Avoiding eBay Fraud

Learn about common eBay scams and how to protect yourself fromfraud.

Occasionally, abusive behavior by eBay members goes beyond rule-breaking and may include illegal activity or attempts to defraud or harm other members. Your best defense against eBay fraud is awareness. Learn about common scams, and then take proactive steps to protect yourself.

Common eBay Scams

Here are some eBay scams to watch out for:

Fraudulent request for payment. This occurs when a perpetrator pretends to be the seller or an eBay employee and contacts the winner of an auction requesting payment or fees. eBay calls this type of fraud "transaction interception." It is much less common now that PayPal is the standard form of payment.

Fraudulent bid retraction. Bidders may fraudulently retract a bid, either as a means of learning another bidder's maximum bid or as part of a "bid shielding" enterprise in which the perpetrator retracts a ridiculously high bid at the last moment, thereby allowing an accomplice to buy the item at a much lower price.

Sales of stolen or counterfeit goods. Unscrupulous sellers continue to offer stolen or counterfeit items to unknowing buyers despite eBay's efforts to prohibit sales of these illegal items.

Fake letters requesting confidential information. Con artists often send fake emails to eBay members pretending to be from eBay or PayPal and requesting sensitive financial or personal information. This is called phishing, or an eBay or PayPal spoof. The goal is to obtain payment information or membership information in order to impersonate you for an unscrupulous purpose, like stealing your identity.

Threats to post negative feedback. Sometimes an eBay member threatens to post negative feedback unless unfair demands are met. It is often called feedback extortion.

Shill bidding. Shill bidding happens when a seller uses multiple identities (or has accomplices) to artificially jack up the price or value of an item.

How to Avoid Auction Fraud

Threats to post negative feedback. Sometimes an eBay member threatens to post negative feedback unless unfair demands are met. It is often called feedback extortion.
Shill bidding. Shill bidding happens when a seller uses multiple identities (or has accomplices) to artificially jack up the price or value of an item.

Various tools exist to protect eBay members, especially buyers, from fraud. The three tips below can help you protect yourself in eBay transactions.

Review eBay guides. eBay provides a great deal of help and advice for common frauds within its help system. Visit eBay's site at www.ebay.com, click on "Buy" in the upper right corner, choose Reviews & Guides, and enter the word "fraud" in the search box. You'll find over 600 guides on buying and selling items in almost every eBay category, including tips on avoiding fraud in that category.

Other websites, including www.fraud.org and www.auctionbytes.com, also offer help to members in avoiding auction misconduct and fraud.

Use an escrow service. An escrow service sends a buyer's money to a seller only according to agreed-upon escrow instructions. These help to avoid disputes between buyers and sellers when it comes to big-ticket (usually over $500) items. Beware of fraudulent escrow services, however. The only eBay-authorized service is www.escrow.com.

Buy from BuySafe sellers. BuySafe is a bonding service that guarantees reimbursement if a buyer is defrauded or does not receive the merchandise. Buying from a BuySafe-bonded seller ensures that you will not lose money on the transaction (at least up to $25,000). BuySafe's seal, and the accompanying statement "Bonded Seller, Protected Transaction Guaranteed to $25,000," can be used only by sellers who meet BuySafe's standards. BuySafe issues its surety bonds through a surety company and the qualification process for sellers is rigorous.

BuySafe urges buyers to click on the BuySafe seal to make sure that the merchant actually is bonded. When you verify a BuySafe seal by clicking on it in the item listing, you should see the URL www.buysafe.com/verifyseal.asp in your browser's address bar.

To learn more about eBay rules and strategies, get The eBay Business Start-Up Kit, by Richard Stim (Nolo).