The Sellers Guide to Dispute Resolution - PayPal Canada

The Seller's Guide to Dispute Resolution

Why Disputes Happen


Every once in a while, something goes wrong with an order. But this is a normal, expected part of doing business - and it doesn't have to lead to serious problems. That's because many disputes stem from misunderstandings, which are often resolved with honest, open communication between buyers and sellers.

Of course some disputes are more complicated, and that's where PayPal Dispute Resolution can really help. It's a convenient, collaborative, and transparent process designed to help you come up with solutions both sides can agree upon.

These are some of the most common reasons a buyer will come to you with a problem:

Item Disputes

This is when an item doesn't arrive, or it arrives significantly different than it was described:

For instance:

  • You received a completely different item.
    Example: You purchased a hockey skates, but received a hockey stick.
  • The item's condition was misrepresented.
    Example: The listing said new but the item was clearly used.
  • The item is missing parts or features, and this was not disclosed.
    Example: You bought a table, and it showed up with only 3 legs.
  • You purchased a specific quantity of an item - but received the wrong amount.
    Example: You bought two laptops but received only one.
  • The item was damaged en route to its destination.
    Example: Your antique vase was broken in transit.
  • You received a counterfeit version of the item.
    Example: That "genuine" diamond bracelet ended up being cubic zirconia.

Unauthorized Transactions

This is when a buyer's account is hacked or compromised in some way, and a purchase is made without their permission. If you are on the selling end of a transaction that's proven to be fraudulent, the order will be cancelled and the buyer will receive a full refund. Learn more about unauthorized transactions here.

The PayPal Dispute Resolution Process

Our resolution system makes it easy for buyers and sellers to track, manage, and resolve disputes. It's a convenient process that helps to bring about the right solutions in a timely manner.

Here's how it works:

Step 1: Dispute Notification

First, you'll receive an email from PayPal (and a message on your Account Overview page) informing you that a buyer has opened a dispute.

Dispute Notice

Please be aware that PayPal will place a temporary hold on all funds involved in this transaction until the dispute has been resolved or closed. Then, once a decision is final, these funds will either be released to you or refunded to the buyer.


If your email notification refers to a chargeback rather than a dispute, learn how to resolve it here.

Step 2: Your Response

Review the buyer's message and post a reply explaining your side on what happened and why. It's a good idea to provide a quick and accurate response.

Resolution Centre Post Reply

You might even include suggestions about how to resolve the dispute, perhaps by offering the buyer a full or partial refund, depending on what happened.

Responding to Unauthorized Activity Claims

If a buyer claims a purchase was made without their consent, PayPal will send you an email to let you know. You'll be required to review the claim and provide a response within 7 days.

If you receive a notice of unauthorized activity and you have yet to ship the order, you can simply refund the buyer's payment. And if you have already issued a refund, all you have to do is show PayPal the proof of the refund.

Step 3: Resolving The Dispute

Once a dispute has been opened, you and your buyer have 20 days to continue the conversation and decide on a resolution. In our experience, collaborative problem solving between buyers and sellers produces the best results.

Once you've resolved the dispute, the buyer will close the dispute and you can get back to running your business. If for some reason the buyer closes the dispute, but ends up filing a chargeback related to this transaction at a later date, you may not be held liable for it.

Step 4: Escalating a Dispute to a Claim

Unfortunately, buyers and sellers can't always work out a solution on their own. When this happens, the buyer may decide to escalate the dispute to a claim, which means PayPal will be called upon to review the case and hand down a decision.

Buyers may only escalate a dispute to a claim within 20 days of first opening the dispute. If more than 20 days elapse, the buyer will lose this option, and the unresolved dispute will be considered closed.

If a dispute is escalated to a claim, PayPal will be responsible for providing a fair resolution to the problem. We try to resolve all claims within 30 days, but some cases may take longer to investigate than others.

During the escalation, you and your buyer may be subject to specific deadlines for new information. We will review the messages you exchanged in the Resolution Centre along with other details, while we work to determine the outcome.

You can track the progress of your claim and respond to requests for information in the Resolution Centre, and we will notify you as soon as we've come to a final decision.

Escalate to a Claim

Step 5: Appealing a Claim

If a claim is found in favour of the buyer, you may be able to appeal the decision, especially if one of the following is true:

  • The item was returned to you, but not in the same condition as it was when 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 PayPal account
  2. Go to the Resolution Centre
  3. Select Closed Cases from the drop-down menu
  4. Click the Appeal button

Once the appeal has been filed, you may be asked to provide documentation supporting your case, file a complaint, or file a police report, depending on the circumstances. A PayPal representative will then review your case, and if an appeal is granted and you win, you'll be reimbursed for the transaction.

Appeal a Claim

Communication Tips


When buyers and sellers enter their negotiations with mutual respect, they're more likely to come to a quick resolution. Here's what you can do to help make the process as smooth as possible.

Keep open communication

Begin the conversation with an open mind and give the buyer the benefit of the doubt. Listen to what the buyer has to say before jumping to conclusions, as many problems result from miscommunication or mistaken assumptions.

Be constructive

From the start, make it clear to your buyer that you think the situation is resolvable. They'll usually reciprocate - and this early show of mutual respect should make the rest of the conversation more productive.

Stay focused

Stay focused on solutions while you're discussing the situation. If you're upset or annoyed, you might feel like giving the buyer a piece of your mind - but that will probably just make it harder for you to come to an agreement.

Be creative

Try to find solutions that allow both you and the buyer to come out on top. If you each offer to make a concession, it may be easier to put the matter to rest.

Think long term

Not every battle is worth fighting. If you give the buyer a break today, it might lead to more business opportunities tomorrow.

Preempt disputes

The Resolution Centre allows you to enter messages that all of your buyers will see before they can open a dispute. For example, if your message says, "All shipments out of Quebec are currently delayed due to the blizzard," the buyer will understand the situation and probably won't bother to open a dispute.