Who wins dispute over Digital Goods with no buyer and no seller protection?

JonnyFive
Contributor
Contributor

I'm specifically interested in a transaction with a gift card. Note, this is not through ebay - paypal only. Let's say I provide a gift card code to somebody over email, and they send me a payment via paypal. Months later after they've used the gift card, this person decides to file a dispute for the card. Who wins is Paypal doesn't offer protection for the buyer or the seller?

 

The Paypal User Agreeement Section 11.5 says gift cards are not eligible for SELLER protection. The Paypal User Agreeement Section 13.3 says gift cards are not eligible for BUYER protection. How does Paypal mediate a dispute by either party then? Are disputes not allowed at all?

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22 REPLIES 22

sharpiemarker
Esteemed Advisor
Esteemed Advisor

If either party is not eligible, PayPal would not rule for either party but the resolution center can be used for you and the buyer to sort out the problem.  Although, if the buyer funded the payment with a credit card, they can file a chargeback and you would most definitely lose since credit card dispute resolution terms are much broader and be charged the chargeback fee in addition.  So split the loss with them.  Or the buyer can dispute with merchant that they used the gift card on.


Kudos & Solved are greatly appreciated. 🙂
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lancelotme
Frequent Contributor
Frequent Contributor

why would the seller lose if the buyer has spent the gift card?

Credit card review may be broader in scope,but along with scope,it does not always rely on tracking etc,and they dont insist on  signature confirmation for payment $750 or more.

And they dont use robots(not yet) so they do read your documents and attachments.

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

I don't know, they can say there's something wrong with the code, that it don't work or was sold a spent code.  Why would someone even ask such what if questions if they were trying to test the waters.


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JonnyFive
Contributor
Contributor

There is no way to prove who used the gift card. This questions is regarding a case of buyer fraud. It seems that Paypal predominantly sides on the case of the buyer. I am curious though what Paypal would rule when neither buyer nor seller has protections. Are there any criteria that govern such a case? 

 

These new Paypal rules which stripped all seller protections for gift cards have been in place for a few months now. Has nobody come across this yet?

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JonnyFive
Contributor
Contributor

Also, just to be clear, within this scenario the buyer and the seller communicate directly. The seller sends a gift card to the buyer, and the buyer then initiates a payment via paypal mass payments. What I'm wondering is if those payments can be disputed and reversed? There is no record of what the payment is for, other than the invoice I email to him, which does happen to be for a gift card. 

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

@JonnyFive wrote:

Also, just to be clear, within this scenario the buyer and the seller communicate directly. The seller sends a gift card to the buyer, and the buyer then initiates a payment via paypal mass payments. What I'm wondering is if those payments can be disputed and reversed? There is no record of what the payment is for, other than the invoice I email to him, which does happen to be for a gift card. 


 

"and the buyer then initiates a payment via paypal mass payments." explain this...How would mass payments be used in this gift card sale scenario.  Mass payment is for sender to make payments out to multiple recipients though.  If gift cards are not covered then it's a moot question wouldn't it unless PayPal makes decisions on a case by case basis with special circumstances which can be difficult to guess at anyway.  If the buyer don't have PayPal Purchase Protection they will seek out a resolution with their bank or credit card if they have a good case too and make a big enough fuss about it.


Kudos & Solved are greatly appreciated. 🙂
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JonnyFive
Contributor
Contributor

@sharpiemarker wrote:

@JonnyFive wrote:

Also, just to be clear, within this scenario the buyer and the seller communicate directly. The seller sends a gift card to the buyer, and the buyer then initiates a payment via paypal mass payments. What I'm wondering is if those payments can be disputed and reversed? There is no record of what the payment is for, other than the invoice I email to him, which does happen to be for a gift card. 


 

"and the buyer then initiates a payment via paypal mass payments." explain this...How would mass payments be used in this gift card sale scenario.  Mass payment is for sender to make payments out to multiple recipients though.  If gift cards are not covered then it's a moot question wouldn't it unless PayPal makes decisions on a case by case basis with special circumstances which can be difficult to guess at anyway.  If the buyer don't have PayPal Purchase Protection they will seek out a resolution with their bank or credit card if they have a good case too and make a big enough fuss about it.


The buyer is running a gift card reselling business. Paypal mass payments is intended to be used for paying out employees, suppliers, etc. The buyer is using the service as it is intended, and paying out all of their suppliers.

 

As stated before, paypal mass payments are made directly from a paypal balance, so no bank is involved and no chargeback can be filed. I don't know if this is a moot point, that's why I'm asking - how does Paypal decide when neither party has protection? I was hoping someone would have experience with this before, or that a Paypal representative could weigh in. These changes were only made to the paypal user agreement a few months ago.

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

Under the old and the upcoming version of the user agreement, it is noted particularly in the buyer purchase protection terms that if an item is not eligible for purchase protection, PayPal will generally not find in buyer's favor if they escalate the dispute to claim but can use the resolution center to resolve directly with seller.  So the parties HAVE to work something out together or if there is some special circumstance unique to the case, as each case can differ on some level, PayPal may intervene.

 

They do not warn of this under seller protection terms so I think the seller is defacto winner.


Kudos & Solved are greatly appreciated. 🙂
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lancelotme
Frequent Contributor
Frequent Contributor

@JonnyFive wrote:

Also, just to be clear, within this scenario the buyer and the seller communicate directly. The seller sends a gift card to the buyer, and the buyer then initiates a payment via paypal mass payments. What I'm wondering is if those payments can be disputed and reversed? There is no record of what the payment is for, other than the invoice I email to him, which does happen to be for a gift card. 


if he paid with a credit card,he could file chargeback with his cc issuer.

if he wins,there is  a chargeback fee of $20 you will  have to pay.

Dont sell anything you cant afford to lose .

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