eBay Chargeback is a forced payment reversal by the customer’s bank. Buyers file eBay chargeback when they have issues with their order. Hence eBay instituted the eBay Seller Protection program to safeguard merchants against unforeseen transaction disputes, such as claims or reversals arising from unauthorized purchases or order loss.

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.

This insightful piece will unveil the hidden secrets of eBay chargebacks and how to prevent them like a pro.

What is eBay chargeback?

An eBay chargeback is a forced payment reversal by the cardholder’s bank.

Like other platforms, eBay customers file eBay chargebacks with their credit card issuing bank or payment institutions, such as PayPal – or eBay itself – for remediation on order issues.

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

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

Although you can’t possibly pinpoint all chargeback residuals and costs, one of the most significant financial constraints of chargeback processing is the fees. Then you add the probability of losing your merchant account for breaching established dispute limits. And you have a messy situation.

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.

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 not the same as 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.

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 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 a return

1. Click through the dispute notification and select “Respond to Case.”
2. Click “Accept dispute and buyer receives refund” then Continue.
3. Select Try to get my item returned.
4. 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 30 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.

What if you want to challenge and overturn the chargeback?

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

Here are the steps to take:

How to Challenge an eBay Chargeback

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

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

To do that:

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

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.

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 only when:

• The cardholder didn’t get their order
• Order delivered by the seller differs from their listing, for example:

• The seller sent the wrong order, or
• The order arrived broken, damaged, or faulty

• The merchant didn’t follow their order return policy as stated in the listing

Does the eBay Chargeback Protection Actually Protect Sellers?

eBay Seller Protection program safeguards merchants against unforeseen transaction disputes, such as claims or reversals arising from unauthorized purchases or order loss.

In the event of such abusive buying behavior and circumstances outside your control, eBay seller protection helps you find some peace of mind. eBay takes care of the disputed amount, foregoes the dispute fee, and removes any transaction-related feedback.

That makes sense.

Unfortunately, eBay chargeback protection does not apply to all transactions.

To qualify, a merchant must meet many pre-conditions, such as:

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

How Do I Avoid Chargebacks on eBay as a Seller?

A Statista survey of online merchants worldwide indicates that 3.7 percent of online orders resulted in chargebacks.

And just like other eCommerce platforms, eBay chargeback prevention measures revolve around transparency and sincerity in your business dealings:

1. Ensure your product descriptions tell the true story about the item to avoid expectation gaps or assumptions. The gains of such false impressions pale compared to the detrimental impact of chargebacks and negative customer reviews.
2. Work with proven shipping companies and handlers to ensure orders get to their rightful owners on time and intact. And don’t forget to collect proof of delivery, especially for orders above $750.
3. Make your customer service a priority. That will also boost your SEO on eBay.
4. Avoid all forms of Laissez-faire attitude with pertinent documentation such as receipts and back office drafts.
5. Obtain customer buy-in when offering a partial refund to ensure you’re both on the same page.
6. Make your site safe with standard anti-fraud tools and best practices.

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.

Our AI-assisted chargeback recovery solution gives you complete coverage against post-purchase chargeback. And you only pay when you win. Or it’s free.