Does PayPal offer buyer protection? If you’ve ever shopped online, you may have had the unfortunate experience of a purchase not going to plan.

Perhaps the product you ordered never arrived or it wasn’t as the listing described, and then when you tried to resolve the issue with the seller, you received no response.

So how do you get a refund? We explain how PayPal’s Buyer Protection scheme works and how it compares to other remedy options.

Does PayPal offer buyer protection?

Buyer Protection is a refund scheme that promises to pay you back for purchases that go wrong (including delivery costs) up to the value of $20,000 – a safety net PayPal says will help you “shop with confidence”.

It sounds like the company is offering the kind of risk-free online shopping we’ve all dreamt of – but beware of the scheme’s limits: its protection isn’t necessarily any better than what’s offered by your credit or debit card through chargebacks.

PayPal Purchase Protection: How It Works and When to Use It

Online shopping has never been more popular.

According to Statista, US eCommerce sales topped $469 billion in 2021. That’s up from $431.6 billion in 2020; roughly a 9% YoY increase. Despite their growing acceptance, however, many consumers remain skeptical about the safety of online transactions.

Of course, most online monetary exchanges are legitimate and safe. But, if a consumer is still unconvinced, a “money-back” guarantee might be a deciding factor. That’s one of the motives behind the PayPal Purchase Protection program.

PayPal says the program lets users “shop with confidence.” But does PayPal Purchase Protection live up to the hype?

In this post, we’ll examine what this program is and how it’s used. We’ll also determine what it does–and doesn’t–cover, and see what you can do about purchases not covered by a PayPal buyer protection program.

What Is PayPal Purchase Protection?

PayPal is one of the world’s largest digital payment platforms. The company boasts over 426 million active users. They processed 5.3 billion payment transactions in Q4 of 2021 alone.

By connecting a user’s credit card or bank account to an “electronic wallet,” the company provides a safe, alternative way to shop or transfer funds online. That said, transactions can still go awry.

PayPal Purchase Protection–sometimes referred to as PayPal Buyer Protection–is a recourse for users if an order isn’t delivered, or is significantly different than described. It lets you recover money in the event that you become the victim of merchant abuse. Put another way: if the merchant won’t refund you, then PayPal might.

There is no fee for PayPal Purchase Protection. The company also has a Seller Protection program, but the two aren’t really related.

How Does the PayPal Purchase Protection Work?

Filing a dispute with PayPal implies you feel you’ve been cheated in some way by a seller. You’re asking PayPal to step in and help resolve the issue.

For instance, let’s say an item you ordered either never arrives, or is significantly different from what was promised. You contact the seller, but they refuse to help. If you made the purchase through PayPal, you can contact the company to request your money back.

If you win the dispute, the money will be taken from the seller’s account and refunded to you. Simple as that.

Online merchants may notice that this sounds very similar to a credit card chargeback. The two processes are closely related. But, as we’ll see later, there are some key differences.

A PayPal dispute is generally faster, but is more limited in scope. This is something consumers need to be aware of, right from the start.

Understanding PayPal Purchase Protection Claim Parameters

As we mentioned, there are only two scenarios where Purchase Protection for buyers comes into play.

If merchandise you purchased was never delivered, PayPal will typically go to the seller for proof of delivery. If the seller can produce compelling evidence, such as a signature on delivery, you’re probably out of luck.

“Not as Described” cases can be a little trickier. You’re either saying what you received was defective, damaged, or a counterfeit, or that you didn’t get everything you ordered. This can also apply to certain intangible items, such as a digital file that you are unable to download.

In these situations, PayPal may ask you to prove your case. A claim for a damaged item, for example, might need pictures of the original damaged package. A counterfeit item case may require documentation from a credentialed professional, certifying the item is fake. Depending on the cost of the original item, some cases may not be worth the time and trouble of disputing.

What If My Claim Is Not Covered by PayPal Purchase Protection?

Well, you have a couple of options.

First, if PayPal decides in the seller’s favor, you may be able to appeal the decision by submitting new or additional evidence. Whether or not you can do this is up to PayPal. And, even if they accept additional evidence, they could still reject your appeal after looking it over.

If that doesn’t work, you can consider filing a chargeback.

All major card networks offer consumers a chargeback option. This allows cardholders to dispute charges they feel are invalid or unfair. For the most part, chargebacks can be filed for any of the reasons PayPal allows, plus a few more.

The steps for filing a credit card chargeback are much the same as filing a claim with PayPal. You’ll need to try resolving the issue directly before filing. You must provide evidence, and you’ll be under similar time constraints. And, like a PayPal dispute, your money is refunded if you win.

Why PayPal Purchase Protection is a Better Option

So why not go with a chargeback in the first place? Well, there are a few reasons.

First, a chargeback should always be thought of as a last resort. You should only go this route after every other avenue has been tried. That’s what the chargeback system was designed for.

On a more practical level, PayPal disputes are less complex. You can access everything–even the seller–right through your PayPal account. Bank chargebacks, on the other hand, tend to be more involved. They require more and deeper communications with the seller and the issuing bank.

A chargeback will also take longer than a dispute. If the bank doesn’t reject your claim in a timely manner, you may miss the deadline to try again by filing a PayPal dispute.

In contrast, let’s say you start with a PayPal dispute, but it gets denied. In most cases, you’ll still have time to file a bank chargeback. In fact, PayPal terms openly state that if they reject your claim, you can pursue the dispute with your card issuer later.

Of course, there’s still a chance PayPal will take too long to deny your claim. If that happens, and you’re unable to meet the bank’s chargeback time limits because PayPal took too long, they will reimburse you outright:

“…if, because of our delay, you recover less than the full amount you would have been entitled to recover from the card issuer, we will reimburse you for the remainder of your loss (minus any amount you have already recovered from the seller or your card issuer).”

PayPal Purchase Protection guidelines

Bottom line: if your transaction is eligible for PayPal Purchase Protection, you’re almost always better off starting there. You can always talk to the bank later. Just don’t try to do both at the same time, as that is likely to get both claims cancelled.

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