When should you file a Paypal Dispute?

Profile picture of the author Justin Wheeler by Justin Wheeler Posted: 02/07/2012
Something I have noticed of late is the number of paypal disputes that come in when people want a refund.

It has always been my understanding that a paypal dispute should be filed as a method of last resort, if you are unable to get satisfaction from the vendor.

I can't help but wonder whether the reason so many well known Warriors, and indeed lesser known Warriors like myself, have had issues with their paypal accounts is because of irresponsible use of the Dispute function with Paypal.

I know the main reason is that there is a large spike in sales volumes, but I am pretty sure that the number of disputes opened may also play a role.

I have also heard that Paypal have been known to ban accounts who always use the dispute functionality within paypal.

So my question is:

Am I right in thinking that the only time a Paypal dispute should be filed is as a matter of last resort and the vendor has been ignoring your requests for help with your product or indeed a refund request?

If so can I urge people to work with the vendors before going down the route of filing disputes. It makes both you and the vendors look bad in Paypals eyes and can lead to limitation or worse closure of your paypal accounts.

This came to my attention on another thread where someone had some minor delivery issues and rather than talk to the vendor went straight to file a dispute with paypal. Just struck me as rather irresponsible.
#dispute #file #paypal

  • Profile picture of the author scott_krech
    scott_krech
    Justin,

    This happened to me several times when my shopping cart had a few delivery issues. I guess my clients [there were about 3 of them] said they tried to contact me via email, but I never received the emails?, so they filed a PayPal dispute to ensure product delivery. I delivered the product and each dispute was closed.

    Best to you.
  • Profile picture of the author Oliver Williams
    Oliver Williams
    Agreed paypal dispute is a last resort however paypal is an inadequate service and should be banned. I am looking for ways to totally rid them from my business altogether and would encourage everyone else to do the same. If they were a financial institution they would have been shut down long ago.
  • Profile picture of the author Jason Z
    Jason Z
    I agree 100% that a dispute should only be a last resort.

    The dispute button in pay pal is sort of like the spam button in email: People don't know that it has negative consequences for the person on the other end.

    If you don't feel like reading my newsletter and hit spam, it causes me to get my account shut down. Just the same as if you buy something from me and due to some technical glitch or error of some sort, you don't see the item you bought.

    So what should you do?

    Step 1: contact the seller.
    In 99% of the cases the seller will work with you and get things resolved.

    You should never go straight to filing a dispute because this can cause a seller to have their pay pal account shut down without doing anything wrong. I recently had a buyer of a wso of mine do just that.

    Their browser locked up and froze pay pal when they made a purchase, therefore they didnt get redirected properly and didn't get their item.

    Note to buyers, most sellers aren't trying to rip you off and we want to do everything we can to get things fixed.

    The person then just filed a dispute. That puts a strike against my pay pal account for something that is not my fault.

    So please please please, all buyers should only file a dispute as a last resort when a seller refuses to work with you and make things right.
  • Profile picture of the author Jason Z
    Jason Z
    Originally Posted by Mrexclusive View Post

    Agreed paypal dispute is a last resort however paypal is an inadequate service and should be banned. I am looking for ways to totally rid them from my business altogether and would encourage everyone else to do the same. If they were a financial institution they would have been shut down long ago.
    On that note, I'll say that I've had bad experiences with Pay pal and I'm not a fan of them. However for people who don't want to open a merchant account to take credit cards and deal with those fees, pay pal is the unfortunate best solution.
  • Profile picture of the author Rob Howard
    Rob Howard
    Yes. Last resort.

    If someone opens a dispute with me, they are instructed to file a ticket and close the dispute to get a refund.

    A majority of people do this immediately and immediately a refund is given.

    This has had a MAJOR impact on my disputes - dropping them to the point of almost nonexistence. Granted, we still get the occasional dipwad who opens and then refuses to close. But those are rare.

    Rob
  • Profile picture of the author J Bold
    J Bold
    Of course it should be a method of last resort.

    I just got one recently, no contact to support, no questions asked, won't respond to email, and yet made up what looks to be some bogus reason to file a dispute and demanded a refund.

    Very annoying...
  • Profile picture of the author Christines Dream
    Christines Dream
    Paypal should always be your last resort.

    Start with the vendor. If you do not get an answer try all the vendor's contact methods (support desk, pm, ...). Then if you still can't reach them see if you ordered through an affiliate...try contacting the affiliate.
  • Profile picture of the author John Trader
    John Trader
    Completely agree, Justin. People in general just need to take a chill and cut each other some grace. :-)
  • Profile picture of the author James Sides
    James Sides
    Everyone has done a great job of explaining that disputes should be a last line of action but one thing I didn't see mentioned...

    Disputes do NOT cover virtual goods to begin with so in all reality a dispute should NEVER be filed on a virtual good. As a vendor all I have to do to win a dispute is tell Paypal you are disputing a virtual good and they close it immediately. This is laid out in their terms of service.

    I always honor my refund policies but when someone files a dispute, often I will make them close it before refunding just as Rob does. Its not fair to put black marks on my account for no reason.

    Cheers,

    James
  • Profile picture of the author J Bold
    J Bold
    Originally Posted by James Sides View Post

    Everyone has done a great job of explaining that disputes should be a last line of action but one thing I didn't see mentioned...

    Disputes do NOT cover virtual goods to begin with so in all reality a dispute should NEVER be filed on a virtual good. As a vendor all I have to do to win a dispute is tell Paypal you are disputing a virtual good and they close it immediately. This is laid out in their terms of service.

    I always honor my refund policies but when someone files a dispute, often I will make them close it before refunding just as Rob does. Its not fair to put black marks on my account for no reason.

    Cheers,

    James

    Very good point. I was ripped off several months ago by a service, which is also not covered under paypal's terms. I filed a dispute after not being able to resolve the issue with the service provider, knowing it was probably in vain. I lost as they said services are not covered. It was immediately escalated to a claim as the seller had been providing such a poor service and had so many disputes his paypal account had been shut down. but I still lost.
  • Profile picture of the author rob-jones
    rob-jones
    They bothered me too at first until I realized most people don't do them out of malice. It's just simple ignorance.

    Customers aren't always as savvy you are. Don't forget what it was like when you were first starting out and everything seemed like a scam. Sales pages are almost always overhyped. There's bound to be a little buyers remorse. Can't avoid that.

    I just treat them like refund requests and just give them the refund if they're within the refund period.

    PayPal set a minimum and a rolling reserve on my account, but other than that, everything has been fine. It really is a high risk industry with massive refund rates and a lot of scammers, so I understand the precautions they take. It's a simple numbers game.

    You're not going to find a bank that's going to be more understanding. They all have to cover their ass. Just be grateful you can make a bundle of cash selling information. Life could be worse for damn sure.
  • Profile picture of the author James Sides
    James Sides
    Originally Posted by rob-jones View Post

    They bothered me too at first until I realized most people don't do them out of malice. It's just simple ignorance.

    Customers aren't always as savvy you are. Don't forget what it was like when you were first starting out and everything seemed like a scam. Sales pages are almost always overhyped. There's bound to be a little buyers remorse. Can't avoid that.

    I just treat them like refund requests and just give them the refund if they're within the refund period.

    PayPal set a minimum and a rolling reserve on my account, but other than that, everything has been fine. It really is a high risk industry with massive refund rates and a lot of scammers, so I understand the precautions they take. It's a simple numbers game.

    You're not going to find a bank that's going to be more understanding. They all have to cover their ass. Just be grateful you can make a bundle of cash selling information. Life could be worse for damn sure.
    I agree mostly! Unfortunately I had my account temporarily frozen and the reason given to me by Paypal was too many disputes even though I've never denied a single refund request.

    It does and can have lasting impacts on our livelihoods.

    Cheers,

    James
  • Profile picture of the author TimPiazza
    TimPiazza
    I am considering a Paypal dispute simply because the vendor (a Warrior Forum member) hasn't responded to any of the several attempts I have made to politely contact them through every means possible. Their support ticket system isn't working, no email response, yet I still get billed for services I haven't received.

    How long would you wait to be contacted before opening a dispute? I am patient, but I'm loathe to be taken advantage of. We're at least 5 days into my attempts to make contact.
  • Profile picture of the author M1chael
    M1chael
    Filing a dispute before you ever request refunds will get you on my block list, blacklist and $#itlist. Its not only bad form its flat out rude and can hurt peoples business. I know that people are sometimes just ignorant of how tonredund, but they really should look before doing that.

    If you file it after repeated attempts to get a refund though proper channels then that's fine. There are times it is warranted, but those have always been very few and far between.

    I have seen a sharp increase in them over the last little bit, compared to past experience. Its too bad really.
  • Profile picture of the author onegoodman
    onegoodman
    I have a rule anyone cross me to paypal get banned from my list, website, and services . I never denied a buyer a refund, but once they go to PayPal first it is a game over.

    Right now I reached my limit and waiting for anyone to get back at him (if someone ask for refund, he is not getting it).

    I just got a dispute today for unauthorized payment ?! really ? the funny part he is not new buyer, but apparently they are aware PayPal protection plan don't cover online services, so now they going for unauthorized payments.

    PayPal should take buyers who fill these claims seriously and get them banned if their claim is fake.
  • Profile picture of the author ShaneWilliams
    ShaneWilliams
    Enjoyed reading this informative post!

    So if it's a virtual product Paypal will deny the buyer's dispute no matter what? Every time?

    What about with refund deadlines? I clearly marked my return policy on a WSO for 30 days. Had a guy create a dispute wanting a refund at 45 days. I took a screenshot of the 30 day policy from the sales page and uploaded that to Paypal.

    Will they always side with us in that situation...even if it's just a day over? Obviously a screenshot could be faked, so not sure how valid they consider that.
  • Profile picture of the author TomHarvey
    TomHarvey
    Interesting post going on here, useful to draw on people's experiences and once again see the inconsistency and non-transparency of Paypal. Having seen a number of people suffer issues recently it must be said it appears somewhat strange that some big vendors and affiliates (Mike Lantz being the biggest of all on here of course) are absolutely fine yet others are having accounts blocked and flagged.

    I guess the key is in how you deal with Paypal, it would appear that if you liaise with them then some of the problems can possibly be headed off before they arise - inform them when you have a launch and expect an influx of sales, explain what you are doing (so they know its a virtual goods business etc etc) - all a bit of a pain and extra hassle and of course getting hold of someone there is notoriously difficult...

    Either way it seems to be something that we will have to live and work with as like it or not, people seem to have a trust of Paypal (probably harking back to their eBay experiences and the fact its so easy to file a dispute!) and its integrated in so much of what we do and use that its a necessary evil.

    That however doesnt excuse the propensity of some to go running straight into a dispute, as is the concensus verdict here, you should always seek to engage the merchant first as 9 times out of 10 they will rectify without the need for further action. Perhaps there is a case to publish this TOS or procedure more widely on the WSO delivery page - an interesting thought perhaps albeit maybe negative as publicising about refunds and putting the idea in the customers mind....
  • Profile picture of the author mrclean78
    mrclean78
    The answer for sellers is simple. Sign up for an authorize.net gateway and gateway provider...then your own shopping cart system.

    You will NEVER have to deal with paypal again.

    I've gotten rid of them months ago and have NEVER been happier.

    Paypal is horrible for sellers. I have too many horror stories to count.
  • Profile picture of the author Justin Wheeler
    Justin Wheeler
    Some great insights here. A nice idea asking people to close a dispute before offering a refund. Up until now I have just accepted the disputes in the vast majority of cases immediately on the basis that the time taken fighting a dispute would be better spent elsewhere.

    I am however fairly confident that paypal do view disputes in a bad light when looking at accounts so I suspect that is a route I should consider going down.

    With regards to TimPiazza, it does sound as though raising the complaint level to a paypal dispute is a good idea in his particular case, although as James Sides points out digital products do not fall under paypal's protection scheme.

    Anyway thanks for peoples comments so far. Learn something new every day as they say!
  • Profile picture of the author paul_1
    paul_1
    I agree, Justine. The Dispute function should be used as the last resort. Meaning you didn't get any help/communication from the vendor and it's leaving you no choice but to use it.

Related discussions