What is a chargeback?
A chargeback is when funds are returned to a card owner after they dispute a transaction on their statement to the card company or PayPal.
Following the dispute, the credit card company or PayPal informs Etsy of the chargeback and may also request more information, such as transaction information, proof of delivery, and proof of refund. Etsy must respond with this requested information within a short timeframe.
Why would a chargeback be filed?
- Fraud - This is when the credit card owner reports they did not make or authorize a transaction. This may happen when a credit card number is used without permission.
- Non-Delivery - This is when a buyer makes a purchase—and that purchase goes through—but the buyer never receives the item(s) purchased.
- Not as Described - In this case, a purchase is made, but the buyer receives an item(s) that is different than what was listed on Etsy, or different from what the buyer thought they were purchasing.
- Return - A credit card owner can request a chargeback if they’re not satisfied with the item(s) purchased and received. This could be for a variety of reasons, including damage.
How does a chargeback get filed against me as a seller?
A credit card owner, who is not necessarily the buyer, contacts their credit card company or PayPal and requests a refund for the transaction. The reason for the refund could be one or multiple types listed above.
How will I know there's been a chargeback filed against me?
Etsy receives reports of chargebacks from credit card companies, banks, and PayPal, then investigates the dispute to determine if it’s valid. If additional information is required from you to resolve the dispute, you will be contacted at the email address associated with your Etsy account.
If you are contacted, you’ll be given a timeframe to respond. If you don’t respond within this timeframe, it could result in a refund being issued on your behalf through a Payment account debit and the potential suspension of your shop. However, if Etsy can resolve the dispute without contacting you, we may do so.
If a refund is necessary, how is it issued?
When a chargeback is filed against a shop, Etsy always conducts a thorough investigation. In most cases, Etsy will inform you as the seller that the refund has been made through a debit from your Payment account.
Etsy debits your Payment account rather than issue a refund for the order due to the restriction in the system once a chargeback is created. This restriction is put in place by the payment processor to prevent the merchant (Etsy) and the seller (you) from issuing a double refund (the chargeback and order refund).
Seller best practices for chargebacks
Although chargebacks cannot always be completely avoided, here are some steps you can take as a seller to help prevent them:
- Provide a reasonable and accurate shipping date (also referred to as “processing time” or “ships-by-date”) using the tools provided by Etsy, and ship the order accordingly.
- Provide valid proof of shipping with all orders. This can include a shipping or tracking number that shows the order is in transit to its correct destination.
- When you ship an order, mark the order as shipped (and include valid proof of shipping). You should only mark an order as shipped when you actually ship an order to a buyer.
- Communicate with the buyer via Etsy Messages about the status of their order, any questions they might have, and any additional details agreed upon in the transaction.
- Rather than encouraging a buyer to file a chargeback with their credit card company, you should use Etsy’s Case system so that you and the buyer can work toward a solution. Etsy is always happy to mediate and assist our community in situations like these. Learn more about how to open a Case on Etsy here.
- Actively participate in the case and respond to all questions posed by both Etsy Admin and the buyer. Cases require the participation of both the buyer and the seller.
- Respond to Etsy’s requests for information. Be sure to respond within the particular time frame given by Etsy.
- Publish your policies for shipping, returns, exchanges, and custom orders on your shop’s Policies page. Also, please be sure that your shop policies are in compliance with Etsy’s site-wide guidelines.
Valid proof of shipping
Always use a secure shipping method, like Etsy Shipping Labels, with tracking and/or delivery confirmation.
If more information is still needed, you will be contacted and given a timeframe to respond.
Valid proof of shipping can be, but is not limited to:
- An Etsy Shipping Label
- A scanned copy of delivery forms or departure information
- A shipping service receipt or customs form that includes the date of shipment, as well as the name, full address, or zip code of the recipient
- A valid tracking number showing movement to the address listed at the time of the transaction or agreed upon in Etsy Messages