PayPal Purchase Protection: What It Is and How It Works

PayPal Purchase Protection is designed to make customers feel safe using PayPal to buy goods and services. Click to learn more about how the buyer protection policy works.
by Roenen Ben-Ami
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Published: February 15, 2023
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PayPal is one of the world’s quickest, safest, and most convenient online payment solutions used by customers and businesses globally. It enables customers to transfer money at the click of a button, allowing them to shop online, send gifts, pay bills, and even process payments from clients or customers. 

By setting up a PayPal account, you can access an array of features that will make it easier for you to transact and send money. With security features like account reserves, preapproved payments, and international withdrawal support in over 200 countries worldwide, PayPal has quickly become the most preferred payment solution for many. 

One of the great benefits of using PayPal is that it comes with a Purchase Protection plan, which covers eligible items in case of payment disputes and unwanted charges.

What is PayPal Purchase Protection?

PayPal Purchase Protection is a consumer safeguard that offers reimbursement for eligible items returned or not received. It protects buyers from any potential issues that arise with their purchase. 

This can include problems such as not receiving an item you paid for or receiving something significantly different from what was advertised. For example, you purchased a book but received a DVD or a different book or purchased four items but only received three. 

PayPal Purchase Protection also covers issues such as faulty items, knockoffs when you paid for an authentic product, and if you received an old product when you paid for a new one. 

This policy will also cover you if you were charged for something you didn't purchase, as in the case of unauthorized access and transaction. You also must have made all transactions through the PayPal website, app, or services. 

To qualify for a claim, shoppers must upload the required documentation within 180 days of purchase and make sure the transaction allows for PayPal Purchase Protection. If approved, customers can receive a full refund in their original form of payment or a comparable replacement item. 

Benefits of using PayPal Purchase Protection

The main benefit of using PayPal Purchase Protection is peace of mind knowing that if something goes wrong with your purchase, you can quickly and easily submit a claim to get reimbursed, avoiding losses.

It's also important to note that this service is free and accessible. No fees are associated with filing a claim or receiving reimbursement if your purchase meets eligibility requirements. 

The policy also makes it possible to run online businesses safely. With PayPal Purchase Protection, business owners selling on eCommerce sites, such as Poshmark, are also protected from fraudulent activities as much as customers. 

How does it work?

If you have a problem with an eligible purchase, you must submit a claim to PayPal within 180 days of the transaction or shipment date to be considered for coverage under the protection plan. 

When submitting a claim, you will be asked to provide information as evidence of the issue, such as photographs, details about when and how the problem occurred, and proof of payment, like a receipt. 

Once you have provided all of this information, your claim will be reviewed by PayPal's dispute resolution team, who will determine if your purchase is eligible for coverage under the protection plan.

If you’re unable to resolve the dispute directly with the seller, PayPal will hold on to all funds related to the transaction in the seller's PayPal account until the dispute is resolved or closed.

If PayPal decides in your favor as the buyer after investigation, PayPal will reimburse you for the full purchase price of the item and original shipping costs from the seller’s account. The seller on the other hand will not receive a refund on the PayPal fees associated with the transaction.

What are the steps for filing a dispute through PayPal Purchase Protection?

Filing a dispute through PayPal Purchase Protection is fairly simple. First, you will need to log into your PayPal account and click on the “Resolution Center.” From there, select the option to file a dispute depending on your circumstance, as described in the listing. 

You will be presented with a form to complete, which includes essential information such as the reason for filing, details of any attempts you made to resolve the issue directly with the seller, and your order number. 

After you have completed this form, PayPal will begin its investigation process. They typically respond within 10 days after all relevant information has been gathered. During this period, both parties will be asked to provide evidence of their position for each case to be assessed fairly. 

At the end of the investigation process, PayPal may authorize reimbursement of an amount up to your initial purchase price.

How long will it take for me to receive a refund if PayPal Purchase Protection approves my case?

If your case is approved, you can expect to have your refund processed within 10 days of the dispute resolution agent's decision. 

They will keep you updated on the status of the investigation and when you can expect to receive your money back. 

Remember that this 10-day timeframe may be affected by factors such as holidays or other interruptions. So make sure you frequently check for regular updates.

What are the eligibility requirements for PayPal Purchase Protection coverage?

To be eligible for PayPal Purchase Protection coverage, you must use a valid PayPal account to purchase and file a dispute within 180 days of the transaction. The item should also be a physical, tangible good that can be shipped and not subject to the exclusions listed in the PayPal User Agreement. 

To ensure you're able to submit your claim to PayPal's Purchase Protection program quickly and easily, it is essential that you keep all necessary records regarding the transaction; this includes proof of delivery or pick-up from the seller, a receipt, or invoice from the seller showing the date of purchase, and itemized list of items purchased. 

In addition, making sure that your payment details are accurate will shorten the time required for processing applications and make dispute resolution smoother.

Are there any exclusions to PayPal Purchase Protection coverage?

PayPal Purchase Protection is excellent for buyers looking for extra coverage when purchasing online, but it is not all-encompassing. Some items fall outside their coverage, meaning you may need to look for other ways to protect yourself by taking extra steps when completing transactions. 

These exclusions include transactions involving hotels, vehicles, and industrial machinery, intangible items such as digital goods or services. It also excludes payments made on third-party websites or apps unless a qualifying direct merchant is involved and illegal items. 

The exclusion also impacts any instance where PayPal decides a buyer's account was used to commit fraud or violated their Acceptable Use Policy is also excluded from the policy. 

Are merchants covered under the PayPal Purchase Protection policy?

No, the Purchase Protection policy caters to buyers. However, merchants are covered under PayPal's Seller Protection policy. With this feature, online businesses can confidently transact knowing they are protected against potential fraudulent activity.

Under Seller Protection, PayPal will cover losses resulting from unauthorized payments or items not received as long as merchants meet certain eligibility requirements. In these instances, Seller Protection can help merchants get the full amount of an eligible payment, subject to the claim, chargeback, or reversal, and waive the chargeback fee, if applicable. 

Final Thought

PayPal Purchase Protection provides an extra layer of security for customers making purchases through their platform, so they don't have to worry about potential issues arising with their purchases in the future. 

Suppose any problems occur with an eligible purchase made through their platform within six months after delivery or payment date. In that case, customers can submit a claim for reimbursement, depending on the circumstance.

This service can provide financial security and peace of mind knowing there’s help available should anything go wrong during an online transaction process. Understanding how this policy works before purchasing is crucial, as it can save you time and money in the long run.

Written by
Roenen Ben-Ami
Co-founder & Chief Risk Officer at Justt. I am an all-around payments expert and a veteran commissioned officer. I previously led the Chargeback and Merchant Risk teams at the payments service provider Simplex, which now successfully recovers millions of dollars a year using the best practices I developed.
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