How to Reverse PayPal Disputes
Table of Contents
- What are PayPal Disputes?
- What are PayPal Claims?
- What are Bank Claims?
- What are Chargebacks?
- What to Do About PayPal Disputes
- Frequently Asked Questions
PayPal is one of the most secure, safe, and accessible ways for merchants to take payments online, but any time money is changing hands there’s a chance for disagreements and disputes, and PayPal is no exception to that rule. There are various issues that can arise from PayPal transactions—disputes, claims, bank claims, and even chargebacks.
It’s important for merchants to look out for themselves and do everything they can to prevent these disputes from occurring, minimize their impact on revenue, and fight to have claims and chargebacks reversed. But to deal with these issues effectively, you have to understand the different types of issues you might be faced with.
What are PayPal Disputes?
When a buyer is unhappy with a transaction, they can open up a dispute in the PayPal Resolution Center. The seller will get a message explaining the buyer’s problem, and can then issue a refund or offer some other way to resolve the dispute. If the seller ignores the dispute or doesn’t offer the buyer a satisfactory way to resolve things, the buyer has 20 days to escalate the dispute to a claim.
What are PayPal Claims?
When a dispute turns into a claim, PayPal gets more directly involved. They will gather information from both the buyer and the seller, investigate the claim, and make a final determination as to whether the transaction should be reversed or not
What are Bank Claims?
When a buyer uses a debit card or bank account to make a purchase on PayPal, they can bring their dispute directly to their bank and file a claim to have the transaction reversed. When they do so, the funds are taken back out of the seller’s bank account, and it becomes the seller’s responsibility to contest the claim by submitting compelling evidence that proves the transaction was legitimate.
What are Chargebacks?
Chargebacks are forced reversals of credit card transactions. These are initiated by the cardholder and executed by their issuing bank, if the bank sees evidence of fraud or merchant error.
Chargebacks are different than disputes in the sense that they do not involve the merchant initially. The decision to initiate the chargeback is help by the issuing bank.
Buyers typically have 120 days to file a chargeback on a credit card purchase from Visa and Mastercard, which includes PayPal transactions funded by a credit card. If the seller wants to fight the chargeback, they have to submit compelling evidence proving the validity of the charge. The seller uploads this documentation to the PayPal Resolution Center, and the issuing bank makes the final decision. Once their decision is made, they notify PayPal, who then notifies the seller.
What to Do About PayPal Disputes
If you do business over PayPal, here are five things you can do to minimize disputes and fight them successfully.
Respond to buyer emails as promptly as you can. Disputes often arise, and escalate to claims or chargebacks, because of a lack of responsiveness on the seller’s part. Be available to your customers and try your best to resolve any disputes—no matter the reason—before the buyer gets PayPal or their bank involved.
Enroll in the PayPal Seller Protection Program. There are certain eligibility requirements for this program, but if you qualify, it offers a good deal of protection against fraud, claims, chargebacks, and other transaction issues that can cost you money.
If PayPal requests documentary evidence from you, be sure to provide it on time. When a buyer initiates a chargeback, the seller only has 10 days to respond. Upload all relevant evidence to the PayPal Resolution Center before the deadline or PayPal will not be able to factor it in to their decisions.
Contact the buyer directly and try to work things out with them. Buyers can cancel chargebacks and PayPal disputes, and if they do so, PayPal gets their money back and will usually return it to the seller within 90 business days (a holding period to ensure that no further disputes get filed).
Take advantage of PayPal’s community activities. PayPal offers programs that can help sellers learn how to run a successful online store, and once a week, they hold live online chats where PayPal program experts answer questions. The PayPal community can also be a great resource for ideas, support, and valuable information
Why Fight PayPal Disputes?
It’s almost always in a merchant’s best interests to prevent and minimize disputes and chargebacks to the best of their ability. With the fees attached to it, a chargeback is always more costly than reversing and refunding a transaction on your own. Merchants who show themselves to be susceptible to chargeback fraud will often find themselves victimized over and over again until they either take steps to stop it from happening—or go out of business.
With diligent record-keeping, attentive customer service, and a knowledgeable approach to navigating PayPal, merchants can avoid many of the pitfalls that lead to claims, chargebacks, and lost revenue.
Also note that PayPal is primarily used for Card-Not-Present (CNP) transactions online. CNP transactions are the most common types of transactions for potential fraud, whether true fraud or friendly fraud.
If you are facing PayPal chargebacks, there is a chance that the cardholder is attempting to get some goods or services for free, and use the chargeback process to do it.
Businesses that process eCommerce and other card-not-present transactions—including the over 17 million who use PayPal for payments—are quickly learning about the risks and realities of chargebacks.
Is a PayPal chargeback illegal?
Do sellers ever win PayPal disputes?
What happens if you lose a PayPal dispute?