PayPal Changing Paypal Purchase Protection

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I received an email from Paypal this morning that may impact domain name deals that are transacted via Paypal. The company is now covering digital goods with Paypal Purchase Protection. The email did not specifically mention domain names, but it would surprise me if domain names were not covered based on the announcement that was made to customers this morning.

In my opinion, the most safe way to transact on a domain deal is to use an escrow service. This helps reduce quite a bit of the risk when doing a domain name deal. The escrow service verifies payment for the domain name and it verifies that the domain name was transferred to the buyer before releasing the funds. Essentially, an escrow service helps reduce risk.

I will reach out to Paypal to see if the sale of domain names is covered when this policy change becomes effective.

Here is the email I received this morning:

Subject: Change to PayPal Purchase Protection

As one of the leading ways to buy and sell around the world, we have provided protection for eligible purchases of physical goods for many years. Now, to bring us in line with coverage that other providers already offer, we are changing that protection to cover intangible goods.

What is changing?
Effective July 1, 2015, we will be extending Purchase Protection to cover intangible goods. This includes services, and digital goods, like online music, e-books, games, travel tickets, and software downloads.
As of this date, 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 file a purchase protection claim.

Why are we changing it?
PayPal’s Purchase Protection globally has covered physical goods for many years, and this update brings PayPal in line with the coverage that some card providers already offer.
PayPal can now be seen by your customers as an even safer way to pay. For businesses like yours, it has the potential to help improve sales, because it can give consumers more confidence when making purchases for digital goods and services.

How does this affect you?
As a business that sells intangible goods, you’ll need to respond to buyer claims for intangible goods, with ‘compelling evidence’ of the transaction. This compelling evidence could vary depending on the type of goods or services provided. Please refer to the User Agreement for more information.
Although the expanded Purchase Protection extends coverage to buyers for intangible items, Seller Protection does not apply to intangible items. However, having proper Proof of Delivery can help a seller win a buyer’s Item Not Received Purchase Protection Claim.

1 COMMENT

    • I presume the seller would only transfer the domain name once the payment has been received. This means the buyer takes on the risk of the seller doesn’t perform.

      That said, using an escrow service is the way to go, as I wrote in the article.

  1. I believe this is the key takeaway for domain sellers….

    Although the expanded Purchase Protection extends coverage to buyers for intangible items, Seller Protection does not apply to intangible items. However, having proper Proof of Delivery can help a seller win a buyer’s Item Not Received Purchase Protection Claim.

    A seller could potentially refer to Whois data but the buyer could use privacy protection or leave the Whois data unchanged after the transfer. Consequently Paypal is not the ideal payment method for large-dollar transactions or with unknown buyers.

  2. I would like to see Paypal work to more clearly protect both ends of domain transactions like places such as Escrow.com

    I have use Paypal for many small domain name transactions as buyer and seller without any real issues. About 2+ years ago I did however have an issue with a scammer from Digitalpoint and I was the buyer. I had sent payment for a domain name in the mid $xxx range via Paypal and then the seller dropped off the face of the earth without transferring the domain. All that it took was a phone call and Paypal was able to cancel the payment. I had also talked to someone at Paypal before the transaction and was assured that I would be protected, as I had suspected that they were a scammer.

    I do however see a huge gap and the need to protect sellers just as much as domain buyers.

    -Chris

  3. Escrow.com is great but they need to have a holding account for sold domains. A name can be sold and transferred but if the new buyer doesn’t change the whois then they won’t release the funds because there is no proof the buyer received the name. Why can’t they have a simple holding account where the seller transfers it to Escrow’s holding account and then Escrow pushes it to the new owner. They would have one holding account at each registrar so it doesn’t matter where the domain is registered it would still be a simple push to another account and the buyer can do with it whatever he wants after that.

  4. I have lost (fraud) 2k because of paypal’s policies. Got paid, Ship + tracking number, claim, account limited, Hours of PAID CALLS with paypal, nothing they can do. Paypal.sucks

    Buy with paypal, don’t sell with paypal!

  5. I believe a holding account for sold domains at Escrow.com is coming later this year. It’s a feature many sellers request – makes things secure and efficient.

  6. I think that using Escrow is definitely the safest way to purchase a domain. But I have to agree with Ricky’s comment that even if Paypal did implement this new policy it seems rather vague as to exactly what it will cover.

  7. Elliot, this is the most recent post on your blog that mentions DogWalker. I was wondering if you’d consider a post discussing your experience with running DogWalker, directory sites in general, and whether you’d do it again. Thanks!

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