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Wednesday, May 07, 2008

PayPal: How to Successfully Chargeback without Losing your Account

I have done it! It only took two months, but I have done what some said could not be done. What did I do, you ask?

I successfully issued a chargeback to PayPal to dispute and auction item and not only facilitated the return of the item in question, but also avoided having PayPal cancel my account in the process. No small feat based of what I have read from various sources.

The good news is that while it took two months elapsed, it very little of my time. Still, both the principle and the challenge of this feat kept me motivated to follow through to success.

So now that I have accomplished this, I will share a little bit of background on how this came about and some easy steps on how you may be able to replicate this success should you run into a similar situation and want to avoid being taken to the cleaners.

The brief background is as follows. A couple of months ago, I purchased a Tamron f/2.8 DI LD Aspherical 17-50mm zoom lens for my Canon EOS Rebel XTi on eBay with the intention of upgrading my outfit from the weak glass that the kit ships with. I paid what I deemed to be a fair price for a US version of the lens, complete with warranty.

What I received however, was a gray market version of the lens – one that should have come at a significant discount to the US model I was expecting. (more on that here) While the lens appeared to work wonderfully, it would be impossible to know what imperfections and / or other issues that might crop up with use over time.

I contacted the seller about the issues, who first denied that that the item was indeed a gray market item – and then refused to honor their clear return policy listed as part of their auction description.

With that background, here are the tips that you need to have in hand to successfully dispute a purchase on eBay through PayPal, issue a chargeback, and not have your PayPal account suspended or terminated.

1. Never pay for an item from PayPal with either your PayPal balance or from your debit card via direct debit / ACH. When you do this, you are forced to solely rely on PayPal as a source of resolution. Rather, pay via your favorite credit card so you retain all of your chargeback and dispute protections that credit cards provide.

2. You need to have a strong case based on the auction description. For instance, in my case – not only was the item supposed to be an authentic, but the seller had a clear 7 day return policy without any exceptions. While you might think the authenticity of the item makes for a clear case, when it comes to chargebacks – the return policy actually holds more water. Make sure that you have a couple of concrete items to dispute before you proceed. There is a big difference between not reading the auction content, asking questions, and the seller clearly delivering less than what they committed to.

3. This is a no-brainer, but try to work it out with the seller first. If you have not contacted the seller about the issue and the outcome you expect – do this. Set your expectations with that seller clearly and allow them to dispute it. The emails may likely become evidence in future conversations or disputes.

4. Know the eBay and PayPal policies. I spoke a little about this a couple of weeks ago, but eBay forces people who pay for an item via PayPal to take their concern to PayPal for resolution. The only problem is that PayPal will only allow you to dispute or issue a claim against a very specific set of circumstances, generally around the quality / expected quality of the item being delivered and/or an empty box showing up at your doorstep.

The PayPal policy clearly states in their member agreement that uses retain the chargeback rights under PayPal, however you MUST follow the following procedure. First, you must give PayPal the opportunity to resolve the dispute / claim. Only after that outcome is determined may you pursue the chargeback option with your credit card. You may not pursue both options concurrently or out of order or PayPal may cancel or suspend your account.

5. Another important note is that if you are disputing the authenticity of the item you received, PayPal put the responsibility on the buyer to determine this. In fact, they may required you to contact an independent third party, have an inspection, and produce a document on their letterhead with contact information in order to verify your claim. If this is your dispute reason, it is best to have a backup such as not honoring a return policy.

That last point is what really made my situation easier. I was able to ignore this request from PayPal (since they will not allow you to dispute based on return policy), allow them to find the claim in the favor of the buyer and then opened the dispute with the credit card. From that point it was only a couple of days until PayPal convinced the seller that I could return the item and provided the return address and RMA.

This is the process that worked successfully for me. If you are caught up in a eBay or PayPal dispute and fear that you have no other options – just follow these simple steps. If you do, you will get to the right outcome and not waste too much of your time – just a couple of emails and a quick phone call to your credit card company to resolve.

Good luck, and please let me know with a comment if either this technique or your own worked!


Anonymous said...

Thank you for sharing your experience. I've recently made a purchase and never received the mechandise or any response from seller. Filed claim with Paypal. Decision was in my favor, but since there wasn't any money in seller's account, only $200 will be refunded. Certainly not satisfied (I still suffer a huge loss), I filed chargeback. Even though I'm not holding much hope that I'll get my money back (seller already became non-registered user on eBay), I'm still glad to see your case was resolved to your satisfaction. And again, thanks for sharing the information.

Ken Hanscom said...

Thanks for your comment, sorry to hear about your experience. I bet that it will be a clear case where your credit card company finds for you. Certainly since you never received the merchandise.

Best of luck and thanks for letting me know!


Anonymous said...

I received a counterfeit item thru eBay paid with cc thru paypal.should I dispute with eBay or go directly to cc company for a chargeback.

Ken Hanscom said...

Start with eBay and then PayPal and use the CC as a last resort.