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PayPal to Protect Purchases of Digital Goods – for up to 6 Months

In a major policy shift, PayPal will extend its buyer protection plan to cover digital goods in the UK, including other “intangibles” such as DVDs and tickets. The Guardian newspaperreported the news on Friday, and a PayPal spokesperson confirmed the new policy in a statement to EcommerceBytes on Monday.

“PayPal is constantly looking for new ways to make the shopping experience even safer, faster and more secure for people around the world. We are currently rolling out new protections for buyers in the U.K. when they use PayPal to purchase digital or intangible goods. If our customers value and benefit from these new protections we may consider extending this program to other markets.”

PayPal and most other online payment services do not generally extend buyer protection to digital goods such as ebooks, MP3s, recipes and the like. And while buyers are likely to appreciate the extra protection, it presents a challenge to sellers who fear an abuse of the policy.

A seller of music MP3s told EcommerceBytes his immediate reaction upon learning of the new policy was that people could download an MP3 and then decide they don’t like the song. “An MP3 cannot be returned but can be put on a CD and passed on at any time.” And, he said, “PayPal are harsh with sellers (like eBay) and always give the buyer the benefit if the doubt. They need to allow for a good exchange of views before making a refund automatic. Physical goods are easier by far but digital goods leave a seller open to being abused if PayPal do not play fair and give room for appeals.”

The Guardian also said PayPal was extending the amount of time buyers who encounter a problem have to report a dispute, from 45 to 180 days. It appears that the extended time period applies only to the digital and intangible goods policy, however, and not to the sale of physical items. UPDATE: a PayPal UK spokesperson said the 180 days is for all transactions – tangible and intangible.

eBay restricts the sale of digital goods on its marketplaces, but it appears the new PayPal UK buyer protection policy will apply to DVDs, which are allowed for sale in the U.S. The idea that buyers who purchase movies have six months to return them could be cause for concern among sellers who would likely worry about buyers seeing eBay as way to “rent” movies and the like.

The new policy is set to take effect in the UK on June 17, 2014.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.