What to expect from PayPal dispute resolution

How your consumer rights are protected when making purchases through PayPal

Gripe Line reader Bob wrote for help in getting two refunds he felt he was owed by PayPal.

"I have been twice burned by PayPal," he says. "In the first case, I ordered a product that was never sent." PayPal investigated this matter and agreed with Bob -- he was owed a refund. "But there was no money in the vendor's account," Bob explains. "So [PayPal] could do nothing for me."

[ When things go wrong with a new piece of equipment, you have several options to protect yourself from poor dispute resolution | Frustrated by tech support? Get answers in InfoWorld's Gripe Line newsletter. ]

The second case was not as clear-cut.

"I ordered some software that did not work," says Bob. "I made more than a few attempts to contact the vendor but got no response." In that case, PayPal responded that, as stated in the user agreement, "The claims process only applies to the shipment of goods. It does not apply to complaints about the attributes or quality of goods received. Therefore, we are unable to reverse this transaction or issue a refund."

I looked into Bob's rights, as detailed in PayPal's user agreement. And it seems to me that, in theory, it supports PayPal's original decision in both cases.

The PayPal Buyer Complaint Policy ... enables buyers to file Disputes for Items Not Received (INR), or for items that are Significantly Not as Described (SNAD). By filing a Dispute, you can communicate with the seller and attempt to resolve the problem. If you are unable to resolve the problem, you may escalate an Item Not Received (INR) Dispute to a Claim - but you may not escalate a Significantly Not as Described Dispute to a Claim.

Even though you may escalate an Item Not Received Dispute to a Claim, you are not guaranteed recovery. If the Claim is decided in your favor, your recovery is limited to the amounts that PayPal can recover from the seller's Account.

Given our recent discussion on consumers' rights to resolve disputes with merchants when using credit cards (and other means of dispute resolution), I thought it would be worthwhile to add PayPal to the mix.

PayPal offers two tiers for dispute resolution: The PayPal Buyer Protection covers eligible items purchased on eBay, whereas the PayPal Buyer Complaint Policy covers all other items purchased on or off eBay. The terms under the Buyer Protection coverage are quite generous and even refund the original shipping charges and the full purchase price if the company finds in your favor.

But Bob's case -- not being a purchase of eligible goods on eBay -- fell under the Buyer Complaint Policy, and that one doesn't offer a program for escalating disputes over goods that are "significantly not as described" to a claim with PayPal. In the case of goods that never arrive, it states, "Recovery is not guaranteed and is limited only to the amounts that PayPal can recover from the seller's Account."

Just to be sure, though, I forwarded Bob's letter to PayPal for comment. I got much more than that -- in the form of an official statement. "Due to our privacy policy, we cannot provide specific details with regard to individual cases. However, we can confirm that PayPal further reviewed the case and that [Bob] was credited in full," it said.

I checked with Bob to make sure everything was now OK.

"PayPal called me," Bob replied, "and said they would refund both purchases! Thanks!"

Got gripes? Send them to christina_tynan-wood@infoworld.com.

This story, "What to expect from PayPal dispute resolution," was originally published at InfoWorld.com. Read more of Christina Tynan-Wood's Gripe Line blog at InfoWorld.com.

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