Fraud and Disputes

PayPal Payments includes built-in protection tools to help reduce fraud and manage disputes, including unauthorized transactions and chargebacks. This section explains how fraud prevention works with PayPal Payments and how to respond to disputes filed by customers.

Fraud Protection

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PayPal automatically applies risk analysis to all transactions processed through PayPal Payments. This includes evaluating:

  • Buyer history and location
  • Order value and item details
  • IP address and browser behavior

Suspicious transactions may be blocked or flagged for further review. Additionally, PayPal may place a temporary hold on funds while it verifies the transaction.

What You Can Do:

  • Make sure your PayPal account is verified and in good standing.
  • Enable order notes and logging in your plugin settings to keep detailed records.
  • Set your WooCommerce settings to require verified billing addresses or logged-in purchases to reduce risk.

PayPal Seller Protection

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If you meet PayPal’s Seller Protection criteria, you may be covered for certain unauthorized transactions and chargebacks. To qualify:

  • Use a PayPal Business Account.
  • Ship to the address provided by PayPal.
  • Provide valid tracking information for physical goods.
  • Respond promptly to any disputes or chargebacks.

Learn more: PayPal Seller Protection Policy

Disputes and Chargebacks

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Customers may open disputes with PayPal for several reasons, such as:

  • The item was not received
  • The item was significantly not as described
  • The transaction was unauthorized

When this happens, you’ll receive a notification in both your PayPal account and the associated WooCommerce order notes.

How to Respond:

  1. Log in to your PayPal account and navigate to the Resolution Center.
  2. Find the dispute case and respond with supporting documents (e.g., proof of delivery or communication).
  3. Monitor the case status until it’s resolved.

PayPal will evaluate the evidence and issue a decision. If the case is resolved in your favor, no funds will be withdrawn.

📝 Note: Disputes and chargebacks are handled entirely through PayPal, not through WooCommerce.

Best Practices to Reduce Fraud

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  • Keep your PayPal email and domain name consistent across checkout and order emails.
  • Use a reliable shipping provider that offers tracking and delivery confirmation.
  • Clearly state your return and refund policy on your store.
  • Enable CAPTCHA or other anti-bot measures on checkout.

For additional information on preventing fraudulent activity in your store, especially automated card testing and abuse of the Store API, refer to this official WooCommerce developer advisory:

🔗 Card Testing Attacks and the Store API (WooCommerce Developer Blog)

This article outlines real-world examples and best practices for protecting your store from automated fraud attempts.