Can I trust PayPal's seller protection? If not, what can go wrong?
December 2, 2007 10:53 AM   Subscribe

Can I trust PayPal's seller protection? If not, what can go wrong?

I placed a nice piece of electronic cell phone gadgetry up for sale on eBay. It sold for a bit over $500. The person who bought it has a relatively new account (Jun of 2007), with no prior feedback. They already paid via PayPal, and I initiated transferring the money out of the separate bank account I keep for PayPal stuff.

I am, of course, concerned that this person might be a scammer, so I did a little google stalking to find out about them. My results were mixed: they have been at the address listed for at least two years, but an old friendster profile has lots of comments congratulating them on being a computer hacker. So I don't know if they are trustworthy. My concern, looking around at horror stories, is that a chargeback will occur after I ship the device, either at they buyer's request, or because the buyer might have used a stolen credit card.

The good news is that I am eligible for PayPal's Seller protection policy, as long as I ship with a tracking number and a signature requirement, which I will do. This should protect me against chargebacks. But I don't know what can go wrong with this. Reading around, it looks like some scammers might be able to reverse charges much later, after the online tracking and signature information have expired.

Does anyone have any experience with this? What can go wrong? Other than reimbursing the buyer and relisting the item, what can I do to protect myself?
posted by procrastination to Shopping (22 answers total) 7 users marked this as a favorite
I've heard stories about people who will initiate a Paypal chargeback the day you will no longer be able to leave negative feedback on them.

That said, I've been an Ebay since 2000, with nearly 500 feedback, and have sold things worth $500-$1000 before and never got scammed in this way.

Make sure to follow every step of Paypal's seller protection process to the letter and you should be fine.
posted by drezdn at 11:14 AM on December 2, 2007

Just make sure you get a hard copy of the sig/tracking info. If you want to be extra, extra sure then pay a bit more yourself for a better courier service. You can't rely on Paypal to protect you.
posted by gatchaman at 11:34 AM on December 2, 2007

Remember the telephone? It's that thing we used to communicate with each other before eBay introduced tiny text boxes where our dialogs are constrained by length and creative punctuation (say, using quotation marks) is forbidden.

Get the buyer's phone number, call him, and discuss your concerns. You may realize in talking to him or her that they are perfectly legit. If the buyer sounds flaky or doesn't want to chat with you on the phone refund the money and offer your gadget as a second chance offer to the next highest bidder.


- Ship via UPS or FedEx. Although USPS offers insurance and delivery confirmation they can't provide the level of security and package tracking that other shippers can.

- Hold on to all your receipts, tracking numbers, etc.

And in the future specify in your auctions that you will not accept bids from users with zero or negative feedback.
posted by wfrgms at 11:50 AM on December 2, 2007 [1 favorite]

In the end it's up to Paypal. Check carefully what they stipulate when it comes to proof of postage and make sure you get it. I've no idea about the USA but they recently stopped accepting regular proof of postage slips as proof, everything must now be signed for in the UK. Use the correct service, keep all the paperwork, and you should be fine.

If the buyer claims he didn't get the item or otherwise tries to get the money Paypal will ask you for a copy of the delivery slip - give them that and they will tell the buyer to get lost. If you don't have that proof then they will always side with the buyer and will refund his money.

There are a couple other things you can do - when you get the money into your Paypal account withdraw it to your bank account immediately. If you have a spare account lying around empty it and use it for shuffling the money down from Paypal, through the spare account, and into your personal account or your pocket. Don't link your important or personal bank accounts to Paypal because if buyers do manage to start fucking with you Paypal just dive into your money to refund them.

Don't worry, you should be fine. I wouldn't read too much into the research you did either.
posted by fire&wings at 11:50 AM on December 2, 2007

you'll be OK. next time, point out that you won't sell to users with zero or negative feedback and you'll be OK.
posted by matteo at 12:04 PM on December 2, 2007

Actually I'm currently on the other end of a transaction like this.

I bought a Video card which was incorrectly described and not working. I have initiated a claim with PayPal about a month ago. Still waiting for PayPal to refund me the money. Therefore seems to me like the PayPal Buyer protection is a total BS.
posted by WizKid at 12:16 PM on December 2, 2007

One common seller's technique that will change the whole question is whether you charged your Paypal fees to the buyer. Sellers who do this lose their Seller's Protection (in most countries).
posted by rhizome at 12:52 PM on December 2, 2007

Been selling on eBay about a year, and have had no problems at all with PayPal (or, for that matter, buyers paying up).
posted by Rykey at 1:51 PM on December 2, 2007

Like WhizKid I was on the other end too. Bought an item (non-ebay) and the seller never shipped even after a month. I made one last request and then initiated a chargeback. Paypal just emailed the seller about it and said ok you two resolve it and if we don't hear from you in 21 days (or some other limit), then this matter is over. Thankfully the seller refunded me.
posted by special-k at 2:45 PM on December 2, 2007


- Ship via UPS or FedEx. Although USPS offers insurance and delivery confirmation they can't provide the level of security and package tracking that other shippers can.

Registered mail is substantially more secure than Fedex & UPS. You're correct that USPS' tracking system is inferior.
posted by aerotive at 3:01 PM on December 2, 2007

I was also on the other end, buying an item and never receiving it. In the end, the seller removed his bank account (or something of the sort) leaving Paypal unable to reclaim my money. All I got was an apology from Paypal
posted by Sufi at 5:21 PM on December 2, 2007

Second Sufi's comment. I also had an experience where the transaction went south, and PayPal basically said "well, we tried to get money back but their bank account had no money. So sorry."
posted by jytsai at 5:31 PM on December 2, 2007

Response by poster: Thanks for the comments. I shipped it out today with all the requirements for PayPal seller protection.
posted by procrastination at 1:31 PM on December 3, 2007

procrastination, regarding the scam comments you just posted to MetaTalk, I'd say you should take it up with ebay/paypal. It's a he said/she said issue, but eBay should side with you because you have more history on the site.

Also, be sure to leave negative feedback for the buyer's false claims.
posted by mathowie at 9:58 AM on December 7, 2007

Response by poster: I posted in MetaTalk (as mathowie said above), but that was the wrong place, so I will post a follow-up here.

So it was a scam. I sent the phone on Monday, and got a notice today from the buyer that he was disputing the claim because the item was "significantly not as described", making up all sorts of stuff about what was wrong with it. I checked the PayPal FAQ and it suggested immediate escalation, so that is what I did. I am hoping that the Seller Protection kicks in, but what I fear is that they will refund him his money and have him ship it back and I will get a box full of rocks.

I have already withdrawn almost all the money in my PayPal-linked bank account. It is also linked to a credit card, and I can't remove it from the account now. The card has expired, though the account number stayed the same. Otherwise, I have followed all the instructions that PayPal has suggested. What else should I be worried about?

It just burns me that even if I get to keep my money, this guy will get away with the phone.
posted by procrastination at 10:49 AM on December 7, 2007

That sucks.

Please do what Mathowie suggests. The one additional thing I would add is when you leave negative feedback and respond to his negative feedback come across as calm as you can.

So if they

You reply something like
The item was as described, the buyer did not contact me before escalating...

If you have some feedback, the average ebayer will think you got stuck with a crappy buyer and will not avoid buying/selling to you in the future.

I learned this lesson the hard way when I got into a shouting march with someone in amazon feedback back in the day.
posted by drezdn at 11:05 AM on December 7, 2007

Response by poster: Ok, so I just figured out what the scam is.

I was expecting the buyer to be using a stolen credit card, but I was wrong. Instead, I now think, he is taking advantage of a loophole in the PayPal agreement to execute return fraud. It goes like this:

- Buy an item
- When you receive it, claim that it was substantially different than the item as it was described.
- When asked to ship it back, substitute an old and broken similar item.
- The seller receives the old and broken item that the buyer described.
- Now it is one person's word against the others. In this case, (according to the very helpful person I spoke with at PayPal) both the buyer and seller protection apparently kicks in.

What I didn't know to do ahead of time was to take pictures of the serial number on the phone, though I did take one of the box. I will do that in the future.

Hopefully, this will all work out. I am all spun up about it, though.
posted by procrastination at 11:54 AM on December 7, 2007

Response by poster: And, a little more. Now I think I am screwed. Reading the Seller Protection Policy even more closely, I see that:

"The Seller Protection Policy does not cover Claims for Significantly Not as Described ..."

which is what my scammer is trying to do. Crap.
posted by procrastination at 12:36 PM on December 7, 2007

Best answer: So, as a follow up, here is what happened. Spoiler alert: I was scammed in the end and learned that PayPal has absolutely no protection for sellers against the kind of scam that was used against me.

The buyer initially filed a claim that the very nice new cellphone I sent him as different in that it was black, not purple, and was significantly damaged, which it wasn't. I responded in brief immediately, telling PayPal that I knew he was lying, and that I would dispute it. I called and spoke to a PayPal resolutions specialist twice, and then sent a long email describing every reason why I thought that the buyer's claim was invalid. At the suggestion of the PayPal representatives, I included links to many different things, including high-res pictures of the cell phone that I took to show color and lack of damage, and web pages that indicated I had a much better reputation than the buyer and that I would have more to lose by trying a scam then I would by getting the money. After one month from the date of sale, exactly, I received an email saying that the buyer was allowed to return the item for a refund, and that he would receive the money as soon as he provided a tracking number. Which was clearly outrageous.

So I spent a very sleepless night, and the next day I called PayPal. They informed me that they would not release the money until I had a chance to see the item. I asked how to prove he sent me back something bogus, and they told me to only receive the item in the presence of a neutral police officer. I also checked my web server logs and saw that they had not even looked at any of the links I provided. I suspect that the case was not even reviewed by a human at this point.

A few days later, they forwarded me the tracking number, and I managed to get UPS to hold the package for me to pick up. Once I did that, they scamming buyer changed tactics (maybe he saw from the tracking that I was having the box held instead of delivered) and he filed a charge back with his credit card company. I checked with PayPal again, and they told me to go ahead with picking the box up in front of a police officer, and that provided with a police report, they would dispute the charge back. They also told me that about 70% of the time they were successful. Fortified with the idea I was doing the right thing and that I had a good chance of winning, off I went.

I spent an afternoon off work, and went to the UPS station. I told them what was going on, and the manager tried to get me to take the box and leave. I refused, and called the police non-emergency line. An officer came pretty quickly, and I received and opened the box in front of him. Sure enough, there was a smashed gold cellphone inside, and almost all the accessories were missing. The police office filed a report of theft that described what he had seen. A week later, I had to take another afternoon off to go to the Police records department to pick up copy of the report, which was a pain in the butt because they charged $5 and only took money orders. I faxed the report off to PayPal and waited to hear about getting my money back that they had held.

Today, they refused to contest the credit charge back. Yes, after sending me out twice to get the supporting evidence they asked for, they didn't even do anything with it. Even though I had police evidence to show that what he sent back wasn't what he claimed to have received, they chose to not do anything.

So I called PayPal again. I eventually talked to an escalation supervisor, and was informed that they only disputed charge backs that fell under their seller protection policy, which doesn't in any way cover claims that the item was not as described. In fact, the 70% statistic that I heard earlier was in reference to things covered under the seller protection policy, and not any not as described scam. So in essence, everything I did a their direction to get the police report was a wasted effort, and I won't get any of the time or money I spent doing it back.

The real lesson here is that, as a seller, you can absolutely positively get screwed selling something. All a scammer has to do is set up an account, buy some cheap things to rack up some positive feedback (if they want), and then claim you sent him a rock. At that point, unless you used an escrow service, you are screwed. And it takes a long time. For me it was seven weeks of stressing about it until today.

Sure, I complained and PayPal is forwarding my case to some special investigative unit, and they were kind enough to refund my fees, but all they will do is block the buyer in the future. The kicker - my only recourse is to sue, PayPal won't release any documentation unless I have a supoena.

So there you have it. It used to be buyer beware, but for PayPal it is seller beware. Anyone can run this scam at least once and get away with it.
posted by procrastination at 3:04 PM on January 21, 2008 [53 favorites]

PayPal are extremely scummy in many ways. This site at least appears to be accurate.

You're actually quite lucky -- you only lost $500. I knew someone a few years ago who ran a small regional ISP and took PayPal. One day his account was locked because, they said, someone had claimed a fraudulent billing... and apparently it was one of his oldest customers. He calls them up and says, "Hey, what's the issue?" The customer says, "What issue?" But he couldn't convince PayPal of this -- which meant his entirely account (that had over $5K) was frozen for over six months, and only when he got a friendly lawyer to do some legal thing did it get his money back...

If you can avoid them, do. There are other services, including Google checkout...
posted by lupus_yonderboy at 10:20 PM on February 11, 2008

I know this is an old thread and my reply may never be seen by the OP, but this question is on the reddit front page today.

Also - perhaps telling your story to might help?
posted by cgg at 8:45 AM on February 12, 2008

Response by poster: Update: I sent email to all the paypal email addresses I could find, asking to appeal the decision not to fight the charge back. I don't know which email worked, but PayPal did eventually dispute the chargeback. The credit card company sided with the scammer, so I am still out $500.

The icing in the crap cake is that I decided that since PayPal would just waste my time getting police reports and would still be unable to help me, I would stop doing business with them. But for the past month, there has been "a known system issue" that makes it impossible to close my account. So I can't even get out of their system.

Please, please, stay away from PayPal.
posted by procrastination at 5:46 AM on April 10, 2008 [1 favorite]

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