Trading on eBay was traditionally for ordinary users. However, the site’s broad reach and popularity as a destination for auction-style sales have long made it attractive to professional sellers.

Today, eBay is the online hub for archives, used goods, and other hard-to-assort treasures.

Just like any other eCommerce platform, eBay chargebacks are a reality. Very much so. The platform owners have established standards for handling transaction disputes in line with conventional credit card chargeback processes.

That’s why we’ve put together this insightful piece to reveal the hidden secrets of eBay chargebacks and how to prevent them like a pro.

What is eBay chargeback?

An eBay chargeback occurs when a buyer's bank forcibly reverses a payment, deducting the transaction amount from the seller's account. This happens when buyers dispute a purchase with their bank or payment provider (e.g., PayPal).

But, as usual, online shoplifters also seek a piece of the action. From what we’ve seen – including payment network news reports on chargeback trends – scammers often use fraudulent chargebacks to deceive sellers and beat the system.

As many eCommerce merchants will tell you, such chargebacks are the worst! They’re difficult to win. And their overarching effects on business profitability are profound.

Chargebacks aren't just refunds. They often have residuals and costs, including dispute fees, lost merchandise, and even the loss of merchant accounts for breaching established dispute limits. More than a 1% chargeback ratio can cost a merchant their processing rights. And, sometimes, it can lead to the death of the business itself.

Detailed sources and causes of eBay chargebacks can be found in this guide.

The Real Cost of eBay Chargebacks

Chargebacks deal a hard blow to merchants of all sizes. The impact is far-reaching. Below are some ideas:

• Dispute fees: $20-$100 per case, depending on your region and the payment provider involved.
• Lost revenue: The transaction amount is deducted even when you successfully ship the merchandise.
• Account operation risks: A chargeback ratio above 1% means high fees, suspension, or termination of the merchant account.
• Reputational damage: Frequent disputes lower your seller rating, reducing visibility.
• Ancillary costs: Chargebacks increase your customer acquisition cost (CAC), meaning more overhead expenses.
• Sales cannibalization: Stolen merchandise often turns up in secondary/black markets.

The list goes on. Here's what these chargeback costs mean in monetary terms.

🛑Why a 1% Chargeback Rate is Such a Big Deal: At least 3.7% of goods bought online are susceptible to chargebacks, according to industry estimates. Therefore, staying below 1% takes a lot of work. Exceeding it signals excessive risk to eBay, threatening business survival and sustainability.

eBay Chargebacks: How Does eBay Handle Payment Disputes?

When eBay receives a chargeback, it will alert the merchant and work with them to resolve the issue.

They give the merchant five days to accept the chargeback or contest it.

If you accept the chargeback, eBay will deduct the transaction amount from your “Available, Processing, or On Hold” fund account.

📍Note: This is different from eBay Money Back Guarantee, where the buyer works directly with you on eBay for a transaction refund. For instance, a buyer can open a return request or report they didn’t receive their order. In such cases, eBay makes the final decision. In chargebacks, eBay mediates between buyer and seller while the customer’s bank or card issuer makes the ultimate decision.

To accept a chargeback:

• Select View details near the disputed transaction in “My eBay Sold” or visit the Requests and Disputes tab in Seller Hub.
• Click on Accept dispute and buyer receives a refund, then click Continue.
• Click on Accept to initiate the refund.

eBay waives the chargeback fee when a merchant accepts a chargeback.

To accept a dispute and request merchandise return:

• Click on the dispute notification and select “Respond to Case.”
• Click “Accept dispute and buyer receives refund” then Continue.
• Select Try to get my item returned.
• After verifying your order return address, select Accept to initiate the refund.

While eBay says they will make efforts to recover the item for you, they cannot guarantee the actual return.

Another caveat is that resolving payment disputes takes up to 90 days or more in some instances, depending on the card issuer. eBay may hold payout funds up to 90 days from the time of the dispute.

Keep track of the dispute's status at “My eBay Sold” or the Requests and Disputes tab in Seller Hub. Sometimes, the customer’s bank might reopen a closed dispute, and eBay will request additional evidence from you.

How to Challenge and Overturn eBay Chargebacks

Like other platform chargebacks, eBay will request supporting documentation from you to overturn the chargeback.

To challenge a chargeback on eBay:

• Click on the dispute notification and select “Respond to Case.”
• Click on “Challenge dispute and provide proof,” then click on Continue.
• Upload your documentation, verify it, and then click on “Submit.”

You can also challenge the dispute and request an order return.

To challenge an eBay payment dispute and request order return:

• Click on “Respond to case” from the case notification.
• Click on “Challenge dispute and provide proof,” then Continue.
• Select “Try to get my item returned.”
• After verifying your order return address, upload your documentation, verify your compelling evidence, and click on “Submit.”

eBay says you must crop an image to the pertinent area before uploading it. They also allow image compression or merging, as the case may be. Your image uploads must not exceed 5, under 1.75 MB, and should ideally be in JPEG, JPG, or PNG format.

🛑Remember: The cardholder’s bank will make the final decision on the case. eBay’s policy requires that “if you’re eligible for seller protections, eBay won’t charge you for the amount of the dispute and may also waive or refund the dispute fee, even if the payment institution decides to refund the buyer.” Otherwise, you will incur a dispute fee. This ranges from $20 to $100 depending on your region.

That brings us to the next point.

What is eBay Money Back Guarantee?

eBay Money Back Guarantee is a consumer protection instrument that helps buyers reverse transactions if they feel they didn’t get what they paid for or the order didn't meet their expectations. It’s like chargebacks but instituted and managed by eBay itself.

Buyers can invoke the eBay Money Back Guarantee for items other than real estate, vehicles, and digital content. However, unlike chargebacks, eBay Money Back Guarantee requires the cardholder to deal directly with eBay without involving the card issuer and credit card network.

eBay gives sellers three days to either accept the customer’s claim and give the cardholder a refund or fight it by sending specific documentation like tracking information or order delivery confirmation to eBay.

eBay Money Back Guarantee applies when the following conditions are true:

• The customer did not receive their order.
• The merchandise the customer received differs from your listing, either because you sent the wrong item or it arrived impaired or faulty.
• You, the seller, did not satisfy your return policy as indicated in your product listing.

The other caveat for buyers is:

1. They must complete and pay for transactions on the eBay platform with eligible payment methods.
2. They must meet eBay policy requirements, like requesting money back within the specified time or seeking a resolution for the same problem another way (say by filing a chargeback).
3. The merchandise must not be subject to any exclusions

Does eBay Seller Protection Actually Protect You?

eBay Seller Protection program safeguards merchants against transaction disputes like unauthorized purchases or non-delivered items – covering the disputed amount, waving fees, and removing negative feedback.

But it's not a blanket guarantee. Eligibility requires:

• Responding to eBay disputes within eBay deadlines.
• Providing all documentation that eBay needs when it needs them.
• Adhere to eBay’s User Agreement, such as the prohibited and restricted item policies and eBay dispute time limits
• The disputed transaction must be physical goods, and you have proof of order delivery or pickup.
• You provided a full refund to the customer through the platform before they initiated a dispute.
• You offered a partial refund for a returned or damaged order (in line with eBay policy).

Some limitations to watch for:

• No tracking? No protection. If shipping lacks delivery confirmation, you're on your own.
• Digital goods are excluded. Only physical items quality.
• Late responses void coverage.

How Can I Prevent Chargebacks on eBay as a Seller?

eBay chargeback prevention measures revolve around transparency and sincerity in your business dealings. Here are 7 proven ways to prevent eBay chargebacks effectively:

• Craft detailed product listing: Include clear photos and specifics (e.g., "Used blue jacket, minor wear on left sleeve") to avoid surprises.
• Ship smart: Use tracked, insured shipping, especially for items over $750, and retain delivery proof.
• Wow with service: Reply to buyers within 24 hours; resolve issues before they escalate.
• Document everything: Save receipts, track numbers, and messages. Compelling evidence wins disputes.
• Secure refunds: For partial refunds, get written buyer consent (e.g., via eBay Messages) to prevent disputes.
• Fight fraud: Enable AVS and CVV checks to catch suspicious orders early.
• Track your ratio: Use chargeback alerts to minimize dispute occurrence and keep chargeback ratios below the danger zoom of 1%.

But, of course, you can’t assume that everyone will be honest and fair. Scammers and fraudsters will find loopholes in your business and punish you with false chargebacks.

For such unavoidable side effects of selling online, Chargeflow has you covered. Chargeflow combines years of experience handling thousands of disputes with industry-first technology to perfect the dispute cycle and deploy it at scale.

Why Chargeflow Works:

1. Automation: Saves essential hours of manual work.
2. Expertise: Leverage deep domain experience in dispute handling.
3. Results: Sellers report up to 80% chargeback recovery rate.
4. Success-based: You pay for results, nothing else.
5. ROI: Up to 400% return on investment.

Wrapping Up

An eBay chargeback is a forced payment reversal initiated by a buyer's bank due to order disputes, deducting funds from the seller's account. Buyers may file chargebacks for product non-delivery or fraud, impacting sellers with dispute fees, lost revenue, and account risks.

eBay's Seller Protection program mitigates some losses from authorized purchases or non-delivered items, but it's limited. It requires stringent commitments.

Unlike the eBay Money Back Guarantee, where eBay decides refunds, chargebacks involve banks as final arbiters. Sellers face profound costs: a chargeback ratio above 1% risks account suspension, while scammers exploit the system with chargeback fraud, reselling stolen goods.

To prevent chargebacks, you should onboard Chargeflow for automated dispute recovery. Proactive chargeback management and adherence to eBay policy are key to surviving chargebacks.

Contact our team if you need further guidance.