eBay Australia has announced that its in-house buyer protection program will be phased out in favor of Paypal, which in turn has doubled the amount it will pay back to customers who are victims of fraud.

PayPal is owned by eBay.

Starting June 7, eBay will no longer be providing protection coverage unless the transaction is made through Paypal. The company will refund up to $3,000 to customers for dodgy transactions if a buyer pays for goods using Paypal. Previously, the limit was $1,500. Typical causes of disputes include failure to deliver goods, or items differing significantly from their online description.

To qualify for the full protection scheme, sellers must have more than 50 feedback messages and a 98% positive reputation, while transactions made to sellers not meeting the said requirements will still be covered for up to $400, including postage costs.

“We know that PayPal is one of the safest ways you can pay for an item online,” eBay trust and security director Alastair MacGibbon told iTWire. “I want to help encourage people to make sensible payment choices.”

MacGibbon emphasized that only a tiny fraction of eBay transactions required intervention by eBay, though he would not provide exact figures. “It is the path of last recourse,” he said. “Most disputes can be resolved through discussion between buyers and sellers. We know that the online dispute resolution process satisfies the vast majority of people. Most sellers want to fix any problems that arise. ”

“If you read a seller’s feedback and really get an idea of their reputation and pay with PayPal, the likelihood of something going wrong dramatically decreases,” MacGibbon said. “I see far too many times when a problem could be avoided if a person just used some common sense. An educated consumer is an essential part of the process.”

MacGibbon agreed that there the scheme might lead to complaints from users seeing it as a backdoor method of forcing eBay sellers to use PayPal. He didn’t want to mandate the use of Paypal but said that it the scheme would provide “a very strong encouragement” for members to make safe payment choices. “Consumers who are aware of protection programs have more trust in ecommerce, and that helps grow the whole market.”

The new scheme has been developed specifically for Australia.

Similar changes are being made by eBay in other countries, but the threshold amounts and scheme details will differ in each market.

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Entry was posted on Thursday, May 10th, 2007 at 11:26 pm under Technology.

Read more entries by Ruben Francia.
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