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Here are a few things that I have learned when dealing with Ebay and Paypal.  I'm not writing this guide to bust Paypal and Ebay's chops,  I'm just wanting the Ebay community to be aware of a few important things.

First, for the Sellers:

1. Always use Delivery Confirmation for EVERY item you sell.  This is your only proof that you shipped the buyer the item.  If an "Item Not Received" claim is filed by the buyer, you have proof of shipment and that it was delivered.  Print your labels through Ebay/Paypal even if you only sell one or two items a month.  It is easy and the Delivery Confirmation is cheaper on Parcel Post and First Class and even FREE if you use Priority Mail!
2. Communicate with your buyer!  Send an invoice as soon as possible, send a personalized email acknowledging receipt of payment and the ship date.  If you print your shipping label online, your buyer will also receive an automatic email showing shipping status and tracking information.  I would rather delete 2 or 3 emails from a seller than wonder when my item is going to ship.  Good communication is a must....your buyer expects to know the who, what, when, where and how concerning their item.
3. Be careful what you sell.  I got burned a couple of years ago on a coin I sold.  It was a seated Liberty dollar that sold for around $200.  The buyer received the item, left great positive feedback, then filed a claim with Paypal that the item was counterfeit!  Paypal asked me a few questions, then next thing I know, the money was pulled from my account for Paypal to hold.  They stated that the buyer had taked then coin to a local coin shop and received a letter that the coin was truly a fake.  The buyer shipped the item and gave Paypal the tracking information.  As soon as the coin hit my mailbox, Paypal awarded him a total refund.  Okay, sounds fair, huh?  When I opened the box, I found a seated Liberty dollar that was a fake.  It wasn't the one I sent originally though!  The buyer later admitted that his friend owns the coin shop and had him write Paypal a letter stating the coin was fake.  The coin I received back didn't match my description or pictures that I listed.  Paypal's answer was that the buyer had proof that the coin was a fake so the case was closed.  Am I saying don't sell coins on Ebay?  NO!  Just be sure to keep any documentation on them and have good pics of the item so you have some ammo if this happens to you!
4. Use USPS whenever possible to ship your items.  I have no connections with USPS other than using them exclusively to ship my items.  My wife even works for UPS and I still use USPS!  They provide Priority boxes for free and the Flate Rate Boxes can save you a ton of money sometimes.  I ship from Kentucky so any item that weighs over 3 pounds and goes even as far as Florida is cheaper in the Flate Rate box.  If you're shipping something under 13 ounces, always use First Class.  It's cheaper and faster than Parcel Post.  Do a little research before you ship.  Sometimes Priority is actually less expensive than Parcel Post if its going just a state or two away.  The buyer gets their item quicker AND you saved a few cents..sometimes even a dollar.  The best part is that the USPS will actually come to your house and pick your item up for free if you ship Priority!

Now, for the buyers:

1. Buy from reputable sellers.  Even after all my Ebay experiences, I have a hard time buying from someone that has under 5 feedbacks or hasn't been an active member.  These users sometimes actually have no item for sale and are just trying to get your money.  By the time you file with Ebay and Paypal, they've emptied their account and Paypal will "promise" to try and get you a refund.  I know that EVERY seller has to start somewhere, but just be careful what you buy and how you pay.  Remember that Ebay DOES NOT require an email address that has to come from an ISP now.  I can set up an Ebay account with a Hotmail address, sell a couple of hundred dollars worth of items and leave town.  Who cares if that account gets a negative feedback...I'll start another one with another name and email address.  BE CAREFUL!!!
2. Send the seller an email just to see if you get an answer.  Ask a silly question if you want.  I often do this just to see if the seller is willing to communicate.  If you aren't getting answers within 3 or 4 days, than don't bid.  This is also a good way to see if the seller is legitimate.  If he doesn't answer then send the question again.  If you still don't get an answer, something's fishy, I say.  Any good seller will answer emails daily at a minimum.  Remember though, that alot of sellers have full-time jobs as well as their Ebay hobby.  Give the seller a chance to answer, but 3 days should be plenty.
3. As they always say "If it sounds too good to be true, then it probably is".  Don't use a Buy It Now on a 2002 Expedition for $3,550.  Use common sense when buying on Ebay.  There are bargains to be found, but don't get suckered in to one of those deals.  Read the description carefully at least twice.  Also pay very close to the shipping charges.  Some folks sell a $300 pocket bike for $0.99 but charge $350 to ship it.  Ebay considers that "circumventing Ebay fees" and they DO NOT tolerate that.  If you sell a seller trying to charge outrageous shipping fees, trying to make the buyer pay the Paypal fees or any other violation, go to the bottom of the item's description page and click on the "report this item" link.  Its these reports that keep Ebay a safe place to trade.   I try to not make a habit of it, but I probably send about 5 of those a week to Ebay.  Remember that it helps to keep Ebay safe!
4. If you need to return an item to a seller...USE DELIVERY CONFIRMATION!!!  This is your proof that you returned the item and the seller received it back.  Without this proof, Paypal won't refund your money unless the buyer admits to receiving it back.  Always contact the buyer before shipping the item and before posting feedback.  Make sure the seller is aware the item is being returned and that you have proof of return, like Delivery Confirmation.  Even if the seller agrees to a refund, I would still suggest using Ebay to make a claim.  If you just return the item on your own, you may have trouble proving it was mailed to the seller. 
5. FEEDBACK, FEEDBACK, FEEDBACK.  When you post feedback for the seller, please remember to be honest.  I take my feedback score VERY serious...maybe even too seriously.  A neutral or negative feedback is very rarely deserved.  Make sure that you have contacted your seller before leaving anything but a positive.  PLEASE give us the opportunity to correct any issues.  Feedback scores and the "Detailed Seller Ratings" or DSRs are very important to sellers.  These scores affect what Ebay charges us to sell items and helps other buyers decide which sellers are providing good products in a timely manner.  Sellers can only leave a positive feedback for buyers.  Make that fair by being honest to your seller when posting feedback.  As far as I'm concerned, a neutral is as bad as a negative.  It means that someone wasn't happy with their purchase and I want to have done everything in my power to correct the problem.  Please be sure that the seller deserves the feedback you post for them. 
6. FEEDBACK, FEEDBACK, FEEDBACK...DSRs this time!  The dreaded DSR system, or the 5-star system.  I still don't care for it but its still there!  Unfortunately, some buyers aren't using this system properly.  Read your item description after you receive the item and compare it to the item.  Make sure that it is EVERYTHING the description said it would be.  Also remember that shipping costs include boxes, packing tape and actual postage.  Besides, you agree to the shipping cost as soon as you place your bid....how can you think that the shipping was too high after you bid and won?  Place bids accordingly....figure the shipping in with your bid and know what the item costs in a local store or another on-line seller.  The shipping time rating is sometimes being rated low because the post office took forever.  This rating should only reflect the time between when you sent the payment to when the seller shipped it out.  We cannot help the fact  that the Post Office or UPS loses a package for a day or two.  If you go to you "My Ebay Items Won" link, you can click on the order details link and see when the item was paid for and shipped by the seller.  An item going from the east coast to Cali or Washington may take up to 9 days using Parcel Post.  If you think you should have received your item within a reasonable amount of time, email the seller..they should be plenty eager to help you "find" your package.

I hope that this helps the community make some wise decisions using Ebay.  If you did find this helpful, PLEASE check YES at the bottom.  The more votes that a guide gets, the more visible it becomes for other Ebay users to see and may provide them the same help as you may have gotten.  Go ahead and look at my other guides and my "ABOUT ME" page.  you can learn alot about a seller by using those tools as well!  Thanks for reading my guide and for taking the time to click YES.

Thanks!!