What are claims and how to resolve them

May 06 2022 | PayPal Editorial Staff

Claims are filed when a dispute is escalated to PayPal or the buyer files an unauthorised transaction complaint. Thankfully, there are ways to manage them. Keep reading to learn what claims are, why they can occur, and what to do to either resolve or respond to a claim.

Claims can help protect a buyer from being responsible for transactions that were made without their consent or if there was an issue with the order or merchandise. Similar to how disputes buy time for both buyers and sellers to come to an agreement, a claim is an extension of that time to arrive at a resolution.

During the resolution process of a claim, both parties will be asked to provide relevant information to support their case, in which the outcome will be determined by PayPal. Plus, when the right evidence is provided, you can retain the full purchase amount from certain claims under PayPal Seller Protection. To learn how to manage claims better, it is important to understand what claims are, why they occur, and the best way to resolve or appeal a claim.

What is a claim?

A claim can happen when a customer’s dispute cannot be resolved directly with the seller in 20 days* and is then escalated to PayPal. A customer can also file a claim for an unauthorised transaction, without initiating a dispute beforehand. This is when PayPal will step in to review the information provided and determine a solution.

Why is a claim being filed against me?

Customers can file a claim for different issues, including:

  • Item Not Received
  • A customer has paid for an item, but claims they did not receive the goods.

  • Significantly Not as Described
  • A customer has received the item, but it does not match the seller’s description as it looks considerably different, or it was damaged when it was shipped to them.

  • Unauthorised Transaction
    A customer claims they did not make the purchase and that the transaction was made without their consent, or they were victims of identity or debit/credit card fraud.

How do I resolve a claim?

Since claims can result in a temporary hold on transaction funds, it’s best to respond to your customer as soon as possible. Although you generally have up to 10 days to respond to a claim, PayPal may also communicate a specific timeline by which you need to respond.

To help us work towards the best outcome for your eligible claim**, you’ll be asked to provide information and evidence based on the type of issue:

  • For Item Not Received claims, you will need to provide proof of shipment or proof of delivery.
  • For a Significantly Not as Described claim, you will need to prove that the item or service provided is materially similar to your description of it.
  • For an Unauthorised Transaction claim where you are eligible for PayPal Seller Protection, you must provide valid proof of shipment or proof of delivery that demonstrates that the item was shipped or provided to the buyer no later than two days after PayPal notified you of the dispute or reversal.

Meanwhile, here are some possible details we may ask you to provide:

  • Proof of shipment or delivery, like a third-party shipping receipt that matches your customer’s address.
  • Proof of replacement delivery or refund if the customer claims to have an issue with the item received.
  • A signed contract or other proof that services were provided.
  • Proof of download if you sold a digital product.
  • Proof of fulfilment, like a digital receipt, if you sold intangible goods.

Note: If you do not respond, the claim will automatically close in the buyer’s favour and they will be refunded. If you do respond to the claim, PayPal will evaluate the information provided and determine the outcome. This usually takes about 30 days whereas more complex cases could take more than 30 days.

How do I appeal a claim?

If the outcome was decided in the customer’s favour, you may be able to appeal the claim by providing new information. After the case closes in the Resolution Centre, you have 10 days to appeal the outcome of the claim. Here’s a step-by-step guide on how to do so:

  1. Log in to your PayPal account.
  2. Go to the Resolution Centre.
  3. Go to the Closed Cases section.
  4. Select Case Details.
  5. Click on the Appeal link and file your appeal.

Note: We may ask you for documentation or to fill out a declaration. Then, our representative will review your claim. If an appeal is granted, you will be reimbursed for the eligible transactions.

More tips on how to prevent claims

You can prevent claims from happening by providing your customers good communication. Here are some preventive steps you can take:

  • Provide detailed descriptions of the item and include clear pictures.
  • Promptly ship items and provide tracking information.
  • Post customer service contact information including working hours, response time frames, and contact details.
  • Offer a refund and post a clear refund policy.
  • Be professional, helpful, and courteous if a customer contacts you.
  • Use the Customer Service Message to provide contact details or to notify customers about shipping delays. If customers are able to get in touch with you about a problem with their purchase, they’ll be less likely to file a dispute or claim.

Create Customer Service Message

Are there any fees involved if a claim is filed?

Whenever a claim is filed, a dispute fee will be charged. The fee is in place to encourage you to interact with your customers directly and resolve any disputes amicably. To understand the respective fees involved, refer to the fee table listed here.

Beyond fees, your account could be reviewed if a claim rate happens to be too high or if other indicators are trending negatively. When either scenario transpires, reserves or limitations could be put in place.

For example, the transaction funds in question may be withheld temporarily when a claim is opened. This hold will stay in place while you work with the buyer to resolve the claim. The transaction funds will then be released back to you if the claim is decided in your favour. Meanwhile, for Item Not Received (INR) claims, the transaction funds will also be returned to you if the claim is settled in your favour and if you provide the relevant information required under the PayPal Seller Protection. Hence, the best thing to do once a claim is filed against you is to promptly provide the requested information.

Key takeaway

A claim may be decided in favour of the buyer or seller. Either way, our goal at PayPal is to make it as easy as possible to resolve a claim. As a merchant, you can also respond to claims quickly and set up a customer service message to help prevent future claims. On top of that, for your peace of mind, you can apply for PayPal Seller Protection to help protect your online payments against unauthorised transactions and unfavourable outcomes.

* The buyer or seller may choose to escalate the dispute to a claim earlier rather than wait 20 days. If there is no response after 20 days, the case will be closed.
**PayPal may determine the outcome of your claim in a shorter time frame. PayPal may also take action based on eligibility requirements set forth in the User Agreement, any additional information provided during the resolution process, or any other information PayPal deems relevant and appropriate under the circumstances – such as your claim history. PayPal’s Seller Protection program is subject to eligibility requirements. Sellers may also be impacted by Buyer Protection processes.

The contents of this site are provided for informational purposes only. The information in this article does not constitute legal, financial, IT, business or investment advice of any kind and is not a substitute for any professional advice. You should always obtain independent, professional accounting, financial, IT and legal advice before making any business decision.

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