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Online Auction Fraud
eBay sales may have grown 51% last year over the previous year, but general online complaints jumped by 66.6% over the previous year to some 207,000+ complaints in 2004. The Internet Crime Complaint Center (IC3), a partnership between the FBI and the National White Collar Crime Center (NW3C), stated in its yearly report that 71.2% of all complaints received pertained to auctions. Online fraud is a growing problem on the internet and the auction segment is far from immune. The IC3 reports that most complaints consist of late or no shipment of products, items that don't match advertised condition and bogus payment or escrow services. If you decide to offer "all items to be shipped within 24 hours", make sure you keep your word, and go to great lengths to honestly represent and describe the item in your auctions. Your bidders will appreciate your honesty and it will eventually show up in your feedback. As consumer fears increase, there are a number of common sense ways to help protect you from fraud, as well as enhance your reputation as a trustworthy seller and set you apart from the crowd. Watch Out for Bad Checks, Money Orders and Cashiers ChecksYears ago I had a buyer who complained rather loudly when I didn't ship an item as soon as I received the check in the mail. In hind site it was a good decision to hold the shipment since the check ended up being fraudulent. Bad checks, money orders, and cashiers checks are rampant in ecommerce today. The simplest way to offset the danger of bad paper is not to ship the auction item until the check, money order or cashier check clears your bank for payment. Overpayments Never accept any overpayments for any item. One of the more popular scams today is for a buyer to send a cashiers check for an amount that is higher than the agreed upon final price. They then claim it was in error and ask the seller to kindly return the overage when the item is shipped. Off goes the item, the overage amount in good money, and the defrauded seller finds out too late the cashiers check was fake. Use an Escrow Service for High Priced Items The primary purpose of escrow services is to protect buyers and sellers from fraud. Basically what they do is to accept the money from the buyer and hold it until the buyer receives and approves the merchandise. Please note that fake escrow services are increasing on the internet. If a buyer contacts you after a sale and recommends an escrow service you are not familiar with BEWARE. At present eBay only recommends one escrow company: www.escrow.com. For information go to http://pages.ebay.com/help/confidence/payment-escrow.html Records, Records, Records Keeps a copy of every transaction detail from the original auction listing to the last email. You will need that kind of proof to validate your claims if you should find you need to file a complaint. Protect Yourself by Being Educated At the very least you need to be knowledgeable about your legal obligations as a seller and familiar with the fraud protections and policies for the auction sites and payment processing services you use. eBay and Paypal have extensive sections on their websites dedicated to fraud policies and protections. You should take the time to read through these or similar information pages for the sites and services you use on a regular basis and be very familiar with the material. A few of the key recommendations from Paypal's Protection for Sellers section include: Ship only to the address listed on the Transaction Details page Use a shipping service with tracking Check out the buyer's reputation Accept payment from only one Paypal account per buyer Limit credit card payments Enhancing Your Safe Seller Image Here are a few tips that will help improve your image as a safe seller for your bidders. Identify Yourself - Make use of the about me pages to let your customers know who you are, how long you've been in business and how much their business means to you. Be honest. Feedback Ratings - Auction buyers want to see 100% positive feedback. Methods of Payment - Make it easy for your customers to buy but consider convenience, cost and security in choosing any payment method you offer. Full Disclosure - Your auction listings should clearly state the condition of the item you're auctioning, your shipping/insurance and return policies. Bonding programs - A number of bonding programs are available on the internet. One of the more popular is BuySafe (www.buysafe.com). In a bonding program the seller agrees to certain obligations such as shipping on time, representing the item correctly, and standing behind the transaction. In return the seller can display a seal on their auctions showing bidders they are honest sellers and providing transaction insurance in some cases up to $25,000. Other programs you should be familiar with include: IDVerify If You Become a Victim of Online Fraud You need to know exactly what should be done in the event you are victimized. Make your plan now, before it happens. The most recommended steps to take if you are victimized are listed below but please keep in mind these are general recommendations and you should have you own plan based on your needs. File a complaint with your auction site Further reading Paypal Seller Protection Policy (go to your Paypal account) FTC recommendations http://www.ftc.gov/bcp/conline/pubs/online/auctions.htm To read the entire 2004 IC3 Internet Fraud Report http://www1.ifccfbi.gov/strategy/2004_IC3Report.pdf More Important Fraud Links Find Your Local Police http://www.usacops.com © Copyright 2005 Steven Woodward - All Rights Reserved Steven Woodward is the owner, editor and publisher of the Auction Sellers Network (ASN); a web site for individuals and companies who are serious about utilizing the online auction marketplace for their business. In addition to topical articles, ASN provides an extensive resource center, news feeds, member forums and classified ads. For more information or to become a member please visit http://www.AuctionSellersNetwork.com No permission is needed to reproduce an unedited copy of this article as long the About the Author tag is left intact and included. We do request that we be informed where it is posted and reciprocal links will be considered.
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