EcommerceBytes-Update, Number 77 - August 25, 2002 - ISSN 1528-6703     2 of 7

Online Auction Fraud: What You Should Know, Part 2

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This is Part 2 of a 3-part series on online-auction fraud. Part 1 may be found at http://www.auctionbytes.com/cab/abu/y202/m08/abu0076/s02.

WHAT TO DO BEFORE BIDDING

ONE) Check the auction description and the terms of sale carefully. Be wary of sellers who only accept cash or money orders. (You should never wire transfer payment.) Also, be wary of excessive shipping & handling costs. If shipping costs aren't explained in the description or in the seller's Terms of Service, contact the seller and verify the costs before bidding.

INSIDER TIP: Watch for phrases like: "I don't know much about this item, so I am selling it as is."

TWO) Check the auction photos. You should watch out for flaws evident in the pictures but not mentioned in the description. Beware of auctions with no photos, or with photos that are lifted from a manufacturer's or retailer's Web site.

THREE) Check the seller's feedback and see if there are "negative feedback points." A perfect record does not mean there are no problems, just as a few negatives do not mean the seller is untrustworthy. You must look beyond the raw numbers and see if there is a pattern that might indicate a problem. Also, see how sellers respond to negative feedback against themselves.

INSIDER TIP: Read between the lines of positive feedback ratings. For example, someone who purchases a videotape may leave a "positive" feedback for the seller that says, "As described, though video quality was poor, possible copy."

FOUR) Check the seller's history. Some sellers accumulate positive feedback by buying very inexpensive items very quickly. This quickly builds up their feedback rating. Also, see what kinds of items the seller has been selling. If they have 1,000 positive feedback points from selling inexpensive collectibles and have recently begun listing expensive consumer electronics, you should be wary.

FIVE) Check that the sellers' trading partners have established feedback, and look for evidence of shill bidding. Shill bidding occurs when sellers use cohorts to bid on their items to raise the price and generate interest in their auctions, when they have no intention of purchasing the item.

You are allowed to contact other people who have purchased from the seller and ask them questions, although they are not required to respond to you.

SIX) Contact the seller with questions. Does it take a long time for the seller to reply? Is the seller rude or evasive? If the item is expensive, call the seller on the telephone. You can get the contact information from eBay. A phone call may help you uncover deceptions.

INSIDER TIP: Be wary if sellers say they can't answer specific questions about an item because it is in storage.

SEVEN) Use software that analyzes sellers' feedback histories. Eccles Software has a product called Safe2Bid http://www.cricketsniper.com/safe2bid.html that can look for evidence of shill bidding.

EIGHT) Use an escrow service. eBay insurance covers cases of fraud, but there is a limit of $200 with a $25 deductible. Disputes between buyers and sellers are not considered fraud by eBay. eBay has an agreement with Escrow.com http://pages.ebay.com/help/community/escrow.html but be aware that there are fees for using the service.

NINE) Use a credit card. If you use a credit card to make a purchase, youare offered certain protections and can "chargeback" your purchase if there is evidence that the seller never sent you the goods.

AFTER YOU WIN AN AUCTION

Once an auction has ended and you have won, you should still remain alert. The seller will contact you with payment information. If you reply with a question and the seller never gets back to you with an answer, call him or her.

Also, verify that the person who is contacting you really is the seller! There have been cases of third-party interference where a person posing as the seller tells you to send payment to their PayPal account. This kind of fraud is not covered by eBay insurance, since you sent the money to a third-party. eBay sends an End of Auction notice to all auction winners; compare the contact information in this notice with the correspondence you receive from the seller.

For more information about fraud on eBay, visit http://pages.ebay.com/help/community/ins-guide.html. Remember that when you place a bid on eBay, you are entering a binding contract, so you must do your homework before you place a bid.

Editor's Note: This is Part 2 of a 3-part series on online-auction fraud. The series was originally published as a complete article in the June 2002 issue of "The CyberSkeptic's Guide to Internet Research," a subscription print newsletter published by BiblioData

Part 1 may be found at http://www.auctionbytes.com/cab/abu/y202/m08/abu0076/s02.

Part 3 will cover "What to Do If You Are Ripped Off." You can also get more information on the AuctionBytes forums at http://www.auctionbytes.com/forum/phpBB/viewtopic.php?topic=674&forum=3.


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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