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Q: What is a chargeback? And what is the difference between a chargeback and a PayPal claim?
A chargeback occurs when a customer asks their financial institution to remove a charge from their credit card statement. Except for certain limitations, buyers have recourse rights and the chargeback is one of the methods that buyers can use to dispute the validity of a transaction.

Once a customer files a chargeback, PayPal and the seller are playing by the rules established by the credit card companies. PayPal will investigate the chargeback and partner with sellers to fight the dispute.

A PayPal claim is when a buyer files a complaint directly with PayPal rather than contacting the credit card company. Since these complaints are handled through our internal system, PayPal can better enable both the buyer and seller to resolve the dispute amicably, before the problem escalates to a chargeback.

Q: How does PayPal fight chargebacks?

The first step in fighting chargebacks is to try to prevent them from ever happening. PayPal offers one of the lowest fraud rates in the industry by working behind the scenes with cutting edge fraud detection tools to help prevent most problems before they reach your business. Secondly, we also provide a Resolution Center and other tools for our sellers to resolve complaints with their buyers before they escalate into a chargeback.

As rare as chargebacks are, though, we know that they are a frustration and a drain on your business. When they occur, PayPal reviews all chargebacks and partners with the seller to fight them. PayPal contacts sellers via email to get information that will help build the case for the seller. Our team of chargeback specialists will also gather evidence, such as the transaction details and the details of the eBay listing, and combine that with the evidence the seller provides. Then, the chargeback specialist will take all the evidence and review every chargeback to determine if there if the dispute is winnable.

Q: Why does PayPal take the money when the claim comes in?

We know that having disputed funds held is frustrating and impacts your ability to manage your business. The standard practice in the industry is to temporarily hold funds that are under dispute because of a chargeback. Like the rest of the industry, PayPal will temporarily hold your funds until the investigation of the claim is complete.

We’ve heard confusion from many sellers who think that, in the case of a PayPal claim, the buyer is immediately given the funds under dispute. Not true. In fact, during a PayPal claim, neither the buyer nor the seller has access to those funds until a decision has been made.

Q: How can I protect myself from claims of Unauthorized Use? What is PayPal doing?

To help prevent receiving chargebacks due to unauthorized use, keep an eye out for potential risks. Below is a helpful checklist of situations to consider when choosing whether or not to accept the payment. Ultimately, though, the choice is up to you.

• Price of Item -- The higher the price, the lower your tolerance for risk may be.
• New buyer -- The more you know someone, the less risk in dealing with them.
• Confirmed Address -- You lower your risk when you know you’re shipping to a confirmed address.
• Auction or eBay -- Use feedback scores and comments to assess risk, as well as checking that shipping information is consistent with account information.
• Questionable behavior -- Rush shipments at any cost, sending partial payment from different PayPal accounts, or not making full payments should be cause for concern. Domestic or International? Address on transaction details in one state but buyer is asking you to ship to another state? If you’re asked to send a high-priced item to a location in one country but the buyer’s address on the transaction details page is in another, use your best judgment.

PayPal is aggressively fighting unauthorized use. We have sophisticated fraud detection tools that scan all transactions for suspicious behavior. And our expert agents monitor questionable activity on your account.

Q: How can I avoid the customer-related issues that can lead to a chargeback?

Here are some common complaints and how to avoid them:

Complaint: The item was never delivered.
Resolution: Provide realistic delivery times and use tracking that provides proof that the items were received. Delivery information such as signature confirmation and tracking numbers on shipments should be recorded and shared with customers. PayPal Shipping is an easy, free way to manage all your shipping needs. In addition, consider purchasing postal insurance. You'll be reimbursed should the package be lost.

Complaint: The item didn't meet expectations.
Resolution: Describe the sale item in as much detail as possible. Include photos and measurements so that your customer has a clear picture of what they're getting.

Complaint: The item was damaged.
Resolution: Be sure to pack your items well before shipping. In addition, provide a clear return/refund policy. Publish your return policy in your auction listings or on your website. Some credit card company policies allow customer chargebacks for undelivered or defective merchandise even if your policy states that all sales are final and no returns. Purchasing insurance when you mail the item can help cover any loss.

Complaint: Price was different than advertised.
Resolution: Make sure you clearly disclose the total cost to the customer up front - the price, taxes and shipping costs, etc.

Plus, there are some general rules that will help mitigate problems regardless of the customer issue:

1. Provide the customer with a way to contact you should they have a problem.
Often a simple e-mail exchange or phone call clears up misunderstandings instantly. You may also want to actively touch base with customers by phone, particularly on higher-priced transactions, to head off any potential issues before the customer has to call you.

2. Respond promptly to customer inquiries.
Waiting too long to contact a customer can make them feel like their problem is unresolved, and they may resort to a chargeback for resolution.

3. Try to resolve problems.
It’s much better to resolve problems before they escalate into a claim or chargebacks.

By following these guidelines, you avoid customer problems now – which is much easier than resolving them with a credit card company later.

When a seller prints postage electronically, there is no proof of shipment unless/until a USPS worker scans the package. If the worker never does this, and the package is lost, the seller loses the claim even if he/she performed.

However - if the seller stands in line at the USPS with online postage and a USPS worker agrees to scan the package for acceptance, does this help if the buyer later files an "item not received" claim?

"If there are no dogs in heaven, then when I die, I want to go where they went." ~ Will Rogers