Industry records show that by 2022, there will be as many as 33 million disputed transactions annually.

Suppose you wonder how to avoid PayPal Disputes from sapping your hard-earned sales revenue. In that case, this post has useful, actionable information that can help you avoid PayPal Disputes with ease.

Here are some exciting e-commerce numbers: A recent Nilson Report found that purchase transactions in the US reached 104 billion in 2018 and are expected to rise to 173 billion by 2028. The Payments Journal estimated credit card transactions for 2020 to be nearly 67 billion with a combined dollar volume of $4.7 trillion.

But as the number and dollar value of online transactions skyrocket, so do disputes and chargeback fraud. Mercator Advisory Group estimates that by 2022, there will be as many as 33 million disputed transactions annually.

For vendors that use PayPal in processing payments, something goes awry with a customer’s purchase every so often. And when this happens, the customer might seek remediation by opening a PayPal dispute or asking their credit card network to reverse the charge. The latter is called a “chargeback.”

PayPal disputes and chargebacks have the same impact on your revenue — PayPal places a hold on the sale’s funds.

How to Avoid PayPal Disputes and Chargeback Fraud

PayPal disputes have risen significantly over the past few years.

According to PayPal, the majority of customer complaints on orders fall under three broad categories:

  • Item Not Received
  • Order Significantly Not As Described
  • Unauthorized Transaction

Before we go into more specific recommendations on preventing the various kinds of PayPal disputes and customer complaints, below is a general dispute mitigation rule of thumb you should always bear in mind.

First, make sure you have clear contact information.

Customers often resort to a PayPal dispute or chargeback to reclaim their money when they cannot reach the seller about the issue. So, make sure you have ample information, such as an email address and phone number. You can also anticipate the customer’s challenges by calling them ahead of time, mostly when you’re selling top-dollar merchandise.

Second, be responsive and proactive.

Put yourself in the customer’s shoes. It is unexciting when we don’t get timely assistance for issues. And our patience wears out quickly, especially when we feel we are not in the wrong. Be quick, professional, and helpful in your response to reasonable customer inquiries. If a customer tells you that they want to file a chargeback with their credit card company, they suggest that they open a dispute in the PayPal Resolution Center instead. That will give both of you the chance to work things out.

Third, have a well-crafted return policy.

Vendors that do not have well-drafted and readily available return and refund policies are susceptible to PayPal disputes. So make sure your customers can easily access and understand your return and refund policies.

Having understood the general rule of thumb on avoiding disputes and fraudulent chargebacks, the remaining part of this article has exclusive insights that can help prevent the various PayPal disputes reason codes highlighted earlier.

How to avoid “Item Not Received” PayPal Dispute

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Below are helpful tips to help you strategically avoid Item Not Received disputes.

Be realistic with your parcel delivery dates and ship with tracking.

Set achievable delivery dates to manage the expectations of your customers better. Unrealistic parcel delivery dates can lead to customers prematurely filing a PayPal dispute.

Equally important, make sure that you ship your consignments with online tracking. Standard shipping receipts only show that you sent an item. But they don’t provide enough compelling evidence that the merchandise got to the receiver or that you shipped it to the right person. Consider using a shipping service with online tracking so that you can quickly produce evidence that you delivered the item in the case of a PayPal Dispute.

PayPal recommends that if the total sale is $750 or more, you should purchase signature confirmation as it certifies that your customer receives their order. The nominal expense is well worth it. Further, they advise that you must use your discretion when shipping internationally using First Class Mail International because PayPal does not accept this shipping service under the PayPal Seller Protection Policy.

Make sure you ship your order with insurance.

Everyone knows that things can go wrong with an order when it’s in transit. So if you are shipping a fragile or expensive item, make sure that you insured it. Among other things, insuring your shipments helps to minimize your losses, as you can easily file an insurance claim with the shipping company in the case of an eventuality. And it also includes tracking and delivery information. That shows the order is en route and lets you know when they receive the package.

Be wary of customers that ask for overnight shipment on high-risk orders.

Be aware; internet fraudsters are notorious for mounting pressure on vendors with requests for overnight shipping so they can resell expensive merchandise as quickly as possible. It can also be a recipe for hot PayPal disputes. And PayPal recommends that as much as you want to be prompt with shipments, when it comes to expensive and in-demand orders, mainly when you are shipping internationally, you should delay shipments 24 to 48 hours to be safe.

Make use of in-house shipping service and be careful when selecting or acting as a dropshipper.

One other notorious attribute of cybercriminals is they often reroute packages to secondary addresses after shipment, which blindfolds the vendor and deprives them of PayPal Seller Protection. So don’t use your customer’s shipping company when mailing orders. More so, be cautious when selecting or acting as a drop shipper.

You are responsible for delivering the customer’s orders. To avoid losses arising from PayPal disputes, choose your drop shippers as though your sales revenue depends on them because most often, it does. Dropshipping companies in high-risk countries are notable red flags.

If you’re a dropshipper, provide a reliable vetting process such as inventory management, product guarantees, and tracking information to minimize risks.

Issue returns quickly, and let customers know whenever you are out of stock/inventory.

With the disruptions in the global supply chain due to the pandemic, many vendors struggle to meet customer orders. One report asserts that COVID-19 disrupted the supply chains of nearly 75% of all US companies. To avoid PayPal disputes due to unfilled orders, update your product or service listing to reflect the out-of-stock status if an item is out of stock. And give your customers ample information on when you can restock, or make it known that choosing an out-of-stock product translates to placing an advance order.

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How to avoid “Item Significantly Not As Described” PayPal Dispute.

There are several things you can do to avoid this category of PayPal Dispute:

  1. Be exact in your product description and provide clear, multi-sided pictures with detailed features and functionality reports.
  2. Provide commensurate disclosures of any functional defects and probable cosmetic damage to items.
  3. Be prompt and professional in responding to customer feedback.

Be proactive and helpful in making sure your customer has a good experience.

How to avoid “Unauthorized Transaction” PayPal Dispute

According to Mercator, credit card transactions rose to 66.8 billion by the end of 2020, resulting in over 33.4 million disputes. That means more chances of CNP fraud also.

Buyers usually open a PayPal dispute or request a chargeback when they believe someone else made a transaction using their PayPal account without their permission. PayPal research found that some Unauthorized Transactions result from fraud, and in other cases, it might be that the buyer forgot they made the purchase.

In any case, they recommend that to avoid unauthorized transactions, PayPal disputes, you must make sure your business name is exact on invoices so that customers will recognize your charge. Also, you must apply a two-factor verification process by contacting the customer before shipment to confirm order information.

Go above and beyond guesswork in avoiding PayPal Disputes

Here’s the cold fact: There’s no guarantee that you can successfully avoid PayPal disputes even if you painstakingly observed all the recommendations above. Many cybercriminals are devising every fraudulent chargeback and disputes strategy known to man these days.

Dispute management has historically been a drain on personnel and a drag on the customer experience. And with the issue of social distancing and lockdowns, it is becoming even burdensome. But you don’t have to let PayPal disputes and chargebacks stall your business growth. Brands such as have created the world’s boldest and most comprehensive PayPal disputes and chargeback management system to help you win more disputes with little effort. provides accurate and in-depth analysis, real-time statistics, and comprehensive transaction data to help you manage and understand your chargebacks. The software also calculates the win rate on every dispute that enters your system and provides a score from 1–100 on the likelihood of winning the dispute so you can better manage your resources.