PayPal Buyer Dispute Refund on Freelancing Services

Author: Zeeshan Arshad     428     06/03/2014

Estimated reading time: 3 minutes, 34 seconds

Zeeshan Arshad - Lifestyle Blog

Recently, I encountered a client who paid me upfront $500 via PayPal. I was new to this and stuck about what to do because I had spent about 9 hours with consultation and helped him in favor of some other tasks out side of project's scope.

Straight to the point, PayPal does not cover to refund intangible services.

Customer Can Only Claim for Physical Goods

[caption id="attachment_1301" align="aligncenter" width="300"]paypal-buyer-protection Click to Enlarge this Photo[/caption]

The client raised the dispute when I clearly said him to stay on agreed project and I cannot work for free, neither my team people to do free services.

I discovered it in a post on warrior's forum posted by "@Nick Brighton".


OK, I'm not going to dig up old laundry here, but suffice to say that I did some work for a client recently and he tried to claim that I didn't do the work, under the conditions agreed. 

I won the case. He tried to dispute it again, so I called Paypal and they told me this shouldn't happen, and won't happen again.


When I told him what I was selling, he told me that because it was service based and the goods delivered were intageable (i.e services and/or digital items) that the buyer was not elligable for buyer protection in the first place.

This is HUGE if you're providing services or certain digital products. This could save you a lot of hassle and lost money. 

Now, I'm sure there are lots of clauses, but as I looked into this in more detail, here's a few things I discovered:

This page talks about:
At PayPal, we are continuously striving to ensure that payments made within our community are safe, by providing specific terms and conditions that need to be followed by buyers and sellers. We help to cover you in the event that something goes wrong with your purchase of tangible, physical goods which can be posted.PayPal's Buyer Protection provides a method for buyers to issue formal complaints regarding goods paid for through PayPal but never received, and regarding goods purchased and paid for through PayPal that the buyer receives but that are significantly not as described by the seller.However, there are some payments that we do not cover including payments for services, real estate, businesses, vehicles , custom made items, airline flight tickets, eBay classified advertisements, licenses and most intangible items. In addition, items prohibited in the PayPal Acceptable Use Policy are ineligible for coverage.

Now, there could be some ambiguity over "tangible items" here, but the guy I spoke to at Paypal claims department said that tangible items include digital items and services.

So, could this mean selling digital items voids buyer protection? I'm not entirely sure, but I'll look into this. 

From the conversation I just had, and after reading this, I'm starting think it might.

But more importantly, this protects freelancers who offer services and then the buyers try and dispute the services offered. This is essentially what happened to me, and they closed the the case in my favour, for this very reason.

Just thought I would mention this, especially for freelancers who may have been through the same situation as I have recently with a client. 

If anybody has more validation or information on voiding Paypal buyer protection through the sale of digital items, please let me know. 

Because as I say, I have a feeling that Paypal views digital products as "intangible" which therefore voids buyer protection. 

P.S - Of course, this isn't a form of encouragement or an open invite for con artists. This is just something that both buyers AND sellers should be aware of, especially when selling services where your time could potentially be lost, without pay, undeservedly.


List of Intangible Items (PayPal's Screenshot)




What Happened After Dispute from Client?

I escalated the dispute to a claim after getting awareness that intangible services are not covered by PayPal. And the rest is under waiting period now.

I will update this post as per the result and further experience.

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