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 Checks Years 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
SquareTrade
Trust-e

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
File a complaint with the Federal Trade Commission
File a complaint with the IC3
File a complaint with the National Fraud Information Center
Contact your local and state law enforcement agencies
Contact the local and state law enforcement agencies in the perpetrator's home area
File a complaint with the shipping company you used
It the perpetrator is a business and a member of the Better Business Bureau you should also file a complaint there.

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
FBI Internet Fraud Unit http://www1.ifccfbi.gov/index.com
FTC Internet Fraud Unit https://m.ftc.gov
USPS Mail Fraud http://www.usps.com/postalinstpectors/fraud/

© 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.

---

When It Comes To eBay, Don?t Follow The Herd

Q: I want to start an online business. Since I... Read More

Everything You Need To Know About Ebay Money Making Opportunities

Ebay money making opportunities are simply the best thing to... Read More

How to Market with Niche Auction Sites

Online auctions are big business. But they can be big... Read More

Instructions on How to Put Picture on Ebay

Like many folks, you have heard of online auctions. Heck,... Read More

5 Secrets for Increasing Auction Profits

1. Include your ebay seller name, store, and website information... Read More

What To Do After Your eBay Auction Closes

So your auction closes. Now what?Hopefully you made a sale... Read More

Use Auction Templates For eBay Success!

Auction templates are simply a must for successful online auction... Read More

The Top Sellers On eBay & What We Can Learn From Them

A fascinating eBay case study is the number one seller... Read More

How to Sell Your Crafts on eBay

Artists, craftspeople and photographers are successfully selling their wares everyday... Read More

Start Your Own Business: Sell Things on eBay

The popularity of online auction site eBay has been legendary.... Read More

Taking Paypal on eBay

Accepting Paypal as a payment method might increase your selling... Read More

2 Step Secret Reveals How You Can Find Wholesale Suppliers

Have you spent hours on the internet searching for a... Read More

The Quickest Way To Have A Product To Sell On The Internet

Creating a product from scratch that you can sell on... Read More

Selling on eBay - Have You Found the Magic Formula Yet?

Selling on eBay can be very profitable and a great... Read More

Profitable Paper Piecing on eBay--Part 1

Why sell paper piecings on eBay?eBay is a great way... Read More

Dont Sell Grandmas Jewelry at a Yard Sale...Get More Money

Have some vintage jewelry? There are several ways you can... Read More

The Ins and Outs of Dropshipping on eBay

Dropshipping is an attractive marketing technique, but when you take... Read More

7 Great Reasons Why You Should Start an EBay Business Today

EBay is a great part or full time business. An... Read More

The Webs Best Online Auction Sites

The best online auction links for buyers and sellers are... Read More

Why Its a BAD Idea To Promote Hot Selling Products on eBay

Do a quick search on Google, Yahoo, or your favorite... Read More

How To Write a Traffic Pulling eBay Auction Title

Selling an item on eBay should be simple but it... Read More

Hurricane Katrina Donations Could be Many Millions More - EBay Sellers Try in Vain to Help

Yesterday I saw a mention in someone's email ezine about... Read More

How To Increase eBay Profits

Some sell on eBay to clean out their garage or... Read More

Make Money Online: Learn To Sell On Ebay

The online auction site eBay is an excellent tool for... Read More

Boosting Your EBay Auction Profits: Just Add Audio

According to a recent report, adding audio to your eBay... Read More

Before You Sell On Ebay, Take The Most Important Step

If you want to earn a full-time income selling on... Read More

Easy Money on Ebay?

Ebay was only two years old when I discovered it.A... Read More

Royal Memorabilia ?Smart Trading and Fake Dodging

This is my second article about trading royal memorabilia on... Read More

When is Wholesale Really Wholesale

You've finally found the wholesale source for the high demand... Read More

Buying At Auction: 6 Hints to Make You a Successful Bidder

Buying at auction, be it for stamps or coins, antiques... Read More

Finding Products to Sell on eBay

Do you know how many people in US are earning... Read More

The 3 Minute Auction and Minute Auction Explained

Am I the only person who doesn't know what a... Read More

Killer Tips To Succeed With eBay Auction

For just a moment, try to comprehend the power of... Read More