GENERAL ADVICE: Everyone buying and/or selling Items on eBay, and paying/accepting payments through PayPal will eventually come across some sort of fraud. BUYERS will pay for an Item and receive a brick in the mail (or something completely misrepresented, or something that does look exactly like the pictures in the description but is completely broken on the inside etc…) whilst SELLERS will eventually be hit by “credit card chargebacks” (when the owner of the card will reverse the transaction) coming from either dishonest buyers who receive the goods and reverse the credit card payment they made earlier, or honest credit card holders whose cards were stolen by fraudsters. I personally know the case when a BUYER would pay for a Gianni Versace jacket (value of 229 British Pounds), and receive exactly what he saw on eBay pictures – however, the inside side of the jacket was so old that it was essentially beyond repairs. I also know numerous cases when a SELLER, honestly selling an expensive mobile phone on eBay (250 British Pounds value) would be lifted straight away on his “Buy It Now” price, the money would be transferred to the Seller’s PayPal account in a second (coming from a Verified member with a Confirmed address), and then the Buyer would ask to ship the phone to another address in Indonesia, Pakistan or any of the other fraud-friendly countries. Such a fraudulent payment from a stolen credit card would be reversed by PayPal within a couple of weeks, and even if the Seller was smart enough not to ship the phone, he would lose the auction, pay all the insertion fees on eBay, and have to wait another 17 days minimum to get his Final Value Fee credit from eBay! Please NOTE: I am not talking here about some 3rd party fraud, like a dishonest postal worker who opens up the parcel and steals the item – obviously there is very little you can do to protect yourself against that (if the item was shipped uninsured). WHAT I AM TALKING ABOUT HERE IS PROTECTING YOURSELF AGAINST THE FRAUDSTER ON THE OTHER SIDE OF THE TRADE! I noticed that 99% of small trades (I’d say below 50 British Pounds or 100 dollars) go without a problem, since fraudsters are not interested in that peanut money. It is above 200 dollars where the exposure to fraud increases exponentially. The fraud problem is aggravated by the fact that PayPal usually does very little to protect the victim of the fraud. It is quite understandable from the financial point of view, as PayPal as a company does not want to lose money, so it tends to punish honest eBayers for the other people’s fraud. In accordance with their latest “Terms of Service”, if your PayPal balance goes negative, they have the right to dip into your bank accounts on their file and get the money from there. Their Seller Protection Policy is so limited that e.g. if you sell something to a Verified member from Germany or France (I am not even talking about Indonesia or Pakistan here!), you WILL NEVER be protected. The worst thing with PayPal though is that it has been hit so badly by fraudsters previously, that PayPal adopted their present practice of “limiting” and “freezing” people’s accounts ENTIRELY AT PAYPAL’S DISCRETION. If PayPal for whatever reason thinks your account has or had some “suspicious” activity, and you keep some decent money in your PayPal account, the chances are they will “freeze” it, and you WILL NOT HAVE ANY ACCESS to your own money! You will be lucky if they disburse your funds to you after 180 days (YES, after half a year!). E.g., if you accessed your PayPal account from an Internet Café, and exactly the same computer was used by some fraudster 20 min ago, you will display the same IP address for the computer, and that will be “suspicious” enough to PayPal to claim that “your accounts are linked by one or more pieces of information” and freeze you! Another Seller I personally know was selling his piece of software for USD 9.99 and once he received 34 identical payments of 9.99 dollars into his PayPal account, it was enough for PayPal to think this activity “suspicious” and freeze his account. He was then asked by PayPal to fax them copies of his driver’s license, SSN, bank statements and utility statements confirming his address and identity, he did all that – only to receive a couple of automated responses from PayPal saying that the matter was still under their “investigation”. Attempts to phone PayPal did not get him an inch further. Eventually, he was happy to receive his funds back only after 180 days!! SO HOW CAN YOU PROTECT YOURSELF WHEN THERE IS NO ONE ELSE TO DO IT? The most important single fraud prevention measure is ALWAYS KEEP YOUR PAYPAL BALANCE AT ZERO! If you are a BUYER, always pay from your credit card registered with your PayPal account. At least, if you get a brick in the mail, you can phone your credit card company and issue a “chargeback”. If you are paying from your PayPal positive account balance, you will not be able to reverse your payment, and PayPal is very unlikely to do it for you, even if they find the dispute in your favour! If you are a SELLER, immediately withdraw all the proceeds on PayPal you get from your sales into your bank account. That will reduce your losses, if you get “limited” or “frozen” by PayPal for whatever reason. I personally see 2 options how you can significantly reduce your exposure to fraud trading on eBay and using PayPal for sending/receiving payments. I am assuming here you both buy and sell on eBay, so there are trades when you act as a BUYER, and trades where you act as a SELLER. OPTION 1: You keep only one eBay account which you use both for buying and selling, and one PayPal account WHICH IS NOT LINKED to your eBay account by same e mail address. On items where you act as a SELLER you honestly state to prospective bidders: “PayPal gladly accepted, however, for security purposes, my PayPal account is not linked to my eBay account. Pls contact the Seller directly if you are intending to pay through PayPal with the address that you want the item to be shipped to.” You will be at the very least guaranteed that no scammer will send you stolen money before you even know that, as the bidder will have to at least send you an e mail with his shipping address, asking you to which PayPal account you want him to send money. If you see he wants 5 mobile phones to be shipped to his “shop” in Indonesia, and he is willing to pay you twice as much as what you are asking, and he wants you to send ASAP, you get the message, don’t you? At least you do not need to disclose your PayPal account details to him and can respond saying that you will not trade on such terms. It is indeed a very safe and robust option, however there is one major disadvantage to it – when you act as a BUYER . Instead of just clicking PayPal and paying for the items you won, you need to go into your independent PayPal account, make a manual payment to your seller, and most probably write him an e mail explaining this. It is 1) an inconvenience, 2) your seller may start thinking you are a fraudster yourself. That is why I personally prefer the 2nd option: OPTION 2: You keep one eBay account ONLY for buying, and that account is linked to your PayPal account by your e mail address, AND you create another eBay account that you use ONLY for selling (that account NOT being linked to your PayPal account). The only downside of this option is that you clock up your positive feedback on your 2 eBay accounts much slower, as the feedback is now spread between your 2 accounts. EIGHER WAY, ALWAYS KEEP YOUR PAYPAL ACCOUNT BALANCE AT ZERO! PHONY ESCROWS: There is a new variety of Internet scam going on which is actually gaining popularity – setting up phony escrow companies and defrauding both sellers and buyers. Usually the way it works is as follows – the Seller is selling something relatively expensive on eBay and receives this sort of mail from prospective Buyer: Question from eBay Member: NEW NOKIA MOBILE PHONE HANDSET (Item #) Dear Seller, Greetings from France! I am very interested in buying your phone and I can offer you a very good price for it. If you have more units please send me details and maybe I can buy more from you. Do you have a final price for it? I live in Marseille, France and I can pay you the shipping fees if you can send it to me. I prefer UPS Express or FedEx shipping couriers for more safety. Since this year I am a member of “NAME OF UNKNOWN NEW ESCROW”, www.*************.com, and I can pay you thru their services. Please review the mentioned payment method and answer me if you agree them. I can pay also the fees for this transaction. It will cost me a small fee but that's no problem since in this kind of transactions we both need to be secured. That third party it's safe for both of us and I will only use this service. I hope we can agree on something to have a nice clean deal. Please contact me only if you agree my terms at ****************@****.com because I have to buy very fast some phones. Kind regards, Mr ************ To view the item, go to: http://cgi.ebay.co.uk/********************************* Thank you, Buyer I personally know a Seller who was approached by a prospective Buyer who wanted the Seller to send his item to www.e-safetrades.com. I AM NOT CLAIMING IN ANY WAY that that particular web site is a phony escrow, however the registry of the site looks a bit “not too promising”. Judge for yourself (suspicious bits are in bold): domain: e-safetrades.com status: production organization: e-safetrades inc owner: rodney quaite email: firstname.lastname@example.org address: 6 shane court city: broughshane postal-code: bt42 4jr country: GB admin-c: email@example.com#0 tech-c: firstname.lastname@example.org#0 billing-c: email@example.com#0 nserver: ns1.mydomain.com nserver: ns2.mydomain.com nserver: ns3.mydomain.com nserver: ns4.mydomain.com registrar: JORE-1 created: 2004-01-28 02:38:02 UTC JORE-1 modified: 2004-02-13 17:22:00 UTC JORE-1 expires: 2005-01-27 21:37:42 UTC source: joker.com Another Seller was asked to send his laptop to www.smallfees-trading.com. Registry check revealed the following information about the site: Domain name: smallfees-trading.com Creation date: 2004-04-29 Registration date: 2004-04-29 Expiry date: 2006-04-29 Admin name: Brian Stanley: Admin address: Earnley House, Clappers lane, Chichester, UK, GREAT BRITAIN Admin Email: smallfeestrading @msn.com Admin phone: 01243 671999 Tech name: XD Communications, Inc. Tech address: 4800 Concentric Boulevard, Saginaw, MI, UNITED STATES Tech Email: firstname.lastname@example.org Tech phone: +1.8885756398 You can see straight away that this site is “cleaner” than in the previous example. At least you are given the phone numbers where you can call and verify some of the information. HOWEVER, there are still suspicious bits (also in bold), and given the fact that the Buyer was willing to pay significantly more than what the Seller was asking for, I personally found it to be ONE BIG FRAUD RED FLAG! My advice would be if you do escrow, do it through www.escrow.com or any other established escrow you know and trust. AT LEAST, if your counterparty wants to use an escrow that you do not know, CHECK ITS REGISTRY!!!! It is very easy – you go into www.register.com, type in the site you are checking and press WHOIS button – you will see all the information on the new escrow in a second! QCHEX RELATED FRAUD: Another fraud which I find growing in popularity is sending payments via www.QChex.com from bank accounts that were hacked by fraudsters. QChex is an established company, however, as you understand, there is not much they can do to prevent that sort of fraud (like PayPal). And of course, do not expect them to be happy to get financially hit just because you accepted a fraudulent check and sent out an expensive item to some fraudster in Indonesia! BE VERY CAREFUL HERE – MOST PEOPLE ASSUME that there is a big difference here – THEY THINK THAT unlike a credit card payment which can be reversed at essentially any time (“chargeback”), once the check cleared in your bank account, it cannot be reversed. MOST PEOPLE ASSUME, that as in the case of a stolen personal check, if the funds were stolen, the owner of the account on which the check was drawn will have to go to his bank, fill out an “Affidavit of Fraud” and work with his bank, your bank and yourself to resolve the situation. NO!!!! QCHEX CHECKS ARE EXACTLY LIKE CREDIT CARDS AND CAN BE REVERSED (RETURNED) AT ANY TIME!!! My advice would be – do not just ship your item once the Qchex cleared into your account – by eBay rules you have to send the item within 7 days of receiving the payment, which in this case is NOT the date when the Qchex was sent, but the date when it CLEARED! Give yourself those 7 days just to be safer. Most people normally check their bank account activity more often than their credit card statements, and there is a fair chance that if the funds were fraudulent, the real owner of funds will ring the alarm during those 7 days. I know this advice may sound outrageous to honest buyers paying with QChex – why would they want to wait for another 7 days? However, as I said before, 7 days IS FULLY IN LINE with eBay rules. PAYPAL eCHECKS: This is perhaps your safest option receiving payments of significant amounts thru PayPal. AMAZINGLY, not too many people know about this option, and even less insist that they accept PayPal eChecks as the only form of payment on PayPal. The reason for that is that eCheck payment feature for PayPal is buried deep with in PayPal. I have no factual ground to claim it was done by PayPal ON PURPOSE, however if you ask me my opinion, it is deliberalely “buried deep” by PayPal. This is how paying with eCheck works on PayPal: Step #1: The buyer logs on to his PayPal and clicks on the "Send Money" button. Step #2: Then the buyer fills out the Send Money screen with Seller’s information in a usual way and clicks onto the actual form of payment PayPal screen Step #3: At this point the Buyer will have a choice to pay with his PayPal account, his credit card, instant transfer from his bank account or to pay with an eCheck drawn on same bank account. NOW: When your buyer sends you money via eCheck, PayPal debits Buyer’s bank account for the funds. However, the recipient of the payment (the Seller) will see Buyer’s order status as "Unclaimed" for 3-4 business days, while the funds clear Buyer’s bank. In order to use PayPal eCheck the Buyer will need to be "Verified" by PayPal. You can see straight away, that the disadvantage of eCheck payments for Sellers is the necessity to wait for 3-4 business days to collect funds in their PayPal account. Another major disadvantage is that NO NON-VERIFIED US Buyer OR VERIFIED NON-US Buyer in some countries where PayPal exists (e.g. Norway or Brazil) will be able to pay the Seller by eChecks. This option IS NOW available for VERIFIED GERMAN OR UK buyers, still the Seller misses out on a rather large “audience”. The HUGE advantage though is extra protection against fraud, as PayPal takes 3-4 days to clear funds. EVEN MORE IMPORTANTLY, if the worst happens, the eCheck clears successfully , but turns out to be a bad check in 2-3 weeks, you have a lot better LEGAL standing against PayPal when they send collection agencies on you trying to recover your negative balance on PayPal, since essentially it was PayPal’s decision to flag the check “cleared”. DO NOT BE LOLLABYED TO THINK THOUGH THAT eCHECK IS YOUR 100% PROOF SOLUTION AGAINST FRAUD ON PAYPAL.!!! Like checks coming from www.QChex.com, PayPal eChecks can be returned at any time by the real owner of the bank account that was hacked into. The only difference here is that since PayPal acts as the clearing house for eChecks (and not your financial institution as in the case of QChex) PayPal has to accept a lot more responsibility for eChecks. That is why I personally believe this option of payment is “buried so deeply” inside PayPal. The general line of defense against fraud from Paypal eChecks would be the same as with QChex. Once eCheck clears into your PayPal account, immediately transfer the funds into your bank account (that gives you 3-4 days plus another 3-4 days) and then ship out the goods within one week of funds being fully cleared in YOUR bank account. “NIGERIAN” SCAM: Here the Seller is usually selling something expensive with a “Buy it Now” option, say a laptop, gets immediately hit on his “Buy it Now” price by a Buyer who has just been registered on eBay with 0 feedback, and gets an e mail of the following sort: HELLO, COMPLIMENT OF THE SEASON, I AM ROSIMARI D. SILVA FROM ALABAMA USA. I SAW YOUR ITEM (COMPAQ ********* Laptop (Item #***********)) AND I WILL LIKE TO BUY IT FOR MY DAUGHTER THAT WILL BE DOING HER BIRTHDAY IN NIGERIA NEXT WEEK. SO MAIL ME NOW THE AMOUNT YOU WILL BE SELLING IT AND THE UPS EXPRESS SHIPMENT TO THE ADDRESS BELOW. I WILL BE PAYING YOU THROUGH WESTERN UNION MONEY ORDER SO MAIL ME NOW BECASUE ITS URGENT. (fraudster’s e mail address) NAME-----------ADESHIDA SILVA ADDRESS---- SOME ADDRESS IN NIGERIA Immediately after that the Seller gets another e mail, apparently from Western Union which looks very convincing, something like this: Dear Seller, Western Union ® Auction Payments hereby congratulate you and at the same time informing you once again that the ® Money OrderSM sent to you from Rosimari D. Silva has been Approved. ® Money OrderSM :$2034.95 Auction Item : Laptop Auction Pin :#2212259422 Please verify that the following address (as entered by the buyer) is correct once again. *SELLER’S NAME* *SELLER”S ADDRESS” If there is a mistake in your address, please go to http://www.auctionpayments.com/SellerRegistration.as To correct the above error. This order has been approved, and will the send the the above address in 5-7 days.You CAN NOW send the items to the buyer. Moreover the above ®Pin Number will be ask before delivering the ®Money OrderSM, you will also identify your self with your ®driving licence or your ®Social security number. N.B NOTE THAT THE MONEY ORDER WILL NOT GET TO YOUR RESIDENT UNTIL THE SHIPMENT TRACKING NUMBER IS SENT TO US FOR SHIPMENT VERIFICATION IN OTHER TO SECURE BOTH THE SELLER AND THE BUYER. And if you have any question, feel free to contact our customer service at (email@example.com) Thank you for using Western Union ® Auction Payments. We look forward serving your online auction payment needs in the future. Sincerely, Western Union Auction Payments How do you know it is fraud? Look at N.B bit (in bold). Western Union NEVER requires that!!!!! If u still have doubts, go click on the provided link. If you have an account with www.auctionpayments.com and someone REALLY paid you, you will see your money there straight away, the transaction will be pending for a while, but it WILL be there! WWW.PAYINTER.COM “ALTERNATIVE”: Here people receive a message of the following sort: “If you sell on ebay and dont have paypal, most poeple that buy on ebay use paypal, so use a service called www.payinter.com, what you do is u sell, then the buyer pays payinter.com with paypal and you recieve a money order to your name in mail fast! you can sell on ebay, pay your rent, send gifts, or anything. TRY THE NEW SERVICE: www.payinter.com!!” Lets check the registry of this new web site. Here's the WHOIS adminstrative contact information: Administrative Contact: Payinter PayInter Co (firstname.lastname@example.org) +1.9874458754 Fax: +1.9874458754 Pay inter Dr Renton, WA 98055 US Do you see the 3 warning signs? 1. Payinter has a hotmail address for their admin. 2. The phone and fax numbers list a non existent area code. 3. There is no such Pay Inter Drive in Renton. Three warning signs on just the registration information is a strike-out by ANY standards!!!!