This overview provides information about how to investigate a chargeback and how to identify and prevent situations that might lead to chargebacks.
What is a chargeback?
When PayPal is notified that a buyer has filed a chargeback against a seller, PayPal emails the seller as soon as possible. Then, the seller can log into their PayPal account and go to the Resolution Center to monitor the status of the case and provide information to help resolve the matter.
How can a seller recover funds when a chargeback occurs?
When a chargeback occurs, the money that is subject to the chargeback is deducted from PayPal's bank account. In turn, PayPal places a temporary hold on the same amount in the seller's PayPal balance (i.e., the funds related to the transaction are frozen).
The seller and PayPal can work together to investigate the chargeback with the buyer's credit card company. While the chargeback is being investigated, PayPal will debit the seller for the amount in question. If the investigation is resolved in favor of the seller with the credit card company, the credit card company will reimburse PayPal for the chargeback and PayPal will transfer the recovered funds back to the seller. Depending on the credit card company involved, the process may take up to 75 calendar days. In a dispute over a chargeback, the decision is ultimately made by the credit card company and PayPal cannot control the outcome.
How do PayPal and the seller work together to investigate a chargeback with the buyer's credit card company?
Sellers can provide PayPal with evidence to dispute the chargeback through the Resolution Center, by email at firstname.lastname@example.org, or fax. PayPal uses this evidence plus any evidence PayPal may already have to investigate the chargeback with the buyer's credit card company. Because of deadlines imposed by the credit card companies, sellers must respond quickly (usually within three calendar days) once they are notified of a chargeback. Response deadlines can be found in the email PayPal sends to the seller when notifying them of a chargeback.
PayPal reserves the right not to dispute a chargeback even if the seller has provided some evidence, particularly if PayPal believes the dispute is not likely to be successful.
Why do some chargebacks occur so long after a seller receives the payment?
Certain laws and credit card issuer policies usually allow buyers to file chargebacks weeks or sometimes months after the initial transaction occurs. If a buyer waits to file a chargeback, a seller may encounter a temporary hold on funds in their PayPal account for a transaction that occurred weeks or months ago.
What are some best practices for avoiding chargeback losses?
Some types of information that sellers can provide to PayPal to increase the chances of winning a chargeback include:
The chargeback system is independent from eBay feedback. Filing a chargeback does not limit a buyer's ability to leave feedback for a seller. In fact, a buyer can file a chargeback even if they have already left positive feedback for the seller. Receiving a chargeback does not in itself negatively impact a seller's eBay feedback rating.
Where can I get more information?
We've created a step-by-step guide to help you through the chargeback process. Take a look at PayPal's Chargeback Guide.