If your customers use PayPal as a payment method, you might be eligible for PayPal Seller Protection. This protects you from chargebacks, reversals, and claims for the full amount on eligible payments due to an unauthorized transaction or an item not received.
PayPal is one of the world’s quickest, safest, and most convenient online payment solutions used by customers and businesses globally. It enables customers to transfer money at the click of a button, allowing them to shop online, send gifts, pay bills, and even process payments from clients or customers.
By setting up a PayPal account, you can access an array of features that will make it easier for you to transact and send money. With security features like account reserves, preapproved payments, and international withdrawal support in over 200 countries worldwide, PayPal has quickly become many’s most preferred payment solution.
What is PayPal Seller Protection?
PayPal Seller Protection is a consumer safeguard offering reimbursement for eligible returned or not received items. It protects buyers from any potential issues that arise with their purchase. This can include problems such as not receiving an item you paid for or receiving something significantly different from what was advertised.
PayPal Seller Protection also covers issues such as faulty items, knockoffs when you paid for an authentic product, and if you received an old product when you paid for a new one. This policy will also cover you if you were charged for something you didn’t purchase, as in the case of unauthorized access and transaction. You also must have made all transactions through the PayPal website, app, or services.
To qualify for a claim, shoppers must upload the required documentation within 180 days of purchase and ensure the transaction allows for PayPal Purchase Protection. If approved, customers can receive a full refund in their original form of payment or a comparable replacement item.
Orders purchased through PayPal will have one of the following three Seller Protection ratings:
- Eligible: the order is protected by PayPal’s Seller Protection for unauthorized payments and items not received.
- Partially eligible: the order is protected by Seller Protection for items not received.
- Ineligible: the order is not protected by Seller Protection.
How does it work?
If you have a problem with an eligible purchase, you must submit a claim to PayPal within 180 days of the transaction or shipment date to be considered for coverage under the protection plan.
When submitting a claim, you will be asked to provide information as evidence of the issue, such as photographs, details about when and how the problem occurred, and proof of payment, like a receipt.
Once you have provided all of this information, your claim will be reviewed by PayPal’s dispute resolution team, who will determine if your purchase is eligible for coverage under the protection plan.
If you’re unable to resolve the dispute directly with the seller, PayPal will hold on to all funds related to the transaction in the seller’s PayPal account until the dispute is resolved or closed.
If PayPal decides in your favor as the buyer after investigation, PayPal will reimburse you for the full purchase price of the item and original shipping costs from the seller’s account. The seller on the other hand will not receive a refund on the PayPal fees associated with the transaction.
Steps for filing a dispute through PayPal Seller Protection
Filing a dispute through PayPal Seller Protection is fairly simple. First, you will need to log into your PayPal account and click on the “Resolution Center.” From there, select the option to file a dispute depending on your circumstance, as described in the listing.
You will be presented with a form to complete, which includes essential information such as the reason for filing, details of any attempts you made to resolve the issue directly with the seller, and your order number.
After you have completed this form, PayPal will begin its investigation process. They typically respond within 10 days after all relevant information has been gathered. During this period, both parties will be asked to provide evidence of their position for each case to be assessed fairly.
At the end of the investigation process, PayPal may authorize reimbursement of an amount up to your initial purchase price. If your case is approved, you can expect to have your refund processed within 10 days of the dispute resolution agent’s decision. They will keep you updated on the status of the investigation and when you can expect to receive your money back.
Remember that this 10-day timeframe may be affected by factors such as holidays or other interruptions. So make sure you frequently check for regular updates.
Types of buyer complaints covered by PayPal Seller Protection Policy
The PayPal Seller Protection policy covers two specific types of Chargeback complaints. These are Unauthorized Transaction and Item Not Received.
An “Unauthorized transaction” dispute means that a transaction took place on their credit card, but the account holder states that he or she didn’t authorize payment. This falls into PayPal purchase protection of overall peace of mind for merchants and customers. Customers can also contact their credit card issuers to start a chargeback process against the payment done on their prepaid card.
As the name implies, customers file an “Item Not Received” dispute when they pay for an item but say they didn’t receive it despite paying the original shipping cost as well.
Both scenarios can affect your merchant PayPal balance. But if the item meets PayPal Seller Protection requirements, they will keep your credit intact, and there’s no charge for the service.
Requirements for Paypal Seller Protection
Basic Requirements
- Your permanent address (listed in your PayPal account) must be in the United States.
- The item must be a physical, tangible good that can be shipped, except for items subject to the Intangible Goods Additional Requirements below.
- Ship to the address on the Transaction Details page.
- If we request documentation or other relevant information, we ask that you respond promptly (typically within ten business days).
The detailed Seller Protection basic requirements can be found in the Seller Protection section of Paypal’s User Agreement.
Additional Requirements
For “Item Not Received” cases:
- The payment must be marked “eligible” or “partially eligible” on the Transaction Details page.
- You must provide proof of delivery for the item
In cases of “Unauthorized Payment”:
- The payment must be marked “eligible” on the Transaction Details page.
- You must provide Proof of Delivery or Proof of Shipment as described in the User Agreement.
For Intangible Goods:
- Met integration requirements
- Paid Standard Transaction Fees on the sale.
- Delivered the item and provide Proof of shipment or delivery for Intangible Goods.
- Provide signature confirmation when the full amount of the payment (including shipping and taxes) exceeds the amount listed in the signature confirmation threshold table (based on the currency of the payment).
Evidence you need for PayPal Seller Protection
When you have determined the transaction is eligible for PayPal Seller Protection, there are two vital documents you need to keep handy at all times. These documents include:
Proof of merchandise delivery
This is an online documentation from a shipping company that includes:
- The item’s status of delivery.
- The exact date when you delivered the item.
- The recipient’s address, showing at least the city and state, or city and country, or zip/postal code (or international equivalent). The address information on your shipping receipt must match the address on the Transaction Details page.
- Signature Confirmation, if the full payment (including shipping and taxes) is $750 or more in the original transaction.
- If you have used a shipping service the delivery confirmation proof is also quite crucial.
Proof of order shipment
Order shipment proof is online or physical documentation from a shipping company that includes:
- The shipping company’s details.
- The date you shipped the item.
- The recipient’s address, showing at least the city and state, or city and country, or zip/postal code (or international equivalent). The address information on your shipping receipt must match the address on the Transaction Details page.
To provide the above documents, visit the PayPal Resolution Center, and follow the guide. The process is straightforward
What Seller Protection does not cover
Most PayPal transactions are covered as long as they follow these requirements. However, there are instances where Seller Protection doesn’t apply:
- Claims, chargebacks, or reversals filed because the item is significantly different from how it was described (e.g. you described an item as “new,” but sent a used one).
- It involves an item that PayPal determines, in its sole discretion, is a counterfeit item.
- It involves an item that you deliver in person, including in connection with a payment made in your physical store, unless the buyer paid for the transaction in person by using a PayPal goods and services QR code.
- It involves sales that are not processed either through a buyer’s PayPal account or a PayPal guest checkout transaction.
- It involves items equivalent to cash including gift cards.
- It involves a donation.
- It relates to the purchase of a financial product or investment of any kind.
- It involves a payment sent using PayPal’s friends and family functionality.
- It involves a payment made using PayPal Payouts and Mass Pay.
- The item is a vehicle, including, but not limited to a motor vehicle, motorcycle, recreational vehicle, aircraft or boat.
- Payments made in respect of gold (whether in physical form or in exchange-traded form).
Benefits of using PayPal Seller Protection
The main benefit of using PayPal Seller Protection is peace of mind knowing that if something goes wrong with your purchase, you can quickly and easily submit a claim to get reimbursed, avoiding losses.
It’s also important to note that this service is free and accessible. No fees are associated with filing a claim or receiving reimbursement if your purchase meets eligibility requirements.
The policy also makes it possible to run online businesses safely. With PayPal Seller Protection, business owners selling on eCommerce sites, such as Poshmark, are also protected from fraudulent activities as much as customers.
PayPal Seller Protection is excellent for buyers looking for extra coverage when purchasing online, but it is not all-encompassing. Some items fall outside their coverage, meaning you may need to look for other ways to protect yourself by taking extra steps when completing transactions. These exclusions include transactions involving hotels, vehicles, and industrial machinery, intangible items such as digital goods or services. It also excludes payments made on third-party websites or apps unless a qualifying direct merchant is involved and illegal items.
The exclusion also impacts any instance where PayPal decides a buyer’s account was used to commit fraud or violated their Acceptable Use Policy is also excluded from the policy.
How to ensure your business qualifies for PayPal Seller Protection Policy
Before you ship your customer’s order, you should do your due diligence, whether it is a high-value item or a low-value one. Check to see if your transaction is eligible for PayPal Seller Protection.
If the order is eligible for protection, any chargeback arising from the sale won’t offset your revenue goals. There’s no registration or extra work required for the coverage.
However, don’t stop there. Get your sales documents together for intangible seller protection against unsecured claims. Keep a record of the date you shipped the item as compelling evidence. And make sure you have the recipient’s address, showing at least the city and state, or city and country, or zip/postal code (or international equivalent). The address information on your shipping receipt must match the address on the Transaction Details page.
Be aware that if your transaction isn’t eligible or is only partially eligible, you bear responsibility for any problems or losses. Hence, review your orders carefully for any sign of fraud like a fake email address.
Lastly, remember that PayPal is not an exchange-traded form. Therefore, as a merchant, you should have a proper policy as a part of customer service to avoid profit leakage in future.
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