How to Chargeback PayPal & Win Disputes?

dropshipping Feb 17, 2021

Paypal is undeniably the go to payment gateway for many e-commerce businesses including dropshippers. Majority of the buyers online have accounts with Paypal and it does make their life easier to make payments online.

But from a seller's perspective, things might go in a wrong way when buyers file a chargeback through Paypal.

What is a Chargeback?

A Chargeback is a dispute raised by a buyer for any of the following reasons:

  • Unidentified transaction on a buyer's bank statement
  • The buyer didn't receive the product/service he/she ordered for
  • The product received was not as described
  • The buyer didn't authorize the transaction
  • The buyer was charged twice
Paypal - Dispute a transaction

The chargeback process is quite simple for any buyer using Paypal as there are no questions asked upfront by Paypal atleast to a customer.

Paypal Chargeback Process

How does a Paypal chargeback work?

  1. A buyer raises a chargeback directly on Paypal or contacts their bank asking to reverse the transaction.
  2. Paypal then immediately freezes the funds in question and asks both the buyer/seller to provide information about the transaction through email.
  3. Both the buyer/seller responds with the information to Paypal.
  4. Paypal then takes a final call deciding the chargeback winner.

Here are some rules around Paypal's chargeback process.

  • Buyers are eligible to raise a chargeback with Paypal upto 120 days from the date of transaction.
  • Merchants/Sellers need to respond within 10 days to the customers chargeback with all the proofs like customer emails, order details, shipping details, delivery confirmation etc.
  • The entire chargeback process might take

Paypal sides with a buyer when a chargeback is raised as they are the people who generate revenue for the company which makes sense. But leaving seller with not much options is sad unfortunately and there is a lot of room for improvement there. Paypal could ask atleast a few questions to a buyer before a chargeback is raised to validate the authenticity of a chargeback.

How to chargeback Paypal?

Although Paypal sides with the buyer initially, it doesn't mean that a seller cannot win a chargeback dispute.

I've won many chargebacks the same way by providing solid proof that a transaction is genuine and that the product was delivered.

Please keep the below key evidence for every transaction to future proof your business:

  1. Order confirmation email sent to the buyer
  2. Delivery tracking information
  3. Delivery confirmation slip (digital)
  4. Buyer's Billing & Shipping address
  5. Fraud analysis (if any) - Shopify's fraud analysis will help here.
  6. Buyer's IP address & Location
  7. Any communication exchanged with the buyer (Emails/Calls/SMS)
  8. Order details (Product, Qty, Price etc.)
  9. Buyer's Email address/Phone number
  10. Images of product(s) dispatched (if available)
  11. Link to your Returns/Refund policy (if applicable)

Above is a handy list you can go through in case you receive a chargeback on Paypal and providing all these details will increase your chances of winning a chargeback on Paypal.

I'd strongly recommend to take necessary precautions to avoid chargebacks in the first place rather than struggling with chargebacks as there is a lot of information that a seller needs to provide to challenge and win a chargeback that takes away most of your time and effort.

Best practices to avoid chargebacks on Paypal

  1. Always check if the buyer's billing and shipping address are matching. If they don't, it could be a red flag.
  2. Google the buyer's shipping address to ensure it is not a reshipper or freight forwarded.
  3. Check the buyer's email address and see if it atleast matches partially with the buyer's name. Gibberish emails are a red flag (example -
  4. Verify if the IP address matches with the buyer's billing/shipping location.
  5. Use a fraud analysis tool like the one that comes with Shopify store by default. Or you can add a third party app to your store to do an advanced fraud check before accepting an order.
  6. Check for any failed payments on the order. Usually with 1 or more failed payments using different cards which is a big red flag.
  7. Make sure the product descriptions and images on your site are thorough and clear.
  8. Ensure your store has an active refund/return policy published to let people know what is accepted vs what is not.
  9. Publish contact information on your store and be always available to your customers.
  10. Subscribe to Paypal's seller protection service to be safe and secure in terms of any payment disputes and chargebacks.

Shopify's fraud analysis for e-commerce owners & dropshippers:

Shopify Store Fraud Analysis

You can make use of the default fraud analysis provided by Shopify which is good enough to make a call if a transaction is genuine or not!

Alternatively, you can use third party apps for an advance fraud analysis to be safe.

I've seen many sellers use an inactive mail address for Paypal and even miss chargeback notifications from Paypal which is very risky as you might lose a lot of money if you don't keep monitoring your Paypal account closely.

Keep a close eye on any notifications from Paypal as sellers only have 10 days time to respond to any disputes or chargebacks from Paypal. Also, I'd recommend to get back to Paypal as soon as possible but with thorough information to stand high chances of winning a chargeback.

Maintain a chargeback checklist as highlighted above and go through all of them before submitting your response to a chargeback. Don't rush things in order to get back to Paypal asap. Instead gather all the critical information available for a transaction and then challenge the chargeback with significant information.


Also, your Paypal account might go into freeze in some cases if you have a high number of chargebacks in a short amount of time or if a huge amount is involved in a chargeback.

For high value orders, always make sure you do a detailed check on the buyer before shipping any goods out as there are high chances of it being a fraudulent order. A seller will be at a huge risk if they miss any of the checks especially for high value orders.

How to win Paypal Dispute/Chargeback?

  1. Don't panic and rush things to respond back with partial details which will do more bad to you. Stay calm!
  2. Gather every single piece of information about the order and customer communication you've had. Grab the checklist above and make sure you cover everything.
  3. Respond to Paypal's chargeback with all the information gathered and keep monitoring your email on a daily basis to ensure you don't miss any communication from Paypal.
  4. In some cases, Paypal might get back asking for some more details or with some additional questions.
  5. Take time again and ensure you give a detailede explanation for each of them.
  6. Ensure you don't rant or talk bad about the buyer as that doesn't take you anywhere.
  7. Wait for Paypal's final call on the chargeback raised.

The above steps are not something that wins you 100% of your chargebacks but at least a few of them for sure!

As they say 'Prevention is better than cure', always stay vigilant and ship products only after checking buyer's authenticity.

Paypal Chargeback - FAQ's (Frequently Asked Questions)

Does PayPal protect sellers against chargebacks?

Although Paypal inclines more towards buyers during a chargeback process, it does support sellers as long as the seller has strong evidence to support their case.

For eligible transactions, you are supported with Paypal's seller protection policy that safeguards your transactions from chargebacks, reversals and disputes. You'll be able to retain 100% of your revenue from a given order that is eligible for Paypal's seller protection. Paypal will cover any losses for you even if you lose a chargeback for seller protected orders.

Paypal's Seller Protection

Do sellers ever win PayPal disputes?

You might have come across sellers on reddit and other online communities sharing their sad stories of losing to chargebacks leaving them with huge losses.

You're now wondering if a seller ever won a Paypal dispute? Yes, definitely! My experience with chargebacks is a real world example and I've won about 7 chargebacks out of 10 till date.

All I've done is making sure I gather as much details as possible upfront before I ship anything and even if I receive a chargeback, I get back with a ton of evidence (list above) from different aspects to stand higher chances of success.

How much does PayPal charge for chargebacks?

Paypal charges a non refundable fee of 20$ for every chargeback a buyer raises. In case of a transaction eligible for seller protection, Paypal covers the chargeback fees and doesn't charge you anything even if you lose the chargeback.

What happens if you lose a PayPal dispute as a seller?

If you lose a chargeback as a seller, you lose the entire order amount in question and also an additional charge of 20$ as chargeback fees.

And in cases where the transaction is backed by Paypal's seller protection policy, you are safe as you are not charged anything even if you lose a dispute or a chargeback.

What happens if a merchant does not respond to a chargeback?

Paypal gives 10 days of time for a seller to respond to a chargeback. If the seller doesn't respond in the given time, the chargeback is closed in favor of buyer.

How to chargeback PayPal for a  friends and family dispute?

Unfortunately, payment to friends and family is not covered under any seller protection policy. Payments to friends and family is only meant for transferring funds to people you know personally and not to be used for any other online transactions.

What does Paypal seller protection cover?
PayPal’s Seller Protection program covers two kinds of buyer claims:

  • Unauthorized Transactions - This is when a buyer claims they didn’t authorize a payment.
  • Items Not Received. This is when a buyer claims they never received the item they ordered.

Also, Paypal's seller protection applies only to purchases that are made using Paypal.

What are the requirements to be eligible for Paypal's protection policy?

  • The product must be a physical good that can be shipped.
  • The product must be shipped to the shipping address mentioned in the order details page.
  • You must respond to any queries from Paypal in a reasonable amount of time.
  • Your dropshipping store must be based in the United States.



Experienced dropshipper with significant success and valuable failures! Here to share all my expensive dropshipping learnings, experiences and fun facts. I'll be dropping value packs here every week!

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