Paypal sellers - You can win more Paypal disputes than you think

Profile picture of the author Nick Brighton by Nick Brighton Posted: 04/12/2011
OK, I'm not going to dig up old laundry here, but suffice to say that I did some work for a client recently and he tried to claim that I didn't do the work, under the conditions agreed.

I won the case. He tried to dispute it again, so I called Paypal and they told me this shouldn't happen, and won't happen again.

BUT HERE'S THE INTERESTING PART:

When I told him what I was selling, he told me that because it was service based and the goods delivered were intageable (i.e services and/or digital items) that the buyer was not elligable for buyer protection in the first place.

This is HUGE if you're providing services or certain digital products. This could save you a lot of hassle and lost money.

Now, I'm sure there are lots of clauses, but as I looked into this in more detail, here's a few things I discovered:

https://www.paypal.com/helpcenter/ma...rInstance=9016

This page talks about:

At PayPal, we are continuously striving to ensure that payments made within our community are safe, by providing specific terms and conditions that need to be followed by buyers and sellers. We help to cover you in the event that something goes wrong with your purchase of tangible, physical goods which can be posted.

PayPal's Buyer Protection provides a method for buyers to issue formal complaints regarding goods paid for through PayPal but never received, and regarding goods purchased and paid for through PayPal that the buyer receives but that are significantly not as described by the seller.

However, there are some payments that we do not cover including payments for services, real estate, businesses, vehicles , custom made items, airline flight tickets, eBay classified advertisements, licenses and most intangible items. In addition, items prohibited in the PayPal Acceptable Use Policy are ineligible for coverage.
Now, there could be some ambiguity over "tangible items" here, but the guy I spoke to at Paypal claims department said that tangible items include digital items and services.

So, could this mean selling digital items voids buyer protection? I'm not entirely sure, but I'll look into this.

From the conversation I just had, and after reading this, I'm starting think it might.

But more importantly, this protects freelancers who offer services and then the buyers try and dispute the services offered. This is essentially what happened to me, and they closed the the case in my favour, for this very reason.

Just thought I would mention this, especially for freelancers who may have been through the same situation as I have recently with a client.

If anybody has more validation or information on voiding Paypal buyer protection through the sale of digital items, please let me know.

Because as I say, I have a feeling that Paypal views digital products as "intangible" which therefore voids buyer protection.

P.S - Of course, this isn't a form of encouragement or an open invite for con artists. This is just something that both buyers AND sellers should be aware of, especially when selling services where your time could potentially be lost, without pay, undeservedly.
#disputes #paypal #sellers #win

  • Profile picture of the author premiumplr
    premiumplr
    To my understanding, you are completely correct. Although ethically you want to stand behind any guarantees you offer, according to paypal, intangible items are exempt from PP Buyer Protection.

    This exemption does help you have any held funds released sooner. All you have to do is call paypal and explain that the purchase was for an intangible item.

    The one caveat is that the customer can still file a credit card dispute if he or she used it to pay for the purchase.

    I have had a few questionable customers try to file fraudulent chargebacks and this policy helped me get those funds released within the hour.
  • Profile picture of the author gotti3636
    gotti3636
    That is true, if you sell a digital item or a service then it is totally up to you to refund or not. The buyer will never win a case on PayPal for a digital item/service if the seller simply puts 'Intangible Digital Item' in the dispute comments. Only physical items are covered.
  • Profile picture of the author Nick Brighton
    Nick Brighton
    Originally Posted by premiumplr View Post
    To my understanding, you are completely correct. Although ethically you want to stand behind any guarantees you offer, according to paypal, intangible items are exempt from PP Buyer Protection.
    I agree. I should emphasise - this isn't about ethics or morals, this is about what options the buyer and seller have. Of course, you should always honour your guarantee, regardless of Paypal's policy.

    However, warning to buyers - technically, a seller can refuse your refund on Paypal's terms. That is something people should be aware of when buying digital items directly through Paypal.

    Of course, that would do more long term damage to the seller is terms of reputation, but I'm sure there are some jack asses out there who would do fly-by-night piking.

    The one caveat is that the customer can still file a credit card dispute if he or she used it to pay for the purchase.
    These can be investigated just like any other. If you have evidence of the work being carried out and terms being agreed (via email or Skype for example) then the buyer doesn't have a leg to stand on.

    And I quote directly from Paypal:

    What are some best practices for avoiding chargeback losses?

    • Follow the Seller Protection Policy guidelines by retaining proof of postage that can be tracked online and delivering to the buyer's address listed on the Transaction Details page.
    • Describe the item that you are selling in as much detail as possible and as accurately as possible. Include pictures, measurements (if applicable) and other relevant specifics.
    • Make every effort to know your customer and to respond promptly to any customer service requests.
    • Keep as much information as you can about the transaction and your customer, including any emails or other correspondence.
    • Publish your return policy in your auction listings or on your website. Also include your policy in email correspondence with your customer. Please note that certain laws and credit card issuer policies provide that buyers may have chargeback rights for merchandise that is not delivered or is defective, even if your policy indicates that all sales are final and that you do not allow returns.
    What information can a seller provide to increase the chances of winning a chargeback dispute?

    Some types of information that sellers can provide to PayPal to increase the chances of winning a chargeback include:

    • Proof of postage or delivery, such as online tracking numbers
    • Copies of the original item description or auction description, including any photos
    • Proof that the buyer was already refunded
    • Proof that the buyer was provided with a replacement product
    • Correspondence with the buyer or feedback from the buyer
    • Any agreements signed or accepted by the buyer at time of purchase
    • Any returns policy that was communicated to the buyer
  • Profile picture of the author Bruce NewMedia
    Bruce NewMedia
    I remember this story, Nick. ...very glad to hear this was settled in your favor.
    I agree this is important, particularly to service providers. And it leaves the only risk that the buyer may fraudulently attempt a chargeback, if they used a credit card through Paypal.
    _____
    Bruce
  • Profile picture of the author Nick Brighton
    Nick Brighton
    Originally Posted by brucerby View Post
    I remember this story, Nick. ...very glad to hear this was settled in your favor.
    I agree this is important, particularly to service providers. And it leaves the only risk that the buyer may fraudulently attempt a chargeback, if they used a credit card through Paypal.
    _____
    Bruce
    Yeah, thanks Bruce. I'm glad too. But I was ready fight this one on principle alone
  • Profile picture of the author BIG Mike
    BIG Mike
    Nick, I can tell you from years of experience that that PayPal will side with the seller on non-tangible, digital products and that includes going to bat for you on chargebacks (although these can take months to resolve).

    The main point is to have your refund policy in place on the sales page above the order button and in appropriate detail - list any special conditions the buyer must meet to obtain a refund.

    Bear in mind that if you offer "No Questions Asked Refunds", then PayPal is not going to back you up - you won't have a choice, even if you think the person is a serial refunder.

    This is where I suspect most marketers shoot themselves in the foot...they automatically assume that not offering a 30 or 60 day no questions asked refund policy will hurt sales. I say this because I sincerely doubt very many of them actually test this - I did, for six months.

    What I found was that sales were not impacted at all and so I made our no refund policy permanent. It's been a couple of years since doing that and our sales continue to grow year-after-year.

    What that does do is allow us to respond to a PayPal dispute like this:

    1. Buyer files a dispute demanding a refund.
    2. We immediately escalate the dispute and state:

    The buyer purchased a non-tangible, digital product named ______ from this sales page ___URL___. Directly above the order button is our clearly stated refund policy which indicates that all sales are final and non-refundable. This is a legally binding condition of the purchase on the buyer. If the buyer is experiencing difficulties with _______ we do offer free technical support the buyer may request by sending email to ___support_email___.

    3. Within 2 or 3 minutes PayPal closes the dispute and returns the funds to us.

    We do something similar for chargebacks, even when they come in as unauthorized purchases. PayPal goes to bat for us and I cannot remember the last time we lost one - credit card companies seem to almost always find in our favor.

    I know that some folks are turned off by a no refund policy, but in my experience and test results I find it's on the order 1:300 who won't buy. What's really important is what it does for us....

    Firstly, it stops the tire kickers and serial refunders cold. Secondly and most importantly, it allows us to decide who should/should not receive a refund rather than be forced by a third party to do so. There are times when a refund is in order from a good customer service standpoint, i.e.; we were not able to correct a problem expediently, etc.

    Now, I'm not suggesting everyone simply go this route - I am suggesting that everyone should carefully test it for themselves to determine it's impact on sales. Don't assume that because everyone seems to say you must offer refunds to make sales that it's true for you.
  • Profile picture of the author Nisip
    Nisip
    but your paypal account was restricted also, during the time of this dispute?

    do you have what type of paypal account?
  • Profile picture of the author Jeff Henshaw
    Jeff Henshaw
    Nick, I can tell you from years of experience that that PayPal will side with the seller on non-tangible, digital products and that includes going to bat for you on chargebacks (although these can take months to resolve).
    I have to disagree with Big Mike on this. Albeit I have only two cases to call on in my experience as a purchaser using PayPal, although I also sell through them.

    I purchase mainly via PayPal and only twice in about 7 or 8 years have digital downloadable products not been delivered to me after payment. On both separate occasions I contacted the vendors at least three times over a period of a fortnight. When I did not get satisfaction, I raised a dispute and sent PayPal copies of the emails that I sent to the vendors. On both occasions my money was refunded by PayPal within a couple of days.

    That's my experience, if it's worth anything to the thread.

    Regards,

    Jeff.
  • Profile picture of the author Tim_Carter
    Tim_Carter
    I have posted this very same thing in here time and time again when new sellers don't know how to win disputes.

    It is true. You always win as a seller on digital goods and services. Just escalate to a claim and tell them what it was (intangible / service)

    Originally Posted by Nick Brighton View Post
    OK, I'm not going to dig up old laundry here, but suffice to say that I did some work for a client recently and he tried to claim that I didn't do the work, under the conditions agreed.

    I won the case. He tried to dispute it again, so I called Paypal and they told me this shouldn't happen, and won't happen again.

    BUT HERE'S THE INTERESTING PART:

    When I told him what I was selling, he told me that because it was service based and the goods delivered were intageable (i.e services and/or digital items) that the buyer was not elligable for buyer protection in the first place.

    This is HUGE if you're providing services or certain digital products. This could save you a lot of hassle and lost money.

    Now, I'm sure there are lots of clauses, but as I looked into this in more detail, here's a few things I discovered:

    https://www.paypal.com/helpcenter/main.jsp;jsessionid=DspLMFFGb42Fv604LFTGzM2h11T0RG nl3z00Jpl69Y5WmRFQWb7l!-617376071?t=solutionTab&ft=homeTab&ps=&solutionId= 1203190&locale=en_GB&_dyncharset=UTF-8&countrycode=GB&cmd=_help&serverInstance=9016

    This page talks about:



    Now, there could be some ambiguity over "tangible items" here, but the guy I spoke to at Paypal claims department said that tangible items include digital items and services.

    So, could this mean selling digital items voids buyer protection? I'm not entirely sure, but I'll look into this.

    From the conversation I just had, and after reading this, I'm starting think it might.

    But more importantly, this protects freelancers who offer services and then the buyers try and dispute the services offered. This is essentially what happened to me, and they closed the the case in my favour, for this very reason.

    Just thought I would mention this, especially for freelancers who may have been through the same situation as I have recently with a client.

    If anybody has more validation or information on voiding Paypal buyer protection through the sale of digital items, please let me know.

    Because as I say, I have a feeling that Paypal views digital products as "intangible" which therefore voids buyer protection.

    P.S - Of course, this isn't a form of encouragement or an open invite for con artists. This is just something that both buyers AND sellers should be aware of, especially when selling services where your time could potentially be lost, without pay, undeservedly.
  • Profile picture of the author seasoned
    seasoned
    Originally Posted by Nick Brighton View Post
    OK, I'm not going to dig up old laundry here, but suffice to say that I did some work for a client recently and he tried to claim that I didn't do the work, under the conditions agreed.

    I won the case. He tried to dispute it again, so I called Paypal and they told me this shouldn't happen, and won't happen again.

    BUT HERE'S THE INTERESTING PART:

    When I told him what I was selling, he told me that because it was service based and the goods delivered were intageable (i.e services and/or digital items) that the buyer was not elligable for buyer protection in the first place.

    This is HUGE if you're providing services or certain digital products. This could save you a lot of hassle and lost money.

    Now, I'm sure there are lots of clauses, but as I looked into this in more detail, here's a few things I discovered:

    https://www.paypal.com/helpcenter/ma...rInstance=9016

    This page talks about:



    Now, there could be some ambiguity over "tangible items" here, but the guy I spoke to at Paypal claims department said that tangible items include digital items and services.

    So, could this mean selling digital items voids buyer protection? I'm not entirely sure, but I'll look into this.

    From the conversation I just had, and after reading this, I'm starting think it might.

    But more importantly, this protects freelancers who offer services and then the buyers try and dispute the services offered. This is essentially what happened to me, and they closed the the case in my favour, for this very reason.

    Just thought I would mention this, especially for freelancers who may have been through the same situation as I have recently with a client.

    If anybody has more validation or information on voiding Paypal buyer protection through the sale of digital items, please let me know.

    Because as I say, I have a feeling that Paypal views digital products as "intangible" which therefore voids buyer protection.

    P.S - Of course, this isn't a form of encouragement or an open invite for con artists. This is just something that both buyers AND sellers should be aware of, especially when selling services where your time could potentially be lost, without pay, undeservedly.
    Intangible LITERALLY means not able to be touched, so services and digital products ARE intangible. However this distinction is not made under the law and if all did this the whole credit industry couldd collapse because all merchants could claim this. So there has to be more to this, or it will have to change.

    Steve
  • Profile picture of the author Nick Brighton
    Nick Brighton
    Originally Posted by seasoned View Post
    Intangible LITERALLY means not able to be touched, so services and digital products ARE intangible. However this distinction is not made under the law and if all did this the whole credit industry couldd collapse because all merchants could claim this. So there has to be more to this, or it will have to change.

    Steve
    Maybe that's why a lot of companies don't use Paypal?

    @ Big Mike - very interesting. I've often thought that over the top guarantees (or often any kind of guarantee at all) is a compensation for a lack of initial trust or relationship between the seller and buyer.

    Sure, it's needed for cold selling... but cold selling is probably the worst way to sell these days anyway.

    In other words, if my brother sold me a car, I wouldn't demand a 100%, unconditional guarantee. Why?

    Because I would trust him enough to know that the car won't break down on me.
  • Profile picture of the author BIG Mike
    BIG Mike
    Originally Posted by Jeff Henshaw View Post
    I have to disagree with Big Mike on this. Albeit I have only two cases to call on in my experience as a purchaser using PayPal, although I also sell through them.

    I purchase mainly via PayPal and only twice in about 7 or 8 years have digital downloadable products not been delivered to me after payment. On both separate occasions I contacted the vendors at least three times over a period of a fortnight. When I did not get satisfaction, I raised a dispute and sent PayPal copies of the emails that I sent to the vendors. On both occasions my money was refunded by PayPal within a couple of days.

    That's my experience, if it's worth anything to the thread.

    Regards,

    Jeff.
    Hey Jeff,

    If you got a refund with in a couple of days, then most likely the seller refunded you to close the dispute. That's one of the few options a seller has in the Dispute Resolution center.

    Do you recall if you escalated the dispute to a claim? PayPal doesn't actually get involved in disputes - they close automatically after 20 days if still open. They do get involved in claims after escalation, so was curious if it went that far?

    @Nick - Sure, an over the top guarantee is one more step up the credibility ladder, but it doesn't necessarily mean one is required.

    The most important lesson I've learned about IM is to take nothing for granted or as an absolute - test everything yourself and make decisions based on your own testing.
  • Profile picture of the author Nick Brighton
    Nick Brighton
    Originally Posted by BIG Mike View Post

    @Nick - Sure, an over the top guarantee is one more step up the credibility ladder, but it doesn't necessarily mean one is required.
    Actually, what I was trying to say is, guarantees are ONE STEP DOWN on the credibility factor... which reinforces why you don't need them in your business to make the same amount of sales.

    A guarantee is compensating for a lack of credibility and trust. If your audience doesn't trust you, then you need to reassure them with guarantees and safety nets.

    If someone I truly trusted offered me something, I would dream - nor dare - ask them for a guarantee in writing.

    I guess it depends on your business model. Obviously, direct mailers and cold callers don't have the luxury of trust in the first point of contact.
  • Profile picture of the author NikkiDelgado
    NikkiDelgado
    I had a 2 recent disputes on Paypal one was for a site that I sold on Flippa. The guy had not read the auction well and thought the site was HTML not wordpress, he didn´t speak very good English and after a long transfer process I eventually won the dispute

    The second was a WSO which I did not offer a refund policy as it was so cheap. The buyer complained because the course was not downloadable it was online. It is very clear in my description of the product what you get and in no where does it say the course is downloadable! I made my WSO this way so that people wouldn´t download it and share it hence me loosing business.

    The buyer ended up winning the dispute I was mad!! So paypal doesn´t always work in the favour of sellers!

    Thanks for your interesting post thought I would share my experience with disputes
  • Profile picture of the author Djrock
    Djrock
    I really hate to bump a 2 month old thread, but I'm currently having two disputes filed against me for supposedly not sending out an item.

    The item in question is a digital item, and I have no tracking information to enter into it. I do have msn chat logs of him affirming he received the item but I'm not sure if that'll help much.

    Should I call up paypal customer support and tell them it was an intangible item, or what?
  • Profile picture of the author Andrea Wilson
    Andrea Wilson
    I learned a lot from this thread. So I thought I must join in, one must always remember that if you made the payment as personal, paypal cant and shall not help you ever. You cant even file a dispute so even if you have a reason to dispute you can't. I know that this form of payment should not be done when paying digital items but some sellers simply wants it that way to get rid of the fees.


    Andrea

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