Helping avoid disputes and chargebacks.

Every once in a while something goes wrong with an order. These problems generally fall under three categories:

  • Item not received – A buyer pays for an item, but never receives it
  • Significantly not as described – A buyer receives an item that’s significantly different than what they ordered
  • Unauthorized Transactions – A buyer claims a purchase was made without their consent

When these things happen, buyers may take action by opening a dispute in PayPal or by asking their credit card issuer to reverse the charge – what credit card companies call a chargeback.

On rare occasions, these issues may be an indication of fraud. Our guide to Avoiding Fraudulent Orders offers many helpful tips for identifying and preventing such fraud.

Most of the time, however, these issues are the result of a simple misunderstanding or human error. Buyers and sellers can usually work together to figure out what happened and to settle their differences. Our guide to Resolving Disputes, Claims and Chargebacks explains the process in detail.

There are several things you can do, however, to prevent disputes and chargebacks from happening in the first place:

Provide Contact Information – Buyers may not resort to a dispute or chargeback if they can talk to you about the issue first. Provide an email address or phone number, or even call buyers in advance when you're selling higher priced items.

Be Responsive – No one likes to wait, so do your best to respond quickly and professionally to all reasonable buyer inquiries.

Suggest Dispute Resolution – If a customer tells you that they intend to file a chargeback with their credit card company, ask them to open a dispute in the PayPal Resolution Center instead. This will give you and your buyer the chance to work things out on your own.

Provide a Clear Return Policy – Make sure your return and refund policies are easy to find and understand on your website and all your auction listings.

Helping Prevent “Item Not Received” Claims

Here are some tips to help prevent or minimize Item Not Received losses.

Give buyers realistic delivery dates

Realistic dates can help avoid having customers prematurely file a chargeback or dispute.

Ship with online tracking

Use a shipping service that provides online tracking to help confirm that the item was delivered. Standard shipping receipts only show that an item was shipped. Online tracking services prove the item was delivered.

  • If the total sale is for $750 or more, obtain signature confirmation to confirm your customer received their order – the nominal expense is well worth it.
  • Use your discretion when shipping internationally using First Class Mail International since this shipping service is not accepted under PayPal's Seller Protection Policy.

Order shipping insurance

Too many things can go wrong in transit. That's why it's important to purchase shipping insurance for items that are fragile or expensive.

Shipping insurance serves two purposes:

  • Insures the item in the event it is lost or damaged.
  • Includes tracking and delivery information so the customer can see that the order is en route, and you will know when the package was delivered.

In case of a shipping problem, file an insurance claim with the shipping company.

You, your customer, or the shipping company can report claims. Contact your shipping company for detailed instructions on how you should proceed with a claim.

Be aware of insurance exceptions.

Liability for loss or damage may be limited depending on the type of package, the declared value, and/or the shipping company. Talk to the shipping company to ensure proper coverage.

Delay shipping high-risk orders.

Delay shipment for new orders that are expensive and in demand for 24 to 48 hours, especially when shipping internationally. Use caution when shipping overnight. Fraudsters will often ask for overnight shipping so that they can resell expensive merchandise as quickly as possible.

Use your own shipping service.

Do not use your customer's shipping company when mailing orders. Packages can be rerouted by the customer to other addresses after shipment, and won't be covered by Seller Protection.

Use care when choosing or acting as a drop shipper.

Since you're responsible for delivering what the customer orders, it's critical to choose a reputable drop shipper to help avoid losses. Be wary of drop-shipping companies located in high-risk countries. If you're a drop shipper, have a vetting process in place for all suppliers. This should include inventory management and product guarantees (to ensure that items are in stock and you're delivering high-quality merchandise).

Issue returns quickly and let customers know when you are out of stock/inventory.

If an item is out of stock, remove the listing or update it to reflect the out-of-stock status. Provide an estimated in-stock date or clearly indicate that customers who choose an out-of-stock product are placing an advance order.

Helping Prevent “Significantly Not As Described” Claims

Here are a few things you can do to help make sure that items meet the buyer's expectations:

Provide pictures and detailed descriptions

Take pictures of products from various angles. Add accurate, detailed descriptions, so customers know exactly what they're buying.

Give adequate disclosures

Clearly disclose any functional defects or cosmetic damage to the item(s).

Answer any questions promptly and clearly.

If you know of an issue that might affect customers, let them know by posting a message using our Customer Service Messaging feature. For instance, if you know shipments will be delayed due to inclement weather, post that information there. That way, customers can find answers to questions without even initiating a dispute.

If a buyer does contact you with an issue, being helpful and keeping the tone of communications positive may help a small problem from growing into a larger one.

Helping Prevent Unauthorized Transaction Claims

Buyers may open a dispute or request a chargeback when they believe that a purchase or other transaction was made using their PayPal account without their permission.

Sometimes this is the result of fraud. It may also be a simple mistake or misunderstanding – the buyer may have forgotten they made the purchase or a family member authorized to use the account made the purchase, for example.

Whatever the reason, our guide to helping avoid fraudulent orders offers many helpful tips for preventing claims based on unauthorized transactions, including making sure your business name on your invoices is clear so that customers will recognize your charge and contacting customers before you ship to confirm order information.