PayPal Seller Protection: what it covers for handmade and custom goods

What PayPal Seller Protection covers

PayPal Seller Protection is a program inside PayPal's user agreement. When it applies, it may let you keep the full purchase amount. It covers Item Not Received claims, Unauthorized Transaction claims, and unauthorized card chargebacks or bank reversals, and PayPal decides in its sole discretion whether a claim is eligible. There is no limit on the number of payments eligible, so it is not a quota you can use up.

Two buyer complaints are covered. The first is an Item Not Received claim: claims that the buyer didn’t receive the item. The second is an unauthorized payment, where the account holder says someone else paid you from their account. Everything else, including a complaint that a handmade piece does not look like the photos, falls outside the program.

The terms on this page are from PayPal's US program, last updated January 26, 2026. This page covers the US version only.

PayPal Seller Protection policy: the basic requirements

To qualify, all basic requirements must be met, plus any applicable additional requirements. Miss one and the sale is outside the program, even if you did ship the item.

• Your account needs a primary account address in the United States.
• The item must be a physical, tangible good that can be shipped. Digital patterns and downloads fall under separate rules: intangible goods have their own additional requirements.
• You ship to the shipping address on the Transaction Details page, not to an address the buyer sends you in a message.
• Made-to-order and pre-order goods ship within the timeframe you specified in the listing. For stock items PayPal recommends shipping within 7 days after receipt of payment.
• You respond to PayPal’s requests for documentation in the time requested.
• You keep proof of shipment or delivery that meets PayPal's standard, described in the next section.

The made-to-order rule matters for makers. Example: if your listing says a custom piece ships in three weeks, that stated time is the deadline PayPal holds you to. Write a realistic production time into every custom listing, because it becomes part of your protection.

The shipping proof PayPal requires

PayPal separates proof of shipment from proof of delivery, and for an Item Not Received claim you need the stronger one: proof of delivery.

Proof of shipment is documentation from a shipping company showing an online, verifiable tracking number, the date of shipment and a recipient address matching the Transaction Details page. Proof of delivery shows an online, verifiable tracking number, the date of delivery and a ‘delivered’ status, again with a matching address. In both cases the recipient address must show at least the city/state, city/country, or zip/postal code.

A photo of the parcel at the counter, or a post office receipt with no tracking number, does not show an online and verifiable tracking number, so it does not meet this standard.

• Buy postage with tracking for every order you want protected, including small, light pieces such as earrings or prints.
• Copy the address from the Transaction Details page in PayPal. If the buyer asks you to ship somewhere else, one option is to cancel and have them pay again with the right address.
• Avoid shipping services the buyer arranges: PayPal recommends not using a shipping service arranged by the buyer, so that you can produce your own proof.
• For international orders, check that the carrier reports a delivered status in the buyer's country. PayPal warns that a carrier that cannot show delivered status at the correct address can get the claim denied.
• Save tracking numbers with the order until the dispute windows below have passed.

PayPal item not as described claims and custom work

A Significantly Not as Described claim is the buyer saying the item they received is not what you listed. Seller Protection lists this as not eligible: claims that the item isn’t what was ordered. Tracking does not help here, because the buyer agrees the parcel arrived.

PayPal's buyer rules say an item may be not as described when it is materially different from the seller’s description, or when it was damaged in the post (damaged during shipment counts as not as described). On the other side, an item is not considered not as described if properly described but did not meet expectations, and it is not considered not as described if the defect was correctly described.

Custom orders get one rule in the seller's favor. Under PayPal's Purchase Protection program, Significantly Not as Described claims for wholly or partly custom-made items are not eligible. A buyer who ordered a personalized name necklace or a commissioned portrait cannot win a not-as-described refund through PayPal. They can still go to their card issuer instead, and the buyer must choose a PayPal dispute or a card issuer dispute, not both.

• Describe color variation, sizing and natural flaws in the listing, because a correctly described defect does not count as not as described.
• Photograph each finished piece before it ships, so you can show what left your workshop.
• Keep the buyer's written approval of proofs, sketches and personalization text for custom work.
• Pack fragile work for transit. Damage in the post can count as not as described under the buyer's rules.

How a PayPal dispute works for the seller

A PayPal dispute starts in the Resolution Center and can end in a claim that PayPal decides. The timeframes below come from PayPal's US Purchase Protection program.

1. The buyer opens a dispute

   An Item Not Received dispute can be opened within 180 days of the date the buyer sent the payment. A not-as-described dispute must be opened within 30 days of delivery or 180 days of payment, whichever is sooner.

2. You and the buyer talk it through

   Reply in the Resolution Center with tracking, photos or an offer. A dispute that is resolved between you and the buyer carries no Standard Dispute fee when resolved directly with the buyer and not escalated.

3. It escalates to a claim

   If you do not agree, the buyer must escalate within 20 days after opening the dispute or PayPal closes the dispute. Once it is a claim, answer PayPal's requests for documents in the time it gives you.

4. PayPal decides

   If the claim meets Seller Protection, the program may let you keep the full purchase amount. If you lose, PayPal takes the full purchase price of the item plus the original shipping cost, and PayPal fees paid on the sale are not refunded. On a not-as-described loss, you may not get the item back, or may have to accept it back and pay return shipping.

What a dispute costs even when you are protected

PayPal charges sellers a Standard Dispute fee of 15.00 USD on payments made through a PayPal account or guest checkout. The fee applies when the buyer pursues a claim directly with PayPal, a chargeback with their card issuer, or a reversal with their bank, and it is deducted from your PayPal account after the claim is decided. A higher High Volume Dispute fee applies when you have a dispute ratio of 1.5% or more with more than 100 sales transactions in the previous three full calendar months.

Several cases carry no Standard Dispute fee. There is no Standard Dispute fee when the claim meets all Seller Protection requirements, no Standard Dispute fee when decided in your favor, and no Standard Dispute fee on claims under twice the Standard Dispute fee. Shipping with tracking therefore protects both the payment and the fee.

Example: a buyer pays $45 for a hand-dyed scarf, says it never arrived, and escalates. If your tracking shows delivered at their address, the claim can meet Seller Protection and you keep the $45 with no dispute fee. If you shipped without tracking, you can lose the $45, the original shipping charge and the PayPal fees, and pay the dispute fee on top.

Payments that never qualify

How the buyer pays decides whether protection is possible at all. A payment sent as friends and family is not eligible, so a buyer who offers to save you the fee is also removing your cover. Take payment as goods and services or through checkout or an invoice.

In-person sales at a market are not eligible unless the buyer paid in person with PayPal’s goods and services QR code. Items you ship after PayPal tells you to hold them are also out: not eligible if sent after PayPal advised you not to release the item.

This page is general information about PayPal's published terms, not legal advice. PayPal changes its terms and PayPal decides in its sole discretion whether a claim is eligible, so read the current program page before you rely on it.

Where Nation fits

Questions about PayPal Seller Protection