As a seller, Paypal lost unauthorized transaction dispute that against me

[SsMlock]

As a new seller, I recently lost two disputes almost $400 worth of gift card, because buyers pulled their money back after they reported to their financial institution as an authorized transaction. I provided as many evidences as I can to prove how transactions were done and what the conversations were.

However, Paypal recently notified me that they lost both cases. I don’t understand why Paypal can lose a case like this. This is clearly a scam. If I use VPN to purchase gift card on Ebay, I could make a fortune, and Paypal can’t do anything about it. I understand I can’t assume everyone does this way. There must be some stolen credit cards. But as a seller, how would I know this. I must admit I’m new seller, I didn’t know Paypal doesn’t cover digital gift cards. I guess Paypal already know they will lose all the cases that involve digital transaction.

In this situation, who is going to protect seller? Seller is innocent here. Do we simply just take all the responsibility on this type of transaction? This is not fair at all. I read other pages in this forum, lots of people were having same feeling about this. There was no any reason why or how they lost their cases. Were my evidences not convincing enough or just a simple email exchange between bank and Paypal will never work?

Sorry about my grammar, I’m just very angry, and want to express my feeling here.

[sharpiemarker · Accepted solution]

@SsMlock 

Gift cards are just not covered. And if the a dispute is filed with the financial institution, its the financial institution that makes the ruling not PayPal. The financial institution refunds the account holder, then PayPal has to pay the financial institution back and then PayPal holds you liable as we are sub-accounts to paypal's merchant card account.

People must decide if their business model fits with paypal's seller, buyer protection and user agreement policies before using PayPal or not. Keep in mind that selling online has its risks; you do not know who is really on the other end could be using stolen/hacked info or not. If you decide to use PayPal, accept the risk going in and prepare to sell successfully more than you lose. Focus on the next sale. Otherwise, you'll end up stressed out and in therapy over some disputes. You can also take a percentage of each sale and put to the side to cover these occasional disputes in exchange for access to millions upon millions of PayPal users. Your choice.

If you really want to protect yourself, sell physical gift cards and mail them with tracking numbers. But even that is not always 100% but at least you have a higher chance of protection compared to digital delivery.