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Chargeback Guide Part 2 - PayPal

Chargeback Guide Part 2

Reduce chargebacks from item disputes.

Keeping buyers well informed, maintaining good records, and following our Communication Tips can help you avoid chargebacks.

Provide contact information.

Buyers may not resort to a chargeback if they have a way to contact you about problems. Provide an email address or phone numbers to help clear up misunderstandings. When you sell higher-priced items, you may also want call your customers proactively.

Be responsive.

Nobody likes waiting. Don't let your buyers feel that their problems are unresolved. Make sure you respond quickly and professionally to all inquiries.

Suggest Resolution Center.

If there’s a problem, and a customer advises you that they want to pursue a chargeback, ask them to open a dispute in the PayPal Resolution Center instead. This process offers buyers and sellers the opportunity to resolve the dispute on PayPal.

Return Policy.

Provide a clear return/refund policy. Publish your return policy in your auction listings or on your website.

Notified of a chargeback?

If you've received a chargeback, want to check the status of a chargeback, or just want to learn more about the process, go to the PayPal Resolution Center.

Preventing common chargeback claims:

  • Item not delivered.

    Some chargebacks are initiated prematurely by buyers. This can be avoided by giving your buyers realistic delivery dates. Also, ship packages with tracking numbers and signature confirmation, to provide proof that the items were received.

    In addition, consider purchasing postal insurance, so you can be reimbursed if the package is lost.

  • Item did not meet expectations.

    Chargebacks can be triggered by disappointed customers. Make sure you describe items as accurately as possible. Include clear images and, if necessary, measurements, so buyers have a good understanding of the product.

  • Item damaged.

    Even if your return policy states all sales are final and no returns are accepted, credit card companies may allow chargebacks for defective merchandise. Purchasing insurance when you mail the item can help mitigate losses.

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Reducing chargeback fraud.

Chargebacks are also used as a tool to commit credit card fraud. Fraudsters complete a legitimate transaction, receive the goods, and then dishonestly request a chargeback from their credit card company.

There are two types of chargeback claims that can be exploited for chargeback fraud:

  • Unauthorized use.

    This is when a buyer reports that someone else has illegally used their credit card information to make a transaction.

    Fraudsters will often make a legitimate purchase and then claim that they never authorized the transaction.

  • Item not received or not as expected.

    If an item is not received, does not meet expectations, or arrives damaged, the buyer can ask their credit card company for a chargeback. Chargeback fraud occurs when a buyer deceitfully makes these claims.

    To decrease the chances of chargeback fraud, closely examine possible issues with your transaction:

Security Threat Low Moderate High
ConsiderationSecurity threat
High-priced itemModerate
New buyerLow
Confirmed addressLow
High feedback scoreModerate
Rush shipment at any costModerate
Partial payments from different PayPal accountsHigh
Not making full paymentsModerate
Billing address and shipping address from different countriesModerate

PayPal and chargeback fraud.

We work behind the scenes to protect you against chargeback fraud with:

  • Sophisticated fraud detection tools.

    Tools scan all transactions for suspicious behaviors.

  • 24/7 transaction monitoring.

    Our worldwide security specialists look for questionable activity in your account.

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Part 3: Resolving Chargebacks

Additional resources for sellers.

To learn more about Selling Safely, go to: