Help avoid disputes and chargebacks

Occasionally, something goes wrong with an order. These problems typically 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 considerably different than what he or she expected when placing the order.

Unauthorized Transaction

A purchase was made without the account holder’s consent.

When any of these things happen, buyers may open a dispute through PayPal, or ask their credit card issuer to reverse the charge (called a chargeback).

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

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

There are several things you can do 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. 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. Respond quickly and professionally to all reasonable buyer inquiries.

Suggest Dispute Resolution.

If a customer tells you that they’re going 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.

Provide a clear return policy.

Make sure your return and refund policies are easy to find and understand.

Help avoid “Item Not Received” claims

Here are some tips to help minimize Item Not Received losses:

Provide realistic delivery dates

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

Ship with online tracking

Standard shipping receipts only show that an item was shipped out. That’s why we recommend using a qualified shipping service according to PayPal’s User Agreement that provides online tracking. This can help confirm that items are delivered.

  • If the total sale is for $750 USD or more, purchase signature confirmation. This ensures that your customer receives their order, and the nominal expense is well worth it.

Order shipping insurance

Sometimes 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:

  • It insures the item in the event that it’s lost or damaged.
  • It includes tracking and delivery information. This lets the customer see that the order is en route, and lets you know when the package is delivered.

If you encounter a shipping problem, file an insurance claim with the shipping company. Be aware that you, your customer, or the shipping company can report insurance claims. Contact your shipping company for detailed instructions on how you should proceed with a claim.

Be aware of insurance exceptions

The type of package, the declared value, and/or the shipping company can limit liability for loss or damage. Talk to the shipping company to make sure you have proper coverage.

Delay shipping high-risk orders

Use caution when shipping overnight. Fraudsters often ask for overnight shipping so they can resell expensive merchandise as quickly as possible. That’s why we recommend delaying shipment 24 to 48 hours for expensive and in-demand orders (especially when shipping internationally).

Use a qualified shipping company

Don’t use your customer's shipping company when mailing orders. Scammers often reroute packages to other addresses after shipment, which voids Seller Protection coverage. Use a qualified shipping company as stated on PayPal’s User Agreement.

Use care when choosing or acting as a drop shipper

Since you're responsible for delivering what the customer orders, choose a reputable drop shipper to help avoid losses. Be wary of drop shipping companies 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. This ensures 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, update your listing to reflect the out-of-stock status. Provide an estimated in-stock date, or clearly indicate that choosing an out-of-stock product is essentially placing an advance order.

Help avoid “Significantly Not As Described” claims

Here are a few things you can do to make sure items meet buyer expectations:

Provide pictures and detailed descriptions

Take pictures of products from several angles. Describe them in accurate detail so customers know what to expect when they buy.

Give adequate disclosures

Disclose any functional defects and cosmetic damage to items clearly and accurately.

Preempt disputes

Make sure that your clients know how they can contact your business in case they need some clarification. Making available your business contact information and responding questions from your customers can help to prevent disputes by your customers.

You can also post messages in your website in case you know shipments will be delayed. For instance, you can post a notice in your website giving notice that shipments will be delayed due to the Christmas season. By doing this, you offer your customers a chance to understand the issue and prevent him from filing a dispute.

Answer any questions promptly and clearly

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.

Help avoid "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, 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 is clear on invoices so that customers will recognize your charge, and contacting customers before you ship to confirm order information.