Most eBay buyers know to watch out for sellers who don't
deliver the goods. After all, no one wants to pay for an item and
then never have it arrive. But fraud isn't limited to sellers.
There are plenty of fraudulent buyers, too, and you can protect
yourself against them by knowing how to prevent the most common
crimes and illicit practices.
Nonpayment
Many eBay members treat eBay as a game and don't understand
or don't care that it's a legal marketplace where laws
apply. Undoubtedly, most of these are neo-postadolescents, but even
some adults aren't above acting with this kind of disdain for
the system, too. This is a real problem for sellers, perhaps the
No. 1 problem. If the winning bidder doesn't pay, a simple
auction turns into an unpleasant task of bill collecting.
To avoid this scenario, set up a system that notifies winning
bidders about shipping and handling charges and how you prefer
payment. If they don't pay after successive requests, notify
eBay and relist the auction. EBay will not charge you in this case.
Always give negative feedback to the nonpayers, but don't get
emotional. Just state the facts.
Payment Fraud
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By not shipping a product until payment has cleared, you're
doing as much as you can to protect yourself. Although counterfeit
checks, cashier's checks and money orders are easy to make,
it's unlikely that someone would use them for Internet
purchases. The culprit could be traced both through the
Internet-access account and the delivery address. Nonetheless, it
pays to be cautious, particularly when handling large orders.
Realistically, you'll probably ship before cashier's
checks and money orders clear. But you're taking a chance in
doing so. Don't ever ship before a personal check clears. Too
many eBay sellers have been burned by buyers with insufficient
funds. This is common knowledge on eBay.
Nevertheless, it's good customer service to ship as soon as
you receive payment. You might receive bounced checks on which you
can't collect, but you can factor these into your expenses.
Physical stores often have to do this. You'll build your
customer-service reputation by shipping immediately.
When to Ship
Deciding when to ship isn't easy, considering that waiting
for a payment to clear is not good customer service. If you sell
five-dozen $25 items each week and experience only one or two
bounced checks, you might opt to ship as soon as the checks are
received. Your loss is small and you need a lot of customers.
Still, if you sell three $1,700 items a week, you might want to
wait for a payment to clear before you ship your product.
If a check bounces, try cashing it again as long as your bank
doesn't apply charges. In the end, when you've lost your
patience and haven't been paid, report your loss to eBay and
give negative feedback to the winning bidder. If the loss is large
enough, pursue a remedy, such as filing a criminal complaint or
filing a lawsuit.
Credit-Card Fraud
Credit-card fraud is widespread. Stolen credit-card numbers
abound. The most quickly growing crime is identity theft. The
object of the identity thief is to get cash and merchandise using
someone else's credit card.
It's not a good idea to ship to a different address from the
one for the credit card used to purchase the item.
The future for the safe use of credit cards looks brighter. Some
cards have a CVV2 number (printed in the back of the card). Some
require a PIN (personal identification number). The use of enhanced
safety features will be much more widespread in the future. If you
can use these safety features, do so. Until then, be careful.
Credit-Card Chargebacks
Many eBay sellers won't accept credit cards. They've
been burned by unjustified chargebacks. That happens when a buyer
contacts his credit-card issuer and claims that the seller did him
wrong. The issuer charges the purchase amount back to the seller
and credits the buyer's credit-card account. The issuer is
invariably a financial institution such as a bank. Some banks do
chargebacks automatically or perform only a cursory investigation.
Others investigate, as they should. When the bank does investigate,
the bank will naturally have a tendency to favor its customer, the
buyer. Nonetheless, some banks favor the seller, oddly enough.
It's a crapshoot. But don't let someone get away with an
unjustified chargeback too easily. Contest it.
Customer Service
Plainly, credit cards are not risk-free. Walking out your door
in the morning isn't risk-free, either. You'll need to
assume some risks to do business. Accepting credit cards is one of
them. Accepting credit cards is good customer service and is well
worth the risk of chargebacks.
Fraud With a Valid Credit Card
Here's an example of how credit-card fraud can cause a loss.
The names have been changed to protect the used-to-be innocent. The
buyer, Mr. Slick in New York, sees Mr. Sellwell's new computer
in an eBay auction ad. He contacts Mr. Sellwell in Los Angeles by
e-mail to order 12 new computers to be shipped to an address in
Pakistan. He gives a credit-card number. Mr. Sellwell, being no
dummy, gets a phone number and calls Mr. Slick to verify the order.
Mr. Slick verifies the order on the phone. Mr. Sellwell ships the
computers. A month later the bank notifies Mr. Sellwell that Mr.
Slick has charged back the purchase, claiming he never ordered any
computers.
Mr. Sellwell calls Mr. Slick to find out what's going on.
Mr. Slick denies ever making the order. (Yes, it's the same
person on the phone.) Mr. Slick's e-mail address is now
defunct. Mr. Sellwell reports this to the bank, which refuses to do
anything about it. Mr. Sellwell then reports it to the attorney
general in New York state and is told the case can't be won in
criminal court. It's just Mr. Sellwell's word against Mr.
Slick's word. So, the attorney general won't even
investigate the case. Mr. Sellwell has no recourse through eBay,
because the transaction took place outside of eBay. Mr. Sellwell
has just taken a loss equal to the cost of 12 computers.
This true story illustrates two points. First, sellers can be
the victims of eBay fraud. Second, don't ship to an address
different from the one given for the credit card.
International Fraud
International fraud is so prevalent that few sellers will sell
to those outside the U.S., at least in regard to the use of credit
cards for payment. Although you might have some workable remedy
inside the U.S., as a practical matter, you have none outside. If
you don't receive a payment before you ship, you're taking
a substantial risk of loss.
Transactions using PayPal.com, an eBay company that lets anyone
with an e-mail address send and receive payments online, are an
exception. The site verifies its credit-card holders and also
allows members to use bank accounts.
Follow this advice and you'll avoid selling to fraudulent
buyers. While it's possible some transactions will still go
afoul, sales to honest buyers will likely far outweigh any
losses.
From StartupJournal.com
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