eBay expands PayPal buyer protection scheme

Angus Kidman
Wednesday, 09 May 2007 07:16

Business IT - Technology

eBay Australia has put its payment scheme PayPal at the centre of its buyer protection initiatives, doubling the amount it will pay back to customers for dodgy transactions involving a PayPal payment and extending the scheme to low-value transactions and new sellers. At the same time, the auction company's eBay-branded protection scheme will be phased out.


From June 7, eBay will refund up to $3,000 if a buyer pays for goods using PayPal and becomes involved in a disputed transaction. Previously, the limit was $1,500. Typical causes of disputes include failure to deliver any goods at all, or items differing hugely from their online description.

Sellers only qualify for the full protection scheme if they have more than 50 feedback messages and a 98% positive reputation. However, transactions with sellers falling under those thresholds will still be covered for up to $400, including postage costs.

The lower value scheme will replace eBay's existing buyer protection scheme, which included a $25 administration fee, making it useless for smaller purchases. It also establishes PayPal as the only means of payment with any form of eBay-backed guarantee. "The company will no longer be providing coverage when a person pays through other means," eBay trust and security director Alastair MacGibbon told iTWire

"We know that PayPal is one of the safest ways you can pay for an item online," MacGibbon said. "I want to help encourage people to make sensible payment choices."

MacGibbon emphasised that only a tiny fraction of eBay transactions required intervention by eBay, though he would not provide exact figures. "It is the path of last recourse," he said. "Most disputes can be resolved through discussion between buyers and sellers. We know that the online dispute resolution process satisfies the vast majority of people. Most sellers want to fix any problems that arise. "

"If you read a seller's feedback and really get an idea of their reputation and pay with PayPal, the likelihood of something going wrong dramatically decreases," MacGibbon said. "I see far too many times when a problem could be avoided if a person just used some common sense. An educated consumer is an essential part of the process."

eBay has more than 5 million local accounts, while PayPal has 3 million members. MacGibbon said that eBay didn't want to mandate the use of PayPal -- "the Internet's about choice" -- but said that it the scheme would provide "a very strong encouragement" for members to make safe payment choices. "Consumers who are aware of protection programs have more trust in ecommerce, and that helps grow the whole market."

MacGibbon agreed that there the scheme might lead to complaints from users seeing it as a backdoor method of forcing eBay sellers to use PayPal. Many Australian sellers offer eBay but encourage local buyers to make direct bank deposits, as the transactional charges involved are slightly lower.

"There will always be people that will say that," MacGibbon said. "I can say quite categorically that my job is about improving the safety and security of Australian consumers using ecommerce. This is a sensible process to improve the process for buyers, and that's good for sellers. I will not shy away from trying to educate people on the safe things to do."

Similar changes are being made by eBay in other countries, but the threshold amounts and scheme details will differ in each market.