Dealing with PayPal: A Guide for Buyers

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The PayPal dispute process can be unnecessarily complicated and confusing for buyers (and sellers, but this guide focuses on buyers). Fortunately, there are proven, effective ways of dealing with the 4 most common PayPal buyer problems. These are outlined below, drawing on the experiences of the many buyers who have visited eBay's forums with PayPal problems.

Before we start, please be aware of the time limits for lodging a dispute (45 days from payment) and escalating to a claim (20 days from opening of dispute).

The first step when dealing with PayPal is to be clear about which Buyer Protection Policy covers your transaction.

If you bought an item through (even if the item came from overseas) it will be the Australian policy. But if you actually logged into the (US) site, for example, to make a purchase, then it will be the US policy. This guide only deals with the Australian policy.

Dates are also critical. On 17 June 2008, a new Buyer Protection Policy came in for Australia, covering transactions paid for from that date. If your transaction was paid before June 17, the old policy applies to you. They can both be read in full on the PayPal website - click "User Agreement" and follow the links. The old policy is named "Exhibit A".

Now here are the 4 most common problems, and their solutions...

Remember that for payments funded with a credit card, a chargeback through your bank is a possible back-up option if all else fails, although it will remove any chance of compensation through PayPal.

Problem 1: "I didn't get a full refund, because PayPal couldn't get all my money back from the seller"

A. For the new policy -

Technically, according to the policy as written, payments in this situation are at PayPal's "discretion".

However, PayPal have claimed that the coverage (up to the $20 000 limit) will always apply, and that refusals are due to a mistaken application of the Buyer Complaint Policy (a less comprehensive scheme which covers non-eBay transactions) in place of the Buyer Protection Policy. At least some of the refusal emails people have recieved mention the Complaint Policy.

Whatever causes this issue, a phone call to PayPal, in which you mention the Banking Ombudsman, followed up by a complaint to the Ombudsman if needed (see ABIO website), has proven very effective at gaining a refund.

Alternatively, as a first step,  if your rejection does mention the Complaint Policy, email Amanda at PayPal - she is aware of this particular issue and willing to help.

PayPal usually describe any refund in this situation as a one-off, goodwill payment, As the policy is very new, it is yet to be seen how they would react to a second complaint from an individual.

B. For the old policy -

The main difference is the lower maximum refund available, which will be noted on each listing - either $400 or $3 000 (depending on several factors).

There is also no "discretion" in the granting of refunds, but PayPal might still apply the Complaint Policy by mistake, so be prepared to contest their decision using the steps above.

Problem 2: "PayPal told me they don't handle items not-as-described, but only items not received"

They're wrong. This PayPal myth seems to be a result of the same mistake described in Problem 1 - the Complaint Policy being used instead of the Protection Policy.

The steps for dealing with it are also similar to Problem 1. Call PayPal, explain their mistake, mention the Banking Ombudsman - and if you have no luck, make a complaint to the Ombudsman (see ABIO website).

Problem 3: "PayPal wants me to send a fake item back for a refund"

As you've probably worked out if you're in this situation, returning items (especially by PayPal-accepted methods) can really eat into your refund.

Where you are claiming that the item is not-as-described because it is fake, this cost is avoidable. Once again, you need to call PayPal. In this case, explain to them that you are not meant to send fakes through the mail.

Basically, this is because, firstly, Australia Post policy states that you are not permitted to post items that it is illegal to possess, which fakes are (at least in certain circumstances). Secondly, if it is an international transaction, there is the issue of sending such items through Customs, and then on into another country with its own laws and regulations.

Once you point this out, PayPal will most probably ask you to destroy the fake, which also means that the seller can't resell it to another unsuspecting buyer.

Problem 4: "I need to change my not-received dispute into a not-as-described dispute"

Firstly, it is best not to close your dispute until you have a full refund or the item, as described. If you close it, you cannot open another of any type for that item.

As for changing the dispute type, under the old policy, there is no room for this. Under the new policy, PayPal has a discretion to allow it if circumstances change. At least one person has done it successfully under the new policy. Follow the steps for Problem 1 if PayPal is reluctant to exercise this discretion.

The Limitations of PayPal

Unfortunately, there are some PayPal outcomes which have no easy answers. These may seem unfair, but are often covered by PayPal's extensive - and frequently vague - terms and conditions. Particularly important are the types of items excluded (cars - which come under another policy) and airline tickets are just two) and what it means for an item to be significantly not-as-described.

It is best to familiarise yourself with the policy (preferably before buying) so that you at least know where you stand, and can take informed action if you feel that PayPal has actually misapplied a policy.

Also, nothing can take the place of common sense when choosing a seller. Research the product, read the feedback, ask questions (through eBay messages), be realistic and, if in doubt, don't buy. Things can go wrong for the most careful purchaser, that's where PayPal can be invaluable, but it's only sensible to mimise the risk - and the amount of time and effort spent dealing with PayPal!


If you still have questions, why not come along to the eBay forums for more personalised advice? Member to Member Help is good for providing friendly help, while the Round Table is a great place to vent with like-minded people.

Best of luck dealing with PayPal!

- Under*Cover*Poster, with assistance from Extreme_Redeye, and inspiration from many knowledgeable posters :)


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