PayPal Seller Protection is PayPal's program that can let you keep the full purchase amount when a buyer claims a payment was unauthorised or that the item never arrived. It only applies to eligible sales, PayPal decides eligibility at its sole discretion, and it doesn't cover a buyer who says the item wasn't what they ordered.
That last gap is the one sellers miss. A Significantly Not as Described claim isn't covered at all, and neither is an item not received claim that the buyer takes straight to their card issuer as a chargeback. Cover depends on your account's primary address being in the United States and on tracking that shows 'delivered' at the exact address on the transaction. This is PayPal's US program, last updated January 26, 2026 and current as of October 2026; UK, Australian and Canadian sellers should read the version on their local PayPal site. It's an explainer, not legal advice.
Covered or not: the quick table
| Situation | Covered? | Why |
|---|---|---|
| Unauthorised transaction, shipped no later than two days after PayPal's dispute notice | Can be | The payment must be marked eligible or partially eligible |
| Item not received, tracking shows delivered to the address on the transaction | Can be | Proof of delivery is required |
| Item not received, buyer files a chargeback with their card issuer | No | Named exclusion |
| Significantly Not as Described | No | Named exclusion |
| Friends and family payment | No | Personal payments are excluded |
| Item handed over in person | No, unless the buyer paid with PayPal's goods and services QR code | Named exclusion |
There's no limit on the number of payments that can be eligible. You can see which transactions may be protected on the Transaction Details page in your PayPal account, and that label is the first thing to check when a dispute lands.
The basic requirements every claim has to meet
- A US account. Your PayPal account's primary address must be in the United States.
- A physical item that ships. It must be a tangible good that can be shipped. Intangible goods and services have extra requirements.
- The right address. You ship to the address on the Transaction Details page. If the parcel is redirected to a different address after you send it, you're not eligible, which is why PayPal recommends not using a shipping service the buyer arranges.
- Fast replies. You answer PayPal's requests for documents in the time it asks, by email or through the Resolution Center.
- On-time shipping. For pre-ordered or made-to-order goods, ship within the timeframe in your listing. Otherwise PayPal recommends shipping within 7 days of receiving payment.
If you've built PayPal Checkout into your own website or app, there's one more rule for business sellers: use the current version of the Checkout product, and pass the session information PayPal needs at checkout if you're connected through a third party or a native app. PayPal uses that information to spot fraud.
Unauthorised transaction claims
This is the claim a buyer makes when they say they didn't authorise a payment from their PayPal account. To be covered, the payment must be marked 'eligible' or 'partially eligible' on the Transaction Details page, and your proof of shipment or delivery must show the item went out no later than two days after PayPal told you about the dispute. PayPal's own example: notified on September 1, shipped by September 3. The program can also apply when a card payment is reversed through a successful chargeback because the buyer didn't authorise it, or when a bank-funded payment is reversed by the buyer's bank.
Item not received claims and the proof that wins them
For an item not received claim, you need proof of delivery, not just proof of shipping. PayPal spells out what each one has to show:
- Proof of shipment: an online, verifiable tracking number, the date of shipment and a recipient address that matches the Transaction Details page, showing at least the city and state, city and country, or zip or postal code.
- Proof of delivery: all of that, plus the date of delivery and a 'delivered' status.
- Carrier check: before you post anything abroad, make sure your carrier can provide 'delivered' status at the correct address, because PayPal warns your claim may be denied if it can't.
- Keep the trail: save the tracking page and the Transaction Details label until the dispute closes.
Digital goods and in-person sales
Intangible and digital goods can be covered, with extra conditions. For unauthorised transaction claims, PayPal must have marked the sale 'eligible' or told you in writing that it's eligible. As proof, PayPal wants compelling evidence of delivery, such as a system of record that shows the date the item was sent and that it was sent electronically to the buyer, including their email or IP address, or that the buyer received or accessed it.
Items you hand over in person are excluded, with one exception: if the buyer paid in person using PayPal's goods and services QR code, the sale may be eligible, and PayPal may ask you for other evidence of delivery.
What PayPal Seller Protection doesn't cover
PayPal's list of ineligible items and transactions is long. The ones small sellers are most likely to run into are:
- Significantly Not as Described claims, whether the buyer files with PayPal or their card issuer.
- Personal payments, including friends and family payments.
- Gift cards, prepaid cards and other cash-equivalent payments.
- Donations, including crowdfunding.
- Payments to the account and routing number of your PayPal business account, and payments sent through PayPal Payouts.
- Items sent after PayPal advised you not to release them.
Bigger-ticket exclusions include real estate, vehicles (except personally portable light vehicles like bicycles), buying a business, industrial machinery, gold, financial products, gambling and payments to government bodies. Guest Checkout and standard card payments also aren't covered for sellers registered in a list of countries PayPal names, so check that section if your business isn't US-registered.
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My verdict
PayPal Seller Protection is a useful shield, but a narrow one. Treat tracking with a 'delivered' scan to the exact address on the transaction as the thing that saves you, ship within two days when a dispute is flagged, and never post to an address the buyer changes after the sale. For what each sale costs you in the first place, read this guide to PayPal's fees, and if you bill clients for services, here's how to invoice someone through PayPal.
Frequently asked questions
What does PayPal Seller Protection cover?
Eligible unauthorised transaction claims and item not received claims, where it can let you keep the full purchase amount. PayPal decides eligibility at its sole discretion.
Who is eligible for PayPal Seller Protection?
Under the US program, your PayPal account's primary address must be in the United States, and each sale must meet the shipping, address and documentation requirements.
What isn't covered by PayPal Seller Protection?
Significantly Not as Described claims, item not received claims filed directly with a card issuer, friends and family payments, gift cards, donations and several other named categories.
What proof do I need for PayPal Seller Protection?
An online verifiable tracking number, the shipment date and a recipient address matching the Transaction Details page. For item not received claims, you also need the delivery date and a 'delivered' status.
Does PayPal Seller Protection cover digital goods?
It can. PayPal needs compelling evidence of delivery, such as a record showing the item was sent electronically to the buyer or that they received or accessed it.
Does Seller Protection cover items delivered in person?
Only if the buyer paid in person using PayPal's goods and services QR code. Other items handed over in person are excluded.
