What is PayPal?

PayPal is an online payment service system that saves your details so you don’t have to enter them every time you want to buy something online.

PayPal works by using encryption software to allow people to transfer money quickly between accounts.

It’s the preferred payment method for many online shopping sites, such as eBay, and is often included among payment options for a lot of high street retailer sites.

In order to send money using PayPal, you’ll need to register a credit or debit card.

If someone sends you money using PayPal, you’re able to quickly transfer it from your PayPal account to your bank account for free.

Is PayPal safe?

PayPal uses encryption software to protect your transactions and doesn’t reveal any of your card or banking details to the person or company you’re sending money to.

It also offers protections if something goes wrong.

But it’s a wise move to link your account to a credit or debit card instead of directly to your bank account, just to be sure as you’ll be covered by additional protections, such as Section 75 and chargeback.

What is the PayPal Buyer Protection?

The PayPal Buyer Protection scheme means you can put in a claim if something you bought using PayPal doesn’t show up or is significantly different to how it was described. But there are some exceptions.

PayPal Buyer Protection exceptions

Some items are not covered by the scheme, including complaints related to cars and other vehicles, flights, custom-made items and eBay classified advertisements.

How can I make a claim to PayPal?

If you’ve used PayPal and you think you haven’t got what you paid for, the first stage is to raise a ‘dispute’ with the seller in the resolution centre.

You must do this within 180 days of making the payment.

There are two kinds of disputes:

  • Item not received - you bought something but you never got it. Be aware, though, that a seller has three days to ship an item after you buy it. Find out more about what to do if an online order hasn’t arrived.
  • The item was significantly different to how it was described.

Examples of items that could be deemed ‘significantly different’ could be:

  • if an item was described as new but was in fact used
  • you ordered three items but only two arrived
  • you ordered a book but a DVD was sent
  • it was significantly not as described because it was damaged in transit.

At the dispute stage, you’ll be dealing with the seller directly.

If you want to return the item, you might be able to ship it back free of charge using PayPal’s Return Shipping on Us feature.

This gives you 12 free returns a year as long as the postage is £15 or less and you paid for the item fully through PayPal.

You can return items for free, even if you change your mind, no matter the retailer’s returns policy.

You’ll need to activate the Return Shipping On Us service through your PayPal account.

What if I can’t resolve my PayPal dispute?

If you can’t bring the dispute to a satisfactory resolution within 20 days of raising it, then you can escalate it and raise a claim under the PayPal Buyer Protection scheme.

To escalate a dispute to a claim, you need to:

  • go to the resolution centre where you raised the dispute and click ‘view’ next to the claim
  • click ‘escalate this dispute to a PayPal claim’ near the bottom and follow the instructions.

PayPal will usually make a decision on your claim within 30 days and may need to ask you for more information during that time.

Note: If you bought the item on eBay, use the eBay Resolution Centre. You can read more about your rights when shopping on eBay in our guide.

What are the PayPal Buyer Protection reimbursements?

If PayPal determines a claim in your favour, it will reimburse you the full purchase price of the item and the original postage costs.

But you will have to cover the cost of sending back any item that you received that was significantly different to the way it was described.

Can I claim under the Consumer Credit Act Section 75 with PayPal?

How you used PayPal when you paid will likely determine if you’ll successfully be able to claim under Section 75.

Don’t forget Section 75 only applies if the item costs more than £100 and not more than £30,000 and was bought on a credit card. Learn more about Section 75.

1. If you used your PayPal account to buy something by logging into the account and making the payment through PayPal, you will have essentially broken the link between you and the retailer.

In this case, PayPal is a third party that you pay, and then it pays the retailer.

The section 75 law requires there to be a link between the debtor, the creditor and the supplier.

But there’s no harm in trying - if you’ve paid for something in this way and there’s a problem, you can always try a Section 75 claim and if it’s declined, you can still complain to the Financial Ombudsman Service.

2. If PayPal is the payment gateway – so you don’t need or use your PayPal account - you may be able to claim Section 75.

This is because, in practice, PayPal is only providing the technology to facilitate the payment and doesn’t actually hold the money at all.

If PayPal is your only payment option, you should also try a Section 75 claim and again, if it’s denied, you can take it to the ombudsman.

What can I do if PayPal has frozen my account?

PayPal will, on occasion, lock accounts that it believes have transactions larger than normal to protect them against fraud.

If your account has been affected, go online to PayPal’s Resolution Centre, and you should be able to find out why your account has been locked.

If the limitation isn’t lifted in three days, call PayPal directly.

If you're dissatisfied with its complaints process, you can escalate the problem to the Financial Ombudsman Service after eight weeks.

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