Are Existing eBay Chargeback Protections Enough to Keep Sellers Safe?
eBay, the global auction site launched in 1995, was one of the greatest success stories of the 1990s “dot-com” boom. eBay’s impact wasn’t limited solely to online auctions. Over the course of nearly three decades, they’ve played a fundamental role in shaping the entire eCommerce market.
For much of its history, eBay conducted payments through PayPal, which they acquired in 2002. However, PayPal was spun off into its own separate company in 2015. As of this writing, all transactions conducted via the site are now processed through eBay itself using a platform called Managed Payments.
Keeping these processes in-house gives the company greater control over eBay payments. At the same time, recent years have seen chargebacks become more of an issue for some eBay sellers. That raises the question: are the eBay chargeback protections offered by the company strong enough to protect sellers’ interests?
Let’s look at some features the company offers, like eBay Seller Protection. We’ll also examine how eBay disputes stack up against eBay chargebacks and see if the protections they offer are sufficient.
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What is eBay Seller Protection?
eBay has always catered to smaller businesses and individuals. The company offers marketplace functionality, but eBay is still an auction site at its fundamental core. Convincing consumers to engage with the site as sellers was not easy.
eBay created the Seller Protection program to encourage people to use the platform. Seller Protection covers eBay sellers in the event of claims, and reversals resulting from unauthorized payments or lost items.
The platform protects sellers against “abusive buying behavior and from events outside your control.” In other words, if a buyer disputes a transaction and claims that they:
- didn't receive the item
- don't recognize the transaction
- have an issue with the transaction as it was processed
- received an item that doesn't match the listing
…then eBay Seller Protection may apply. This means the company would cover the amount of the dispute, waive the dispute fee, and remove any feedback related to the transaction.
eBay Seller Protection: Limitations
eBay Seller Protection does not apply for all transactions. To be eligible, you must respond to the eBay dispute and act within the required time frames (where applicable). You also need to provide any evidence required by eBay in a timely manner.
You must comply with eBay’s User Agreement to qualify for Seller Protection, including their prohibited and restricted item policies. You must also comply with any applicable eBay dispute time limits, and one of the following must be true:
- The transaction was for physical goods, and there is evidence of a successful delivery or pickup.
- You issued a full refund to the buyer through the platform before the eBay dispute was filed.
- You issued a partial refund for an item returned used or damaged (as per eBay guidelines).
- An eBay Money Back Guarantee case of the same type already resolved the dispute.
eBay Disputes vs. Bank Chargebacks
If used as designed, eBay Seller Protection does a great job of protecting your interests as a seller. However, it would only apply to an eBay dispute, which is not the same thing as a chargeback.
If a cardholder has an issue with an eBay transaction, they have the right to file a dispute through the platform. It’s your responsibility to make every attempt to resolve the dispute. If you can’t reach an agreement with your buyer, eBay will intervene. Then, if the company decides in the customer’s favor, the buyer will be reimbursed, and eBay will recover the funds from your account.
When a buyer opens a dispute directly through eBay, the company can decide the outcome of the dispute based on their published policies. Buyers can pursue another option, though, by contacting the bank instead of eBay.
If a buyer is unhappy with a transaction, they have the right to contact the institution which issued the credit or debit card used for the purchase and file a chargeback. That means the payment gets reversed; the funds are deducted from your account, and the customer is reimbursed. This happens at the bank level, and eBay has no influence over the situation. They provide no protection from bank chargebacks.
This can be problematic for merchants. While the ability to file a chargeback is an important consumer safety mechanism, it is also a source of fraud. Our data suggests that roughly 60% of all chargebacks are potential cases of friendly fraud (deliberate or unintentional chargeback abuse by cardholders).
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How Does eBay Handle Chargebacks?
eBay chargebacks mostly follow the standard chargeback process. First, a customer contacts the bank to dispute a charge. The bank then does a preliminary investigation of the cardholder’s claim, requesting additional evidence from you as needed. Examples of this documentation can include sales receipts, proof of delivery, etc.
If a bank issues a chargeback against you, they will take the disputed amount directly from your merchant account. You’ll also get hit with a chargeback fee from eBay ($20 in the US, as of this writing). Note that eBay claims no responsibility for the chargeback and has nothing to do with the final decision at all.
The company says it will represent sellers when buyers file chargebacks. If the bank finds in your favor during this process, the original transaction amount will be returned to your account. However, some sellers have expressed that they still feel unprotected, claiming that eBay chargebacks “appeared to be at an all-time high” by June 2021.
You Need More Than Seller Protection
Protecting your business against chargeback fraud is an expensive, time-consuming process.
Built-in eBay chargeback protections are a great asset… where they exist, that is. Relying totally on any one chargeback protection method is dangerous, though.
You may be insulated against eBay disputes, but not against eBay chargebacks. No single tool or strategy will do the trick; reducing chargebacks over the long haul requires a proactive prevention strategy that addresses disputes at their true source.
If you’re feeling overwhelmed by chargebacks, maybe it’s time to look beyond payment-platform protection. Chargebacks911® can take card-not-present chargebacks and other dispute issues completely off your plate and up your ROI. Contact us today to learn more.