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How to Avoid Unnecessary Paypal Chargebacks

By Jason Lee
Filed under: Online Merchant Accounts         Words in this Post: 400



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If you’re a big enough seller, it’s bound to happen sooner or later. You sell an item, receive payment, and ship it out. But then, a few days or a few weeks later, the customer files a complaint with either PayPal or his credit card company, claiming he didn’t receive the item or that it was defective. In response to the complaint, PayPal freezes the funds in your account for the amount in dispute, or simply deducts that amount from your account. The credit card company and PayPal take the customer’s word, and you get screwed.

You can’t totally protect yourself against all chargebacks. In fact, some chargebacks are legitimate, especially the buyer never receives an item you ship.

That said, you can protect yourself against most chargebacks by embracing the following business practices:

  • Describe the items you sell as accurately as possible, and include photos of all damage or blemishes. This should reduce the number of complaints about items not being as described in the listings.
  • Clearly publish your returns policy in your auction listings. Make sure that your terms are simple and understandable; don’t make the customer hunt for your return policy.
  • Sell the item “as-is,” and clearly sate this in your item listing and returns policy. You might also wait to add a “no buyer’s remorse” clause. This should protect you from buyers who want to return a product simply because they don’t like it or no longer want it.
  • Respond quickly and politely to any customer emails or complaints. You’d be surprised how many chargebacks can be avoided just by being responsive.
  • Retain all records and emails for all your sales, including shipping receipts. You might need these records to dispute a chargeback.
  • Ship only to the confirmed address listed on the PayPal transaction details page. Do not ship to an alternative address, even if the buyer emails with a different address. (Many scams come from someone other than the buyer diverting shipments to an alternative address.)
  • Purchase delivery confirmation (Or signature confirmation, for items over $250) so that you can track and confirm delivery of the item. Hang on to all proof of shipment and delivery.
  • Purchase delivery insurance or require the buyer to purchase insurance for the item. This protects you and the buyer should the package be lost or damaged in transit.

Following these best practices won’t completely protect you against all chargebacks, but it will reduce the number of potential chargebacks you receive.

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Author: Jason Lee

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