It has come to my attention lately in the Etsy forums that some less-than-scrupulous buyers have found a loophole in the PayPal system and are utilising it to rip off Etsy sellers. The scam is basically the following: A seller completes an order and ships it out after recieving payment through PayPal. A day or so later they are contacted by PayPal and told that the funds are being frozen because the buyer has filed a non-delivery complaint. PayPal will automatically take the side of the buyer and freeze the funds in the sellers account until the matter can be resolved. Unfortunately the only way to resolve the matter in the sellers favour is for the seller to provide online evidence of shipping. That is tracking information or delivery confirmation provided to the seller at the time of shipping. In order to have tracking information in Canada, the seller must purchase a more expensive form of shipping. It goes without saying that higher shipping costs are not appealing to honest customers!!
It seems to me that PayPal has an easy way to resolve some of these disputes.Non-delivery complaints filed by buyers less than 2 weeks after the sale is completed should be automatically red flagged. It is utterly unreasonable for PayPal to take these complaints seriously as it is totally impossible to ship an item internationally or even domestically in less than a day!!
Other than using the higher priced shipping options that can offer sellers some protection from these scammers, online sellers using PayPal are taking a gamble with their money. There really isn't much one can do to protect oneself from thieves being aided and abetted by PayPal. One suggestion I have made in the forums is for sellers to mark items as shipped a day or so before actually sending them out. Then if this scam is perpetrated the seller at least maintains the item and can cancel and flag the sale through Etsy. It is shameful that sellers would have to go to these lengths to protect themselves not only from thieves but from PayPal as well!