PayPal is everywhere and allows making sales and payments in a jiffy. PayPal processed over $199 billion in total payments in the fourth quarter of 2019 adding 9.3 million new active accounts. The figures are truly impressive as PayPal is currently viewed as the staple of a secure way to transact from any part of the world to another to buy and sell products and services and a lot more. PayPal has a few policies up its sleeves that prevent both buyers and sellers from fraud and one such technique is called a ‘PayPalchargeback’ which keeps the interest of buyers in case of any invalid payments.
But chargebacks have become a common way to fraud merchants and it is exponentially increasing. So, how to fight a PayPal chargeback in 2021? Here’s everything you need to know about chargeback and how you can take the measures to prevent and fight it.
What is a PayPal Chargeback?
As PayPal quotes it, a chargeback is “initiated by the customers when he/she contacts the payment issuing company to get a refund or payment reversal. With a chargeback, the buyer is disputing a payment made starting either the payment went through unauthorized or when the seller ships an unwanted or damaged product and so on”.
Note that PayPal is representing the seller/merchant where it allows communication between the customer’s issuing bank and the seller. A chargeback can be disputed by providing all the required documents, proof of sales and shipping, etc.
Until then, PayPal holds the payment made to the seller and keeps it frozen until there’s a resolution to the chargeback. In case if the chargeback is valid, the seller losses the payment plus a $20 chargeback fee. If the buyer losses the dispute, the payment is processed to the merchant.
How To File A Chargeback on PayPal?
A buyer can file for a chargeback on PayPal for different reasons like when his/her PayPal account is used for an unauthorized payment. Other types of disputes include if a buyer gets a damaged or incorrect item or the box is empty or if the buyer is charged twice for the product.
Further, buyers can file a chargeback if the product didn’t arrive at all. Note that although not all chargebacks are fraudulent, it is a common Paypal chargeback scam that has caused quite a stir as people are using it for their good while causing massive losses to the merchants and sellers.
The process of filing a chargeback Paypal 2021 is simple. It usually involves a buyer contacting his/her debit or credit card issuing company reporting an unauthorized transaction or alleging a series of other reasons listed above.
This is when the card-issuing company contacts PayPal and the chain of steps mentioned in the “How PayPal Chargeback Works” take place until a resolution isn’t met.
How Does PayPal Chargeback Work?
In order to understand how to fight a chargeback on PayPal, you need to first understand how a PayPal chargeback works so here we go:
- The buyer checks out a range of products/services and buys a product of his/her choice.
- In case if the product was damaged, faulty, or any unwanted items or the product was never delivered, he/she can contact an issuing bank for a payment reversal (chargeback).
- The issuing bank (supporting both credit and debit card) notifies PayPal about it.
- PayPal freezes the payment and deems it untouchable and holds it until the chargeback request is deemed invalid or otherwise.
- Both buyer and seller are notified about the chargeback and PayPal asks the latter to provide all the documents including proof of shipment, delivery slips, etc to confirm it.
What is the PayPal Seller Protection Program?
The PayPal Seller Protection works as a policy that is created to protect all your transactions from chargebacks, reversals, and other related fees. In case you sell something to a buyer, and they opt for disputing or reversing the transaction, you are probably going to be eligible for retaining the full purchase amount. And this entire process is going to happen while avoiding any kind of related paid feed as a chargeback. It is applicable for debit and credit card transactions.
The PayPal Seller Protection program usually covers two types of buyers’ claims. Firstly, it covers unauthorized transactions when a buyer claims that he/ she didn’t authorize payment. Secondly, it offers cover for items which are not received. In case a buyer claims that they have never received their purchased item, the PayPal cover is going to protect them.
But the Seller Protection does not cover buyers’ claims for those items received which are “Significantly Not As Described (SNAD).” In other words, if the purchase of the buyer does not match with what they ordered, it is not going to get the cover. However, the SNAD complaints are easy to reduce by providing a detailed description of the items that you are selling. Also, communicating with the buyers, answering their item-related queries, and resolving issues are effective ways to get help.
How To Fight A PayPal Chargeback?
There are valid and true chargeback claims that buyers file with PayPal against a seller for a variety of reasons. It could be because they didn’t receive the product or it is different from what they ordered and so on.
However, there is an ugly side to it and that is using fraudulent techniques to get a chargeback. This often ends up bad for the sellers as they usually end up delivering the product and the buyer gets his refund plus there’s a chargeback fee that PayPal imposes on the seller and so on.
So there are ways in which you can fight the chargeback claim which we have mentioned below:
1) Speak with the Buyer
It is estimated that over 40% of the chargebacks are a result of a merchant’s error. It can be easily solved by simply talking to the buyer and mitigating probable solutions to the issue. Settling any discrepancies via refunding with PayPal is better on the seller’s reputation and incur fewer losses.
2) Check if the product is covered by Seller Protection Program
As said, check if the order is covered by the Seller Protection Program or not. If yes, PayPal will allow the seller to retain the full amount when a chargeback is hit while waiving off any chargeback fee. The sellers would need to provide documentation if requested.
3) Check out the Proof of Online Tracking
PayPal offers a secure platform for transactions. Even after that, it is subjected to frauds using different techniques. However, a great way to minimize chargeback by a buyer claiming ‘unauthorized transaction’ as the cause is to check for proof of online tracking. A merchant’s dashboard has everything they need to track the transaction details if the sale is “eligible” or “partially eligible” that can prevent from losing the sale.
4) Check the Proof of Shipment or Proof of Delivery
One of the common techniques used by fraudsters to rip refunds is using one of the many PayPal chargeback 2021 like listing the product as ‘Item Not Received’. Here, the buyer states that he/she didn’t receive the product.
Since PayPal requires merchants to upload and keep the proof of delivery or shipment from an online shipping company. This ensures that the merchants have all the proof validating the delivery and can be used to fight Paypal chargeback disputes.
5) Response for the Chargeback Notice within 10 Days
Now, this is crucial. PayPal requires sellers to respond to any chargeback disputes within 10 days. They can go to the Resolutions Center to check if there’s any chargeback or dispute ordered by any customer. Responding quickly can help gain an advantage over those who would take days to respond. This way, you can check with the customer who has filed the claim and solve the issue as soon as possible.
6) Email PayPal with all Documentation
The best way a seller can respond to an invalid or fraudulent dispute is to provide all the documentation supporting the sale and delivery of the order. The email should contain everything from communication details with the buyer, customer history, proof of shipment and delivery as well as likelihood that a merchant is working in good faith or a buyer is using fraudulent tactics to rip off PayPal’s chargeback feature.
7) Check the status
A chargeback can take as many as 75 days or more depending upon the case. Here, sellers can check out the status of the dispute within the Resolutions Center. This makes it easier to track the status as well as provide any other documents or anything else that PayPal might request during the course until a seller wins or loses a claim.
8) Appeal the claim
This works if the seller losses the claim. Here, they can appeal to the claim and there’s a possibility that the buyer either returns the items although the condition could vary from damaged to incorrect items, etc.
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How can a Seller Manage PayPal Chargeback?
According to PayPal, being responsive and professional can help mitigate the ongoing claims. The sellers can give accurate descriptions, pictures, return policy, and more to avoid getting entangled in any claim by buyers thereby minimizing the risk of chargebacks and whatnot.
As said, a chargeback comes with a hefty $20 fee and on the other hand, a refund would steer away from any further losses although if the merchant is confident about the product delivered, they can respond to the claim and appeal for it to win it.
Taking added measures for orders coming from high-risk countries can help minimize unauthorized transaction claims as well. On the other hand, sellers can minimize ‘Item Not Received’ claims by providing all the necessary information to the buyer as well as PayPal.
It includes, but not limited to, updating the delivery dates as well as uploading the status of the items. Sellers must upload all the proof of shipments and delivery to ensure that they are a step ahead of any unwanted chargeback scam that could cost them a lot.
Sellers complying with the Sellers Protection Requirements have a greater chance of minimizing claims and disputes. This ensures sellers retain the amount while the chargeback fee which is $20 is also waived off for covered items.
Also, a seller must be aware and avoid risky transactions that PayPal might not cover such as any transactions for high-tech equipment or gift cards and a whole string of other products that aren’t covered under PayPal’s seller protection program.
Is a PayPal chargeback the same as a dispute?
Though the ideas of chargeback and dispute for PayPal may be cohesively positioned factors. But they are definitely not the same. All the chargebacks come from disputes. But not all disputes are going to turn into a chargeback.
Most of the time, disputes begin when a cardholder focuses on their card statements and sees an unauthorized charge. Most of the charges usually come with identifying information with the credit card statement so that cardholders can contact with questions in case they don’t recognize a charge.
In case a cardholder cannot reach an agreement with the merchant, they usually contact the bank. This is usually known as the dispute.
Chargebacks, on the other hand, come with a dispute. When a dispute becomes a chargeback, it is going to be assigned with a reason code. In case of a chargeback, the merchant becomes automatically liable. Thus if a merchant wants to fight back the chargeback and keep the money, then they have to provide evidence regarding the legitimacy of the charge.
We hope this article was helpful for you to learn how to fight a PayPal chargeback in 2021. We have other useful guides and reviews as well on our website.
Frequently Asked Questions on PayPal Chargebacks (FAQ)
How does PayPal notify when a chargeback is filed against a seller?
When a buyer files a chargeback, the credit company of the buyer notifies the merchant bank of Paypal. Then the merchant bank informs regarding the chargeback, and Paypal then emails the seller. Now, the seller can log in to their Paypal account to see the case status from the Resolution center and provide information regarding the matter.
Why do some of the chargebacks take a long time even after payment has been received?
There are certain laws and credit card issuer policies, which allow the buyers to file chargebacks within weeks or months after the initial transactions take place.
Where can I get all the information about chargebacks?
To get help during the chargeback process, you can take a look at the Chargeback Guide of PayPal. Also, the Paypal Resolution Center offers a step-by-step guide on how to respond to a chargeback that is filed with a credit card company.