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
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.

More Resources

When You Need Extra Cash Ebay Fits the Bill
We all have items in our closets and stuffed in drawers that we no longer have a use for. Some of us use our free time to manufacture craft items that we give to our friends and families for gifts, and still others of us buy candles and other items in bulk to sell to family and co workers for a little extra cash.
Taxing eBay Part Deux
When my column on paying income tax on eBay profits ran it brought a wave of emails on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.Several folks argued that just because their little eBay hobby generated a little cash, that didn't make it a full blown business.
From Ebay Zero to Power-Selling Hero: Don't Be That Random Ebay Guy
If I could convey only one concept to someone who wasabout to start selling on Ebay, it would be this: no one has ever purchased anything on Ebay with this in mind--"I think I'll buy something on Ebay from some random guy and pay more than I would at the storedown the street."No one has ever said that.
Game Theory, Nobel Prize, & Auctions - Auction Primer Series - Part 1
William Vickrey, highly regarded as the founder of auction theory, was an economics professor at Columbia University when he published two papers outlining his views on auctions:"Counterspeculation, Auctions, and Competitive Sealed Tenders", 1961, Journal of Finance"Auction and Bidding Games", 1962, Recent Advances in Game TheoryIn 1996 he received a Nobel Prize "for fundamental contributions to the economic theory of incentives under asymmetric information." It's important to understand that asymmetric information is an essential component of auctions, where potential buyers have varying levels of knowledge about the value of the item.
Instructions on How to Put Picture on Ebay
Like many folks, you have heard of online auctions. Heck, even non-computer users have heard of Ebay.
How to Double or Even Triple Your Net Profit Selling on eBay
eBay Search tips and secretsThis is an example of how I used the Ebay search tab to triple my sales and profit in 1 month!I had found a great supplier of computer liquidation products using my Ebay Power seller Cloning techniques. I was excited to be selling over $1000 a day in these products (laptop parts and accessories).
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 a kind person who had an eBay auction with the proceeds going 100% to help victims of the horrible Hurricane Katrina.It struck a chord with me because I had wanted to set up something similar, but found that the "eBay Giving Works" charity program seems to be terribly flawed for us small sellers.
Losing Sales By Overcharging For Shipping And Handling
As a serious seller on eBay you're familiar with their fee circumventing rules. If not, visit: http://pages.
10 Tips to Starting a Financially Successful Ebay Business Startting Right Now
Ebay is Perhaps the easiest and fastest way to start a home based online business. Here are 10 Tips to starting a Successful Ebay Business1 - Become an Ebay ShopperBuy a Few things on Ebay.
The Secret Of The Ebay Money Machine And How To Get Your Share
If you have all the money you need, then this information wont be of much use to you!If however, like most of us, there are times when you could do with a little more, read on.At times we all come across circumstances where we could do with some extra income, be it that extra special present we need to buy, that unexpected bill that needs paying or just to make ends meet.
Auction Image Hosting for Ebay Auctions: Free Single Most Recommended Tip
It is a well known fact that the more pictures taken of an item, the better it will sell. Not only will you get more bids, but you will make a superior final profit.
Is it Antique and is it Worth Anything?
Is it an antique and is it worth anything?Would you know?At some point in our lives most of us are going to put in a position where we have to ask ourselves the question-Which of my treasured possesions should I keep because they might be worth something and which can I throw away?Would you know??We start our own homes full of enthusiasm and with all the lovely clutter that makes up our lives and that of the family, but as time goes on, the children leave home, we decide to move to a smaller house or maybe we decide to live abroad. At that stage we have to decide what to keep and what to part with.
5 Secrets for Increasing Auction Profits
1. Include your ebay seller name, store, and website information with all items you ship.
How To Cut Your eBay Fees By More Than 90%
Now, are you ready for the REAL TRUTH about selling on eBay?It's simple; don't list too many items for sale using their auction format. Instead, set up one of their stores.
eBay Listing Service : Make Managing Your Auctions Easy
Do you want to have a lot of auctions going but don't have time to keep track of them all? Trust me, you're not alone. With more and more people making significant portions - if not all - of their income from their eBay auction websites the need has arisen for many people to have someone manage the listing of their auctions for them.
Start an Easy Home Business: Become an Ebay Trading Assistant
EBay's online auctions have created business opportunities for thousands of people. Now the Trading Assistant program is making it easier than ever to start a business from home.
Auction Seller Guide To Success
When its time to clean-up around the house, some people havea hard time deciding what to keep and what to throw out.What they need is an incentive.
eBay After Sales - as Important as the Listing Itself
Your eBay listing has finished and you have made a sale, now the next important stage starts - the after sales. Again we are aiming to develop the professional image or ourselves in the customers eyes to encourage them to come back to us again and again because it is easier to sell to a current customer than it is to a new customer.
What to Sell on eBay - 7 REAL Tips for Finding Successful Products
This question has become one for the ages. There are many answers to it, few of which will actually help you.
The Benefits of Buying and Selling Locally
Shop at a flea market in Oaxaca, Mexico. Trade with a vendor in London, England.

More Auction Information:

Related Articles

Joint Venture For eBay Success Too!
Whether you're succeeding in your online auction attempts, just getting by, or failing to make money; Joint Ventures Can, and almost certainly will, Multiply Your Income Without Spending A Single Penny!Joint Venture, or JV, is a big general term for setting up creative ways to cross promote or cross market with other people Just Like You.How do I know.
From Ebay Zero to Power-Selling Hero: Don't Be That Random Ebay Guy
If I could convey only one concept to someone who wasabout to start selling on Ebay, it would be this: no one has ever purchased anything on Ebay with this in mind--"I think I'll buy something on Ebay from some random guy and pay more than I would at the storedown the street."No one has ever said that.
EBay: No Way?Yes Way (Ten Seller Themes)
Hearing that there are more than 1.2 million registered eBay users, that more than 25,000 members make five figure income as full time eBay entrepreneurs, and that more than 250,000 part timers make several thousand dollars a year of supplementary income from eBay enterprises would make anyone comment in disbelief with, "No Way".
Why Ebay Is The Best Place To Make Your First $1000 Online
I'd like to begin with a question - and I'll bet the answer is going to surprise you (it sure did surprise me!).Q.
Rent A Coder & Other Service Auctions
You may be in the market for a new website. Perhaps you may be looking for a new logo or a database constructed for yourself or a small business.
Online Auctions: How To Generate Fast Traffic From Online Auctions
Have you ever participated in any online auctions?Yes, people are making piles of cash from online auctions.And you can take advantage of this new gold rush to generatea lot of traffic to your own website.
How to Sell on eBay Internationally without Risk
eBay allows you the opportunity to sell all over the world. It is exciting to communicate with a customer from England, Australia or Japan via email.
Dropship Your Way To Ebusiness Success
Q: I would like to start my own eBay business, but I really don't want to invest in a ton of inventory until I can get a better handle on what might or might not sell. I read another column about dropshipping, but I'm still a little fuzzy on how the whole process works.
Royal Memorabilia -Smart Trading and Fake Dodging
This is my second article about trading royal memorabilia on eBay and other online auctions. We're going to explore just what items are really tradable, how and where to find your stock and mention some definite pitfalls to avoid.
USP on eBay
If you have dabbled at all in the world of Internet marketing, you may have heard the term "unique selling proposition" or USP. USP is a technique that Internet marketers use to set themselves apart from the competition.
Making Your Auction Business Stand Out From The Crowd
When my sons were growing up they started playing hockey when they were 6 years old. Each of them, in their first year, scored more goals than the rest of their team combined.
Be Realistic When Selling on eBay
As some of you know, I spent many years buying and selling both on and offline and several of my products are based upon my own experience in this area. I know that the vast majority of my customers and subscribers have an interest in trading whether it be on eBay or at the local market but more and more I am seeing people with completely unrealistic expectations of what they will be able to do.
Effective Online Car Sales on Ebay Motors
Remember back when selling online was a new experience? Dealers tried everything to sell their vehicles online. Today's market has expanded to include several hot online marketplaces.
Dont Sell Grandmas Jewelry at a Yard Sale...Get More Money
Have some vintage jewelry? There are several ways you can sell collectible or vintage costume jewelry. How much your vintage jewelry is worth depends on several things.
Free Auction Templates: How to Set Your Border Color With FOAM
If you have not heard of Foamtemplates.com yet, home of the "Free Online Auction Maker", now is a good time to get your feet wet.
How To Make Money Online : Sell On eBay
Selling on eBay can be very profitable, and is a great way to make some extra cash, or even turn it into a full-time business.If you're retired, or a stay at home Mom or Dad, or are in the market for a part time job you simply have to consider becoming a seller on eBay.
Make Money Online: Learn To Sell On Ebay
The online auction site eBay is an excellent tool for makingmoney online. Think of eBay as an online yard sale andshopping mall.
eBay - Getting More Bids Using An Auction Preview
If you sell in small niches as I recommend and are organized enough that you know what you will be listing on eBay 1 to 2 weeks ahead of time, you should give serious thought to previewing your upcoming auctions for your customers. The result can be increased sales and higher final bids.
Making Money on eBay is Really Easy
If I can do it you can.Let me tell you my story.
eBay Auction Bidding Strategies--Overcoming the most Frustrating Situation on eBay
The Problem..