August 7th, 2006 by Skip McGrath

Chargebacks are a serious issue for eBay sellers. See how PayPal is working in your favor to help protect you from chargebacks.

Chargebacks are one of the most frustrating and costly aspects of credit card payments. If you have a dispute with an eBay buyer, you can go back and forth via email numerous times, think the issue is resolved, only to find out that the buyer filed a chargeback with their credit card company and you lost the money anyway, even after all that time consuming effort.

PayPal recently introduced an online Resolution Center where you can post customer service messages which all of your buyers will see if they open a dispute with PayPal. For example “Hurricane Chris is approaching my area and shipments will be delayed until it has passed” or a later update of “All delayed shipments were processed and mailed today. Thank you for your patience.”

This is a good time saver in certain situations and can help prevent a buyer escalating their dispute to a claim. If they do pursue the dispute, you will communicate with the buyer directly through PayPal’s site to resolve the issue. If you both agree to a certain course of action, or the buyer files a claim and PayPal finds in your favor, you are then covered under PayPal’s chargeback protection.

If, after an amicable decision is made or PayPal finds in your favor, the buyer still files a chargeback with their credit card company, PayPal will not take the funds from your account to cover the chargeback.

This is a fairly significant new feature. Of course, there are restrictions – you must have reached a final decision in the dispute resolution process, or PayPal must have found in your favor BEFORE the chargeback occurs otherwise you are not covered.

Still, if your chargebacks are usually around 2-5% and you do $5000 a month, that is $100-$250 a month, or $1200-$3000 a year!

See Also

• PayPal Dispute Resolution Center
  Note: You will have to log into your PayPal account before accessing this page.
• The Wholesale Buying System by Skip McGrath
  How, what and where to buy goods at wholesale to sell on eBay or your web site.