Overview

PayPal has provided protection for eligible purchases of physical goods for many years. Now, to bring themselves in line with coverage that other providers already offer, they are changing that protection to cover intangible (digital) goods.

PayPal Buyer Protection

What Exactly is Changing?

Beginning on 07/01/2015, PayPal is extending the Purchase Protection program to cover “intangible goods.”  This includes services and digital goods like online music, e-books, games, travel tickets, and software downloads.

If a customer pays for a service or digital product using PayPal and it’s not received or is significantly different from how it was described, they can now file a buyer protection claim.  These types of transactions were simply not previously covered.

Why is It Changing?

Quite simply, PayPal was feeling pressure from consumers (and competition) attempting to purchase these types of items without realizing that they were not covered by the Protection Program PayPal advertises heavily.  This update brings them in line with these competing coverage plans that other providers are offering.

What does this mean for sellers?

Intangible goods are still NOT covered by PayPal Seller Protection.  Businesses that sell intangible goods will need to respond to buyer claims with “compelling evidence” of the transaction.  That’s the interesting thing here, for me.  What exactly does that mean?

PayPal says to refer to the User Agreement Policy Updates, however, it doesn’t tell us much more.

“Proof of Delivery” for intangible or virtual items or services is documentation satisfactory to PayPal that the item or service was provided to the buyer such as proof of download including the date of fulfillment.

So again, what does that mean?  It means the burden is going to be on the seller to prove somehow beyond any doubt that the buyer did indeed receive their digital goods.  This may or may not be a simple thing for people depending on the tools they are using to sell and their technical know-how.

One example PayPal provides is the following…

If you sold a music download, then you might consider providing proof that you sent the buyer the link to the download and proof that they buyer accessed the download, giving dates and times (illustrative example only).

That may sound simple to some of you, but it won’t for many others.

Conclusion

With PayPal buyer protection expanding to include intangible goods things could get interesting.  I will definitely be interested to see how much backlash I hear from sellers, especially if buyers (or more specifically, fraudsters) begin taking advantage of sellers who cannot provide the technical information necessary to prove delivery of a digital good.

Need Additional Help?

Schedule a live meeting with Drew Angell, PayPal Certified Developer, and get all of your questions or concerns answered.

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