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!

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Understanding PayPal’s Dispute and Claims process

I finally – after several years – understand PayPal’s dispute and claims process by which buyers and sellers are asked to resolve any disputes that they have with the other party. In my case, I wrote about a particular dispute on a gray market lens that I purchased through eBay almost 45 days ago at this point. Interestingly and initially surprising – I actually lost the dispute claim I opened up with PayPal last month. But I am not necessarily concerned anymore, here’s why.


PayPal’s dispute and claim resolution is solely designed to protect against counterfeit, fraud, and incorrectly described merchandise from a seller. This is something that I never understood until recently because I looked at them as more of a credit card company – which they are not. Their goal is to make sure that you received what you bought, and it was as described and not a counterfeit item. That is as far they will go.

In my case, I had a few different options for my dispute. The first was to pursue the fact that the Tamron lens was a gray market lens. However, after seeing the requirements that PayPal places on you I decided not to go that route. Those requirements include going to a dealer, having an inspection and having that inspector provide a letter on their company letterhead stating why the item has issues. That option was way too much work and possibly too expensive for me.

The other option I had was that the seller had a money back guarantee on their auction, but was not willing to honor it.

PayPal has updated their user agreement to support credit card chargebacks – which did not use to be the case. Since as long as you follow the process in the user agreement that PayPal has setup, they will not suspend you account for doing a chargeback to the vendor from your credit card.

This in fact is the reason WHY you should NEVER, EVER pay for an item via PayPal with you bank account, even though PayPal tries to make you pay that way. The instant you pay via ACH (or via your bank account / ATM card) you lose the protection that you have from your credit card.

And that was exactly what I did – bought the item on a credit card so I could retain my right to escalate to a chargeback. First, rather than leaving the item in a dispute status which I initiated, the seller immediately escalated it to a claim. Over the next month I answered a few emails from PayPal while simply insisting I wanted to return the item per the auction seller’s original terms, but had been denied by the seller.

After the end of 30 days, since the authenticity of the item could not be determined – I refused to go have a third party verify since I was only disputing the conditions of the return – PayPal resolved the claim in the favor of the seller. Something I completely expected.

My action? Once I received the email from PayPal (a requirement of the user agreement for a chargeback is that you attempt to use their dispute resolution first, and do not run them concurrently), I simply called my credit card and disputed the charge.

Since I had the note from the seller stating they would not honor the return, according to my credit card company it is a closed case – and I now have my money back.

The only odd part is that I still have the camera lens. I am fully planning to return the camera lens, but my credit card company says the seller must now send me a postage paid return label for me to return it. From my perspective this was an even better outcome than I expected – as I was planning to pay return shipping previously.

PayPal actually provides adequate protections now that they have amended their user agreement to allow a chargeback without the threat of an account cancellation. With a little information, that is easy to execute on.

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PayPal’s Dispute Process – Slow, Even with Open and Shut Cases

eBay and PayPal’s dispute process is painfully slow. Especially when you believe you have an open and shut case. Not only that, but it appears based on my recent experience that they do not follow the process that they want you as a user to follow. Concerning, as it appears they do violate the user agreement which they ask you to adhere to.

As I mentioned in my “gray market lens” article recently, the seller that sent me a gray market lens in addition to having a standing seven day return policy (no exceptions) on their auction is refusing to accept a return for the camera lens. Rather than working out the situation, the seller decided to immediately escalate the case with PayPal to a claim from a simple dispute.

An additional important side note, eBay has now completely intertwined their complaint process with PayPal – if you used PayPal to make your purchase, you cannot also file with eBay to report an issue with a seller. This is unfortunate since many of the PayPal dispute criteria do not match with the sorts of eBay issues you can have.

The PayPal process is supposed to be the following. 1. One party escalates the dispute to a claim. 2. The seller has up to 10 days to respond. 3. PayPal provides the response to the buyer to see if there is a disagreement before proceeding. If the buyer disagrees, they are allowed to respond to the case. 4. Once both sides have responded, PayPal reviews the claim.

In my case, step three was completely missed and did not occur. The seller responded to the case on February 19th and then the case immediately went into the “Being reviewed by PayPal” status. What in the world was going on here?

After a quick call to PayPal, they mentioned in some cases that this happens. I asked why it would ever be in review status without having both sides of the story. Side-stepping the out-of-process issue with PayPal, the agent mentioned I could email PayPal at “resolution@paypal.com” and they would document my issue and add it to the log.

My sense here is even if the “claim” is not resolved in my favor that I have quite a leg to stand on in terms of a dispute with a credit card. The reason is that PayPal has not followed the process that they outline in their member agreement. While I am hopeful this will not be the case here, it could always be a possibility!

In order to make sure my position was clear, I went ahead and sent in an email to the resolution@paypal.com email address. PayPal logged it and the case continued. It appears that today PayPal contacted the seller again. My hope is that the case is on its last leg and PayPal’s contact was to confirm my position or ask for evidence that the seller did not offer the return policy.

Despite that, it does seem like this is taking an awfully long time – we are at two weeks since the dispute was changed into a claim. In that time, I have received no official contact from PayPal which is a little discouraging. Perhaps that does confirm my thoughts that this is really an “open and closed” case. I was assuming that the nature of this case would have an end result much more quickly.

Let’s hope it ends soon. That would mean I can return the lens shortly and get on without a gray market lens and buy what I really need. Have you had a PayPal dispute take this long?

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Gray Market Lenses for Canon EOS Cameras

What would you do if you received a “gray market” or “Japanese” version lens when you were left with the impression that it was a genuine USA lens? Would it matter if you spent more on the lens because you were led to believe the lens was a genuine USA model?

This is an issue that I recently encountered and it was both an educational and learning experience for me. This is not only a gray market story, but also an eBay story – of which the outcome is still pending.

Before we get started, let us define what a gray market lens is. According to Tamron (the manufacturer of lenses for Canon cameras) here is the deal with gray market lenses:

In looking for our products, you may find that products not supplied through our regular channel are sold in your market. Such products are generally called “gray-market products” and may involve quality problems.

Interchangeable lenses are precision optical and mechanical products. Therefore, if handling during transportation or storage is not adequate, defects or malfunctions may occur. As for our products supplied through our regular distribution channel, meticulous care is taken in transportation and storage in order to ensure quality protection. However, in the case of gray-market products, it is more likely that they are handled inadequately during transportation or storage; are exposed to undesirable conditions such as high temperatures, vibration, shock, high humidity, dust, dirt and so on; or that they have been mixed up with used products since they are not under our strict control. Therefore, we are unable to warrant the quality of gray-market products.

The reality of the statement is that in most cases the gray market lenses are of the same quality and reliability as their genuine USA counterparts. However, since there is no way to guarantee this – they are not covered by warranties since their authenticity cannot be determined. In addition, these lenses have a significantly lower resale value (~25%) than their genuine counterparts for the same reason, even though most warranties are not transferable in the first place.

Just a couple of weeks ago, I bid on and won a Tamron SP AF17-50mm f/2.8 XR Aspherical lens on eBay. The lens was used, but was in mint condition and a genuine USA product. I placed my bid for what I thought was a reasonable savings over whether I had purchased the lens new from B&H or Amazon.com. Fortunately, I won the lens well within the price I was looking to pay and the items was delivered very quickly to me.

When I opened the box, I was immediately concerned that the lens was not a genuine USA lens. Why? Because all of the pamphlets, manuals, and other documentation were written only in the Japanese language. There was one small foldout that had a couple of sentences of English in it – and that was it. Two other telling signs, there was a multi-layer “receipt” in the box with Japanese writing on it and the US UPC code and information on the bottom of the box was covered with another sticker that had additional information on it.

However, since I was not positive, I hooked the lens up to my Canon EOS Rebel XTi 400D and snapped some quick photos. The lens worked great, and the clarity of the photos taken with the new lens were far superior to the kit lens, the EF-S 18-55mm lens that the Rebel XTi ships with.

Still, I had to contact the seller to see if they knew that the item they sold was a gray market lens rather than the genuine USA one. After a quick reply, the seller suggested I check with Tamron to verify the authenticity. Even though the lens came from “Preferred Photo” a well-known grey marketer and seller of imported products – the seller was not willing to discuss options until I received word from Tamron.

The next morning, I placed a call to Tamron. I spent about 5 minutes on the phone with the agent providing information and asking a number of questions. At the end of the call, the agent responded with – the serial number is not in our system, and based on the rest of the information – you have a “gray market” lens. Now it was time to go back to the seller.

While I was willing to put several different options on the table, the seller was not. The seller felt it was fine to mislead buyers since the lens worked well – regardless of the authenticity or the lowered resale value. For me personally, I could not advertise a lens as genuine USA that was not for a couple of reasons – one, it is dishonest and two, I would expect a reasonable buyer to return the lens.

At that point, I requested that I return the lens under the 7 day money back guarantee that the item was posted under. The seller has resisted, but should not be able to step around the clarity of the return policy. I will update on how that goes as it is currently in the PayPal “dispute” statue.

Now I will need to scour the market to find the best price on a genuine USA lens from B&H Photo or Amazon.com.

To summarize and answer my own questions:
What would you do if you received a “gray market” or “Japanese” version lens when you were left with the impression that it was a genuine USA lens?
I would return it.

Would it matter if you spent more on the lens because you were led to believe the lens was a genuine USA model?
Yes, especially since at some point I plan to resell the lens.

More importantly, what would you do? Let me know with a comment below.

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The Anatomy of an eBay Scam – Finished

It has been several weeks since I have updated you with my ongoing saga with eBay and PayPal regarding the attempted eBay purchase of a Canon PowerShot SD800 IS digital camera. At this point I considered everything to be resolved – boy was this quite an amazing experience.

In the end, I have lost any respect that I had for PayPal, and because eBay owns that company – I am no longer quite the admirer of the company and service. The bottom line is that PayPal only cares about protecting itself and provides plenty of ways for folks to game their system. eBay recently announced that security is a top priority of theirs for 2007, however I say that it is too little, too late.:

This is how the situation concluded. After receiving an unauthorized payment from a compromised PayPal account, that amount was put on hold by PayPal. I immediately contacted the seller and notified them I was bringing the authorities into the situation. That prompted the individual who lived a short ways from me to immediately send a U.S. Postal Service money order for the full amount of my purchase. This was great news, in terms of recovering my payment.

(On a side note, I have since found out that the authorities technically would not get involved in such a situation. This is, according to my local police department is a civil matter between the two parties. Regardless if any fraud is involved.)

However, I contacted PayPal because there were many suspicious items including that the person involved in the transaction had access to multiple, false PayPal accounts to receive and send money. My suspicion was this person was part of a phishing ring, given that I encountered three different PayPal accounts during my involvement. I even offered to provide the envelope and information from the money order to assist in the investigation.

PayPal never contacted me nor responded to my offer. My bet is that as long as they received their commission on the transfer – they did not care.

For those keeping track, here is the history of this experience:

• The Anatomy of an eBay Scam: I discover the scam and attempt to contact PayPal to inform them.
• The Anatomy of an eBay Scam – Revisited: The user has covered their tracks and neither the FBI(IC3) or PayPal have responded. I discover more demographic information about the seller.
• PayPal is a RIPOFF: PayPal contacts me to let me know they have found in my favor, but cannot recover the money. However, they will “try” to.
• The Anatomy of an eBay Scam – Resolved: I receive a payment via PayPal from a different account and think my problems have gone away.
• The Anatomy of an eBay Scam – Reloaded: The money sent to me in the previous post is from another hijacked account.
• The Anatomy of an eBay Scam – Resolved Part II: I threaten the individual with legal action and luckily it pans out. A money order for the $289.00 is sent to me, is confirmed and clears the bank.
• Top 5 ways to make eBay a better place: Lessons learned on how eBay enables and supports the fraudulent users and activities without taking action.

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eBay Heightens Security Precautions in 2007 - A Translation

Recently in an article by Rachel Konrad, eBay says they are making security a top precaution in 2007 for their customers. However, it reads more like a marketing spun press release than an Associated Press article. The truth is that eBay has sat by idly over the past two years and allowed identity thieves, scammers and frausters to run rampant on their sites (including PayPal) without any regard for their customers or users. The only reason eBay is now making this a priority is because of the results of an internal survey suggesting their reputation is suffering.

Based on my experiences with eBay, I have selected the important points of the article and translated it to what William C. Cobb, President of North America and others were really saying.

"Engineers also want to reduce counterfeit items and clamp down on scams between buyers and sellers from different countries, said William C. Cobb, president of eBay North America."
Translated: We would think our security and marketing departments would want these changes to be made rather than relying on our engineers to make the suggestions. This suggests we really do have an issue.

Cobb said in comments posted Wednesday to an eBay forum. "Where we've historically put an emphasis on transparency and free choice, today the security threats are more complex, and we're more actively protecting our buyers from fraud."
Translated: We've been very lazy because we are a very popular site. We are only making these changes now because we are starting to see lost revenue associated with it. Furthermore, eBay is doing very little at this point to protect buyers. The biggest scam on the planet, the $.01 auctions used to only boost feedback are still active. How we can continue to justify these auctions is beyond reason, in fact anytime someone intentionally loses money to sell something, we really should question it.

Representatives are also sending nasty e-mails to sellers who charge egregious shipping and handling fees. EBay reduced the average shipping cost in the "cell phones" category by 25 percent since last summer, Cobb said.
Translated: We noticed the people were simply charging the cost of their goods in the shipping rather than in the auction price. We calculated the revenue we were losing on that technique and decided we had to stop it. In the end, we realize that the users on our site are paying the same or a little bit more due to the increased fees. However, we are making more money.

"We're never going to completely stop the bad guys from using the Internet, but we do know that negative experiences are a major reason people leave eBay - and they pass along word of mouth to other people," Durzy said. "In 2007, you'll see a sea change in our approach to trust and safety."
Translated: We've never going to completely stop the bad guys. Heck we are not even really going to try. We are going to continue business as usual and do the absolute minimum we have to, so we can convince some people that we are trying to change. In the end, we realize we are a very popular site.

EBay says less than one-hundredth of one percent of the listings on its Web site are fraudulent.
Translated: We're going to give you a number that looks really small. However, we are not going to discuss dollar value because it will sound like a much larger number. This larger number will probably make you realize that we really are not trying, and even scare you. We realize that most scams are for larger dollar items, rather than the small value items that make up the majority of our auctions.

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Top 5 Ways to make eBay a Better Place!

As promised -- given my recent experiences on eBay, both the good, the bad, and the ugly, I am providing my top 5 list of ways to make eBay a better place. I have been on eBay since December 1995 when I started trading Baseball Cards, seeing a lot of changes take place on the site.

However, this Christmas holiday shopped season in particular has been a nasty one for both buyers and sellers alike on eBay – perhaps like never seen before. All one needs to do is to look at a number of auctions for the Sony Playstation 3 (PS3) and Nintendo Wii to see large quantities of Non-Paying Bidders, Shill Bidding, & Fraudulent sellers. The criminal community has found a way to really game the eBay system and now is time to stop it!

So, below you will find my “Top 5” ways that eBay can improve their systems to protect bother buyers and sellers in their auction marketplace.

1. Require Stronger User Validation. It is too easy to get an eBay account. They should require some sort of physical address, phone number, or other sort of verification that the person is who they say they are.

2. Require “authorization” of funds when bidding. A huge problem right now are people with zero or low feedback posting fake bids without an intention to actually make good on their purchase. By requiring a credit card authorization in the amount of their bid placed (whether or not they choose to pay via that method) is an option that may sellers would like to see as a requirement to insure the bidder “intends” to purchase the item rather than leaving the seller stranded with seller fe