What You Need to Know About PayPal Chargeback Protection

PayPal is a global web-based company that specializes in transferring money between individuals and businesses through Internet services and email. PayPal also works as a payment processor for online merchants and auction sites, such as eBay

According to the most recent stats, there are currently more than 325 million active PayPal accounts worldwide. 

If you’re using PayPal to process payments for your online business, it’s essential to learn the nitty-gritty on their refund policy and rules regarding chargebacks. In this article, we’ll be covering the bases of PayPal Seller Protection and how it can protect you from disputed transactions and chargebacks. 


How to Prevent Chargebacks on PayPal?

PayPal offers some useful tips on how to avoid situations that could lead to the buyer disputing the transaction and demanding a chargeback.

If you’re a seller on PayPal, you ought to:

  • Provide your contact information—most buyers will not resort to filing a dispute if they discuss the issue with you first
  • Communicate—respond quickly and clearly to your buyer’s questions and concerns
  • Suggest dispute resolution—instead of the buyer filing a chargeback with their card issuer, it will be easier for both parties to find a solution through the PayPal Resolution Center instead
  • Be transparent—offer a straightforward, easy-to-find return policy

Are You Eligible for PayPal’s Seller Protection Against Chargebacks?

PayPal Seller Protection is a program that protects the seller’s or merchant’s transactions from chargebacks, reversals, and all attached fees. Seller Protection is available to business accounts for free if the transaction is qualified as eligible.

PayPal’s Seller Protection program can be applied if a buyer states that:

  • They didn’t approve or profit from the amount sent from their PayPal (this is known as an Unauthorized Transaction that occurred in an environment hosted by PayPal)
  • They did not receive the item from the seller (classified as the Item Not Received claim)

PayPal’s Seller Protection program may also cover instances in which a transaction is reversed because of a successful chargeback by a buyer. It can also be applied when the buyer’s bank reverses a bank-funded payment.

Seller Protection doesn’t apply to cases in which the buyer claims the received goods did not match the buyer’s description. PayPal refers to those as “Significantly Not As Described (SNAD)” items.

How to Qualify for PayPal’s Seller Protection

To meet the criteria for their Seller Protection program, PayPal states the following requirements:

  • The primary address for your PayPal account has to be in the U.S.
  • The item must be a physical, tangible good that can be shipped
  • You need to send the item to the shipping address on the transaction details page in your PayPal account for the transaction. If you first send the parcel to the recipient’s shipping address on the transaction details page, but the item is later sent to a different address, you will not be protected by the Seller Protection program
  • You must respond to PayPal’s requests for documentation and other information within the requested time frame. The due dates will be outlined in PayPal’s emails or correspondence threads through the Resolution Center
  • If the sale involves pre-ordered or made-to-order goods, you have to ship them honoring the dates you specified in the listing. Otherwise, you should send the items within seven days of receiving the payment

What Is the PayPal Chargeback Policy for Buyers?

PayPal states that, if the buyer used a credit card or debit card as the payment method for a transaction on their PayPal account and are dissatisfied with it for any reason, he or she may be able to dispute it with the card issuer. 

Applicable card chargeback rights may be broader than those available under the PayPal’s Buyer Protection program. 

The buyer has to choose whether to pursue a dispute with PayPal under the Buyer Protection program or do so with their card issuer. It’s not allowed to do both at the same time or seek a double recovery.

What Is the PayPal Chargeback Policy for Sellers?

According to PayPal’s User Agreement, if you receive a payment for selling goods or services that is later refunded or invalidated, you are responsible for the full payment sent to you, as well as any additional fees (including the chargeback fee). Every time a transaction is refunded or otherwise reversed, PayPal will refund or reverse the purchase from your account in the original currency. 

If you receive a debit or credit card-funded payment through your PayPal account and the buyer files a chargeback claim with their bank, PayPal will not assess you with a chargeback fee if you’re eligible for the PayPal Seller Protection. If a buyer files a chargeback, the card issuer will decide who wins the disputePayPal has no say in the matter.

How Buyers Dispute PayPal Payments?

If a buyer used PayPal for a transaction that they’re unhappy with, and they paid with their debit or credit card, but the efforts to resolve the matter with the seller didn’t yield results, they can ask their bank to start the chargeback process.

Typically, the buyer will have to:

  1. Contact their card issuer, i.e., the bank
  2. File a transaction dispute and explain why 
  3. The acquirer/card issuer of the merchant will receive the request, then send it to the merchant
  4. The merchant can choose to refund the buyer’s money or challenge the chargeback

Some banks allow their customers to start a chargeback process online, while others have specific procedures in place. Here are some of the most common methods:

Can a buyer request a chargeback via

Yes / No

DoNotPay

Yes
Email

Yes, if the card issuer allows it 

Phone

Yes, if the card issuer allows it 
Letter

Yes, if the card issuer allows it 

Website

Yes, if the card issuer allows it 
Fax

Yes, if the card issuer allows it 

Secure a PayPal Chargeback with the Help of DoNotPay

Fox details how DoNotPay makes it easier to fight companies by suing them in small claims court

What if you find yourself on the other end of the bargain and want to dispute a transaction that occurred through PayPal? DoNotPay can help you file a claim and demand a chargeback.

Follow these easy instructions:

  1. Open the DoNotPay app in your web browser
  2. Select the Get Protected option under the Chargeback Instantly button
  3. Answer the questions from our chatbot (this will mainly involve your personal details, your bank, and the vendor of the disputed transaction)
  4. Verify your signature 
  5. Submit your request

DoNotPay will collect all the necessary data for you and then:

  • Get in touch with your bank with the request for a chargeback 
  • Apply relevant Visa or Mastercard rules and policies to create a more compelling case

Cross Off Your To-Do List With DoNotPay 

We’re living in a messy, busy world. If you’re trying to instill some order back in your life, DoNotPay may be the gamechanger you didn’t know you needed. Whether you need help with canceling subscriptions for services you’re no longer using, requesting a fee waiver for your unpaid medical bills, or filing a harassment complaint at work, our app will become a useful tool and resource. 

You can access DoNotPay from any web browser. We can give you a hand with: