PayPal’s Dispute Resolution Is Destructive

Violin

While paying a visit to the fantastically disturbing Regretsy site today I couldn’t help but be amazed by the sorry tale that was submitted by a regular visitor to the site.

A lady by the name of Erica relates in her email how she had sold ”an old French violin” (in her words a pre-World War II violin) to a buyer in Canada and accepted payment for the item through PayPal. The payment in question was for the not inconsiderable sum of $2500.

Unfortunately the buyer was not happy with the authenticity of the violin, raising a dispute over the label (the paper sticker inside the violin identifying the luthier that supposedly crafted the instrument).

Labels in the violin world are notoriously unreliable and have been faked for centuries, in fact it was a common “marketing” practice in the Victorian era to attach fake Stradivarius labels to contemporary violins because they were “made in the style of”…

The consensus of opinion in the murky world of violin sales seems to be that a label is only the starting point for the valuation of an instrument and that for any truly reliable opinion, a specialist instrument valuer should be consulted.

Of course it is the buyer’s prerogative to raise a dispute through the official PayPal process if they feel that they have been deceived into buying counterfeit goods and, not having seen the original advertisement for sale, it would be impossible to form an opinion on that. What really stopped me in my tracks though, were the instructions the buyer received from PayPal in order to qualify for a refund.

Rather than have the violin returned to the seller, PayPal reportedly instructed the buyer that he must destroy the violin and provide evidence of its destruction in order to get his $2500 refunded. This all apparently happened without the involvement of any independent verification and resulted in the photograph you see in this post.

This process is all detailed in the Dispute Resolution terms and conditions on the PayPal site “If you lose a Significantly Not as Described Claim because the item you sold is counterfeit, you will be required to provide a full refund to the buyer and you will not receive the item back (it may be destroyed).” All decisions are at PayPal’s discretion and are final “based on any criteria PayPal deems appropriate“.

One very upset violin seller and a destroyed violin, is only a part of the issue here. PayPal’s dispute resolution process in the format described above leaves itself wide open for abuse. Let’s say I fancy myself a nice designer label watch or handbag (for someone else, you understand) but I can’t afford the real thing, what can I do?

Well I could always go and see my friendly street corner counterfeit Rolex or Gucci salesperson and pick one up nice and cheap, then go online and buy the real thing. When it arrives I simply show the counterfeit as proof that I was deceived, provide evidence of its destruction, get my money back and keep my nice shiny new purchase.

When the purchase is only a few pounds, euros or dollars this is of relatively minor importance but when we are talking about antiques or designer goods, the sums involved can rapidly escalate and so can the risk.

With online purchases, it’s not just caveat emptor but caveat venditor as well. If you are selling expensive items online it is advisable to collect as much evidence as you can of the authenticity and condition of the item in question prior to shipment. Make sure you share this evidence with your buyer and keep a record of all communications.

On the buyer side, make sure you fully satisfy yourself of the true nature of the item you are purchasing before parting with any cash. Both parties may wish to consider using a reputable escrow service where the cash is held by a trusted third party until both buyer and seller are satisfied.

Obviously the PayPal story as told by Erica is only one side of a two-sided story, there is no mention for example of whether the buyer intially directly asked the seller for a refund, but for PayPal to have chosen to instruct the buyer to destroy the very item that was in dispute seems short-sighted in the extreme and that’s without having to consider the wanton destruction of a beautiful musical instrument.

As Solutions Architect for Trend Micro, Rik Ferguson interacts with CIOs from a wide variety of blue chip enterprises, government institutions, law enforcement organisations. Recognised as an industry thought leader and analyst, Rik is regularly quoted by the press on issues surrounding Information Security, Cybercrime and technology futures. With over 15 years experience in the IT Industry with companies such as EDS, McAfee and Xerox Rik’s broad experience enables him to have a clear insight into the challenges and issues facings businesses today.