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Are You Prepared for New 6-Month PayPal Purchase Protection?

eBay reminded its users that PayPal’s new protection policy launched on Tuesday, but it extends far beyond eBay. Any seller who uses PayPal to process payments on any venue may be held liable to buyer claims for 6 months after the purchase date.

To put it another way, buyers can dispute a transaction 6 months after making a purchase paid with PayPal on eBay, Etsy, or any other venue. Online sellers are calling it the PayPal 6-month rental program, fearing that shoppers will abuse the policy.

In fact, when the company announced the new PayPal Purchase Protection policy in September, some sellers said they would have to consider whether to continue offering PayPal as a payment method.

Among the reaction from sellers at the time, one asked (presumably with some sarcasm), “Hey, can I buy a car with PayPal?” It’s difficult to believe a dealer would take back an automobile that had been driven by a customer for 6 months, but online sellers expressed outrage that PayPal expected them to accept their items back after 6 months of use.

Clothing sellers are among those sensitive to buyer abuse, many reporting shoppers wear their online purchases before returning them for being “not as described.”

Sellers of antiques and vintage items were particularly concerned about the policy. Some banded together and signed a petition asking PayPal to exempt such goods from the policy:

Vintage and antique goods are delicate and fragile and often require careful handling and storage. It is important that purchases be opened, inspected, and then properly stored within a reasonable time-frame to ensure they remain in the condition they were sent. Not doing so can compromise the goods and even cause them to deteriorate. This new policy removes the sense of urgency in taking care of a vintage or antique item soon after its delivery and allows too long of a time window for the item to sit in its packaging and potentially become damaged by rough handling, extreme temperature changes, etc.

In a chat session with eBay sellers about the new policy in early October, PayPal explained some of the reasons behind it:

We have found that the 45 day time frame that has been offered up to now was not long enough in a number of instances. If a buyer is ordering from overseas for example it may take longer than 45 days for the item to arrive. We also run into this issue with a number of pre-sale items.

In many cases where the 45 day time frame was exceeded the buyer would then file a claim with their credit card issuers, as many of the card issuers allow 180 days to file a claim currently. When a chargeback is received it causes additional fees for the seller. It also takes the decision of the case out of PayPal’s hands and the outcome is decided by the card issuer. In many cases, if the buyer wins the chargeback case they are not required to return the item to the seller per credit card issuer guidelines.

Overall the chargeback process is rarely a good experience for sellers. By lengthening the time frame for claims to be filed we will reduce the number of chargebacks filed and negative experiences for sellers. We will continue to use customer evidence when deciding a case. If we can see that the item has been received and was in the described condition then buyer claims will be denied as they are currently.

Sellers expressed concern as to whether they would have information necessary to defend themselves, such as delivery confirmation from shipping carriers; records of their communication with buyers; and the original listing details to show they accurately described the items.

We gathered a list of questions sellers asked about the new policy and sent it to PayPal for answers. A PayPal spokesperson responded, “Thanks for reaching out. Please refer to this link which should have answers to most or all of your questions.”

Here are two FAQs that partially address two of the questions we sent to PayPal this afternoon:

How can I submit proof of shipment or proof of delivery?

If you are responding to a claim or a chargeback for an unauthorized payment, you can fax or upload scanned images of your proof of shipment in the Resolution Center.

If you are responding to a claim or a chargeback for an item-not-received, we accept online tracking information as proof of delivery in the Resolution Center.

Do services such as Endicia, USPS Click N Ship, UPS WorldShip, USPS First Class Mail International, or Stamps.com provide valid Proof of Delivery or Proof of Shipping?

In order to be covered under Seller Protection, the information provided by the tracking number from the shipping company must meet the proof of shipping or proof of delivery requirements. Please verify that the information from the shipping services meets these requirements.

It’s clear that having proof of delivery – and retaining it for well over the 6-month dispute period – would be wise. We have a question in to PayPal about how sellers can do that and asking for answers to our remaining questions.

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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. See disclosure at EcommerceBytes.com/disclosure/.