How to Handle Disputes in PayPal?

PayPal is one of the largest online money transfer platforms. You can use it as an individual or business to send and receive payments around the world. PayPal offers a protection program to safeguard you from online scams. You can use this protection to raise a dispute and get your money within 60 days from the purchase. In this article, we will explain how to handle disputes in PayPal resolution center and close the open cases.

PayPal Disputes

There are two possibilities of handling disputes as a PayPal account owner.

1. Creating a dispute as a seller
2. Received dispute from the buyer

Let us explain both cases in detail.

1. Creating Dispute as a Seller

Let us take an example. You hired a freelancer for designing your website and paid him an advance payment for starting the work. However, the freelancer did not complete the work on time or not started the work at all. In this case, you can raise a dispute in PayPal to hold the payment to the freelancer and get the refund of your money. Follow the below instructions to handle PayPal dispute as a seller.

Login to your PayPal account and go to the “Activity” tab. Find the transaction for the payment that you want to raise a dispute for refund and click on it. This will show you the details of the transaction like below.

Scroll down to end of the details and click on “eligible for purchase protection” link.

Selecting Dispute Type

PayPal will ask you to select the type of dispute you want to create. There are four types of disputes available in PayPal:

• I didn’t receive an item I purchased
• I receive an item that wasn’t as described
• I want to report unauthorized activity
• I have a billing issue

You can hover over the dispute type to get more details.

For example, in the above freelancer example case, you can select “I didn’t receive an item I purchased” if you haven’t received the final designed website. Otherwise, you can choose “I receive an item that wasn’t as described”, if the website design is not as per your specifications.

Submitting Dispute

Select appropriate dispute type for you case and go to the next screen. Here, you have to fill up the details of the issue and attach screenshot if required. Make sure to explain the issue with a proof that the item was not received or not delivered as per your order.

Click on the “Submit” button to send the dispute to the person who received money (seller) from you.

PayPal Dispute Resolution Center

PayPal will take up the dispute and send the details to the seller for getting clarification. You can view the current status of your dispute and the responses in the Resolution Center.

Anytime you can click on the dispute and view the latest status or send additional details to the seller. If there is no response from the buyer, you can escalate to PayPal within 20 days of opening the dispute.

Closing the Dispute

Now that you have raised a dispute and there are few possibilities for closing the issue.

• Seller agreed to return the money – in this case PayPal will automatically close the dispute
• You received the money outside PayPal or agreed with seller to close the dispute – open the issue in Resolution Center and scroll down to the bottom. Click on “Close this case” link and confirm the closure.

Remember, once you closed a dispute for the transaction, there will be no further possibilities to raise another dispute in PayPal. Therefore, ensure to get the complete refund before you decide to close the dispute.

Related: Beginners guide to PayPal China.

2. Received Dispute from Buyer

If you are selling items, there are lot of reasons buyers can raise a dispute to hold the payment. When you receive a dispute for refund, PayPal will put hold for the transaction and you can only transfer the money after resolving the dispute with the buyer.

Find the transaction under “Activity” tab and click on it to view the details. You will see an information message showing there is an open dispute for that transaction.

Click on the “Visit the Resolution Center to view status” link to go the Resolution Center. As explained above, you can see the dispute case details and the reason from the buyer for asking refund in Resolution Center. You can either provide the details and convince the buyer or send the refund to close the case.

Refunding Buyer

This is a simple way to close the dispute. You can agree with the buyer’s complaint and send the refund to close the dispute. Remember, PayPal will refund the transaction fee and you do not have to pay any additional transaction fee again for refund.

PayPal will process the amount and inform the buyer.

The case will be closed once the refund is successfully processed and sent to buyer.  

Escalating with PayPal

If you do not agree with the buyer, you can provide the clarification to PayPal in Resolution Center before the deadline. Alternatively, it is also possible to escalate to PayPal regarding the buyer’s behavior and deny the refund with reason. In most cases, you may need to provide additional details so that PayPal can decide who can win the dispute.

Winning or Losing the Dispute

It is not always the buyer will win the dispute in PayPal.

• Remember, it is quite difficult to create dispute for digital goods. For example, you might have ordered an eBook from a website and found the content is outdated in the book. In such case, you may not win the dispute as this can’t be described as an issue from payment point of view.
• Some marketplaces like Envato will block your account if you raise PayPal dispute. Since they also sell digital goods like themes and plugins, you will lose the dispute even though the product is not as described.
• The best option to handle disputes in PayPal is to contact the buyer or seller and resolve it outside the PayPal.
• PayPal has to transfer the money to bank account on the same day in some countries like India. In this case, you may not have any balance when there is a dispute for refund from a buyer. You will see a negative balance and you are liable to remove the negative balance before 120 days. Otherwise, PayPal will limit your account from sending and transferring the money.

If neither party agrees to close the dispute, PayPal may apply the dispute fee to handle it further and resolve.