Pay-in-4 charging overdue for reversed charges by credit card company

[devisamy]

HI

I raised a dispute on a product which stopped working. It was paid for under Pay-in-4. I did not receive any emails from Paypal with regards this dispute but the merchant replied and agreed to replace the product. I didn't receive the replacement and when I checked with PayPal, it said the case has been closed because I didn't escalate the case. But I wasn't able to do that as I didn't receive the normal email PayPal that states the option to escalate and also because the merchant had agreed to replace. PayPal insisted that they had sent me the email to escalate.

The merchant had stopped responding to my emails about the replacement or their 100% money back guarantee. PayPal refused to reopen the case and said I have to approach my credit card company. 

After investigations my credit card company reversed the charges to my card. But now PayPal's Pay-in-4 is claiming overdue payment of the reversed charges as they claim they have already paid the merchant and closed the case in the merchant's favor since I didn't respond to have the case escalated. But the fact that I didn't get a working replacement product nor a refund from the merchant seems to be falling on deaf ears with PayPal. 

Has anyone else had similar issue with PayPal and how did was it resolved?

Looks like my credit rating might be affected if I do not settle Pay-in-4.

[PayPal_Meghan]

Hello @devisamy, 

Thanks for joining the Community! 

I'm sorry to hear your dispute case did not turn out as expected. I also understand there's some confusion around the Pay in 4 plan and refunds. I'll be happy to help with this. When a dispute is filed, a buyer and seller have 20 days to come to an agreement before the case automatically closes. If an agreement is not made, either party can escalate the dispute to a claim within their PayPal Resolution Center. If the case automatically closes because it was not escalated, we are unable to reopen it. In this situation, opening a case with your financial institution is a perfectly understandable next step. This can cause some confusion regarding the Pay in 4 plan, though. 

Pay in 4 is a short-term loan where the customer agrees to pay it back in four automatic installments. When it's used for a purchase, PayPal will immediately send the full amount to the merchant on the customer's behalf; this allows merchants to ship items immediately. If a refund is successfully processed through PayPal, it will automatically be applied toward any remaining Pay in 4 installments. Any extra would then be placed into the PayPal balance. However, in your situation, since the refund was unable to take place on PayPal, the installments would still be due. 

I hope this information helps to clarify any confusion with the Pay in 4 refund, and I apologize for any frustration caused by the case outcome.

- Meghan