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Tue Mar 22 2016 14:43:38

Deadbeat Bidders Infect High End Auctions

By: Ina Steiner

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Deadbeat bidders aren't just a problem for eBay sellers, they are a growing problem for higher-end auction houses that are increasingly bringing their sales online. Greg Smith wrote about the problem in Antiques & The Arts Weekly, citing a case in which Christie's sued a buyer for allegedly failing to pay in full the $37 million he had bid on a piece of artwork. 

But as Smith points out, most auction houses can't afford to take legal action in the pursuit of deadbeats. In fact, he said auction houses are struggling to keep up with the pace of fraudulent bidders thanks in part to the transition to online bidding platforms.

On the one hand, online bidding has grown business for auction houses tremendously, while at the same time, they struggle to deal with remote buyers who are increasingly willing to disregard an invoice.

Smith spoke to an appraiser at a New York auction house whose online sales grew from 10 - 15 percent of total sales ten years ago to over 40 percent today, who told him the worst offenders (in terms of deadbeats) come from China, Russia and Eastern European countries.

Whether your auction ends at $30, $1430 (the average selling price of Bidsquare, a consortium of auction houses), or $37 million, a non-paying bidder presents a big problem.

Smith said that online platforms have begun employing independent dispute databases that list all discrepancies associated with a particular user. "As a user gets a dispute filed against him or her due to late or nonpayment, the user's dispute history is available to see by any auction house on the platform for as long as that user continues to use that particular account."

While platforms like Bidsquare may share that information, eBay does not share such information with its sellers - and sellers have no way to warn their fellow sellers about bad buyers.

eBay is certainly aware of the problem. Four years ago, it had considered offering a form of "immediate pay" for auctions. Buyers would sign a one-time billing agreement that would give eBay permission to automatically collect payment once a bidder won any future auction. However, eBay did not implement the practice.

Readers shared some interesting thoughts at the time, including skepticism that eBay could enforce immediate pay, and pointing out difficulties in cases where buyers expected combined-shipping discounts when buying more than one item.

In some of the discussions about eBay deadbeats, sellers said they stopped using the auction format because of the problem.

Should eBay do what other auction platforms do and share information about deadbeat bidders/buyers with sellers who receive bids from those users?

How big of a problem is deadbeat bidding, and what can be done about it?



Comments (19) | Permalink

Readers Comments

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This user has validated their user name. by: Ric

Tue Mar 22 16:02:52 2016

For eBay the solution is simple.  

Instead of a one time agreement to deduct payments if an auction bid is the winner, eBay should opt for a more transaction approach.

One time authorization can be forgotten so a bid by bid approach  authorizing payment would be much more informational for the buyer.

The process would be simple and work something like this....  Bidder places their bid much as thry do today, however, before the bid is official, the buyer needs to check off a box authorizing immediate payment if their bid is a successful one.  Buyers would have to check that box for any and all subsequent bids as they raise their offers.

This is a clean and simple approach which would benefit all parties.

eBay would have to coordinate with their former division to implement this, but how hard can that be since the two companies while separate still work as closely together as they did before the split.

PayPal could offer this format to other auction houses which would result in their payment method being accepted across more platforms.

The process would be a win for PayPal, a win for eBay, a win for non eBay auction houses, a win for bidders and a win for sellers.

The question is, why is something this simple and straightforward not already in place?


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This user has validated their user name. by: iheartjacksparrow

Tue Mar 22 19:25:00 2016

My idea for eBay: If a buyer gets two unpaid item claims against them, they're banned for life, and the ISP associated with their account is also banned for life (so they can't open up a new account under another ID).

I have always thought that all auction wins should be immediately paid through a bidder's PayPal account. Ric's idea that the bidder check a box authorizing same is a great idea.  

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by: Paul W This user has validated their user name.

Wed Mar 23 00:42:59 2016

My suggestion:  eBay collects a deposit equal to 10% of bid price (maybe with a minimum deposit of some nominal amount).  When winning bidder pays, deposit is credited toward the total.  If winning bidder fails to pay, deposit is credited to the seller.

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by: Chicago48 This user has validated their user name.

Wed Mar 23 04:27:41 2016

Wow! didn't know about the high end auctions.  That's interesting.  They'll figure it out.  $37Mil is too much to lose.

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by: Leesantiques This user has validated their user name.

Wed Mar 23 05:45:28 2016

When it is $37 million, the auction house has incentive to hire an attorney and pursue in court the non-paying bidder.  When the amount is in the $30 - $1,000 range where most of us live, taking someone to court is not a practical option.  Especially when that person lives across the country.

I've had buyers request that I delay shipping until they get back from a trip, and I want to give good customer service and accommodate them.  If Ebay requires instant payment, then they also need to allow for delayed shipping at the customer's request without dinging the seller.

Some buyers purchase multiple items and want, and rightfully expect, the postage savings from combined shipping.  This needs to be accommodated by Ebay as well for any instant purchase requirement, even if the combined items end on different days. (With the seller getting to define how many days they are willing to allow.  I often allow a week or so, for example. Combined shipping saves everyone money, including the seller.)

I really like the idea of 10% down when the auction ends, with it being forfeit to the seller in the case of non-payment.  Seems fair to everyone.

Lee

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by: msquezal This user has validated their user name.

Wed Mar 23 06:54:25 2016

Years ago this never used to be an issue. These days approximately 20% of all my online auctions have problems associated with payments. Either they are extremely late paying, non paying or they figure out a way to scam something at the end of the auction after it is closed and the item is received.
I will never understand how someone can bid in the last 20 seconds, win the auction and then disappear for a week! It takes two seconds to click the PayPal button and pay the seller! I have had people pay for an item literally minutes before i could process the non paying bidder report! People think its a game! Its disgusting....and a world away from the eBay we all knew and loved 15 years ago!

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by: Surplus This user has validated their user name.

Wed Mar 23 06:55:37 2016

Since we don't do auctions anymore on ebay we don't have too much of a problem with Auctions.  However we do have 2-3 deadbeat buyers each month on Ebay best offer items where buyers make offers, we accept and buyers don't pay.  There is no way I am buying the excuses I've heard for non-payment since making an offer is a multi-step process.  The solution to me is simple as part of the offer making process the buyer agrees the funds will be sourced from their selected method of payment automatically if the seller accepts.  What could be easier for buyer or seller.  For us any buyer that does not pay is automatically put on our banned buyer list in Ebay.  I've had one or two complain they could not buy because they were on the list.  Deadbeat buyers are a waste of our time and a small amount of money in fees.  As to the combined shipping issue you can always do a partial refund in Paypal for whatever the shipping overages are.  We do it all the time with combined shipping.    

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by: trader_chris This user has validated their user name.
Web Site

Wed Mar 23 08:34:49 2016

Ina - I agree that this is a problem. I have started to focus on selling higher-end items through eBay's auctions in the last few years and have found an increase in non paying bidders. Most recently, I had sold a rare vintage candlestick for over $4,500. Immediately after the sale, the winning bidder attempted to back out. When I offered the item to the next highest bidder, they promptly asked for a $600 discount. I opted to re-list the candlestick again, but feared the re-selling an item that was no longer considered ''fresh to the market'' would do as well, as most of the time re-listed items may only sell for 65% to 80% of the original bid price (as buyers often wonder what is wrong with an item, even though it may just be an instance of a dead beat buyer failing to pay).

You wrote a few weeks ago about one of the eBay management team's quest to achieve Top Rated Seller status through the platform by selling items himself. I think it's a good start to see management finally making a greater attempt to understand some of the everyday struggles that sellers go through, but selling a bunch of items at $10 is nothing like selling a $1000+ item (no offense to anyone... I started with selling a lot of $10 items myself...) I think Ric's suggestion (above) is probably the most straightforward and easy to implement. The only feedback I would have for that is that Paypal is often the bottleneck on higher value transactions for me, as they may limit the amount of money that can be paid in a single transaction, especially for foreign buyers. I have had to send two recent buyers separate invoices for items that they were unable to pay through the eBay/Paypal invoicing system because of limits to their buying accounts. The easier and more reliable the payment process can be made, the better it will be for everyone involved.

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by: RLS This user has validated their user name.

Wed Mar 23 09:17:42 2016

We have implemented a policy of countering an offer that is acceptable to us with the exact same offer and terms of immediate payment. This has cut down on many cancellations and allowed the listing to stay listed until the buyer accepts the offer. I sell mainly apparel so not sure if it will work for all product lines but do not see why not. If time is available I will also review the buyers feedback especially the fb left for others. If I see an excessive number of negatives I will generally stay away. Sometimes not selling is a good thing

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by: epuise This user has validated their user name.

Wed Mar 23 09:48:03 2016

Item listed at 99 cents no-reserve auction + actual Priority shipping...
Two bidders drive price to $48.00...
Winner bids all week, up to last minute to win...
Auction ends Sunday night...
Bidder does not pay or communicate by Wed...
Seller sends invoice...
No communication...
Seller files UPI...
Seller sees 'winner' is getting FB on new purchases...
Seller files & gets fee back the following Sunday night...
Seller sends 'Second Chance Offer' to under bidder...
{ Who got 'beat out' a minute earlier than winner }
Underbidder declines with this note:
Looks like the winning bidder is a fake.
eBay has hundreds of these "bidders" in their system just to raise selling prices.
Higher selling price, more commissions for eBay.
This bidder didn't want to buy your camera from the very start.
So...
This deadbeat...
Who, like all Buyers, has 100% perfect Feedback...
Who, I'm told, can rack up MORE than 3 UPIs...
Has cost the following, money:
1. The Owner I sold it for
2. eBay
3. PayPal
And... the REAL QUESTION...
How many PEOPLE were adversley affected, 'changed' by this deadbeat ?
In this case:
1. The lady I got the item from
2. Anybody she tells the story to
3. Me
4. Anybody that I tell
5. The 'winner', who knows he can get away w/ this
6. Anybody he tells
7. The underbidder, who believes my auction was a fraud
8. Anybody he talks to
Is it any wonder Auctions are DEAD ?
Why nobody bids until the last second ?
Why they seldom bid against another person ?
Tell me, eBay...
WHY are you protecting deadbeats who are destroying the integrity of the site ?

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by: epuise This user has validated their user name.

Wed Mar 23 09:50:56 2016

I work for a 'live' auction house who started accepting eBay bidders thru Auction Zip... now... instead of one late payer... there are 50 +... instead of one no pay... there are 10%... all from eBay registrants...

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This user has validated their user name. by: FEEbay

Wed Mar 23 11:45:10 2016

With Ebay, is is "business as usual." With Brian Burke leading the charge, everything is slanted against the very folks who are the source of most of Ebay's revenues- THE SELLERS

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by: doboy This user has validated their user name.

Wed Mar 23 12:30:48 2016

I posed this issue several weeks ago and was pooh poohed.  Now it appears high end auction houses are more important than what happens to eBay sellers.  There is no reason for a credit card not securing registration to bid.

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by: spooky This user has validated their user name.

Wed Mar 23 15:54:24 2016

READ THIS - I have ZERO sympathy for the fancy auction houses who list on eBay to get a jump in prices. they do NOT play by the same rules as regular sellers. Biggest issue is shipping - the fancy auction houses leave some vague murky shipping suggestions about taking the item to a local packer. No shipping prices are included in any of their listings. So if a buyer wins a small figurine that any other seller on eBay would change around $10 for, but the fancy auction houses often charge many times that. I do not blame winners for feeling duped.  

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This user has validated their user name. by: LasVagueness

Thu Mar 24 23:00:53 2016

I can't recall a single Russian customer not paying, but EVERY SINGLE SALE FROM CHINA has gone unpaid. I get my fair share of deadbeats. Without transparency there is no incentive for eBay buyers to behave. eBay shrouds, facilitates and girds deadbeats with a roomy cloak of invincibility.  

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by: gizmo This user has validated their user name.

Fri Mar 25 11:16:28 2016

Deadbeats are a serious pain. just 1 reason I list nothing on deadbay.
I think non payers should be flogged. Non payers in my opinion, are criminals. If they are willfully doing something negative , they should be banned for life. Exclude them from ever getting on sales sites. Black book their a-- !

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by: Just My Humble View This user has validated their user name.

Fri Mar 25 15:30:06 2016

I sort of like Ric's idea, but I can see where it would create problems in some situations.
1. For auctions where the bidding gets ''hot and heavy'' toward the end... The additional time to authorize the immediate payment could result in a lower sell-through price, and a bidder who is normally able to get that last bid registered would time-out. eBay could adopt the practice of other auction sites by extending the bidding by 5 minutes if a bid is placed in the last 5 minutes of the auction ... but then it would take away the 'fun' of those who enjoy a good snipe.
2. Bidders would need to be able to set up an immediate payment method for each auction. Currently, I'm able to choose to pay by credit card directly on the eBay site and leave my PayPal funds untouched (if I choose). The payment processes through PayPal, but doesn't use their default method of payment.
PayPal's default is to first use PayPal funds, then the bank account for any balance. When making payment manually, the user can change the payment method so that any amount over the PayPal balance comes from the owner's credit card rather than their bank account.  

Personally, I don't remember the last time I had a non-paying buyer (knock on wood). I sell primarily fixed price, with about 5 - 10% auctions -- depending on what I have on hand. Some things just sell better at auction. :)
I allow 3 days for payment, and my payment instructions indicate that should someone need longer to pay, they can contact me to make arrangements. Through the years, I've had many customers thank me for my generous payment policy, because they were ''cash only'' households and needed to wait for payday to make payment. They ALWAYS pay after contacting me, without reminders. Of course, most people pay either immediately, or within the 3-day limit.

I also NEVER start an auction at 99 cents. I think it attracts deadbeats, but that's just my opinion. The minimum I start an auction is $9.95, more often higher.

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by: Volvo351 This user has validated their user name.

Sun Mar 27 10:50:54 2016

Clearly, these auction houses need to VET those super high-end bidders via posting of a bond. It's really very simple: you Pay to Play. Put Up or SHUT TF Up!

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by: Volvo351 This user has validated their user name.

Sun Mar 27 10:54:57 2016

@JMHV

You're smart to avoid 'penny' [or 99c] auctions; they're a great way to lose your shirt!

Back in the Day, it was the way things were done. The low starting bid got you a cheap listing, and bidders set closing price at Fair Market Value. Not anymore.



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