PayPal’s eBay Payment Holding Policy, Why I Agree, and How to Work with it.
I seem to be alone on an island with the idea that I actually agree with PayPal’s new system for new or low volume eBay sellers. I understand it can be frustrating and especially confusing for new sellers, however, I believe it will solve more problems than it causes and if you work with the system properly everybody can be happy. I’ll discuss more about the reasons this system has been introduced later. For now, let’s talk about how we can work with the system, because like it or not, if we’re going to sell on eBay, we have to.
So, we sold our item on eBay and now “evil” PayPal has placed a temporary hold on these funds, however, they’re telling us to go ahead and ship it. The way this new system works is that our funds will not be released until one of the following things happens:
- Your buyer leaves positive feedback
- 3 days pass after delivery confirmation (via tracking number)
- 21 days have passed
Obviously, we don’t want to wait 21 days for our money. So how can we ensure that one of the first two things happens in a timely manner so that we can have access to our money as quickly as possible? Here are a few things to consider.
eBay’s Selling Manager application provides an easy way to automate the process of requesting feedback from your buyers. You can create rules to send a feedback reminder x number of days after shipping it. Beyond that, you can easily find all of your sold items that need feedback and with just a few clicks you can send out feedback request emails to every one of them with a personal, customized message to each.
If the Selling Manager doesn’t offer enough help you can use the eBay web services API to develop custom tools to completely automate the process of requesting feedback from buyers who have not left any, as well as leaving feedback for your buyers on a set schedule, after they’ve left one for you, or however you’d like to handle it. You could even create a system that automatically tracked all of your current shipments and sent out reminders on the same day your customer received their item. Within the reminder, ask them to inspect their item and ensure they’re happy and then please leave a feedback on eBay.
Of course, the key to obtaining a positive feedback quickly is to be honest about what you’re selling and maintain good communication with your buyer throughout the entire process. If your buyer is truly happy with your service and the product they received they are much more likely to take a few moments and leave you a feedback.
Tracking Numbers – Proof of Delivery
PayPal will also release the funds once three days have passed after proof-of-delivery (tracking number shows delivered). If you use PayPal’s shipping buttons to print shipping labels for your products then this step is taken care of automatically. The tracking number is entered into the transaction details and PayPal’s system can easily track it and release the funds accordingly. This probably covers the majority of you.
Here’s the part PayPal screwed up! They do plan to fix it, though.
If you are NOT using PayPal’s shipping buttons to print shipping labels it can be a nightmare to maintain the tracking numbers in PayPal so that their system can successfully release funds on time. Currently, the only way you can get your tracking information into PayPal if it was generated elsewhere is to manually add it. There is no access to tracking information via PayPal’s web services API!
This problem could indeed be a big one. I have a couple of clients that use FedEx for shipping so they don’t even have the choice of using PayPal’s shipping features to generate shipping labels. As such, the only option they have is to employ somebody to enter tracking numbers manually into PayPal’s system. As such, they typically skip this and focus on obtaining positive feedback from the buyers.
Why is PayPal Doing This?
I think the easiest way to explain why this system has been put into place is to provide an example scenario in which not having this system hurts everybody. I’ve seen it all too often. Consider the following:
Buyer purchases a desktop computer on eBay for $1000 from Seller. Seller states in the auction that the computer has 4 RAM slots. He also states that he has a 7 day return policy should anything go wrong with the sale.
Buyer pays for the item via PayPal and Seller has the money instantly. Seller is an honest guy that just needed to get rid of this computer. He ships the computer and assumes everything will be just fine. Seller proceeds to spend the $1000 on this month’s bills and his PayPal account is now at $0.
Buyer receives the computer and sees that it only has 2 RAM slots in it. He had already purchased 4 sticks of RAM and was ready to load up his new machine and is rather upset. Buyer contacts Seller and explains the situation and also opens a new PayPal dispute claiming the item was not as described.
Seller, again, is an honest guy. In the PayPal dispute he apologizes for his mistake and agrees that Buyer should get a full refund upon returning his item. Buyer returns the item and provides proof-of-delivery on the returned merchandise. PayPal sides with Buyer on the dispute and attempts to refund Buyer.
The problem is that Seller already spent the money. Seller’s PayPal account now goes into the -$1000 balance. PayPal has to explain to Buyer that because the Seller has insufficient funds they cannot refund the money even though they sided with Buyer on the dispute. Buyer, of course, is not happy with this news.
Seller is also not happy because his PayPal account is now -$1000 they’re coming after him for that money. Seller is struggling to pay it back, though, because he already spent it on his bills.
At this point Buyer is unhappy with PayPal, Seller is unhappy with PayPal, and PayPal is unhappy that they now have 2 people spreading the word on blogs that PayPal is a horrible thing.
That is just one of the many examples I’ve seen that could have been avoided if the Seller would have simply waited until the buyer had received his item and was completely happy BEFORE spending the money. Buyer would have gotten his refund and Seller could have re-listed the item and sold it again with the correct specifications.
Here’s another scenario to consider:
Scammer has a list of phished eBay and PayPal accounts. Scammer proceeds to list items on these accounts that are high dollar and quick sellers. Things like iPhones, laptops, and the likes. Scammer sells approximately 20 of these items without any intention of ever delivering a single thing to anybody. Unsuspecting buyers purchase these items and send payment right away. Scammer then moves the money from these payments between a bunch of different phished accounts to make it hard to track and eventually gets out with cash or might even use the funds to purchase items and have them shipped to “drop-spots” where they will be able to obtain the merchandise.
In such a case, once PayPal discovers this has happened they are forced to freeze ALL ACCOUNTS INVOLVED while they investigate and try to track down all of the money that has now flooded their system with disputes. Now you’ve got a whole mess of upset customers.
Again, this scam could have been avoided had the funds not been made available until after the buyers actually had their items, which in this case would have been never. Then, when disputes were filed the funds would still be available to refund to the buyer.
Once more, these are just a couple examples of the many crazy scenarios I’ve seen with buyers and sellers on eBay using PayPal. By implementing systems like this “Escrow” holding, huge problems can be avoided and if you follow the guidelines of the system it will not be a nuisance.Tags: disputes, ebay, escrow, payment holding, payment holds, paypal, policy