If a paying customer doesn't recognize a charge on their statement, or if they are unsatisfied with the services they have received, they may file a dispute with their bank. This is called a chargeback and payment processors like PayPal are under strict regulations to comply with chargebacks.
When a chargeback occurs, PayPal will notify you by email with more information and instructions on how to challenge the chargeback filed by your customer. PayPal is also required to immediately return the disputed payment to the customer who filed the chargeback. This will require PayPal to debit money from your bank account or your PayPal account for the amount of the chargeback.
Chargebacks often take a long time to resolve (45 to 90 days in most cases) and can have a significant impact on the cashflow of your business. If you receive multiple chargebacks from your customers, PayPal may even decide to close your PayPal account altogether. For these reasons, we encourage you to do everything in your power to avoid chargebacks from your customers. For more information on this, check out How can I protect myself against chargebacks?
Hopefully you will never receive a chargeback, but if you ever need assistance with a chargeback our dedicated support team at PayPal is available to assist you by phone or email: I have a payment issue, how do I contact PayPal? – The Joist Help Center