Resolving disputes, claims, and chargebacks

Every once in a while, something goes wrong with an order. Buyers may take action by opening a dispute through PayPal or by asking their credit card issuer to make a clarification and reverse the charge (credit card companies call this a “chargeback”). Disputes and chargebacks have the same net effect – a hold is placed on the sale’s funds – but their resolution processes are slightly different.

Our guide to helping avoid disputes and chargebacks offers suggestions to help prevent these issues from happening in the first place. But if a customer files a dispute or chargeback, here’s what you need to do.

Resolving disputes

In most cases, the easiest way to settle a dispute is for buyers and sellers to connect, work together to figure out what happened, and come to an agreeable solution. This helps to release sooner the holds placed on your account and can go a long way toward keeping customers happy.

Tips on successfully communicating with customers:

Presume good faith

Begin conversations with an open mind and listen patiently to what buyers have to say. Many problems result from miscommunication and simple human error.

Be constructive

Make it clear to buyers that you want to find a resolution – customers usually want the same thing. Showing mutual respect can lead to a more productive conversation.

Stay focused on solutions

Even if you grow impatient, avoid letting emotions domain the conversation. It only makes coming to an agreement harder.

Think long term

Not all battles are worth fighting. Give a buyer a break today and you may open the door to more opportunities tomorrow.

Preempt disputes

Make sure that your clients know how they can contact your business in case they need some clarification. Making available your business contact information and responding questions from your customers can help to prevent disputes by your customers.

You can also post messages in your website in case you know shipments will be delayed. For instance, you can post a notice in your website giving notice that shipments will be delayed due to the Christmas season. By doing this, you offer your customers a chance to understand the issue and prevent him from filing a dispute.

PayPal dispute resolution process

When buyers and sellers can’t come to an agreement, we can help them arrive at an agreeable solution. Once a buyer initiates the dispute resolution process, we’ll hold the transaction’s value until the dispute is resolved. If buyer and seller can’t reach an agreement, the dispute can be escalated to a claim. At that point, we’ll step in to determine the issue’s outcome.

Here’s how it works:

Step 1: Dispute notification

We'll notify you by email if a buyer opens a dispute. Then we’ll place a temporary hold on all funds in the transaction.

Step 2: Your response

Review the dispute and reply with your explanation of what happened. Respond quickly, and include suggestions on how to resolve the dispute.

  • If the buyer claims a purchase was made without their consent, review the claim and provide a response within 10 days.
  • If you haven’t shipped the order yet, you can simply refund the payment and show us proof (or explain why you haven’t shipped).
  • If you’re an eBay seller and your transactions are eligible you may benefit from our Seller Protection. You can review our policies in the PayPal User Agreement to know the details about protection coverage and eligibility of transactions.
  • The transaction details page will indicate if your transaction may be eligible for Seller Protection.

Step 3: Working it out

Once a dispute has been opened, you and your buyer have 20 days to come up with a resolution. In most cases, this is all that’s needed. The buyer closes the dispute once you’ve worked things out. However, when disputes can’t be resolved, either party can escalate the dispute to a claim.

Escalating a dispute to a claim

Claims give PayPal the authority to investigate the case and determine an outcome. Buyers have 20 days from the time they open a dispute to file a claim.

If a buyer files a claim against you, we may ask you to provide an explanation of what happened and all the information required supporting your case. You can review the Seller Protection policy in the PayPal User Agreement to know the details about coverage and eligibility of transactions. The transaction details page will indicate if your transaction may be eligible for Seller Protection.

The delivery of this information is time sensitive, so don’t wait until the last minute or you might lose the claim.

How to appeal a claim

When a claim’s decision is reached in favor of the buyer, you may be able to appeal it. The decision could be reversed in the event of one of the following:

  • The item is returned to you, but not in the same condition as the buyer first received it
  • No item was returned at all – just an empty box
  • The wrong item was returned to you

You can file an appeal in just a few steps:

  1. Log in to your account
  2. Go to the Resolution Center
  3. Select “Closed Cases” from the drop-down menu
  4. Click the “Appeal” button

Once your appeal is filed, you may be asked to provide documentation supporting your case, fill out an affidavit, or file a police report (depending on the circumstances). Then we’ll have a representative review your case. If an appeal is granted, you'll be reimbursed for the transaction.

Resolving chargebacks

We don’t initiate or handle chargebacks – the buyer's credit card issuer does. So that process follows the issuer’s policies. We also don’t judge the validity of a chargeback; that’s the responsibility of the card issuer. Our role is simply to collect information about the transaction and help you work with the card company to resolve the chargeback. There are a few general timeframes you should be familiar with:

  • Buyers can file chargebacks 180 days or more after an order’s been placed.
  • If you receive a chargeback, you’ll have 10 days to answer it.
  • Chargebacks are usually resolved in a few weeks, but they can take 75 days or more in some instances.

Here's a quick overview of the chargeback process:

  1. The buyer requests a chargeback from their credit card company.
  2. The credit card company notifies our merchant bank and withdraws the funds from PayPal.
  3. We place a hold on your (the seller’s) funds related to the chargeback.
  4. We immediately notify you via email and request information that could help to dispute the chargeback.

We may ask you to provide the information needed to help you resolve the chargeback. As long as you are eligible for PayPal Seller Protection, we’ll cover your loss – even if you lose the chargeback. Learn more about chargebacks.

How to fight a chargeback

If you've been notified of a chargeback, we'll help you sort it out. Our team of chargeback specialists can help you build a case to take to the credit card company – assuming you have good reason to dispute it. We'll provide you with all the relevant transaction details and walk you through the steps for submitting information to the credit card company.

Here’s what to do if you receive a chargeback:

  1. Log in to your account.
  2. Go to the Resolution Center.
  3. Respond to the chargeback notice (or check the status of an existing one).
  4. Provide us with the information relating to the chargeback, including all transaction records (such as proof of shipment).
  5. The chargeback specialist will then dispute the chargeback on your behalf and try to recover your funds from the buyer's credit card company.
  6. If the credit card company decides in your favor, the buyer will be charged for the transaction and you'll get the payment back.
  7. If the decision is in favor of the buyer, the transaction will be cancelled and the buyer will receive a full refund.

It's our mission to help you resolve the dispute as quickly and painlessly as possible, but sometimes the process can be lengthy. Please be patient. It typically takes 30 days for us to dispute a chargeback, and it may take your buyer's credit card company up to 75 days to come to a final decision and resolve a chargeback.