Getting to know chargebacks
Why are chargebacks filed?
Chargebacks happen for many reasons, but most commonly it’s because:- The customer didn’t receive the item.
- The item the customer received is significantly different to how it was described.
- The customer claims the purchase was unauthorised; made without their consent.
What happens when a customer files a chargeback against me?
When a chargeback has been filed, the credit or debit card provider will notify PayPal and request a response. We’ll then follow our chargeback process:- We’ll email you about the chargeback. You’ll also see a notification in your PayPal account.
- The transaction may be placed on hold so that the funds are available and there’ll be no interruption to your cashflow if the customer needs to be refunded.
- We’ll ask you to provide information to help answer the chargeback within 10 days. The information we need vary depending on the reason for the dispute, but it could include proof of shipment, proof of service fulfilment, a transaction receipt, or communication between you and the buyer.
- We’ll then collate the evidence and submit it to the card provider who’ll use it to decide the outcome of the chargeback.
Do I have to fight chargebacks myself?
As long as you have a good reason to dispute it, we’ll help you build a case to take to the card provider. Our chargeback specialists can give you relevant transaction details and walk you through the steps, or you can access them directly in the Resolution Centre. Note: Ultimately, it’s the card issuer, not PayPal, who gets to decide the outcome of the dispute over a chargeback.What should I do if I receive a chargeback?
- Log in to your PayPal business account and visit the Resolution Centre. This is where the details and status updates of chargebacks will be. It’s also where you’ll upload any required documentation. Make sure you respond within 10 days.
- Once you’ve submitted the required information, one of our chargeback specialists will review it and take the necessary actions on the claim for you. The goal is to recover funds from your customer’s card provider, but it’s still up to the card provider to make the final decision.
- If the card provider sides with you, the customer will be charged for the transaction and the money returned to your account. If they decide in favour of the customer, the transaction will be cancelled and a full refund will be issued.
- Regardless of the outcome, if the transaction is eligible for Seller Protection, you’ll keep the funds and any related chargeback fees will be waived.
Tips for dealing with chargebacks
- It’s a good practice to get online tracking numbers for all your shipments. For high value items, you might also want to require a signed delivery confirmation. You can proactively add the tracking information to your transactions in your PayPal account and, if you do, we’ll usually be able to confirm delivery automatically. Proactively adding this information also saves you hunting it down if we ever need to ask for it.
- Always review and respond to requests for information quickly. Sometimes you may need some time to find the required information or documents, but it must be submitted within 10 days.
- Provide all the information you have that’s related to the transaction to build a strong case.
How long does it take to resolve a chargeback?
Our goal is to resolve disputes as quickly as possible, but the process can be long so patience is key. It typically takes us 30 days to process a chargeback, but the card provider can take 75 or more days to resolve the issue and make a final decision.Chargebacks and disputes in review don’t limit your ability to continue selling and getting paid with PayPal.
Frequently asked questions.
Chargeback Protection is an opt-in risk product that helps eligible merchants reduce the risk of fraudulent credit or debit card transactions. We’ll help protect your Advanced Credit and Debit Card transactions from or “item not received” chargebacks, and once you submit the info we need, we’ll waive the chargeback fee and remove the hold on the dispute amount. Read the Terms and Conditions for Chargeback Protection.
This feature is only available for business accounts with Advanced Credit and Debit Card checkout.
Which merchants are eligible for Chargeback Protection?
To be eligible for Chargeback Protection, a merchant must have a PayPal business account and have enabled Advanced Credit and Debit Card checkout.
How can a merchant apply for Chargeback Protection?
Merchants can apply for Chargeback Protection from within their PayPal account. Simply click on 'Manage Risk and Fraud' in the Payment Preferences section within Account Settings and select Chargeback Protection. Terms apply.
How does Chargeback Protection work?
We’ll help provide risk decision-making on all your Advanced Credit and Debit Card transactions and decline potentially fraudulent payments. If an approved transaction is later identified as fraudulent, it will be chargeback-protected once the info we need is submitted.
You can end Chargeback Protection anytime. There are no yearly caps on losses, no fixed duration, revenue requirements, or cancellation fees. Merchants simply need to click on “Manage Risk and Fraud” in the Payment Preferences section within Account Settings and select “No protections right now."
How much does Chargeback Protection cost?
*Fees are subject to change.
What info must a merchant provide in connection with an eligible chargeback dispute?
If a chargeback occurs, merchants must submit proof of shipment /delivery as requested by the Resolution Center to qualify for Chargeback Protection.
What types of transactions are eligible for Chargeback Protection?
Chargeback Protection applies to PayPal Commerce Platforms Advanced Credit and Debit Cards (ACDC) checkout. Exclusions apply.
What types of chargebacks are eligible under Chargeback Protection?
Chargeback Protection is only offered for “unauthorized” and “item not received” chargebacks. You must still respond to these chargeback disputes in the PayPal Resolution Center to get the benefits of Chargeback Protection.
What types of chargebacks are not eligible under Chargeback Protection?
All chargebacks other than “unauthorized” and “item not received”, such as “broken item”, “significantly not as described,” “refund not processed”, and “duplicate charge”, are not eligible for Chargeback Protection. You’re expected to respond as usual to these chargeback disputes in the PayPal Resolution Center.
What are the differences between Chargeback Protection and Fraud Protection?
*When you sign up for Chargeback Protection, we’ll automatically disable Fraud Protection on your account. You’ll no longer have access to the Fraud Protection dashboard if you are enrolled in Chargeback Protection.
This feature is only available for business accounts with Advanced Credit and Debit Card checkout.
Which merchants are eligible for Chargeback Protection?
To be eligible for Chargeback Protection, a merchant must have a PayPal business account and have enabled Advanced Credit and Debit Card checkout.
How can a merchant apply for Chargeback Protection?
Merchants can apply for Chargeback Protection from within their PayPal account. Simply click on 'Manage Risk and Fraud' in the Payment Preferences section within Account Settings and select Chargeback Protection. Terms apply.
How does Chargeback Protection work?
We’ll help provide risk decision-making on all your Advanced Credit and Debit Card transactions and decline potentially fraudulent payments. If an approved transaction is later identified as fraudulent, it will be chargeback-protected once the info we need is submitted.
- We’ll monitor Advanced Credit and Debit Card checkout transactions
- We’ll review those transactions for risk of fraud
- We’ll waive any chargeback fees and remove the hold on the disputed amount if a transaction is later found to be “unauthorized” or “item not received” upon our review of the info requested from you.
You can end Chargeback Protection anytime. There are no yearly caps on losses, no fixed duration, revenue requirements, or cancellation fees. Merchants simply need to click on “Manage Risk and Fraud” in the Payment Preferences section within Account Settings and select “No protections right now."
How much does Chargeback Protection cost?
| Plan | Fee* |
| Chargeback Protection | 0.40% per approved transaction |
*Fees are subject to change.
What info must a merchant provide in connection with an eligible chargeback dispute?
If a chargeback occurs, merchants must submit proof of shipment /delivery as requested by the Resolution Center to qualify for Chargeback Protection.
What types of transactions are eligible for Chargeback Protection?
Chargeback Protection applies to PayPal Commerce Platforms Advanced Credit and Debit Cards (ACDC) checkout. Exclusions apply.
What types of chargebacks are eligible under Chargeback Protection?
Chargeback Protection is only offered for “unauthorized” and “item not received” chargebacks. You must still respond to these chargeback disputes in the PayPal Resolution Center to get the benefits of Chargeback Protection.
What types of chargebacks are not eligible under Chargeback Protection?
All chargebacks other than “unauthorized” and “item not received”, such as “broken item”, “significantly not as described,” “refund not processed”, and “duplicate charge”, are not eligible for Chargeback Protection. You’re expected to respond as usual to these chargeback disputes in the PayPal Resolution Center.
What are the differences between Chargeback Protection and Fraud Protection?
| Chargeback Protection | Fraud Protection |
| Chargeback Protection is a built-in, risk decisioning tool available to eligible PayPal merchants for a fee. | Fraud Protection* is a built-in, fraud analysis tool provided to ACDC PayPal merchants at no rate. |
| PayPal uses risk models and analysis in real-time to accept or reject transactions based on their risk level. | Merchants set risk rules and filters within the Fraud Protection tool, determining which orders to accept or reject. |
| PayPal will waive any chargeback fees and will release the disputed amount to the merchant for any “unauthorized” or “item not received” chargebacks that may later occur upon receipt of the requested information from the merchant. | Merchants carry the liability for any chargebacks that may occur when using Fraud Protection. |
Chargebacks happen when your customer disagrees with a credit card charge and asks the credit card provider for a refund.
Customers initiate chargebacks for a variety of reasons:
You can learn how to avoid disputes and chargebacks on our website.
Customers initiate chargebacks for a variety of reasons:
- An item is different from its description or is defective.
- An item hasn’t been received.
- A credit card charge isn’t recognised.
- A payment is processed multiple times.
- A payment is unauthorised.
You can learn how to avoid disputes and chargebacks on our website.
What’s a pre-chargeback alert?
A pre-chargeback alertis a type of case notification sent to merchants, to help identify transactionsthat have a possibility of receiving a chargeback. These aren’t actualchargebacks but only an indicator of possible chargebacks.
How will I receive a pre-chargebackalert?
You’ll receive an alert as a new case in the Resolution Center. You’llbe notified about the case through all the usual notification channels.
You canview these alerts by using the “Case type” filter available in the ResolutionCenter. A pre-chargeback alert row get shown as “High Priority”.
Can I respond to a pre-chargeback alert?
Yes, youcan respond to these alerts in the Resolution Center. You’ll get a 20-hourwindow to issue refunds for transactions without fulfilling orders and avoidingany fees, as applicable.
If you’ve successfully fulfilled the order, within or outside the20-hour window, you’ll be able to also provide evidence in the alert. PayPalwill use this evidence to contest the chargeback when it arrives.
Why should I respond within the 20-hour window?
As a benefit, if yourespond with a refund to your buyer within the 20-hour window, you can avoidgetting a chargeback and any associated chargeback fees.
Will I be able torespond outside this window?
Yes, you can choose to respond outside the 20-hour window aswell. You’ll get the regular 10 days torespond after that. If you choose to dothat, you may not be able to avoid receivinga chargeback or the fee associated with it.
Item Not Received chargeback
Physical Item
When responding to an Item Not Received claim you can provide a tracking number as evidence that the customer received their item.
If the buyer says they didn’t receive the service or virtual item, you’ll need to provide evidence that it was delivered, used, provided, or the service was completed.
Unauthorised Chargeback
Physical Item
When responding to an unauthorised chargeback, provide a tracking number:
When responding to your chargeback, provide evidence that the virtual item was delivered, used, provided, or the service was completed.
Merchandise Chargeback
When responding to a merchandise chargeback provide the following information:
Physical Item
When responding to an Item Not Received claim you can provide a tracking number as evidence that the customer received their item.
- Be sure it can be verified online and shows delivery to the address the customer provided in the transaction details.
- If the transaction is over $750 USD (or currency equivalent), signature confirmation must be included.
- If the online tracking doesn't show delivery, you’ll need to upload a document from the postal company confirming delivery.
If the buyer says they didn’t receive the service or virtual item, you’ll need to provide evidence that it was delivered, used, provided, or the service was completed.
- The evidence must be linked to the buyer (i.e. name, address, email address, PayPal transaction ID, or some other identifier that we can find in our transaction details - such as an invoice ID).
- The evidence must clearly show the fulfilment of the transaction and that the customer either benefitted from the transaction or had the opportunity to do so in accordance with the terms and conditions of the service.
- The evidence provided must come from sources or procedures already in place and must not be created ad hoc in response to the claim.
- Provide any evidence or other relevant information that verifies the receipt of the item or completion of the service.
Unauthorised Chargeback
Physical Item
When responding to an unauthorised chargeback, provide a tracking number:
- Be sure it can be verified online and shows delivery to the address the customer provided in the transaction details.
- If the online tracking doesn't show delivery, you’ll need to upload a document from the postal company confirming delivery.
When responding to your chargeback, provide evidence that the virtual item was delivered, used, provided, or the service was completed.
- The evidence must be linked to the buyer (i.e. name, address, email address, PayPal transaction ID, or some other identifier that we can find in our transaction details - such as an invoice ID).
- The evidence must clearly show the fulfilment of the transaction and that the customer either benefitted from the transaction or had the opportunity to do so in accordance with the terms and conditions of the service.
- The evidence provided must come from sources or procedures already in place and must not be created ad hoc in response to the claim.
- Provide any evidence or other relevant information that verifies the receipt of the item or completion of the service.
Merchandise Chargeback
When responding to a merchandise chargeback provide the following information:
- A short (one or two sentences) overview of your business model and process.
- A response based on the chargeback reason, describing why the chargeback is unwarranted and a refund isn't due. Provide details of the terms and conditions the buyer agreed to when making the purchase that apply to this situation.
- Any documentation (including pictures) that would be helpful when determining the outcome of the claim. Please don't send stock photos.
- Any correspondence you had with the buyer in question as they attempted to resolve the issue directly with you.