are specific requirements that you as a Seller must adhere to or these protections will not apply to your transactions.

First, it is important that we define what PayPal considers a “protected transaction.”  They will cover under this program only transactions that result in the sale of physical goods to a Buyer.  They will not cover digital items or services under their Seller Protection program.  Second, the covered transactions are only for physical goods sold and shipped (with proof of delivery) from within the United States to buyers around the globe.  Third, you must ship your order within seven (7) days of receiving it to the specific address indicated in the transaction details and you must provide to your Buyer an accurate delivery estimate.  Finally, you must disclose to the PayPal claims department all of the details of the item…….specifically any product defects, use or other abnormalities about the product or the order in question.

While the aforementioned information provides a brief overview of the requirements of the program, let’s “drill down,” and review some of the more specific requirements the Seller will need to meet.

What are the requirements for Seller Protection?

Initial Requirements:

• You must ship the sold merchandise to the specific address on the Transaction Details page. You must make sure you are shipping the item to a confirmed
• The item sold must be a physical, tangible item that can legally be shipped. Digital goods and services are NOT covered.
• If PayPal requests documentation or other relevant information, you must respond to those requests promptly….this means no more than ten (10) business days.
• Your Permanent address used as the point of origination for the transaction in question (and as listed in your PayPal account) must be in the United States.

Additional Requirements:

[For “Item Not Received,” Cases]

• The payment must be marked “eligible” or “partially eligible” on the original Transaction Details page.
• You MUST provide online tracking to be eligible for protection.

[For “Unauthorized Payment,” Cases]

• The payment must be marked “eligible,” on the original Transaction Details page.
• You must provide Proof of Delivery or Proof of Shipment from a verified shipping company that includes all of the below:
• The item’s (package) status as delivered.
• The date the package was delivered.
• The recipient’s address, showing at least the City and State or the City and Country or the zip/postal code (international equivalent). The address information on your shipping receipt must match the address on the original Transaction Details page.
• Signature Confirmation, if the full amount of payment (including shipping and taxes) is $750.00 USD or more. This documentation can usually be supplied by the shipping company since the package was signed for on delivery.

Most PayPal transactions are covered as long as they follow the aforementioned requirements.  However, there are instances where certain transactions will not qualify for the Seller Protection program.

What isn’t covered by Seller Protection?

• Claims, chargebacks or reversals filed because the item is significantly different from how it was described to the Buyer. A blatant example would be describing an item as “new,” and sending a “used,” one.
• Intangible purchases like services, digital goods, downloadable software applications, etc.
• Items picked up locally or in person.
• Transactions made through PayPal Direct, Virtual Terminal, PayPal Business or PayPal Here.
• Instances where the Seller receives multiple payments for an item.
• Claims filed directly through an EBay account.
• Prohibited items sold such as drug paraphernalia, ammunition/ firearms or counterfeit goods.
• First Class Mail International, as the receipt only shows the package was delivered to an address….but not the specific customers address.

You can find more details about the eligibility requirements for Seller Protection coverage in the Seller Protection section of PayPal’s online User Agreement section.

Tips for Secure Sales with PayPal!

While a certain amount of risk comes with all merchant transactions, there a few things you as a Seller can do to help lower that risk……and increase your likelihood of having the PayPal Seller Protection program work to your advantage.

1. For payments over $750.00 USD (including shipping and tax) be sure to get a signature confirmation of delivery in addition to proof of shipment from the shipper.
2. If a buyer files a claim, please promptly respond to PayPal’s requests for information and documentation regarding the transaction.
3. Only (Always) ship the item to the shipping address listed on the PayPal Transaction page.

If you follow the above suggestions from PayPal you will find that you have a better chance that they will support your side of the resolution for a disingenuous claim filed against your company.

No one is perfect.  From time to time it is to be expected that your company will forget to completely fill an order or a package may arrive with damaged goods contained within it.  In those cases, it is expected that you will work to satisfy your customer’s issues.  That is what good customer service is all about.  However, when you find yourself on the wrong side of a fraudulent claim or a dishonest Buyer is trying to “scam” you… just remember that PayPal may be on your side after all.