Business Resource Center

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Chargebacks.

What is a chargeback?

A chargeback is a complaint your customer files with their credit/debit card company. The card issuer notifies PayPal, requesting a response. PayPal then notifies you about the request, asking that you provide information about the transaction, and then provides it to the card issuer, so that the complaint can be resolved.

How does the PayPal chargeback process work?

  • PayPal notifies the seller a customer has filed a chargeback with their card company.
  • The seller provides PayPal with evidence to help answer the chargeback.
  • PayPal submits the evidence to the issuer, who makes a decision based on the evidence.

What are most common reasons buyers file chargebacks?

Your customers can file a chargeback with their credit/debit card company for various reasons. The most common types are:

  • Item Not Received (INR). Your customer states that they never received an item they ordered and paid for.
  • Unauthorized Transaction/Payment Reversal. Your customer claims that someone accessed their PayPal account or financial information without their permission and sent you a payment.
  • Significantly Not As Described (SNAD). Your customer states that the item they received was significantly different than what they ordered. For example, your customer ordered a red sweater and received a blue sweater.

What can you do to help protect yourself?

Always respond to credit card chargebacks. If you follow eligibility requirements, PayPal Seller Protection will protect you from liability for unauthorized transaction and INR chargebacks. Unfortunately, while SNAD chargebacks aren’t covered under PayPal Seller Protection, they can sometimes be resolved with the buyer before the dispute escalates.

If your transaction does not qualify for PayPal Seller Protection, you can still provide information that can help you win the chargeback.

What are the most common reasons Item Not Received chargebacks aren’t covered by PayPal Seller Protection?

  • We did not receive your response in the PayPal Resolution Center.
    • You shipped the order but didn’t respond to PayPal. When a chargeback is filed, PayPal receives a complaint from the issuing bank and sends you an email. If you do not respond in the PayPal Resolution Center within 10 days with either a proof of delivery or a signature confirmation if the order amount was $750 or more, we may decide in favor of your customer. The address on the shipping receipt must match the customer’s address listed on the PayPal Transaction Details page.
    • What is proof of delivery? Proof of delivery is online documentation that indicates that the item was delivered to the recipient. It shows the city, state, and ZIP code to which the package was shipped; the date the package was delivered; and its delivery status. For payments of $750 USD or more, a signature confirmation of receipt is also required. Read the PayPal User Agreement for our complete terms of coverage.
  • You issued a customer a refund but did not respond to PayPal. If you were out of stock and issued the customer a refund, please use the Resolution Center to notify us that you have resolved the chargeback and to provide proof of a refund.
    • Prevention Tip: Issue refunds as soon as possible to help prevent chargebacks. To issue a refund, always use the refund link in the PayPal Resolution Center. Refunds issued outside of PayPal are not covered under Seller Protection.
  • We did not receive the information we needed. You responded to the chargeback within 10 days and provided a response in the PayPal Resolution Center. However, we did not receive the information we needed. Some common cases are:
    • Online tracking does not show delivered status. The online tracking number does not show that the order was delivered to your customer. Many things can go wrong during the shipping process, so just because the item was shipped does not mean the order was delivered to the customer.
    • We did not receive proof of delivery with signature confirmation (for orders of $750 or more). A signature confirmation receipt is required for orders of $750 or more.
    • Prevention Tip: Provide your customer with an online tracking number as soon as you ship the order. If the order shipment will be delayed, contact your customer immediately to see if they are interested in waiting, or if they would like a refund.
  • Order was shipped to an incorrect address. You provided an online tracking number or signature confirmation receipt (for orders of $750 or more), but the tracking number shows that the order was shipped to an incorrect address. You are required to ship to the address on the PayPal Transaction Details page. Online tracking/signature confirmation documents for $750 or more must include – at a minimum – city and state, city and country, or ZIP/postal code to which the order was shipped, and the address on these receipts must also match the address on the PayPal Transaction Details page.
    • Prevention Tip: If you decide it’s worth the sale to ship to another address, review the order for any signs of suspicious activity before you ship. Just remember that the transaction won’t be covered under Seller Protection if a problem arises. Learn more fraud-fighting tips you can use to Help Prevent Losses.
  • Online tracking number was invalid.
    • You provided an invalid online tracking number in the Resolution Center. Customs forms, email, or text responses without the online tracking number/proof of delivery are not accepted. Always double check the tracking number and only provide relevant, requested information to help you win your chargeback.
    • To help win your chargeback, you must respond with this information in the Resolution Center within 10 days. Provide PayPal with the online tracking number or signature confirmation of delivery for orders of $750 or more (includes shipping fees and taxes).

What are the most common reasons unauthorized chargebacks aren’t covered by PayPal Seller Protection?

We did not receive your response in the PayPal Resolution Center. When your customer files a chargeback against you, PayPal receives a complaint from the issuing bank and sends you an email. To help us determine if you’re protected by Seller Protection, you must respond in the PayPal Resolution Center within 10 days and provide proof of shipment for unauthorized claims or proof of delivery for Item Not Received claims.

  • What is proof of shipment?
    • Proof of shipment is online or physical documentation from a shipping company that includes the date the item is shipped and shows that the recipient’s address matches the shipping address provided on the Transaction Details Page. The recipient’s address must show at least the city and state, city and country, or ZIP/postal code (or international equivalent).
  • We were unable to verify that the order was shipped to an approved address. You responded to the chargeback within 10 days and provided a shipping receipt, but the order was shipped to an incorrect, invalid, or unconfirmed address.
    • Order shipped to incorrect address. To be covered under PayPal Seller Protection, you are required to ship to the address on the PayPal Transaction Details page. PayPal carefully reviews the address on the PayPal Transactions Details page to help prevent fraud. If you shipped the order to a different address at your customer’s request, you won’t be covered under Seller Protection.
    • Order shipped to invalid address. You responded to the chargeback within 10 days and provided a shipping receipt or online tracking number. But the shipping receipt/online tracking number doesn’t show where the order was sent, or the address doesn’t match the customer’s address on the PayPal Transaction Details page. Shipping receipts must include – at a minimum – the city and state, city and country, or ZIP/postal code to which the order was shipped. Customs forms, email, or text responses that do not include the online tracking number/proof of shipment are not accepted. Always double check the tracking number and only provide relevant, requested information to help you win your chargeback.
    • Order shipped to unconfirmed address. You responded to the chargeback within 10 days and provided a shipping receipt, but you shipped the order to an unconfirmed address, which is not covered under PayPal’s Seller Protection policy. An unconfirmed address is an address that PayPal hasn’t validated. Addresses outside of the U.S., Canada, and the U.K. are unconfirmed addresses. If you ship outside of these countries, it is very important to review each order for fraud because these orders are not covered under the terms of the PayPal Seller Protection policy.
  • The item sold was delivered in person or picked up. In-person and first-party deliveries are not covered under PayPal’s Seller Protection policy, because they do not provide a third-party shipping receipt to prove the customer received their order. However, you can provide evidence to PayPal that may help you win the chargeback:
    • Cardholder signature on the pick-up form.
    • Copy of identification presented by the cardholder.
    • Details of identification presented by the cardholder.
  • The item sold was an intangible good. Intangible items are not covered under PayPal Seller Protection. However, you can provide evidence to PayPal that may help you win the chargeback:
      For digital goods:
    • The buyer’s IP address.
    • The buyer’s email address.
    • Description of the goods downloaded.
    • Date and time goods were downloaded.
    • Proof that the merchant’s website was accessed for services after the transaction date.
    • Evidence that the transaction was completed by a member of the cardholder’s household.
    • For services provided:
    • Signed work order indicating completion of the work requested.
    • Communication between you and the buyer that supports rebuttal of the chargeback.
  • You’re not protected under PayPal’s Seller Protection policy or lost a chargeback. Now what? PayPal deducts money from your account to cover the amount of the customer’s chargeback. If the rate of complaints you receive each month approaches 1%, your account may be subject to further review (most merchants, however, fall well below this threshold).
    • Understanding the most common reasons for losing a chargeback can help you prevent future losses and claims. (Learn more about claims. Review our Help Prevent Losses page to learn how to reduce chargebacks and losses.)
  • Unaware you received a chargeback? If you were not aware that your customer filed a chargeback against you, please verify that your PayPal account has the correct email address and recheck all your emails folders – including junk and spam folders – for our notices. Our emails subject lines typically include the word “Case #” or “Case ID #.” We send an email each time a chargeback is filed, a reminder email requesting a response, and an email when you win or lose the chargeback. You can also log in to your PayPal account and visit the Resolution Center.
    • Track and respond to your chargebacks by clicking on the individual case and providing the requested information.