Note: This is a work in progress, and suggestions for improvement are requested and appreciated.
Reckner77 has put together a general PayPal FAQ in the Finance Forum. As his links to this, I thought a link to that FAQ might be a good idea here as well.
Acronyms:
PP= PayPal
SPP = PayPal Seller Protection Policy
INR= Item not received
SNAD=Significantly not as described
CC=credit card
Contents:
I. PayPal Seller Protection Policy
II. Reversals and Chargebacks on PayPal payments
III. How to fight reversals and chargebacks
IV. Important measures to take to protect yourself
V. Important dates/Timeline
VI. FAQs
VII. Special info for PowerSellers
I. PayPal’s Seller Protection Policy:
The SPP is a policy that provides some protection against claims of nonreceipt. It WILL NOT protect you against SNAD claims. To qualify for the SPP, you must:
1. Have the right kind of account, and live in the right country.
a. Account type
Sellers must have a business or premier account to qualify for the seller protection policy. Users with personal accounts will automatically lose all claims of non-receipt. As of August 18, 2005, all eBay sellers must either have a biz/premier account or be willing to upgrade to one.
How do you tell what kind if account you have? Log into your PayPal account. As you can see on a screenshot of my account, the account type is listed right under the nav bar at the top of the page.
You must have a verified account to qualify for the SPP. You can verify your account by linking a checking account to your PayPal account. Some people prefer to use a checking account that is not their primary account. A free account with a low balance works quite well for many sellers.
b. Seller’s location/Buyer’s location
All U.K., Canadian, and U.S. sellers are covered when shipping to U.S., Canadian, or U.K. buyers (as long as all other requirements are met). This is new as of June 28, 2005.
Buyers in Puerto Rico can be covered under the SPP. Buyers with APO/FPO addresses may be covered. See the second section down ("Online Trackable Proof Of Delivery") for details.
2. Ship to a confirmed address
Confirmed addresses are those at which a buyer receives his credit card statement. Do not confuse a confirmed address with a verified account. Addresses can also be confirmed through other means (Alternate Address Confirmation - usually involves faxes in utilities statements and related stuff), but most buyers use the CC method.
To be SPP-eligible, PayPal requires you ship to confirmed addresses only. This is new as of June 28, 2005. Shipping to any other address voids the SPP.
If your buyer indicates a confirmed address on the transaction details, but then requests you ship to another address, and you do it, you will lose an INR complaint automatically.
How do I know you the buyer's address is confirmed? Look at the transaction details page. Below the shipping address, you should see "Confirmed" in green letters (like in this screenshot).
Some addresses in the following countries have been reported to be confirmable: United States; Canada; United Kingdom; Japan*. keep in mind that a confirmed address is necessary but not sufficient for SPP-eligibility.
*Japan addresses may or may not be confirmable. Yonatan found that a Japanese address was listed as confirmed in an email and not confirmed in PayPal. YMMV.
It is possible to have the block on unconfirmed addresses in place and still get a payment from an unconfirmed address. This is due to a quirk in the "pay multiple sellers at once" feature buyers can use. If set your PayPal preferences to NOT include you in the "pay all my sellers at once" option, then the block works as it is supposed to. I'll post a screenshot when I get a chance.
3. Online-trackable proof of delivery
PayPal requires you obtain online-trackable proof of delivery. If you ship via the USPS, get Delivery Confirmation (DC). If you ship via UPS/DHL/FedEx, you’ll get tracking automatically.
DC is confirmation of delivery only. It is not tracking. You may get some scans along the way, but consider those a bonus.
If the total combined payment (item price + shipping + handling + insurance) is $250 or more, you MUST get a signature upon delivery. If not, you WILL lose an INR claim. For shipping via USPS, get Signature Confirmation (SC). For the other 3 carriers, request a signature.
If you allow pickups, you will not have online trackable proof of delivery. You WILL lose all INR claims. A receipt signed by the buyer in DNA-typable blood will not satisfy PayPal. Therefore, do not accept PayPal for pickups.
If you want to ship to international locations, you need to use FedEx or UPS (get tracking) or USPS Global Express Mail (aka GEM). UPS or FedEx will tick off your buyer as they get charged brokerage fees. Additionally, if the buyer does not pay the brokerage fees, FedEx will go back to the seller to get the fees. USPS Express is somewhat expensive but is PayPal-approved for online proof of delivery according to JenniferStash's conversation with PayPal.
Registered Mail (USPS) will meet the PayPal SPP online trackable proof of delivery requirement for items under $250. RM does require a signature, but it is not displayed online and as such will not meet the signature requirement for items $250+. This means that as long as all other criteria are met, you can ship items under $250 to APO/FPO addresses with RM and be covered under the SPP. Thanks to Airtommy for confirming with PayPal that RM will work.
If you plan to ship with Fedex, you have 3 options for obtaining a signature (indirect, direct, and adult). To comply with the signature requirement, you should request either direct or adult. PayPal requires that the package be signed for by someone at the delivery address. Indirect may not get a sig from the delivery address, so it may not meet the SPP requirements. It might, depending on who the Fedex driver gets to sign, but you should not count on it.
4. Ship within 7 days of payment
You must ship with 7 days of payment if you want any SPP-coverage. For eChecks, the clock starts the day PayPal clears the payment into your PayPal account. For all other payment types, the clock starts as soon as the payment hits your PayPal account.
5. Accept ONE payment for all items shipped.
If you split payments, you lose protection. If a buyer wins 3 auctions and pays in 3 separate transactions, but wants you to put everything in one box, you have trouble. You would only have ONE DC or tracking number. The buyer can file an INR on the other two and win.
If the buyer tries to pay with two (or more) separate payments (such as in installments), for one item, you have trouble. You are required to accept one payment. Refund both (or all) payments and submit an invoice for one payment.
6. Item must be tangible
Services do not qualify for SPP protection. Intangible goods (such as digital goods) do not qualify for SPP protection. if you're selling something that is not tangible, you get zero protection. This means WoW codes, gift codes, prepaid cell phone minutes, eBooks, or anything you might email, etc are not covered. You can help protect yourself by shipping a physical item. No shipping means you violate the requirement for online-trackable proof of delivery. If you want to sell a gift card, you can email the code to your buyer but you had better also ship that physical card. If you want to sell a Staples discount code, you will not be SPP-eligible.
7. There must be no surcharge for using PayPal
Both the Paypal and eBay UAs explicitly forbid applying a surcharge to buyers who wish to use PayPal. Depending on which state you are in, it may also be illegal. Aside from that, a surcharge will make you ineligible for SPP coverage. So, don't do it.
II. Reversals and Chargebacks on PayPal payments
Reversal vs Chargebacks:
A reversal is done via PayPal. It may be done in response to an INR or a SNAD claim, or because the funds used in a payment were fraudulent, etc. A chargeback is done through a CC company, which yanks back the payment from PayPal, which in turns tries to yank it back from you. We often talk about these processes loosely at FW, but they are distinctly different and each has different implications for sellers.
III. How to fight reversals and chargebacks
1. Take a deep breathe. Refuse the urge to scream or cry. A reversal/chargeback will come to every seller given enough time and enough sales.
2. Gather together your side of the story. Locate your DC/tracking number. If it's a SNAD complaint, locate all of your photos and the item description.
3. If it's a PayPal reversal, log into your PayPal Dispute Console and enter all the info requested. You must do this by the stated deadline (usually 3-10 days after the complaint is filed) or you automatically lose.
<If you have experienced a reversal or chargeback claim, and can elaborate on the process and provide any tips for handling them, please PM me or post in this thread. I've only done it from the buyer's perspective>
IV. Important measures to take to protect yourself
In no particular order:
•Refuse PayPal from most international buyers. It's just too risky. You can set your PayPal account to block them automatically. US, UK, and Canada sellers may sell to US, UK, and Canada buyers under SPP eligibility if they also meet the rest of the SPP requirements.
•Ship only to confirmed addresses. You can set your PayPal account to require confirmed addresses.
•Make sure you ALWAYS have DC/tracking on EVERY package. Get sigs when necessary.
•Have clear, concise, and precise Terms of Sale.
•Clearly and accurately describe your items, and take very good, clear photos. This is your best defense against a SNAD claim.
Not sure how to block payments from unconfirmed addresses, or from non-U.S. buyers? Log into your PayPal account. Click the Profile tab. Click on Payment Receiving Preferences. Set your prefs to look like mine.
Not sure if your transaction is SPP-eligible? Log into your PayPal account and look at the transaction details. If the transaction is SPP-eligible, you'll see about halfway down the page the line "Seller Protection Policy" followed by "Eligible" in green type (see this screenshot for an example).
Not sure how to block payments from countries you don't ship to? If you do not ship worldwide, blocking people registered in countries to which you do not ship will really cut down on problems. You can put this block in place by logging into My eBay. On the left menubar click on "eBay preferences" (under "My Account"). In the "Seller Preferences" section, click the second to last "change" link on the right side (see this screenshot). That brings you to the Buyer Requirements page (looks like this). Choose whatever blocks you like. Mine are shown on that screenshot.
V. Important dates/Timeline
Day 0 – Payment
Day 7 – You need to have shipped by today to be covered by the SPP
Day 45 – All INR and SNAD claims must have been filed by today
Day 46 - You're safe from all PayPal claims if they haven't been filed yet. You're still potentially at risk for CC chargebacks.
Day unknown – CC chargebacks can be done for potentially months after payment, depending on the CC company
VI. Frequently asked questions:
1. How do I know if I am covered by the SPP?
Once the buyer has sent payment, look at the transaction details page. It will say either “Seller Protection Policy: Eligible” or “Seller Protection Policy: Ineligible”.
2. I don’t accept credit cards through PayPal, am I still safe?
If you have a personal account, you get no protection against INR complaints. If you are sure you did not receive a CC-funded payment (with any account type) then 45 days after payment, however, you are safe from any reversal. As of August 18, 2005, all eBay sellers must either use a biz/premier account or be willing to upgrade, and may not prevent buyers from using a CC to fund purchases.
3. How can I tell if my payment was funded with a CC or not?
If your payment was marked an eCheck, then you know it wasn’t a CC. If your buyer does not have a verified account, then he has either paid with existing funds or a CC. If your buyer has a verified account, there is no way to tell. No, PayPal CSRs will not tell you how the buyer paid if you call and ask.
4. I have a premier/business account and don’t want to accept credit cards. What do I do?
As of August 18, 2005, you are no longer be able to block CC payments. If you accept PayPal, you must accept all forms. This also applies to personal accounts that may be forced to upgrade. See the second question above. The nly exception allowed is for echecks; sellers may choose to state they don't take them. Sellers can block echecks if they wish, but the block is imperfect.
5. I just received an eCheck and my buyer wants me to ship ASAP. Should I?
NO. PayPal tells you to wait until the eCheck clears. This usually takes 4-5 days, but may take longer. The eCheck can bounce, just like a real check, so you must wait. If your buyer gets pissy about the wait, forward them the payment notice you got from PayPal and point out that PP is telling you to wait.
6. My buyer wants to send the item to his son at school. Am I protected?
Not if it’s not a confirmed address.
7. A buyer wants me to send his item to Nigeria. Am I covered?
No, you are not. Please read the Scam FAQ for additional info on sales to Nigeria.
8. My item sold for $5400, but my buyer’s CC limits are $2000 and $4000 respectively. She wants to pay me in 2 separate payments so she can charge the item. Is this a good idea?
No, it is not. If you allow this, you lose SPP coverage. You also lose an extra 30 cents in fees.
9. My item sold for $240, and my shipping/handling fee was $12. Do I need a signature at delivery?
Yes, you do, if you want to be covered by the SPP.
10. My buyer lives just 20 minutes away and wants to pay with PayPal so she can use her CC, but she wants to pick up my item since she’s so close. Should I let her?
You can let her pick it up, but DO NOT accept PP on this sale. You will lose any INR complaint.
11. But I’ll have my buyer sign a receipt. Won’t that work?
NO! PayPal doesn’t care if you have a receipt. PayPal doesn’t care if CNN broadcasts live footage of the buyer accepting her item. PayPal only cares about having online-trackable proof of delivery.
12. Why do you say I have to do this, that, and the other thing? I sell a lot, don’t do what you say I should, and never have any problems.
Good for you. You’ve been lucky. Don’t assume you will continue to be. If you like the level of risk you are exposing yourself too, fine. If you prefer to minimize risk, follow the terms of the SPP.
13. Do you work for PayPal? You sure sound like you love them and think they can do no wrong.
No, I don’t work for PayPal or eBay. PayPal is a tool, nothing more. Used correctly, you can conduct business with minimal risk. Used incorrectly, you can lose your shirt.
14. My buyer's account is verified. Does that mean I have SPP-coverage?
Only if the shipping address is confirmed. A verified account is one that has a checking account linked to it. What you need for SPP coverage is a confirmed shipping address. A transaction with a buyer who has a verified account but an unconfirmed address does you no good as a seller.
15. My buyer has an APO (or FPO) address. It is not confirmed. Am I covered under the SPP?
No, you are not. Unconfirmed addresses are not covered, no matter where they are.
16. My buyer has an APO (or FPO) address that IS confirmed. Am I covered?
If the transactions shows as SPP-eligible, AND you get confirmation of delivery, yes. APO/FPO addresses are tricky, however. You must use the USPS (no UPS, FedEx, DHL, etc). As of sometime in November 2006 DC is available for most APO/FPO addresses. Signature confirmation does not seem to be currently available based on information at usps.com. You can also send your item Registered Mail. If you use RM, confirmation of delivery does show online. RM requires a signature upon delivery, but it does not show online. This means that RM will work as confirmation of delivery and therefore meet the SPP requirements ONLY for items under $250. Thanks to Airtommy for confirming PayPal will accept RM as proof of delivery.
17. I shipped a widget to my buyer confirmed address with UPS. My buyer then did an address correction with UPS that resulted in the package going somewhere else. What will PayPal do?
According to this thread, that would result in PayPal ruling delivery was made to an unconfirmed address, which means the transaction would not be SPP eligible. Buyers may similarly have products rerouted through a USPS forwarding scheme. I've seen reports from PayPal reps that if the tracking/DC shows the package was sent to the confirmed zip but was forwarded in response to a buyer's change of address forward order, that this should be covered by the SPP. You may have to talk to a rep to get them to handle this situation properly.
18. I have blocked payments from unconfirmed addresses, but my buyer still managed to pay me with an unconfirmed address. How did he do this?
It is possible to have the block on unconfirmed addresses in place and still get a payment from an unconfirmed address. This is due to a quirk in the "pay multiple sellers at once" feature buyers can use. If you set your eBay preferences to NOT include you in the "pay all my sellers at once" option, then the Paypal block works as it is supposed to. See this screenshot
19. My buyer has a confirmed address, but is shown as unregistered in PayPal. Am I safe to ship?
Buyers may use PayPal a few times before PayPal forces them to register. A buyer's status as registered or unregistered does not affect SPP eligibility. As long as you follow all the SPP criteria, and as long as the transaction details page says you're SPP-eligible, you are covered by the SPP.
20. Is SPP coverage unlimited?
The SPP covers sellers up to a max of $5000 per year. Anything over that amount the seller is responsible for. I believe the year resets on the anniversary of the account opening, but am not entirely sure on that. This is about the only situation in which you can be certain that your buyer is using a CC, if you care about that trivia.
21. My PayPal account is in the negative. Can PayPal yank money from my bank account or CC?
PayPal used to do this, but lost a lawsuit several years ago and now will not pull funds from any source without your authorization. If your account balance is negative (through a chargeback, reversal, etc), here is what they may do (in the likely, though not guaranteed, order):
*Take any funds in your paypal account to bring the balance back to zero
*Use any incoming payments to cover the negative balance
*Ask you to add money to your account to solve the problem.
*"Piggyback" the owed amount onto any payments you might make. There is full disclosure as to the total amount you are authorizing to be pulled from your selected funding source, and you do have the option to decline to make any payments.
*Send your account to collections
Keep in mind that you will not be able to send any payments (including payment of eBay fees) until your account is brought back to zero. If you refuse, and incoming payments are not sufficient to create a positive balance, your account may eventually be locked and sent to collections. Opening a new account to get around the restrictions is forbidden by the UA, and if/when PayPal discovers the new account, they can and will lock it and use any funds in it to cover the previous negative balance.
22. My buyer filed a SNAD dispute, and I lost. What happens now?
Your buyer will be given 10 days to return the item to you. He must pay for it, and you cannot be charged for the return shipping fee. The package must be returned with DC/tracking (and a sig for items $250+), just like you have to do as a seller shipping goods. At the end of the 10 days if the DC/tracking shows delivery, PayPal coordinates the refund. If the DC/tracking shows the item is still in transit, typically a PayPal rep will allow it to go a few more days. If the buyer does not provide proof of return, and you do not otherwise acknowledge receipt, then PayPal closes the dispute with no money changing hands. That doesn't mean you're out of the woods, as the buyer may be able to file a chargeback.
23. Will I always lose when shipping to an unconfirmed address?
No, not always. PayPal looks for online-viewable proof of delivery (and a sig when necessary) when handling INR claims. The confirmed address requirement comes into play when defending against a chargeback, or when the buyer claims the payment was unauthorized. So says this PayPal employee at Paypal's Online Merchant Network. I haven't had to defend against INR claims with unconfirmed addresses yet, so can't confirm this firsthand. IMO, given payPal's vagaries it's probably better to assume that unconfirmed will result in a loss, and be pleasantly surprised if you win.
24. Does the SPP apply to off-eBay sales?
Yes, it applies to sales made both on eBay and off eBay.
VII. Special info for PowerSellers:
eBay has modified the SPP for PowerSellers. Essentially, all sales and payments made while a seller is an active PowerSeller will be considered to have confirmed address for the purpose of determining SPP eligibility. Sellers will still need to obtain proof of delivery and signatures as appropriate, but will be able to ship virtually worldwide covered by the SPP. The old $5k per year coverage limit is also being eliminated for PowerSellers. This expanded SPP for PowerSellers applies to sellers registered in the U.S., U.K., Canada, and Hong Kong.
PowerSellers do not need to register for expanded coverage. They simply need to ship to the address listed on the PayaPal payment details, and follow the usual other criteria. I.e., ship with DC/tracking, and get a sig for sales $250+. Basically, the entire SPP still applies with the exception of PowerSellers need not demand confirmed addresses, as ANY address will now be treated as confirmed.
At this point I do not have info about when one must be a PS to qualify. certainly individuals who hold PS status at the tie a listing is launched, ended, and paid for will be eligible for the expanded SPP. It remains to be seen to what extent sellers who move up to or out of PS status will have expanded coverage.
5/22/05 update: Added a bit more on the reversal/chargeback process, and some tips on minimizing risk.
6/10/05 update: Added some screenshots and directions to modify PayPal accounts.
6/28/05 update: Modifed information after SPP updated 6/28/05
7/15/05 update: Added tangible goods requirement per Peacherwu's suggestion.
7/15/05 update: Added notes about upcoming changes to PP policy regarding accepting PP and CCS.
7/15/05 update: Added explanation about the difference between verified accounts and confirmed addresses per Count26's suggestion.
8/1/05 update: Added note about use of USPS Global Express to satisfy proof of delivery requirements when shipping internationally.
8/8/05 update: Added link to reckner77's general PayPal FAQ in the Finance Forum.
8/27/05 update: Added Japan to list of countries that may have confirmed addresses per Yonatan's post in this thread.
9/21/05 update: Added info about Registered Mail and APO/FPO addresses. Thanks to Airtommy for supplying the RM info.
4/18/06 update: Added "no surcharge allowed" portion of the SPP, and cleaned up various typos.
6/13/06 update: Added, per Forbin4040's request, what PayPal will do if a UPS shipment is redirected; cleaned up typos and tightened some language.
6/13/06 update: Added info about how/why some unconfirmed addresses can slip through blocks and how to prevent it.
10/25/06 update: Added a screenshot, and fixed a few typos.
12/12/06 update: Updated info about DC to APO/FPO after USPS service changes.
2/18/07 update: Added info about SPP eligibility and buyers not registered with PayPal.
3/7/07 update: Added info about max annual SPP coverage.
5/31/07 update: Added info about PayPal and negative balances.
7/10/07 update: Added info about return shipping for SNAD claims, and cleaned up other sections.
7/26/07 update: Added info about confirmed vs unconfirmed and INR complaints
8/13/07 update: Added info about sigs and fedex.
11/9/07 update: Added clarification as to SPP application to SPP sales.
2/11/08 update: Added info about expanded PowerSeller SPP coverage
