|
|
|
|
| The Basics | 5 ways to avoid auction rip-offs
|
Don't lose your money to crooks. Auctions still top the list of online frauds. A few simple steps can allow you to buy with confidence.
By Jennifer Mulrean
For the fifth straight year, online auctions topped the Internet Fraud Watch's list of Top 10 Net scams in 2002. The average loss? A not-so-insignificant $468.
And yet millions of users continue to flock to these sites. More than 28 million people visited eBay in one recent month, according to Jupiter Media Metrix -- accounting for the lions share of the 32 million-plus users who accessed online auctions that month.
Shop till you drop
What they all have in common is the lure of the deal. With hundreds of thousands of items and flexible prices, its like a global garage sale on your desktop. Its downright frightening to contemplate what these sites mean to the shopaholics out there.
For other users, auctions are the get-rich-quick deal du jour. How else can you explain the cottage industry -- replete with books, sites and workshops (eBay University?) -- dedicated to the how-to of making money on eBay?
Of course, youve got eager buyers seeking deals too good to be true and anonymous sellers looking to make a killing. That's a fertile breeding ground for fraud.
Feedback distortion
It wasn't supposed to be this way, of course. The original idea was that consumers would band together and create an efficient market where they largely policed themselves. Feedback ratings were both a seller's best advertisement and a buyer's best shot at gauging whether a deal was worth the risk.
But those same ratings have allowed a few scam artists to succeed. In late 2002, one seller with a seven-year track record and thousands of positive feedback ratings cheated more than a hundred eBay bidders when he disappeared without sending them their goods. Authorities believe the seller made off with about $225,000, but some victims believe it could be as much as $400,000.
And earlier in the year, MSNBC reported that some eBay users were tricked into paying designer prices for cheap knockoffs, while others bought nonexistent Super Bowl tickets on Yahoo! Auctions. The knockoff sellers built positive ratings by first buying a number of low-cost items, then using the ratings to sell their bogus goods.
Beefing up security
Despite this, auction sites continue to tout feedback ratings as the cornerstone of their fraud-prevention plans. But the sites have also added a number of other security measures, including escrow services, fraud investigation teams and alternative payment methods, such as PayPal, which allow bidders to pay without disclosing credit card or bank account numbers.
EBay's efforts, called "Safe Harbor," include all of the above, as well as ID verification, where sellers display a logo indicating they've verified their ID through Equifax, one of the "big three" credit-reporting agencies.
Many sites also offer free insurance -- up to $200 at eBay and $500 at uBid, less a $25 deductible at both sites -- though there are limitations. At uBid, for example, both the seller and buyer must be in "good standing" to recoup any losses. This means having a 4-star rating (based on a scale of one to five stars, where five is highest). Buy from a merchant with less than four stars or who is not yet rated, and you're not covered.
!5 steps to fraud defense
Despite the pitched battle raging between con artists and the auctioneers, you can still buy with confidence from online auctions. Follow these five steps to help minimize the chances of being ripped off and make it easier to get your money back if you are.
- Do your homework. Be sure you understand what you're bidding on, its relative value and all terms and conditions of the sale, including the seller's return policies and who pays for shipping. This is especially important on sites such as eBay, where a bid is considered a binding contract.
- Establish your top price and stick to it. If you've done step No. 1 above, you should be able to set a price that is a good value for the item. Most sites make it easy to set a limit and make bids automatically up to the price you specify.
- Identify the seller and check the seller's feedback rating. If nothing else, negative feedback should send up a warning. It's also important to see whether the seller's feedback rating would make your purchase ineligible for the site's insurance coverage. In addition, eBay's ID verification program offers extra assurance that the person you're doing business with is who they say they are.
- Evaluate your payment options. A third-party payment system such as PayPal, Billpoint or c2it prevents anyone from seeing your credit-card number and provides the full protection of paying by credit card. Alternatively, when buying from a seller who can accept credit cards directly, you may want to use the new single-use credit-card numbers, which -- as their name implies -- expire after each purchase. These are available from American Express, Discover and MBNA.
- Consider using an escrow service. This is especially important if the seller doesn't accept credit cards or third-party payments, and the price will exceed the amount covered by the site's insurance policy. Be aware that there is an added fee for using these services -- Tradenable, for example, charges 4% for purchases up to $25,000.
Finally, it's wise to keep a record of your transactions and all correspondence between buyer and seller, including a copy of the original listing.
|
|
|
|
