EcommerceBytes-NewsFlash, Number 896 - November 23, 2004     1 of 4

BIN Bandit Scam Stings eBay Sellers, Site Launches New Policy

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A new scam known as "BIN Bandit" fraud is causing headaches for eBay sellers. Using eBay's "Buy It Now" feature (BIN), fraudsters can purchase thousands of dollars worth of items in a short period of time and try to perpetrate a payment scam for the purchases. eBay announced a new policy Monday that may help cut down on the fraud.

Online scams are often a numbers game, only a small percentage of targets need to fall for the scam to pay off. But all of the sellers whose auctions are ended fraudulently must go to the trouble of relisting the items and must file for credits from eBay. The sellers are also out money since eBay only refunds commission fees, not listing fees, for "Non Paying Bidders."

One example of the scam occurred Thursday, November 18. A person from Singapore registered on the site using the name campuswaco. In under 2 hours, he made 27 BIN purchases on items ranging in price from $425 to $1,825.

Buyers are usually required to pay for BIN items right away. But, campuswaco allegedly sent sellers an email requesting he be allowed to send a certified cashier's check for an amount higher than the item's value, and asking the seller to wire-transfer him the difference.

We first wrote about the Counterfeit Cashier's check scheme last year (http://www.auctionbytes.com/cab/abn/y03/m12/i01/s02).

The scheme works like this: the scam buyer sends the seller a cashier's check for thousands more than the item costs. The seller deposits the check in his bank account, waits until the check clears, then wire transfers the extra money to the buyer. Weeks later, the seller learns from his bank that the check was counterfeit, and he must refund the full amount to the bank.

Most people are unaware they are responsible for reimbursing the bank for depositing counterfeit cashier's checks because the bank initially cleared them.

eBay spokesperson Hani Durzy said it is called a Nigerian scam and has been around for longer than eBay. "It sometimes pops up," he said, but is low on the list of frauds targeting eBayers.

In Thursday's scam, campuswaco racked up purchases totaling $25,519.23 in less than 2 hours. Five sellers quickly caught on to the scam, and left the buyer negative feedback. eBay's system suspended campuswaco automatically once it detected it had a net negative 5 feedback. (Once a user is "No Longer a Registered User," or NARU, no other users can leave feedback for that ID.) It's unknown if any of campuswaco's trading partners fell for the scheme.

Scot Wingo, CEO of ChannelAdvisor, which provides services to eBay sellers and ecommerce merchants, said he has heard of a couple of instances of rogue bidding and is starting to hear more about it. Usually nuisance bidding activity is targeted against a seller in retaliation, or is a kid playing on the computer, Wingo said.

Ed Koon has been selling cars for 30 years and began selling cars on eBay in 1999. He became disgusted with the fraud he saw on eBay Motors, and started a site called eBayMotorsSucks.com (http://www.ebaymotorssucks.com). Koon said the problem of fraud on eBay Motors gets worse each year. He began documenting eBay Motors fraud on his Web site after feeling eBay was not listening to sellers' concerns.

A page on Koon's Web site documents "BIN Bandit" scams. The site points one case where ten IDs, all with the same root name: oyewolelink, registered on November 16. By 10 am that day, four of the accounts were suspended. By 5 pm, nine of the accounts were suspended. All the accounts were used to purchase expensive items on eBay before being suspended.

Another long-time eBay member who prefers to remain anonymous started seeing a lot of similar posts about malicious bidding and did some investigating. While she has no way of measuring the extent of the problem, she said she has been able to find some occurrences of malicious bidding on every day going back 2 weeks. She said the bidders purchase expensive items in categories like furniture, bike, laptops, cameras, Rolex watches, pianos, and cars, ATVs and motorcycles.

Many users say 1-day auctions are ideal ways for fraudsters to quickly target victims. eBay recently banned 1-day auctions from eBay Motors vehicles listings. But Koon said fraudsters now use the Parts category on eBay Motors, as well as the core site and the Salvage & Junk category.

Koon said eBay needs to get back to basics and start requiring all users be ID verified and have a credit card on file.

"I want to see eBay clean this place up," said Koon. "They are making money hand-over-fist. I've been on eBay since 1999 and I can hardly do business on there now. They need to take responsibility, they need to have a phone line to report fraudsters."

Sellers have often complained about eBay's policy of allowing new users with zero feedback and unverified contact information to bid on an unlimited number of auctions. Some have urged eBay to allow them to block bidders with zero feedback from bidding on their auctions, or at least for listings with a Buy It Now option.

eBay's Durzy said sellers can use the Bidder Requirements tool in My eBay to ban users from other countries; those with net negative fees; or those with unpaid item strikes. He also said the site is poised to make an announcement about other enhancements to the Bidder Requirement tool.

eBay also announced Monday it was introducing a set of buyer activity limits to reduce the problem of non-paying bidders (or unpaid items, as eBay now calls the problem). "These limits will be applied in very rare circumstances and only to new users or to members demonstrating a highly unusual pattern of buying," the announcement stated. http://www2.ebay.com:80/aw/marketing.shtml#2004-11-22155621

eBay is not the only site targeted by fraudsters, but some of the other auction sites have stricter user verification requirements. Durzy said eBay has to balance keeping the site safe and not placing so many restrictions that it negates the benefit that eBay provides.

Some users passionately disagree. Another user who also wished to remain anonymous said eBay needs to verify contact information and limit the number of bids that a new member can make, and the number of auctions a new seller can list. She said, "There need to be stricter guidelines, and they refuse!"

More examples of BIN Bandit scammers began loading onto Ed Koon's site on Monday: http://www.ebaymotorssucks.com/~ebayother/rb/


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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