For the first time ever (as far as I know) PayPal has taken the side of the seller in a dispute over the sale of a non-refundable digital item. This is a very encouraging step in the right direction on PayPal’s part, so I want to make as many digital sellers aware of it as possible!
Here’s the thing: PayPal offers a very nice Seller Protection package that covers sellers in the event of disputes or chargebacks. But, this Seller Protection only extends to sellers of tangible goods (i.e. items that can be shipped). PayPal’s user agreement specifies that items/transactions not eligible for PayPal Seller protection, include “Intangible items, including Digital Goods, and services.” So if you sell PDF files, eBooks, mp3 files, etc, there’s no Seller Protection for you.
Rules that govern the sale and refund of physical items cannot apply to digital items: there’s no way to ‘return’ a digital item in exchange for a refund. For that reason, most digital sellers state that all sales are final.
However, sometimes a buyer files a claim with PayPal that the item was not what was expected, usually because they didn’t read the item title or description, just looked at the picture and assumed they were buying a ridiculously inexpensive handcrafted item (with no shipping charges!) instead of a PDF file containing the instructions to make the item themselves…
In these cases, PayPal seems to invariably side with the buyer (in the case of everyone I’ve spoken to about it, at least). They remove the money from the seller’s account and refund it to the buyer, thus making a mockery of the seller’s ‘no refunds/all sales are final’ policy. In this situation, the seller has no comeback: the buyer has the pattern and their money back; the seller is left with nothing but bitterness. Has this happened to you? Please share your story in the comments! I’d love to know how prevalent this really is.
In early December, one of my Etsy customers neglected to read the title or description and asked for a refund after receiving the pattern. I referred the customer to my ‘final sale’ policy but they wouldn’t accept that and launched a “significantly not as described” dispute against me. It’s taken over a month for PayPal to resolve the case, during which time they withdrew the funds from my account, but today, they found in my favour and returned my money to me!
If you’re a digital seller, you may find yourself in the same situation, so here’s my advice:
1. Gather your evidence
Why is the buyer’s claim flawed? Make a list of facts (and figures, if possible) that support your side of the story.
Here’s mine. I ignored my main shop when gathering my figures, as this dispute was over an item in my Etsy shop, so adding sales numbers from my own shop would be misleading. In my Etsy shop (at the time of responding to the dispute):
- I only sell crochet patterns
- 2919 crochet patterns already sold
- 88 other copies of the same item already sold (all 88 using the same photos and description) with no other misunderstandings
- 100% positive feedback
- I state “CROCHET PATTERNS” (in capitals) in the item title and mention throughout the description that it’s a pattern that will be emailed as a PDF file
- My Etsy seller policies clearly state that I sell crochet patterns, not finished items, and that all sales are final
- The seller confirmation email from Etsy also states that the pattern will be emailed, giving the buyer the chance to contact me prior to my sending the patterns if they had made a mistake
Pretty solid evidence, I think, that “significantly not as described” was not something that can apply here!
2. Present your evidence
The key here is to be professional. Imagine you’re presenting evidence in a court case – the most compelling response is an objective account of the facts you’ve gathered.
You only get one chance to respond to PayPal, so make it count. Don’t hit ‘respond’ and begin typing directly within PayPal; compose your response in your text editor of choice, and save it. Then step away from the computer, do something else, and let yourself cool down.
When you look over it again, edit out any emotional phrases and any waffly bits, so it’s concise and to the point. Make sure you’ve included all the evidence that could count in your favour, and end with a short, clear conclusion. Read it over again, and only then paste it into the PayPal response box and submit it.
It took over a month for the case to be resolved. During that time, I heard nothing more from PayPal, and I assumed the worst. Then, yesterday, I got the email:
We have concluded our investigation and have decided in your favor. The listing accurately described the item the buyer received. Any funds that may have been temporarily held have been returned to your account.
Victory! I don’t know if this is the start of a change of policy by PayPal, or my evidence was just too compelling for them to ignore, but please feel free to use my case as precedent if the same thing happens to you: PayPal case number PP-001-585-575-355 (or just share the link to this post).
Digital sellers are not a small minority group any more. Digital sales is a massive and fast-growing sector, as books and CDs are replaced by ebooks and mp3 downloads, and self-publishing becomes ever-more prevalent. PayPal would do well to look after their digital sellers; we’re making them a lot of money in commissions.
I hope that my victory this week is a sign of better things to come…