What are disputes and how to manage them

Apr 17 2024 | PayPal Editorial Staff

Resolving disputes quickly can prevent them from turning into a claim. Read on to learn what are disputes filed with PayPal, situations in which they may occur, and how to respond to them when they arise.

Dispute filed with PayPal is an opportunity for both sellers and buyers to resolve an issue before it escalates to a claim. It allows time for both parties to work together to find a solution and for the seller, it is also a chance to utilise great customer service to solve the issue amicably. Hence, to help you approach disputes better, it is important to understand what they are, why they happen, and the best way to respond to them, depending on the type of issue.

What is a dispute?

A dispute happens when a buyer has an issue with a transaction and files a complaint through PayPal. It is also the inquiry phase of a claim, where the buyer may bring the issue to the seller’s attention by opening a dispute in the Resolution Centre on your PayPal account. At this point, PayPal is not involved in the process.

However, if the dispute cannot be resolved, either the buyer or seller can escalate the dispute to a claim. Once escalated, PayPal will step in to determine the outcome.

Why is a dispute being filed against me?

Disputes can occur due to reasons such as:

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

  • Significantly Not as Described
    A buyer 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.

  • Billing Error
    A buyer has an issue with how the transaction was processed or carried out. For example, they were charged the incorrect amount or the payment was charged twice.

How do I respond to a dispute?

Here’s a step-by-step guide on how to respond to a dispute:

  • Step 1: Get notification and login
    We’ll notify you via email that you’ve received a dispute and temporarily hold the transaction funds. Next, you can log in to your PayPal account and click on Open Cases in the Resolution Centre.

  • Step 2: Find your case
    Click on the Response Required tab to review.

  • Step 3: Respond
    Respond quickly or as soon as possible to your buyer before they escalate it to a claim. Do provide an explanation of what happened and suggestions on how to resolve it.

Tips on responding to disputes based on issue

Item Not Received Significantly Not as Described
  • Do share relevant information
    explaining how you delivered the item
    or service.
  • Do inform your buyer that the item
    or service provided is in line with the item or service promised to the buyer before payment.
  • If you haven’t shipped the order,
    explain why and offer a refund if
  • Respond with how you had
    accurately described the product or
    service and include relevant details.
  • If you shipped the order, share the
    shipping receipt or online tracking
    order with your buyer, along with the
    expected delivery times.
  • Consider offering partial refunds or
    implementing a return or exchange
    policy, if applicable.
  • For intangible goods, do keep records
    of the delivery such as proof of
    download or email receipts.

You can find more information on how to provide the right documents for your case here.

How fast should I respond to a dispute?

To prevent a dispute from turning into a claim, it is best to respond to the dispute with your buyer as soon as possible. If you don’t respond quickly, buyers tend to escalate their dispute to a claim approximately after 4 days.

Note: A dispute can be escalated into a claim within 20 days* from when the dispute is filed with PayPal.

If you’re unable to come to a resolution within 20 days, you or the buyer can escalate the dispute to a claim and allow PayPal to investigate the case. Meanwhile, if the dispute isn’t escalated within 20 days, the case will be automatically closed on the 21st day and the withheld payment will be released to you. After a dispute is closed, it cannot be reopened or investigated. For more information on how to respond to a PayPal dispute, you may learn more on our Help Centre.

How can I prevent a dispute?

To prevent disputes from happening in the first place, good communication is key and you may start by taking these proactive steps:

  • Provide detailed, accurate descriptions of the item and include clear pictures from multiple angles.
  • Ship items promptly and provide tracking information promptly.
  • Post customer service contact information including working hours, response time frames, as well as a toll-free phone number and email address.
  • Offer a refund and post a clear refund or exchange policy.
  • Be professional, helpful, and courteous if a buyer contacts you.
  • Use the Customer Service Message to provide contact details or to notify buyers about shipping delays. If buyers 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

Key takeaway

Anticipating your buyers’ needs with helpful information and positive communication will help prevent disputes and maintain customer satisfaction in the long run. Plus, resolving disputes quickly before they turn into a claim is imperative in protecting your business, on top of ensuring an easy and secure shopping experience for your buyers.

*Timeline is subject to change. 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.

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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