Archive | July, 2009

How to Return an eBay Item to the Seller Part 1 – Am I Eligible?

28 Jul

You may also be interested in these guides: How to Return an eBay Item Part 2 – Contact The Seller and Return Shipping and When to Buy Shipping Insurance Part One – The Buyer’s Perspective

A guide on returning an eBay item might seem a bit mundane.  Unfortunately, returning an item and actually receiving a refund can be a complicated process that often leaves the buyer without the item they purchased and without their money back.  My third favorite eBay “joke” is, “I accept returns, but don’t offer refunds.”  If you were to ask around about people’s experiences on eBay, you’ll find that many (probably all) people will report being “ripped off” at some point.  The most common rip off tactic on eBay is sellers who receive returns but never process a refund.  This is a relatively easy scam for sellers to pull off because Paypal requires proof that the buyer returned the item and the seller received it.  If the buyer does not have this proof, in the form of a verifiable online Delivery Confirmation or equivalent tracking number, the seller is not obligated to refund the buyer.  This is because the buyer has no proof that they returned the item.  This guide will explain how to return an eBay item and actually receive a full refund.  Many times buyers can also receive a refund for their return shipping as well.

Return and Refund Eligibility as Stated in eBay Listing

It is now required that all sellers include a “return policy” in their listing.  This can be found by clicking the “Shipping and payments” button on the item page and scrolling down to the bottom.

eBay Return Policy

Make sure to read this policy prior to purchase as it obviously varies from seller to seller and even item to item from the same seller.  The good news is that even if the seller says they don’t accept returns it is still possible to force a return by opening a “Item Not as Described” Paypal dispute.  I will cover that process in part three of this series.

Is Returning the Item Worth It?

Consider the amount paid for the item and whether or not it will be worth the potential hassle of returning it.  It is official eBay/Paypal policy that the buyer is always responsible for return shipping unless an agreement can be reached for the seller to reimburse the buyer for the cost of shipping.  Shipping two pounds Priority Mail across country with Delivery Confirmation is around $9.  I’ll explain techniques that will help convince sellers to reimburse shipping costs in part two of this series.  Depending on the issue with the item, the seller may also deduct the original shipping cost from the refund.  If the item included “free shipping,” the seller may deduct the actual cost of shipping from the refund.  Returning an item can quickly add up to $20 or more ($10 original shipping and $10 return shipping for example) and the buyer will have nothing to show for it.

In addition to shipping costs, some sellers charge a “restocking fee.”  Many stores, like Best Buy and Target, charge restocking fees for open merchandise or electronics in an attempt to minimize returns.  Restocking fees aren’t prevalent on eBay, but some sellers do advertise and charge them.  It is actually against eBay policy to charge a restocking fee as a percentage of the price of the item.  For example, sellers are not allowed to charge a 15% or 20% restocking fee.  This doesn’t stop sellers from continuing to charge restocking fees in this manner.  In fact, several of the top sellers in the United States continue to try to charge restocking fees as a percentage of the sale.  Sellers are allowed to charge a set restocking fee, like $5 per item for example.  Take this into consideration when deciding if a return is worthwhile.

I Shouldn’t Tell You This

I get into a lot of trouble for recommending buyers open Paypal disputes.  It isn’t in my best interest to tell anyone this, but since we’re friends and no one really reads this “auction blog” anyway, I might as well.  No matter what a seller’s terms are, a buyer can always receive a full refund including the original shipping charge by opening and winning a Paypal dispute.  Even if the seller’s return policy states “no returns,” lists a restocking fee, or the seller otherwise tries to deny the return, a correctly filed Paypal dispute will always result in a full refund of the entire payment.   Once a Paypal dispute is initiated, Paypal will most likely hold the entire payment until the dispute is closed.  Paypal does this so the seller is unable to withdraw the funds and disappear.  In addition, in order to file a credit card chargeback, Paypal requires the buyer to go through Paypal Dispute Resolution first.  I’ll be going over the various kinds of Paypal disputes in depth in part three of this series.

In part two of this (riveting) series, I will explain how to contact the seller to organize a return and go over the  shipping requirements necessary to guarantee a refund will take place.

EBay’s Real Problem – An Erosion of Trust Between Buyer and Seller

25 Jul

You’ll have to excuse the following rant.  I know I promised not to do this, but it’s just so fun I can’t always help myself.  I intended to write about how to return an eBay item and that is my next planned article, but I think the following will form a solid foundation for exactly what I’ll be talking about.

The biggest problem with eBay is inherent in its construction.  It has always existed.  It will always exist. The problem isn’t Paypal, it isn’t CEO John Donahoe, it isn’t Ex-CEO-Never-Gonna-Happen-For-Governor Meg Whitman, and it isn’t whatever new policy is currently being touted as “the worst ever.”  The problem with eBay is that it’s impossible to trust whoever it is that you’re conducting business with.  When I say “impossible,” what I mean is that you shouldn’t trust whoever it is you’re dealing with on eBay.  I’ve had the following conversation with people at least five or six times: “My suggestion is to never buy anything on eBay.”

Person 2: “Why?  Isn’t that what you do?” “Imagine the person you trust least in this world.  Now imagine you don’t know them, they live 1,500 miles away, and you just sent them $700 with a service you can’t even begin to understand.  That’s eBay in a nutshell.”

I think eBay is beginning to realize that people don’t trust eBay.  I don’t mean sellers can’t trust eBay or eBay is an evil company.  What I mean is that people don’t believe is a safe place to go to spend their money.  This is why eBay has been bringing in, General Motors, and offering those “Daily Deals” every non-featured seller hates so much.  EBay is trying to boost confidence and regain people’s trust by offering products from companies and sellers that it knows will deliver the item as advertised.

To further my point about trust, two weeks ago eBay tried a new stunt.  They put a huge “flash sale” banner on the eBay homepage and an icon on the navigation bar with a link to an eBay store run by “ideeli,” who only had 22 feedback at the time.  Many sellers were up in arms over what they considered to be gross preferential treatment and hypocrisy.  After all, how could a seller with 25 transactions be featured on the eBay homepage while sellers with 50,000 feedback are buried in “Best Match” search?  Read the full story at Auctionbytes . The bottom line is that eBay checked out and trusted ideeli to follow through with their promise to supply buyers with low prices, offer free shipping, and provide great customer service.   In fact, I’m sure there was a lengthy contract signed by ideeli that this is exactly the service they would provide.   This is, after all, precisely how eBay wants every seller to behave.  The unfortunate reality is that low prices, free shipping, and great customer service are rarely achieved in any business environment, let alone a relatively anonymous auction website.

EBay’s answer to the “trust problem” has been an increase in eBay suspensions and Paypal limitations.  If anything, these suspensions and limitations cause sellers to go “underground,” registering with fake information and resorting to shadier selling practices.  Once a seller loses their account and is forced to reregister under an alias or family member’s name, there is much less at stake for the seller.  With relatively little to lose, the motivation for doing a good job decreases as sellers become less interested in providing services they once were proud of.  Furthermore, many sellers (and buyers) on eBay operate numerous UserIDs.  It is not uncommon for a seller to operate a dozen or more accounts at the same time.  I recommend registering multiple IDs in a number of my guides because if something happens to one account – like a negative feedback or unauthorized listing removal – it is easy to switch to another account without those problems.  Although this might be good for the seller in the short term, it certainly doesn’t make the eBay marketplace any safer.  Imagine if Enron could have just switched their name and continued going about doing business in the same exact fashion without anyone knowing they were the same company.  In essence, this is exactly what eBay is allowing sellers to do every day of the week.

How Can eBay Regain the Trust of Buyers and Sellers?

Luckily, this isn’t my problem and it would be a waste of time to go on about all the changes I think eBay should make.  Plus, being negative all the time is a lot more fun than trying to help people or provide any answers to problems.

Until next time,


Paypal Rolling Reserves Rolling Out For Many July 23, 2009

24 Jul

What Are Rolling Reserves?

Back in June on Paypal’s own blog, The Paypal Blog Paypal introduced a new policy called “seller reserves.”  In short, Paypal is requiring account holders to keep a percentage of their revenue in their account for 60 days before they will be allowed to withdraw it.  This money will be used to cover what many fear will be an onslaught of fraudulent disputes and chargebacks by buyers who use loopholes in the system to scam sellers.  This new policy overlaps with other Paypal policies that hold sellers’ money, including the 21-Day Payment Hold and $500 Monthly Withdrawal Limit.

Why Has Paypal Instituted This Policy?

Paypal is in a vulnerable position.  Just as there are buyers who set out to rip off sellers, there are sellers who set out to rip off buyers and ultimately eBay and Paypal are stuck with the bill.  Without going in to too much detail about how this might be done, it is fairly easy to set up an eBay and Paypal account, sell a number of items, withdraw the money, and disappear.  Even sellers who have been “legitimate” for years are liable to rip off buyers and disappear.  The most famous case is a seller in Australia who ripped off buyers to the tune of several hundred thousand dollars which Paypal was finally forced to refund out of their own pocket, One of Many Paypal Australia Debacles.  Paypal is taking on considerable risk as a payment processor and is continuing to figure out ways to mitigate that risk. Unfortunately, risk mitigation for Paypal means lost revenue for sellers.

Paypal doesn’t collect enough information during signup to properly identify who is actually using the service.  This is because they don’t want to scare off any potential users by requiring a Social Security number, utility bill scan, credit card scan, supplier invoices, etc. on signup.  This is why they hit sellers with the Paypal Limitation after a certain amount of transactions or revenue.  Paypal gets nervous and wants to know who is actually using the account.  When the account holder is unable or unwilling to complete the steps to remove the limitation, Paypal holds the funds in the seller’s account for 180 days happily collecting interest on all money held.

The second reason Paypal is instituting this policy is because they will have the opportunity to earn interest on the money that is held.  Imagine if at any time you could take hold of a hundred million dollars and earn interest on it.  You would be foolish not to take advantage of that wouldn’t you?  With eBay’s declining stock price and worsening platform outlook, eBay needs all the money they can get.

Who is Affected By This Policy?

This is a difficult question to answer because Paypal will never admit how many people are affected or how they decide who will be slapped with a reserve.  There is a reason there’s no “Paypal” in “transparency.”  On June 9th, Paypal announced that the number of accounts that were affected by seller reserves was “currently less than 1%.”  Since this was a new policy, it’s perfectly possible that the current number was less than 1%.  At the same time, Paypal advertises on their own website that there are more than 70 million account holders worldwide.  One percent of 70 million is still 700,000 accounts affected at the time of the policy announcement and that number is only increasing.  Since this is a relatively new policy it is difficult to ascertain who is being targeted.  There are many reports around the internet and on eBay’s own message board from sellers who say they have been hit with a reserve but have never received a credit card chargeback.  In addition, small and large sellers alike are reporting that they have received the following email.

What’s Happening July 23, 2009?

The major reserve rollout is coming on July 23.  Paypal sent out an email on June 23, 2009 informing account holders who would face a rolling reserve 30 days later stating:

An important change to your PayPal account


Your business is important to us, and we are working hard to provide an easy, fast and secure payment service to you and your customers while keeping our prices competitive. We’re also committed to clearly communicating changes to our policies and procedures. To that end, we are writing to inform you of a change to your PayPal account, which will take effect 30 days from the date of this email.

Beginning 07/23/2009, a small percentage of the total payments you receive will be held temporarily as a reserve in your account. This small reserve amount helps to ensure that funds are available to cover payment reversals or buyer chargebacks, if you do not have a sufficient PayPal account balance and do not provide the funds to do so.

A reserve is like a security deposit for your PayPal account and is standard practice in the payments industry, especially for retail segments like Clothing, accessorie where there is a higher-than-average risk of reversals or chargebacks. This does not mean that you have done anything wrong. We are requiring a small reserve in your account because you sell in a category that has a higher risk of reversals and chargebacks and because you are relatively new to PayPal as a seller.

Your reserve amount will be 10% of the total payments you receive, which will be held on a rolling 60-day schedule. That means 10% of the money you take in each day will be held in your account, and then made available for withdrawal 60 days later.

For example, if you receive $2,000 every 60 days into your PayPal account, then a reserve amount of about $400 would be required on a rolling 60-day period. In other words, about $6.67 would be held in reserve each day, then released 60 days later.

If you are a PayPal Money Market Fund customer, you will still earn interest on your total balance while your money is in reserve. Click here for more information or to enroll in the PayPal Money Market Fund.

We recognize this is a change in the way we do business with you. By requiring some merchants to reserve money in their accounts, we’re able to lower our own costs. Keeping our costs low helps us to continue providing competitive pricing for all sellers who use PayPal.

If you have any questions about this change, please call us at 1-877-729-7252. We appreciate your business and look forward to a continued partnership.



When I first received this email from I thought it was one of the cleverest phishing emails I’ve received.  The most glaring issue with the email is that their math is wrong.  Ten percent of $2,000 is $200, not $400.  Second, “accessorie” is spelled wrong.  I also didn’t recognize the phone number on the bottom and it isn’t in Paypal’s M.O. to offer phone assistance in the first place.    When I searched for the number, I came up with Paypal’s own website stating the same thing that’s in the email including the phone number.

Why Is This Policy Alienating The Few Honest Sellers Remaining on eBay?

First, people don’t trust Paypal to actually release their money.  Second, the average profit on an eBay item after fees, shipping, etc. is generally less than ten percent in the first place.  The fact that Paypal is holding ten percent for 60 days means sellers will not have access to their profits for two months.  Imagine if you get hit with a rolling reserve on October 15 and don’t have access to your money for the entire holiday season.  Third, the only way to earn interest on the money held in the rolling reserve is to give Paypal your Social Security number and allow them to invest your money without FDIC insurance, regulation, or oversight.  The current Money Market Rate is a paltry 0.08%, less than most checking accounts.   Paypal reaps the rewards while sellers continue to assume all the risk.  If a seller chooses not to enroll in the money market fund, they receive no return on their money and Paypal will still earn interest on the money by investing in certificates of deposit, bonds, treasury bills, or whatever else they want to do.

What Can I Do To Lessen the Chance My Account Will Have Rolling Reserves?

At this point it’s difficult to say.  Many of the techniques I write about I have been practicing myself for several years.  New policies are a different bag altogether, but I have some general advice from what I’ve picked up on thus far.  First, always add tracking/delivery confirmation numbers as quickly after receiving payment as possible.  If you print labels with Paypal, print them at least once per day.  Even if you aren’t going to ship the item until the funds clear to your checking account, make sure you print the labels because it tells Paypal that you are on top of your sales and actively ship items.  Second, I suggest leaving a reasonable amount of money in your Paypal account.  There are many detractors to this advice who will tell you that leaving any balance in your Paypal account is crazy because of the chances that Paypal will freeze or reverse the payment. The bottom line is that if a payment does get reversed and you don’t have the funds in your account Paypal will go after those funds with all they’ve got. This is the real reason they collect your Social Security number – not to run a credit check but to impact your credit negatively should you ever “owe” them money.  In essence, you are creating a rolling reserve by choice.  The benefit is that you will have the ability to withdraw the money if absolutely necessary and Paypal is less likely to hit your account with a $5,000 minimum reserve plus ten percent of sales like some people are receiving.  Paypal’s fraud management system is as complex as any computer system on the planet.  If you make Paypal nervous they are more likely to limit your account and institute a rolling reserve.  Many sellers are reporting that they are being hit with rolling reserves even though they have never received a chargeback and have few disputes.  The truth is that their actions make Paypal wary and when Paypal is wary they take your money and hold it for as long as they can.

As I’ve said before, limiting disputes is also imperative.  Paypal calculates a “reversal percentage” which is the number of disputes/claims/chargebacks compared to the total transactions you have completed.  For example, if you’ve had 100 transactions and 3 of them end up in the Resolution Center as disputes then your reversal percentage is three percent.  Once you hit a specific percentage, the computer will tell Paypal to review the account and they will then issue a limitation on the account telling you that you have to resolve all complaints before you can withdraw any money.  This means you will have to refund every single person that has a dispute before you can access your funds.

Paypal is telling buyers to return items to the seller for a refund in almost all dispute scenarios.  With this in mind, if a buyer has a problem and it seems like they’re serious about it, deal with it outside of Paypal by telling the buyer to return the item for a refund.  The benefit of dealing with it outside of Paypal is that you may also be able to keep the original shipping charge and charge restocking fee.  If the buyer takes it to Paypal via a dispute you will be forced to refund the entire payment including shipping paid by the buyer, no matter what previous arrangement you made with the buyer to pay the original shipping.


Rolling reserves is just another policy in Paypal’s ever expanding arsenal to part people from their money for as long as possible.  I think we can all understand where Paypal is coming from, but it is unfortunate that honest people have to pay for the misdeeds of others.  The bottom line is that this will be another successful policy for Paypal. Those of us who have been swearing off eBay for a while now will continue to use it and try to cope with the plethora of changes so many of us find detrimental. Time will tell how this roll out affects the marketplace and I will be doing follow up articles outlining the effects and any new coping mechanisms that come to light.