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What Can You Do When Defrauded on eBay?

Posted by Cliff on from the darkside-of-online-auction-sites dept.

zeno_lee asks: "About 55 eBay buyers were defrauded by a single high volume ebay seller. I discovered all the victims by backtracking each transaction this guy had for the past month and contacting each one individually. Everyone lost between $400 to $1700 each. I then started an email group to organize action against him and to get our money back. This guy was particularly successful because he had positive feedback ratings before he decided to jump ship. " Systems like eBay are, as most have seen, extremely popular, but the one big shortcoming is that the system only works when buyers can trust the sellers. It's actions like this that break the system and if dishonest sellers can get away with fraud, auction sites will suffer. What options are there when consumers have been frauded on auction websites?

"Most of us followed the proper procedures. You wait 30 days to file a fraud claim on ebay. Then you have the option of getting $175 at most from eBay's insurance. It softens the blow, but for many it's not anywhere close to what they lost. Contacting local authorities hasn't accomplished anything nor has filing with the FBI. Many people who paid via PayPal did get a refund, but others paid via checks.

eBay has been one of the bright spots of the internet. As a NYSE listed company, you'd expect more to be done about helping customers. I hope this question comes as a warning to be more cautious on eBay or not to bid for items on ebay over $400 without escrow protection. I've learned my lesson not to do business with anyone who doesn't use paypal or billpoint. But regardless of what we learned, most of us feel helpless because eBay has not done more to get our money back. Any suggestions?"

17 of 382 comments (clear)

  1. Escrow Transactions by Anonymous Coward · · Score: 5, Insightful

    If its more than the insurance limit, escrow all transactions.

  2. Auction fraud by man_ls · · Score: 5, Informative

    Auction fraud is illegal, I believe there is a way you can file with the FTC and have the fraudelant seller fined thousands of dollars, or even possibly jailed. IIRC, something about interstate commerce, or whatknot. I think you may also get a full refund of the amount of money you were defrauded from, or a portion of the money collected by the FTC in fines; I don't remember which.

    Look in to it.

    JKoebel

    1. Re:Auction fraud by schnurble · · Score: 5, Informative
      Auction fraud is illegal, I believe there is a way you can file with the FTC and have the fraudelant seller fined thousands of dollars, or even possibly jailed. IIRC, something about interstate commerce, or whatknot. I think you may also get a full refund of the amount of money you were defrauded from, or a portion of the money collected by the FTC in fines; I don't remember which.

      Absolutely. Since this is interstate commerce, it falls under the category of Mail Fraud. Contact the postmaster in your area, as well as the FTC. You might also want to seek legal advice (I wouldn't retain a lawyer yet) to get specifics for your locality (and his).

      --
      "To err is human, to forgive is simply not my policy." --root
    2. Re:Auction fraud by sigwinch · · Score: 5, Informative
      Auction fraud is illegal, I believe there is a way you can file with the FTC and have the fraudelant seller fined thousands of dollars, or even possibly jailed. IIRC, something about interstate commerce, or whatknot.
      The US FTC doesn't usually handle individual consumer complaints. However, they are interested in finding patterns of abuse and ripping new assholes for serial criminals. It might not immediately help, but filing a complaint on their web page only takes a moment. The various Better Business Bureaus serve a similar function. You can also send complaints to you state/regional Attorney General.
      --

      --
      Kuro5hin.org: where the good times never end. ;-)

  3. I think I read a suggestion by JoeShmoe · · Score: 5, Interesting

    I remember back a couple years ago when eBay frauds were big news...some article was suggesting that whenever possible involve the US Mail system. Have them mail you a quote, or mail payment information or such.

    The thing about it is, mail fraud is a federal crime which much higher penalties than other forms of fraud (Internet fraud being generally unclassified). If you get ripped off online, you can try to complain to your local police, or the police in the criminal's jurisdiction (if you can find it) but you will probably get nothing.

    In you involve the mail system, then the it becomes a federal issue that is tackled by the Office of the Postmaster General and/or the FBI?

    Don't quote me on this, but it would be definitely something to ask your local post office about. If a seller is legit, they should have no problem putting some information on paper and mailing it to you, right?

    Other than that...the other thing that was suggested is use a credit card. Paypal had a big fight with credit card agencies on whether people can dispute Paypal charges for fraudulent auctions, but I seem to remember that the courts came down on the side of consumers (yes they could dispute) forcing Paypal to get insurance.

    Sorry I couldn't find a link, but maybe it helps narrow down your searching?

    - JoeShmoe

    --
    -- I wonder which will go down in history as the bigger failure: the War on Drugs or the War on Filesharing
  4. The system works by CmdrTroll · · Score: 5, Informative
    If you pay by credit card, you will not have to pay for fraudulent charges because it is the merchant's burden of proof to show that you got what you paid for. Almost all banks are extremely sympathetic to customers who are victims of fraud, because banks (who make about 2% commission on every single purchase on your card, in addition to interest) want to keep you as their customer. They don't have any reservations about sticking it to a bad merchant. And yes, if you paid through PayPal, you can still dispute the charge and win (regardless of what PayPal tries to tell you). I've done it before - because PayPal's customer service takes weeks to respond and my bank (MBNA) is much faster and nicer.

    If you paid by check or money order, though, you're just plain silly. Just because a seller has a fancy auction page or a good feedback rating doesn't mean you should send a check for $400-1000 to a total stranger somewhere else in the country and expect the seller to make good on it. Where's your common sense? People get busted for that all of the time and auction sites account for the majority of fraudulent online activity. So think before you pay next time, and good luck getting your money back.

    -CT

  5. Duh ... use escrow services. by Dr.+Zowie · · Score: 5, Interesting
    Escrow services like Tradenable (formerly i-escrow) and even Billpoint let you trust the largish corporation (which has much more incentive not to cut and run) instead of the seller. When buying anything over $100, I always use escrow. Sure it costs a couple of bucks more, and there's a tiny amount of added hassle (you have to go back to the web site to verify that the stuff arrived on time), but the security is great and the service really isn't very expensive.

    On several occasions, shady-sounding individuals have backed out of auction deals with me, after I suggested using Tradenable. To me, that's the surest sign of a huckster and a good indication that escrow works.

  6. Re:Paypal doesn't give you much more protection by soren · · Score: 5, Informative

    I've used paypal numerous times successfully w/o a problem. Whether sending money from my bank account to someone just for the purposes of cash or purchasing on eBay. There was one problem with an eBay transaction. Suffice to say, the guy never fulfilled his obligation and proceeded to not respond for a month, then I notified paypal, they did their investigation and within a week I received a phone call notifying me that they had refunded the $539.00 -- problem solved. I'm not sure whether the guy had his paypal acct. yanked or who knows what action paypal took, but, problem solved on my end. ;)

    --
    :wq
  7. The problem with Reputation... by Ted+V · · Score: 5, Insightful

    The problem with reputation is that it's just so easy to buy! Lets say I go place 20 bids on random crap and my $1 bid wins. Hey, I just got 20 points of reputation for $20! Then I can sell the crap back for maybe $.50 and I have 20 more points worth of reptuation! For literally $10 (and some free time), you can get 40 reputation points from ebay. The whole reputation system is flawed because untrustworthy people are allowed to give out good feedback. Who says that just because someone was honest with a $1 transaction that you can claim they are a "Good trader, very prompt"? What do you know about whether that person is really honest? Yet people give all the feedback to others because they want good feedback in turn.

    Listing how much money was spent as part of the feedback doesn't really help either. Just set up a ring of ebay accounts, bid on each other's stuff, and have it sell for higher values. Sure, ebay gets a small cut, but all you're really doing is buy reputation from ebay which you use to screw other people. Suppose I forge $5000 of transactions on ebay and they take 3%. I just bought an enormous amount of reputation (trustworthy for $5000 in transactions) for $167. It shouldn't be that hard for an unethical person to go make $500/scam off of 20+ people.

    Lets face it... Reputation doesn't mean anything.

    -Ted

    1. Re:The problem with Reputation... by choprboy · · Score: 5, Informative

      The problem with reputation is that it's just so easy to buy! Lets say I go place 20 bids on random crap and my $1 bid wins

      Well, gee... Your saying maybe we ought to look at the actual circumstances of the transaction rather then some overall number? Anybody who does Ebay business regularly should look at the seller's actual auctions. More than once I found deadbeats trying to build up feedback like this. Usually a ring of new accounts, all selling ridculous things like "Used condom" or "Banana peal" for $0.01 that closed 5 minutes after it opened with the "Buy it Now" feature. Easy... report them, accounts closed, move on with life.

      Just set up a ring of ebay accounts, bid on each other's stuff, and have it sell for higher values

      Well, that's a good idea too, it's called "Shill bidding" and it's against the rules. Again, by looking at the actual auctions you can easily detect this. Don't just look at the feedback of the seller, look at the feedback of those who left the seller's feedback, and the feedback of those who left the feedback of those who left feedback. Are they all the same people? Are they all new users whose account were all created the same day? If so, it's a pretty obvious clue there's some fraud going on.

      Most criminals aren't very smart, instead they just rely on others being dumber than they are.

  8. Escrow, with a twist... by chhamilton · · Score: 5, Insightful
    Perhaps eBay should take a step forward here and make escrow transactions standard. If eBay itself would act as the escrow agent, and build it into their infrastructure, everybody wins. Typically, escrow fees are pretty tiny, and in reality, they make sense for most transactions.

    If eBay set up a decent, reliable, and affordably priced system and made it inherent in the auction process, the masses would follow.

  9. Same problem from other direction: bad buyers. by aussersterne · · Score: 5, Interesting

    What about all of the bad buyers?

    I both buy and sell on eBay. I've stopped listing auctions with the BuyItNow! option because too many of my auctions have been ended when a brand new bidder (i.e. someone who joined eBay within the last couple of days) comes and uses BuyItNow! to end the auction, then disappears completely and is never heard from/never logs into eBay again. Negative feedback doesn't help in this case, because these bidders inevitably have a feedback of zero or at best one and don't care if they lose one point.

    Even without BuyItNow, I've had a number of auctions close and then never heard from the high bidder again, forcing me to relist and costing me time and money. In the worst case, one of my auctions closed at just over $300, the buyer e-mailed me a simply said "I changed my mind I don't want it sorry" and when I left negative feedback saying so, I of course got the retaliatory "FRAUD! Took my money and never delivered!" feedback. Legal action got the feedback removed, but that cost me as well.

    I think that eBay should require a bank account number as a pre-requisite for buying or bidding. You agree when you join that if you default on a bid or if you are accused by n people of fraud, your assets will be frozen until the situation can be resolved and those involved can get the money owed to them.

    --
    STOP . AMERICA . NOW
  10. That ol' stamp and envelope thing... by sphealey · · Score: 5, Informative

    For any significant amount of money on eBay I send the postal money order by U.S. Mail. The penalties for mail fraud are quite severe and the post office does like to investigate reports of same.

    See if any of the buys used the U.S. Mail and/or a postal money order. If so, have that person or persons file a complaint with the postmaster of their zip code, and have him reference the other cases that you have dug up.

    sPh

  11. Do what I did... by BoarderPhreak · · Score: 5, Interesting

    I reported him to the following agencies:

    - United States Postal Service
    - Internet Fraud Center
    - FBI
    - Discover Card
    - Ebay
    - Billpoint
    - PayPal

    This guy is currently wishing he never heard of me, with several charges levelled against him, including:

    - Mail fraud
    - Credit card fraud
    - Grand larceny
    - Plus the fact this was all interstate, making it worse.

    I also tracked his ass down using every known resource on the Internet, and ended up with his home address, home phone, AERIAL PHOTOS OF HIS HOUSE and more...

    Needless to say, my money has been safely returned and he's in a world of shit. Sorry, asshole.

  12. Wanna buy a bridge? by MadCow42 · · Score: 5, Insightful

    I'll sell you and each of your friends a bridge that they can call their own for the meer sum of $25 each.

    After I've defrauded you on this, you won't feel the need to pursue it personally, because after all it's only $25. This is great, because I can now go and defraud the next guy, and eventually become a millionaire.

    The point is, "these losses weren't too important" just don't cut it. You have some sort of responsibility to ensure that these people don't f**k over other people too. If everyone just rolls over because it's too much hassle, they'll never stop because it's profitable.

    Please, for OUR sake, do NOT forget about these types of things, and pursue them as hard as possible, no matter how trivial $25 or whatever seems to you.

    Thanks,
    MadCow.

    --
    I used to have a sig, but I set it free and it never came back.
  13. I just got done with a fraud battle on Ebay... by greygent · · Score: 5, Informative

    I just got done with a fraud battle on Ebay and this page was of immense help, and eventually got me my full money back from the bastard who tried to swindle me:

    http://www.mindspring.com/~bookdealers/ripoff.ht ml

    Pay particularly close attention to the sections on reporting the fraud to the IFCC section of the FBI, and the Postal Inspector fraud complaint form.

    In the postal inspector's case, when you file a fraud report, they notify the person that they're being investigated. This led to me promptly getting a $600 money order from the criminal in question. They actually had the money order to me in a day, and it cost them $25 to mail it. File reports galore, and try to get as much information about the person that you can.

  14. USPS Postal Inspection Service is our friend. by Multics · · Score: 5, Interesting
    I got whacked by a similar deal. 12 positive feedbacks and then wham, 6 of us were ripped off for HP laser printer parts. Thankfully, TWO of us paid by USPS.

    Between the TWO who paid by USPS we crossed the felony fraud line for them. It took them about 2 months to find him (he skipped his address and skipped on his roommates too). Though all I got back was ebay insurance (so far), USPS PIS did find him and jail him. I've not heard if they'll go for recovering all of our money, but eBay was very friendly with the USPS setting up the case.

    Moral: NEVER PAY BY ANY MEANS BUT USPS. People who only accept PayPal are likely to be trouble because they know that there can't be a USPS inspector knocking on their door if they exclude that mechanisim for payment.

    -- Multics