Etsy's seller protection must meet certain requirements. First, you must fill out shop policies. These need to outline your policies on returns, customization and exchanges. You also need to make sure your policies are in line with any local laws, especially if you're selling food or pet treats. You also must have detailed photos of the item, including color, size, materials, conditions and any customized options. (Basically, if you send a blue shirt, and the customer tries to claim it's a green shirt to file a "not as described" complaint, you need to be able to prove they ordered and were sent a blue shirt.)
You also need to ship to the address given in Etsy by the customer. You also must be able to prove date of shipping and proof of delivery for US shipments. This is something I cannot stress enough, is to ship everything with tracking within the US and wherever possible internationally. A lot of sellers who sell smaller items ship without tracking, but if you print your shipping labels online, tracking is included for free. Up to 3 oz will cost you $1.93 with tracking within the US when you print the labels online.
The item also must be a physical item you send to the customer (digital downloads will not receive this coverage). You can do local pickups, but you should get a signed receipt saying they received the item and are happy with its condition. If you do a local pickup and don't get that signed receipt, you will have no way to prove they received it or the condition should they try to dispute the charge.
If a customer does open a case against you in Etsy, make sure you reply in the case (not a separate convo to the customer) with all of the relevant details including shipping date and proof of shipping and delivery.
You can read Etsy's full protection policy here.
Paypal's seller protections are more limited in some ways than Etsy's. The key points to qualify for protection are: You must ship to the confirmed address in Paypal. If the address is international or unconfirmed, it may not qualify for any protection. It must be a tangible item, digital items are not covered. You must respond to any request for further information from Paypal within the time frame they give you. Finally, your address must be within the US.
There are some additional requirements depending on what type of claim the person may file. If they file an "item not received" claim, their payment must be marked as "eligible" or "partially eligible" on the transaction page and you MUST provide proof of delivery in the form of a tracking number. Local pickups are not covered by Paypal's seller protection, even with a signed receipt.
Here's what Paypal doesn't cover:
- item significantly not as described
- digital items
- Local pickups
- Transactions made through Paypal Here card reader or other virtual terminals
- Multiple Payment items (the item was on layaway so the payments were spread out over time)
- International shipments are not covered when delivery cannot be confirmed
You can read Paypal's full protection policy here.
Since most eBay transactions are done through Paypal, Paypal's policies are where most of the coverage comes into effect. For the few suggestions eBay has, you can read those policies and recommendations here.
Customer Claims They Didn't Receive Item, Tracking Shows as Delivered
I'm including this as a separate point, because it can happen anywhere. Basically, the customer opens a complaint with the selling venue or payment processor claiming they didn't receive their item even though the tracking says it was delivered. Or they may claim they received an empty package.
There are several steps that you can take at this point. First, contact your post office, and have them contact the receiving post office and verify delivery with the carrier. I've been told the new carrier scanners show a GPS location of where the item was scanned as delivered, so they can verify if it was left at the correct house or place of business. I'd say at least 75% of the time where I've talked to or heard from sellers who have had this happen, once it gets to the point of checking with the carrier, the package "miraculously" appears.
Now, if the carrier cannot confirm the delivery, you have a couple of options. You can offer to resend the item if it can be replaced. You can refund the customer, or you can follow through to the next step, and this is the one that will call the bluff of most anyone trying to pull a scam. Tell them at this point they must file a stolen mail report with their local post office and police department, and once you receive a copy of that report, you will refund their money. Most small time scammers won't cross the line of filing fraudulent police reports because the penalty for that will be far worse than whatever money and item they're trying to scam you out of.
If they go to that step and file the report, then you can probably be 99% sure the item was stolen from their mail and their claim is legitimate. This leads me to my last recommendation, which is insurance. Anything you aren't willing to self-insure (either to remake/replace or refund the money directly out of your pocket), if the value is higher than the free insurance offered by the post office ($50 on Priority Mail, $100 on Priority Express), then you MUST purchase additional insurance on the shipment. Should you need to file a claim, you'll have to provide the postal service with a copy of the transaction receipt to prove the value, so make sure you claim the full value and don't try to pad it. The additional insurance is inexpensive, and filing a claim can be easily done online through the USPS website at USPS Online Claim Form.
So make sure you follow the rules of the venue or payment processor and keep your documentation in case you need it. Most do provide seller protection, because their success depends on having sellers willing to sell there and knowing the venue will back them up when they've played by the rules. But it's not an all-encompassing protection against everything and everyone, because they need to have the trust of buyers as well against fraudulent sellers. Sometimes they may rule against you even when you know your case is right, but likewise, sometimes buyers get ruled against when they have a legitimate claim. All you can do is make sure you have the documentation needed to prove your side and that you've done everything necessary to fulfill your side of the transaction.