Posted by Chuck on May 5, 2016
Shopping

Published on May 5th, 2016 | by Chuck

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Paypal Buyer & Seller Protection on Gift Cards

Paypal has clarified that gift card purchases will not be covered under Paypal Seller Protection or Paypal Buyer Protection. This clarification will be added to Paypal’s User Agreement on June 25, 2016. (Source)

Link to Updated User Agreement for June 25, 2016

Link to Current User Agreement

Paypal Buyer Protection

Paypal Buyer Protection includes digital goods such as music downloads and similar but does not include prepaid cards or gift cards, “Items equivalent to cash, including prepaid or gift cards”(Section 13.3). In the updated agreement, they’ve clarified this further: “Stored value items such as gift cards and pre-paid cards.”

This exclusion covers both physical gift cards and electronic gift cards.

Paypal Seller Protection

Paypal Seller Protection excludes digital goods (section 11.5), but it doesn’t specify gift cards in particular. As of June 25, they language will clearly exclude gift cards. “Items equivalent to cash, including gift cards.”

This exclusion covers both physical gift cards and electronic gift cards.

Protection for Fraudulent Gift Card Use

eBay gift cards can only be used by checking out with Paypal. Suppose an eBay gift cards get fraudulently depleted, will that be protected by Paypal?

No, the terms seem clear that they don’t cover gift cards used through the Paypal checkout.

“If you add a Closed Loop gift card to your Account, but this card does not act as a funding source in your Account, then any use of this card is not considered a transaction in your Account. Accordingly, any Unauthorized Transaction, Other Error, or Remittance Transfer Error on this gift card is not PayPal’s responsibility and you are not covered under any PayPal protection programs.” (Section 12.1)

eBay Buyer & Seller Protection

While Paypal won’t protect the buyer or the seller for gift card purchases, you still do have protection when buying and selling gift cards on eBay under eBay’s Money Back Guarantee and eBay’s Seller Protection. Be sure to follow all the rules for selling gift cards on eBay such as shipping with tracking, otherwise, you won’t be protected.

In my personal experience, when I sold a gift card on eBay and got a chargeback from the buyer, I won the case since I had followed all the rules. Interestingly, it was Paypal who resolved the issue for me, and I didn’t have to contact eBay directly. Either Paypal works it out with eBay behind the scenes, or else it may have worked differently back when eBay and Paypal were one company.

Final Thoughts

For buying and selling on eBay, we have eBay’s protection so hopefully we’re covered there. For buying on other websites which offer Paypal as a payment option, we’ll have to rely on the credit card protections in case something goes wrong as Paypal won’t cover gift card purchases.

Hat tip to Milestomemories for some good info on this subject.



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HG
HG

And if you rely on CC protections, you can kiss your PayPal account goodbye.

V
V

Is this from your personal experience? Please share if so.

Amy
Amy

It’s been quite some time so I’m drawing on a fuzzy memory, but I believe I once ended up doing a chargeback when I didn’t get any traction through PayPal for a bad eBay transaction, and I still have my account. But then, it’s been quite some time so maybe their stance/behavior has changed since that incident.

tlan
tlan

not just gc, all pre-paid cards (e.g.wireless refill). also all digital goods excluded, same as before.

Evan
Evan

So what happens now if you sell a gift card and the buyer claims that the card arrived depleted? Will eBay
seller protection be any good?

alex
alex

probably NOT.

if a buyer files a claim and says that you sent them a package full of rocks instead of the actual product purchased you are out of luck.
there is no way for ebay to investigate the case even if they wanted to?

on the other hand, if the buyer say that they did not receive the package then your tracking will cover you.(or if they say they changed their mind)

as long as the buyer says the item is defective(for example depleted gift card) you the seller automatically lose.

CHUCK, in your case that was resolved in your favor what did the buyer claim???

Mike
Mike

This is why I don’t sell much on eBay anymore outside of uncommon items scammers don’t target. The smart scammers know all the loopholes and ways to bypass seller protections from both eBay and PayPal. If you sell popular electronics, e-items or gift cards you WILL get scammed. I sold three auctions of Kohls Cash and was systemically targeted by scammers (probably same person) using three different eBay IDs. All disputed via their CC which PayPal automatically settles in the buyers favor.

Dan
Dan

This stinks. I recently used Paypal protections successfully to resolve an issue with 3 Toys R Us GCs sold by PP DG that had their balance mysteriously disappear. PPDG was completely unresponsive on eBay so I filed a claim through Paypal (feels strange filing a claim against a company…through that company). Enough time had gone by already that I could no longer make a claim through eBay; Paypal was my only recourse

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