Quick Query: PayPal Exec On Payment Disputes

Many ecommerce merchants allow customers to pay for their products using PayPal, the popular payment service that’s owned by eBay. But some of these merchants say PayPal unfairly sides with customers if the customers dispute legitimate purchases. We asked Colin Rule, PayPal’s Director of Online Dispute Resolution, about this assertion, and how, exactly, PayPal resolves disputes between ecommerce merchants and their customers.

PeC: If an ecommerce customer pays for a legitimate product using PayPal and then decides he doesn’t like it and complains to PayPal, what will PayPal do?

RULE: In cases where the buyer is simply disappointed in the item, we would encourage the buyer to work directly with the seller. PayPal does offer buyer protection, but this protection covers buyers for items that they didn’t receive and for items that are significantly not as described. It does not cover cases where the buyer is merely disappointed with the item or where the item did not meet the buyer’s expectations.

PeC: What are a merchant’s options if a customer asks PayPal to hold payment?

RULE: If a merchant does get a chargeback, a couple pieces of information can be extremely helpful 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 a merchant did refund the buyer at any point in time, proof of the refund (and/or the shipment of a replacement item) is important.

PeC: What other options are available to merchants to address disputes?

RULE: Again, we always encourage buyers and sellers to first try to work through disputes together. To help with that, we’ve launched the dispute resolution center – a step-by-step system designed to facilitate communication between the buyer and the seller in order to get resolution of the issue. Since launching PayPal Dispute Resolution, buyer claims against sellers decreased by 50 percent, and seller losses on PayPal due to chargebacks decreased 20 percent.

If the dialogue with the seller fails to produce a satisfactory result, the buyer can then escalate the dispute into a claim, where our claims specialists gather information from both parties, examine the case and work with both parties to try to fairly and efficiently resolve the claim. In this process, PayPal will ask sellers for documentation that helps us determine that they shipped the item to the buyer and that the item was as described.

PeC: Why should an ecommerce merchant accept payments from PayPal?

RULE: It helps them increase sales and lower costs. PayPal has 141 million accounts worldwide and merchants therefore have access to a large, global base of buyers. At any given time, there is $3 billion stored in PayPal accounts, which turn over every two weeks. Many buyers view the money in their PayPal accounts as discretionary, so they are more willing to spend it, perhaps with an ecommerce merchant.

PEC Staff
PEC Staff
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