Topic: eBay Workshop: Reducing Chargebacks, Dealing with Claims and Avoiding Risky Transactions
Host: eBay and PayPal Staff Date: Friday 04/04 Time: 1:00 p.m. to 2:00 p.m. Pacific time Location: Workshop Board
Description: Whether it’s chargebacks, risky transactions or buyer fraud, sellers face challenges when selling online. Successful sellers know how to manage these risks while growing their businesses. Join the PayPal and eBay staffers for a workshop on some best practices on how to reduce chargebacks and avoid risky transactions. We’ll also answer your questions about chargebacks, dispute resolution, Seller Protection Policy, confirmed/unconfirmed addresses, and other risk reduction measures.
Let's start off with an explanation on chargebacks...
Chargebacks are a perennial hot topic for PayPal sellers. Get any group of merchants together and ask them about their primary concerns, and you’re sure to hear something about chargebacks. And during the holiday season when sales go up, so does the risk of receiving chargebacks. But before we proceed, let spend a moment clarifying exactly what a chargeback is.
Many misunderstandings persist around the difference between PayPal’s complaint processes and credit card chargebacks. The word “chargeback” is sometimes used inaccurately to indicate any buyer complaint against a PayPal seller. We’ve had several sellers tell us that they had a chargeback, only to later learn that the buyer had in fact filed a PayPal Buyer Protection claim.
To be specific, a chargeback is the result of a buyer contacting his or her credit card company asking to reverse a charge that had been placed on the card. The credit card company then asks the buyer what kind of chargeback this is: did the buyer not authorize the purchase? Did an item they ordered not arrive? Or did the item delivered not look at all like the item they bought? Most card companies immediately assume the buyer is right, so they grant the chargeback without too much rigmarole. Then they inform PayPal that a chargeback has been filed. PayPal passes along this information to you, and the payment is reversed.
This chain of events a chargeback creates is often a frustrating experience for our merchants – especially if it’s the first time they’ve received a chargeback. Oftentimes, we hear that sellers think that PayPal is responsible for filing the chargeback, because they are informed of the chargeback by us. In truth, we’re just the messenger in this scenario.
Buyers cannot file a chargeback on the PayPal site. Instead, they must file directly with their credit card company. The chargeback process is not designed nor maintained by PayPal, so we can’t change it or reject it. Everyone who accepts, issues or processes credit cards has to abide by these rules - from sellers on eBay to huge retailers like WalMart or Target.”
Hi, everyone -- happy to be in here with you. I'm Colin Rule, the Director of Online Dispute Resolution at eBay and PayPal. (Also, that first post-- ebayharrigan-- was from Sarah, who manages Seller Protections at PayPal.)
I just wanted to add that it’s important to note that within these rules, sellers can dispute any chargeback. One of the benefits of selling with PayPal is that our chargeback specialists will review any chargeback claim made against you and file a dispute on your behalf if you disagree with the chargeback reason offered by the buyer.
The best way to deal with chargebacks is, of course, to avoid having transaction problems in the first place. In other words, your good customer service and business practices are the best way to prevent a chargeback.
However, chargebacks are an inevitable reality of selling online. If you do get a chargeback, a couple pieces of information can be extremely helpful if you want to dispute it. Proof of delivery, such as online tracking offered by both USPS and UPS, can be critical evidence in reversing the chargeback. A copy of the buyer’s signature confirming receipt can also be extremely effective. Finally, if you did refund the buyer at any point in time, proof of the refund (and/or the shipment of a replacement item) is important. Of course, if you used the PayPal refund tool, we already have the evidence needed to fight the chargeback on your behalf.
Most eBay sellers understand the risks associated with doing business online. Most sellers have set up processes or thought through how to handle these typical business problems, but many sellers on eBay haven’t had the experience of running an online business, or even a face-to-face retail store. In reality, as large merchants have understood for a long time, selling (whether as an eBay seller or a large brick and mortar retailer) always involves some risk. Online, there’s always the possibility that an item will get returned, a shipment will be lost, or even that a buyer may attempt fraud (such as payment with a stolen credit card). Offline, there’s shoplifting, bounced checks, counterfeit currency, returned merchandise, or payments from stolen credit cards.
One last point before we get the discussion going...
Businesses grow by understanding how to balance risk with profit. Being too risk averse may limit your buyer pool, and in turn, your total sales volume. Not being risk aware opens you to problems such as chargebacks. Managing these risks intelligently may involve exposing yourself to more chargebacks, but the tradeoff may in fact be worth it.
In some cases, PayPal proactively protects you against chargebacks through our free Seller Protection Policy (https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/cps/securitycenter/sell/SellerPPOverview-outside). Seller Protection covers shipments of physical goods against claims of unauthorized payment or false non-receipt. As long as you ship to a confirmed address within seven days of payment and get online proof of delivery for your shipment, we will protect you against non-receipt and unauthorized chargebacks. In essence, by following good selling practices and good customer service as captured in the steps of the Seller Protection Policy, you’re giving us the information to dispute the chargeback and re-present the charge on your behalf.
The best thing about Seller Protection is that even if the re-presentment of the charge is denied by the credit card company, you keep your money.
So please, we're eager to hear your questions... don't hold back!
Yes, the Seller Protection Policy applies to chargebacks that were filed because the buyer claims they didn't get the item or they didn't authorize the payment.
In addition, we have something called Chargeback Protection when a issue has been filed and resolved through PayPal dispute resolution. If you resolve the issue or win it outright through the claims process on PayPal and the buyer files a chargeback after the fact, PayPal will protect you for that chargeback, no matter the reason.
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Seller protection never expires, so even if they manage to file a chargeback six months down the road you're still covered. Also, if you're not eligible for Seller Protection, and you work the issue out in the dispute or claim process, you'll be covered under the Chargeback Protection program, as Sarah just explained.
That said, most card issuers have a limited timeframe for filing a chargeback -- usually about two billing cycles. So I'd bet that kind of super-late chargeback filing is relatively rare.
In post number 1 you are saying that the credit card companies usually side with the buyer, so there is nothing you can do and the seller automatically loses. (Most card companies immediately assume the buyer is right, so they grant the chargeback without too much rigmarole. Then they inform PayPal that a chargeback has been filed. PayPal passes along this information to you, and the payment is reversed. )
Don't you have the means to dispute the chargeback?
And if we don't know that we are paid by credit card, aren't we as the merchants at a disadvantage? I'll fight the credit card company if you won't, but my hands are tied because I don't even know it is a credit card payment.
In the spirit of reducing chargebacks, here are some tips to sell securely online:
Provide clear, detailed descriptions. Buyers don't like surprises. Give a detailed description of your item and include photos. Pictures are especially important when selling in countries where buyers may not be as fluent with the language in which the seller wrote the listing. Also clearly state your return policy in a place where buyers can find it.
Respond promptly to enquiries. Show buyers that you are listening by promptly and courteously responding to all questions.
Beware of unusual requests. Abnormal requests can be a sign of suspicious activity. A few examples include:
• Rush deliveries at any cost. • Partial payments from multiple PayPal accounts. • Payments not received in full.
Be extra cautious with high-priced items. It’s fairly common for postal addresses to differ from billing addresses. However, be extra cautious when sending high-priced items, especially if payment is received from one country and sent to another.
Know the buyer. • Does the address destination look suspicious? Is it spelled correctly? • For e-commerce sites with feedback systems, what is the buyer's score? • Do you have any questions? Get answers by emailing or calling the buyer.
Track packages. Packages should be sent with tracking numbers. Once you get a tracking number from the delivery service, promptly send it to the buyer. As an extra precaution, you should consider adding delivery confirmation. Finally, make sure you keep proof that the package was received by the buyer.
Insure packages. When sending goods, opt for postal compensation to protect yourself in the event that a consignment is lost or the buyer claims it was never delivered.
Keep buyers up-to-date about delivery. Set expectations up front. Once payment is received, give buyers an estimated delivery time. Keep in mind, it's better to overestimate delivery time than have a package show up late. If a package is not sent in time, tell your buyer about it.
Will the new PS seller protection save us even from chargebacks if we ship to the address on the payment and have delivery confirmation?
And what is the deal with Fed ex and USPS as proof of delivery. Why is UPS not on the list?
When a buyer claims they didn't receive the item, we will protect the seller as long as they can provide proof of delivery to the buyer's address. FedEx and UPS provide online tracking as does USPS Delivery Confirmation. This applies for both the Seller Protection Policy and expanded seller protection for PowerSellers.
I recently had a person ask me if I could ship my item to another address. I assume he would have payed through Paypal, and request another shipping address. I have heard sellers are not protected when doing this, can you explain why? and wouldn't having delivery confirmation protect the seller?
Clint, What if a buyer does a chargeback on an item that was purchased 7 months ago-Can that tracking number somehow be found as proof on the seller side?
I recently had a person ask me if I could ship my item to another address. I assume he would have payed through Paypal, and request another shipping address. I have heard sellers are not protected when doing this, can you explain why? and wouldn't having delivery confirmation protect the seller?
While there are certainly legitimate reasons why a buyer might ask to send to a different shipping address, this is a common tactic by fraudsters. They will steal someone's financial information and ask the seller to send the item to a different address, thereby circumventing all of our fraud checks.
If a buyer asks to send to a different address than the one on the PayPal transaction, I would counsel you to ask the buyer to resubmit the payment with the new address.
"In post number 1 you are saying that the credit card companies usually side with the buyer, so there is nothing you can do and the seller automatically loses. Don't you have the means to dispute the chargeback? And if we don't know that we are paid by credit card, aren't we as the merchants at a disadvantage?"
Well, first of all, if you get a chargeback, you know that the payment was funded with a credit card. The only way you can get a chargeback is if the payment was funded off of a card.
PayPal can dispute any chargeback received for a PayPal payment. The credit card issuer will almost always side with the buyer, as we noted in that first post, but if we have good evidence to counter the buyer's claim we can fight back.
What we have to do is “re-present” the charge; essentially dispute the chargeback through the credit card network. Sellers that process their credit card payments themselves without using a PayPal have to do all this work themselves. One of the values of PayPal is that our chargeback specialist team will review the chargeback claim made against you and file the dispute on your behalf. This team consists of experts who know all the ins and outs of chargebacks -- usually they have long experience in the chargeback industry -- and they know how to maximize the chance of success when they re-present.
Merchants who take credit cards directly see the credit card numbers, obviously. But on PayPal, that information isn't shared with the merchant (also known as "shop without sharing"). Because we handle the chargeback re-presentments, though, that doesn't provide any disadvantage to the seller.
Let me know if I was unclear on any of this, golfingaddict. Thanks for the follow up.
Regarding post #16, it's very rare for chargebacks to occur that long after a purchase.
If USPS Delivery Confirmation has expired, you can visit the post office, and they can provide you with printed documentation about the delivery. You can provide the printed documentation to PayPal as proof.
In a case of an "Unauthorized Charge"..if an item was shipped to their Confirmed Address how is it they get to keep the item-shouldnt they send it back to me if they didnt order it?
In a case of an "Unauthorized Charge"..if an item was shipped to their Confirmed Address how is it they get to keep the item-shouldnt they send it back to me if they didnt order it?
In the case of a true unauthorized charge, it's pretty rare that the address would have been confirmed. Fraudsters generally don't want to send the goods to the true account holder's credit card billing address.
This is most likely a case where the buyer forgot they made the purchase. Morally, I would say that buyer should return the item, but there's no official step in the credit card chargeback process to enforce this. You should feel comfortable reaching out the buyer in these cases to request they return the item.
How does a seller protect themselves from paypal's represenitives when paypal decides to give our $$$ back to a buyer when it is truly un-justified....one example that happened to me.....I sold a men's dress shirt did not mention anything about the collar didn't feel I had the need to as the picture was quite clear....sold the shirt buyer decided they didn't want the shirt as it had buttons on the collar....nothing was mentioned about the collar having buttons or no buttons...paypal decided to give my $$ back to the buyer.....nothing described was significantly different then what was stated or pictured in the auction......fair? I think not...
While it’s important for sellers to remain alert, you can feel safer knowing that PayPal works hard behind the scenes to detect and prevent fraudulent payments – all at no additional cost.
• Antifraud risk models. Our highly sophisticated, proprietary fraud risk models help detect and predict fraudulent transactions – before they affect your business.
• Industry-leading use of data encryption. We use data encryption more extensively than any financial services company.
• Safeguarding buyers' financial information. We don’t share buyers’ financial information with sellers, enabling buyers to feel more secure and confident buying from PayPal merchants.
• Industry-standard services. We use industry-recognised Address Verification Service (AVS) and Card Security Code (CSC, also known as CVV2) to help stop identity theft.
• Patent-pending Verification. We employ our proprietary bank account Verification as an additional level of authentication.
• Antifraud Team. Our antifraud team is composed of over 1,000 specialists from around the world. The team works 24/7 to help keep your transactions safe and to ensure that your sensitive information remains private.
another one.....paypal decided to refund my $$$ because the buyer thought the color was something that it was not.....I don't have control over other's color monitors...color was stated as tan....buyer felt it was too dark of a tan.....paypal refunded my $$$$ fair? I think not.....
I have a claim that is pending now on an item that was purchased in December & the Chargeback just showed up in April. I first question why it took so long. I dont know about you, I am forever checking credit card statements & checking account statements. If something is wrong I call someone ASAP, not months later. It should be interesting what PayPal decides. I thought I was safe by sending an item that was paid via PayPal to a Confirmed Address....
While I appreciate those things that you do, are there some things you can do that will help sellers with "pain points?"
For example: 1. Have buyers need to "reconfirm" their addresses with Paypal. The USPS is changing-expanding zip codes all over the country. Buyers do not always go in and update their information and sellers don't have valid information to ship to.
2. Use the USPS standardized address system and compare what the account holder gives you against that database. I can't tell you how many addresses I have to fix because they are a "form" of the correct address but not good enough for shipping purposes.
3. Flag accounts with expired credit card information. When the credit card expires and the buyer makes an instant transfer and DOES NOT have sufficient funds or the bank account is closed, the seller gets a nifty little "reversal".. in the meantime, the buyer has the item, and the seller is left holding the bag (ask me how I know about this?)
I have a few more suggestions, but I suspect this is not the forum for it..
"How does a seller protect themselves from paypal's represenitives when paypal decides to give our $$$ back to a buyer when it is truly un-justified....one example that happened to me.....I sold a men's dress shirt did not mention anything about the collar didn't feel I had the need to as the picture was quite clear....sold the shirt buyer decided they didn't want the shirt as it had buttons on the collar....nothing was mentioned about the collar having buttons or no buttons...paypal decided to give my $$ back to the buyer.....nothing described was significantly different then what was stated or pictured in the auction......fair? I think not..."
also,
"another one.....paypal decided to refund my $$$ because the buyer thought the color was something that it was not.....I don't have control over other's color monitors...color was stated as tan....buyer felt it was too dark of a tan.....paypal refunded my $$$$ fair? I think not....."
Sorry to hear about this situation, ithinkim. I understand your frustration. Item not as described disputes are quite hard for us to resolve to the satisfaction of both parties, as we never physically see the item in question, and often times both the buyer and seller are 100% convinced that they're right. Usually in cases like these we require the buyer to return the item to the seller at the buyer's cost -- did that happen in your situation? Then at least you can re-list the item and sell it to someone else.
In the shirt situation, if the shirt was accurately described in the listing, then the presumption from the agent working the claim would be to decide in your favor. Without looking at the detailed notes on the case, I'm guessing there must have been some other rationale for their decision. The color question is slightly harder. Yes, it does seem unfair to hold you accountable for the buyer's monitor colors, but if you as the seller took a picture that was extremely bright or color altered in some way, the item could arguably be considered misrepresented.
Most sellers are held responsible for the buyer's satisfaction, whether online or offline. A face-to-face store has to accept returns, and many online sellers (such as buy.com, Amazon, etc.) accept returns from buyers for any reason. In the EU, for example, all professional sellers are required to accept any return within two weeks of the sale. On eBay we try to be reasonable, but we want buyers to feel trust that they'll be satisfied with what they purchase, and if they're not, that they'll be able to get redress. All the more reason to be extremely detailed and accurate in your listings, so that your buyers will have no surprises.
Regarding post #25, you're right, most Chargebacks happen soon after purchases, but some buyers don't file them so quickly.
If your PayPal payment was marked SPP Eligible and you shipped to the Confirmed Address, you can provide PayPal with your proof of delivery and you should be protected.
There are a few other requirements for protection, but they're usually easy to meet - shipping within 7 days, for example. The full list is in Section 11 of the PayPal User Agreement:
Thanks for all of these suggestions. I couldn't agree with you more. We are looking at ways to improve the quality of buyer's addresses in the system (including standardizing them with the postal formats).
I'm sorry about the third issue. This happens infrequently, but when it does happen, it's extremely frustrating.
I appreciate your feedback however I don't think any seller should be accountable for a buyer's ASSUMPTIONS.....it is always stated clearly in the auction site to ask ???? before bidding....Most of us sellers are not Dillards or Nordstrom's we are not department stores ..it is time consuming and expensive to handle returns.....buyers should be viligant in their purchasing on aution sites and remember that it is an AUCTION not a department store.....
Regarding post #29, we're having some technical difficulties. I haven't used my ID to post to a Workshop before, so we're still getting it set up as a pink. Don't mean to be confusing!
"I appreciate your feedback however I don't think any seller should be accountable for a buyer's ASSUMPTIONS.....it is always stated clearly in the auction site to ask ???? before bidding....Most of us sellers are not Dillards or Nordstrom's we are not department stores ..it is time consuming and expensive to handle returns.....buyers should be viligant in their purchasing on aution sites and remember that it is an AUCTION not a department store....."
I'm with you there. I do think that buyers can have unreasonable expectations. Unfortunately, that's the reality of selling online. To be clear, we decide SNAD cases in favor of sellers all the time -- our goal is to make the best decision we can in each individual case. And we do require the buyers to return the items at their cost in an acknowledgement that not all sellers can bear the costs the way Dillards or Nordstrom's does. But your point is well taken.
Okay, everyone -- looks like we're coming up to the end of the hour.
Thanks for participating. My email is my eBay ID, so if you have any further questions, please don't hesitate to drop a line.
May all of you see no chargebacks in 2008 (and beyond!)
Colin
ps. great to see you, Catherine! Appreciate you participating...
Thanks everyone for participating in today's workshop.This concludes the "Reducing Chargebacks, Dealing with Claims and Avoiding Risky Transactions" workshop. Be sure to check the Workshop Calendar for upcoming workshops.
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