No merchant wants to need to know how to fight PayPal chargeback fraud. But it’s a reality of using the platform. However, it’s possible to fight back and, in some cases, recover stolen funds.

Something to keep in mind is that, unlike regular credit card transactions, PayPal offers additional programs and resources that put a few options at the merchant’s disposal. Although by no means foolproof, they can help. Below is an action plan along with links to resources merchants can use to try and get their money back.

How to Fight PayPal Chargeback

  1. Enable Instant Payment Notifications

    PayPal offers an Instant Payment Notifications service to instantly inform merchants of anything that triggers a transaction on their account. This guide shows you how to integrate the feature on the backend for all the possible transactions and automate chargeback notifications.

  2. Try to Speak with the Buyer

    Experts at Chargebacks911 estimate that as many as 40% of a merchants’ chargebacks are the result of merchant error. Many times, it’s possible to clear up misunderstandings about billing descriptors or return policies by reaching out to the buyer. If this doesn’t work, move on to deciding whether to fight the chargeback.

  3. Check if the order is covered by PayPal’s Seller Protection Program

    PayPal runs a program to help merchants hit with chargebacks. In general, the requirements for an order to be covered by the PayPal Seller Protection program are shipping a physical good from a US-based account, on-time to the address on the transaction page, with the ability to provide any order documentation requested.

  4. Provide Proof of Online Tracking

    If the item is covered, it’s time collect evidence of fraud. One category of chargebacks covered by the PayPal Seller Protection program is “Unauthorized Transaction”. This means the account holder says they never authorized the transaction. To win this claim a merchant’s Transaction Details page must mark the sale “eligible” or “partially eligible” and they must provide online tracking.

  5. Prepare Proof of Delivery or Proof of Shipment

    Another category of chargebacks covered by Seller Protection is “Item Not Received”. This means the account holder claims they never got the item they paid for.
    To win this claim, merchants must provide either proof of delivery or proof of shipment from an online shipping company. Proof of delivery must provide a signature confirmed delivery date to the address on the Transaction Details page. Proof of shipment must show the name of the shipping company and that the item shipped to the address on the Transaction Details page.

  6. Respond to the Chargeback Notice within 10 Days

    Once all the documentation is in order, merchants can respond within 10 days. To do this, log into PayPal and go the resolutions center and provide all the order transactions records.

  7. Send a Detailed Email Along with the Documentation

    Merchants should include an email letting PayPal know the reasons for disputing a chargeback. This email should accompany the documentation, and give a detailed account of the merchant’s side of the story. Include any customer history, communications, or anything else that will demonstrate merchant good faith and a likelihood of fraud by the buyer.

  8. Check the Status of the Dispute

    It can take as many as 75 days for the entire PayPal chargeback process to resolve itself. During that time, merchants can continue to check the status of the dispute. To do this, go to “open cases” in the dispute resolution center. Updates about “what happens next” will also be provided.

  9. Appeal a Claim if You Lose

    If the buyer wins the dispute, merchants can appeal PayPal chargeback decisions. To do this, go to the Resolution Center in the merchant account, navigate the drop-down menu to “closed cases”, and click “appeal”. Decision reversals occur in limited circumstances. These include if a buyer agreed to return an item but did so in a damaged condition, returned an incorrect item, or sent a package with no item in it at all.

  10. Discuss How to Fight PayPal Chargeback Fraud in the Community Forums

    If all else fails, resources like the PayPal managing risk and fraud forum may help ease the pain. Although this won’t help with a past chargeback, merchants can share their story and get tips for how to prevent eCommerce fraud in the future. Other good resources include the disputes and limitations forum, and the payments forum.

Do More to Fight PayPal Chargebacks

Fighting against fraudsters is a last resort. Ideally, preventative measures can stop fraudsters before they strike. It’s impossible to prevent eCommerce fraud altogether, but merchants can take a few steps to better protect themselves.

Firstly, watch out for current scams. The list of them is constantly changing, but PayPal provides a guide to help merchants spot fraud recurring attack methods. This includes actionable advice for avoiding prize winning, fake charity, overpayment scams, and more.

Secondly, PayPal provides a resource for how to prevent fraud when shipping an order. It reads as a mini-checklist of things to pay attention to before shipment, and it’s a good idea to review the best practices there. Highlights include verifying the shipping address, using online tracking, and always using a known and trusted shipping service.

Finally, PayPal allows merchants to report buyers for abuse, including unjustified chargebacks. A single act of abuse won’t cause PayPal to take action, but a pattern can result in disciplinary action. To be clear, this won’t refund a merchant’s money. However, it can help ensure one less fraudster exists in the community.


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