eBay Chargebacks: Resolving Marketplace Buyer Disputes

eBay is one of the most storied and long-standing eCommerce shopping websites. Started in 1995, the “auction-style” selling platform helped popularize the digital payment ecosystem during the dot-com boom. eBay has since solidified its position as a major player in eCommerce, primarily supporting consumer-to-consumer and business sales in an online marketplace.

While eBay enabled independent sellers and businesses to accept digital credit card payments, it also introduced the nasty problem of eBay chargebacks. eBay buyers are free to dispute any purchase made through the eBay platform — the surprise charge repudiations force vendors to take on unexpected fund reversals, chargeback fees, and extra labor expenses for prevention tactics. Chargebacks are an ever-present threat to eBay merchant revenue and the platform itself.

eBay traditionally relied on its partnership with PayPal to manage all payment processing, including chargebacks. However new changes towards in-house management have altered eBay seller protections. Let’s look into how eBay now addresses the problem of eBay chargebacks and how you can stay protected.

When eBay operated with Paypal, the payment processor provided chargeback support. PayPal set up PayPal Seller Protection, a program designed to cover the costs associated with customer chargebacks on eligible payments. PayPal also helped sellers fight false customer claims by assigning a chargeback expert. The expert would help you present evidence proving the legitimacy of a transaction to the card issuing bank.

But eBay split with PayPal in 2015, opting to manage its payment process through Managed Payments and Adyen (though you can continue to accept PayPal payments). Keeping both payment and chargeback processing under platform control reduced costs, lowered risk exposure, and let eBay craft a new payment experience — but it retooled the protections sellers had come to expect.

eBay caters to its clients: vendors and merchants. To protect its sellers, the platform created several seller protection programs. There are four distinct policies eBay enacts to resolve disputes for you and all buyers:

eBay provides a money-back guarantee to eBay buyers for product-related issues: failed delivery, faulty or damaged items, or descriptions that do not match the product listing. Since many customer disputes are related to delivery issues or customer dissatisfaction, an automatic customer refund is an easy way to eliminate chargeback volume. The money-back-guarantee is a buyer protection that eBay handles internally, but you may refute eBay’s ruling with proof (e.g. by providing a delivery receipt).

Unhappy eBay buyers can also open eBay disputes. Closely related to money-back guarantee requests, buyers and sellers can ask eBay to intervene on specific purchase problems (errors, refunds, acts of God). Merchants have a responsibility to fix any issues according to seller policies. If you and the buyer disagree, eBay will decide the outcome based on their terms and conditions. While eBay can deter many chargebacks by managing disputes, it does not prevent buyers who lose an eBay dispute from filing an official chargeback with their credit card issuer.

eBay does provide seller-specific protections, as they hope to defend merchants from abusive customer behaviors and different forms of friendly fraud. eBay will refund the sale amount, waive dispute fees, remove negative feedback, and provide shipping credits if you prove that a customer made a false claim. Such seller protection policies deter disputes based on buyer’s remorse, forgetfulness, or charge misunderstandings (common reasons cited by customers who file a chargeback). Merchants must follow eligibility requirements and eBay gives final judgment on all disputes.

If a customer does not contact eBay and files a chargeback with their issuer, eBay will engage in the chargeback representment on your behalf. eBay levies a $20 chargeback fee along with any other sale reversals included in the standard chargeback process for lost disputes.

While eBay’s in-house “administrative law” approach to disputes supports fast resolution times, the method does not offer additional solutions regarding the bank-related chargeback process. Customer dispute policies lower overall chargeback volume on the platform, but you might still face the financial hardship passed down by issuers.

Since eBay refers all sellers to the decisions of the credit card company, some merchants do not feel fully supported by Managed Payments. Users can feel short-changed when the platform sides with issuer decisions on appealed cases rather than back its sellers. Others also struggle with the five-day time limit for chargeback rebuttals and the additional effort required to navigate the eBay resolution center. While beneficial, eBay’s robust set of seller protections do not cover the entirety of the chargeback lifecycle.

The problem only compounds with the overall increase in chargeback fraud across eCommerce and the known fraud problem of eBay scammers who take advantage of eBay’s internal case system. It makes sense that sellers who want guaranteed protection from the problem of chargebacks feel frustrated.

eBay continues to take action and implement policies that protect its sellers. But you need more than eBay seller policies to truly defend against the cost of chargebacks.

If you are an eBay merchant, consider integrating a third-party chargeback mitigation solution to gain comprehensive protection from eBay chargebacks. Experts in chargeback management can devise specific solutions that help you win cases and lower the overall number of chargebacks. Complete reliance on eBay for dispute protection often won’t be enough to protect revenues—it is best to supplement with proactive strategies that protect your business. That’s why Justt’s chargeback solution relies entirely on success-based fees: you assume no financial risk when bulking up your chargeback defense.

If you need support with eBay Chargebacks, Justt chargeback mitigation solutions can handle the entire chargeback lifecycle for you. Talk to us to learn more about how you can win back lost revenues due to customer disputes.