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Fraudsters who slipped past eBay’s scam screens in March, bilking about 100 buyers, have raised longstanding questions about how the online auction giant can lower the gavel on dishonest sellers.
The scam artists created fake seller profiles, then used bogus feedback to build up customer satisfaction ratings. With the trap set, they held phony auctions for laptop computers and other goods that winning bidders never received after sending payment. EBay shut down the suspect accounts, and the Los Angeles Police Department is investigating the scam, which apparently was based there.
Despite eBay’s use of credit card checks and customer satisfaction ratings, observers say the mantra on auction sites is much the same as anywhere else: “It’s always buyer beware,” says Adam Sarner, customer relationship management analyst for the Gartner Group, Stamford, Conn.
“Statistically it’s not a huge problem,” counters an eBay spokesman, noting that for every complaint of fraud, 250,000 to 300,000 auctions go smoothly. Ebay also offers insurance covering buyers for up to $175. For auctions of pricier items, it has escrow services that withhold payment until buyers receive and inspect the goods. The company also requires buyers to keep a credit card on file to authenticate identification. The information is verified when first entered, but the spokesman would not comment on whether cards are periodically checked
To help resolve buyer-seller disputes, eBay contracted with SquareTrade, an online mediation service. The two began a three-month test of the program in mid-March.
The bottom line, says to Forrester Research analyst Frank Prince: “The exchange makes the rules known to participants, but sometimes it can be spoofed.”