Here's what to do when a buyer disputes a payment sent to you.
If you're a seller and a buyer has filed a claim against you [Hack #16] or initiated a chargeback [Hack #25], you should respond online through PayPal's Resolution Center within 10 days. If you don't, you'll forfeit your defense and PayPal will refund the buyer.
When you respond, you'll be able to choose how to resolve the dispute from a menu of options, including disagreeing with the buyer's claim.
Most claims involve nonreceipt of merchandise. Nervous buyers sometimes file claims before sellers have had a chance to ship merchandise. The most effective way to respond to such a claim is to promptly provide an online tracking number for your shipment. This allows the customer (and PayPal) to confirm that the merchandise was not only shipped, but also delivered to an address attached to the buyer's PayPal account.
Without verifiable proof (e.g., a tracking number) that your package was shipped, you'll lose the dispute and forfeit the payment.
Overcommunicate with your buyers, especially newbies. Email them when you expect to ship, and email them again when you actually do ship (include a tracking number whenever possible). This allows your customer to check delivery status, which helps to reduce buyer anxiety about transacting with a stranger and thus reduces the likelihood that a dispute will ever be filed.
Also, be compulsive when writing your product or eBay listing descriptions. (Good descriptions often garner more buyer interest anyway.) If the item is used, say so, and exhaustively describe all wear and tear. Include actual photos you took yourself (e.g., a picture of the actual iPod you're selling rather than one you grabbed from Apple's web site).
Finally, to protect yourself against fraudulent chargebacks, ship to your customer's address as listed on the Transaction Details page, and ship only if you see that the transaction is eligible for the Seller Protection Policy [Hack #25] .
As a seller, you can pick and choose with whom you do business. If someone makes a payment you subsequently decide is not worth the risk, you can always issue a refund [Hack #21] and make other arrangements.