PayPal buyer protection succeeded: Can the seller still demand payment?

The case: Money returned, sales dispute still open

In 2011, a buyer ordered a metal band saw for EUR 486.79. He said the delivered goods did not match the pictures in the online shop. He applied for PayPal buyer protection and submitted a privately commissioned expert report. PayPal refunded the purchase price and debited the seller’s account. The seller maintained its demand for payment (BGH, VIII ZR 213/16, paragraphs 1 to 6).

The Federal Court of Justice set aside the decision against the seller and remitted the case. Crucially, it did not hold that the buyer necessarily had to pay again. The appellate court first had to determine whether, and to what extent, statutory remedies for defects assisted him against the demand (operative part; paragraphs 43 and 44).

Why a PayPal refund does not finally settle the dispute

An agreed payment through PayPal initially discharges the purchase price debt once the seller receives unconditional credit and can freely use the amount. However, absent indications to the contrary, the Federal Court of Justice also inferred an implied agreement from the parties’ joint use of the payment system: if the amount is refunded following a successful buyer protection claim and debited from the seller’s account, the previously discharged purchase price claim is re-established. The interpretation of the parties’ intentions and the terms applicable at the time were decisive (paragraphs 13 to 20, 27 to 33).

The payment provider thus decides on its protection programme. Whether the goods were delivered as agreed and what consequences follow from a defect are separate questions. In the decided case, the simplified buyer protection process did not replace a full examination of statutory remedies for defects. Conversely, buyers could continue to pursue their rights after an unsuccessful buyer protection claim (paragraphs 32 to 37).

Which rights buyers can still examine

For defective goods, section 437 of the German Civil Code provides for subsequent performance, rescission, price reduction and damages, subject to the respective requirements. Subsequent performance generally means repair or delivery of a defect-free item under section 439. The PayPal notification alone therefore does not replace an examination of the alleged defect, what the seller was told, and which remedy was requested or offered.

In the band saw case, one particular unresolved issue was whether a prior request for subsequent performance could exceptionally be dispensed with. The court established neither the alleged defect nor a definitive right to rescind (paragraphs 43 and 44). For present-day consumer purchases, section 475d must also be considered: an express deadline is unnecessary in the situations covered by that provision, for example where a reasonable period has elapsed since notification of the defect without subsequent performance. A blanket rule that an additional fixed deadline must always be set is therefore also inappropriate.

Current terms and the individual purchase matter

The 2017 judgment concerns a historical purchase and the PayPal terms applicable at the time. The currently accessible buyer protection programme contains its own requirements, procedural deadlines and exclusions. For example, the provider terms dated 15 April 2025 exclude industrial machinery used in manufacturing and items intended for resale. The old band saw case therefore does not establish present-day buyer protection eligibility for such goods.

Even for a private online purchase, three questions need separate answers: Is the payment covered by the protection programme? What have the buyer and seller agreed? What statutory rights exist in the particular case? This article addresses German sales law. For cross-border purchases, the applicable law and contractual arrangements, among other matters, require separate examination.

What should you do about a new payment demand?

Our practical recommendation: respond with the specific reasons for your objection and preserve the documents. Relying only on the positive PayPal decision leaves the sales-law issue unresolved. Equally, do not pay again merely because the seller cites the Federal Court of Justice judgment. Examining the contract and your defences is necessary to assess the demand.

Our own simplified example: a buyer receives a PayPal refund for a device advertised as new which she says arrived damaged. If payment is demanded later, the listing, the condition on delivery, notification of the defect and subsequent correspondence are also important. The refund does not conclusively establish whether a defect exists.

• Save the listing, order confirmation, invoice and product description.
• Record photographs, delivery evidence and the chronology of your complaint.
• Save the complete PayPal case, including the decision and refund entry.
• Gather messages about repair, replacement, return and renewed payment demands.
• Have court documents and any deadlines stated in them checked promptly.

What buyer protection still offers

Despite the possibility of a further dispute, the Federal Court of Justice considered buyer protection useful: the buyer recovers the advance payment without first having to sue for repayment and enforce a judgment (paragraphs 38 and 39). Our assessment: this improves the starting position, but does not replace a sound explanation of the buyer’s position under sales law.