Chargeback Processes: Amazon vs eBay and PayPal

Posted on May 15, 2009. Filed under: Amazon, eBay, Paypal | Tags: , , , |

More online sellers are becoming multi-channel and, as such, it is critical to understand the differences between venues so that you can know what to expect as a seller.  Take, for instance, the issue of chargebacks.  eBay sellers are treated completely differently than Amazon sellers when there is a credit card chargeback initiated by a buyer.  Amazon sellers are considered “innocent until proven guilty” whereas eBay sellers are considered “guilty until proven innocent.”

Financial implications: Amazon only takes the money back from sellers if the credit card company decides in favor of the buyer whereas eBay automatically deducts the funds from a seller’s Paypal account while the outcome is being decided.  With eBay, that process could take many months during which time the seller does not have access to the funds in question.  And, very importantly, PayPal admits that they do not always fight chargebacks.  If PayPal does not think that a chargeback can be won they will not fight on the seller’s behalf.

Reputation implications: Amazon only records a black mark on a seller’s record if the credit card company decides in favor of the buyer.  Of course, the buyer can leave negative feedback and that opinion is one part of the performance measurement by which Amazon sellers are judged.  In contrast, eBay automatically includes the dispute-in-progress in the “buyer dissatisfaction” rating.  More than 5% dissatisfied buyers, as determined by buyers who leave negative feedback OR leave 1 or 2 DSR rating OR file a paypal dispute or chargeback, and a seller is restricted from selling on eBay. 

Details of the Amazon Chargeback Process:

An email is sent with the subject line: “Your Immediate Response Required: Charge Dispute Inquiry”

Among other things, the email from Amazon includes the following:

“In order to respond to the credit card issuer on your behalf, we need you to provide us with proof of delivery, which we will provide to the credit card issuer.

By doing so, you will help resolve this issue faster for both you and your
buyer. ”

In answer to the question of  How will I know what the outcome of a chargeback is?

“The final outcome of a chargeback can take up to 90 days to be received from the date the charge was represented to the issuing bank. In rare cases, it can take even longer. We will inform you of the outcome only if you are held financially responsible for the chargeback. The e-mail notification sent regarding the funding decision will outline why you have been debited. Otherwise, you may assume that the information you provided was sufficient.”


Details of the eBay / PayPal  Chargeback Process (as copied from the PayPal Help pages): 

  • If a buyer files a chargeback against you for a credit card transaction through PayPal, we’ll email you as soon as we’re contacted by the credit card company.


  • The funds in question will be held temporarily, as we work with you to resolve the chargeback with the buyer’s credit card company.


  • We help you minimize the expense and hassle of chargebacks by building a case to take to the credit card company in instances where chargebacks can be fought.


  • The resolution process can take 75-100 days, depending on the credit card company.


  • If the credit card company decides in your favor, PayPal will immediately transfer the funds back to you.


Why the differences?  Two main reasons:

1. Volume of chargebacks: eBay and PayPal has significantly more chargebacks than Amazon pending at any given time.  When the credit card company notifies Amazon or PayPal of a chargeback, the money is temporarily withheld by the credit card company which means that PayPal would have to front sellers a huge amount of money for the vast number of chargebacks currently pending at any one time.   

2. Differences in quality of sellers: Until recently, eBay had absolutely no seller standards so PayPal probably had good reason to assume many eBay sellers were guilty until proven innocent.  And PayPal did not review a seller’s performance history so they had no idea of the quality of a seller who had received a notification of chargeback.  PayPal temporarily holds the money from sellers because it might be difficult to get the funds from a seller 75 or 100 days in the future because the seller might no longer have any money in their PayPal account.  In contrast, most Amazon sellers are in it for the long term so Amazon can easily recoup the chargeback amount in the future should it become necessary.

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3 Responses to “Chargeback Processes: Amazon vs eBay and PayPal”

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It is not entirely correct to imply that Amazon doesn’t hold funds while deciding a chargeback. I recently had funds withheld from my settlement payment for 10 weeks while a chargeback was pending a decision. Granted it only happened once…

Amazon is holding my funds for more than the “90” days.

They sent me an email and said “we are allowed to hold the funds for up to 90 days from when your account was suspended which was July 14th 2009”

The fact that they even know that it has been 96 days is sad. Idiots owe me money.

Amazon has A-Z guarantee, where any customers can claim for any reason to get their money back and they are not required to ship the items back.

Even if the sellers have proof of the pictures before shipping and confirmation number, it does not matter to Amazon.

Customer always right and they will always get the money.

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