Sunday, July 02, 2006
Self-Defense For EBay Buyers
Avoiding Unpleasant Surprises On World's Biggest Auction Site

By Kathleen Day
Washington Post Staff Writer
Sunday, July 2, 2006; F01

Stephanie Marhefka bought several dresses and a laptop computer over the years on eBay without problem. But the psychologist says her last purchase was a disaster: She paid $700 for what an eBay seller said was a solid wood desk, plus an additional $40 for the Brooklyn merchant to deliver it to her mid-Manhattan apartment.

The desk she received in 2004 turned out to be damaged and made with veneer, not solid wood. The seller's promise to replace it never panned out. EBay's suggestion for remedying the situation went nowhere. Two years later, the seller's phone is disconnected and Marhefka is stuck with an unwanted desk.

Michael R. Dimino, a law professor at Widener University in Harrisburg, Pa., has made 30 or so purchases on eBay without incident. But his luck ran out last December, when the PlayStation 2 video game system he paid $100 for never arrived. He soon discovered that other buyers had complained about the seller.

Goods that are damaged, counterfeit, don't match what was advertised or are never delivered remain a persistent problem for eBay and its customers -- even though the numbers represent a relatively small fraction of transactions on the Web site. How big a problem is unclear. EBay Inc. does not disclose specific totals.

The auctioneer has been an Internet wunderkind, evolving since its founding in 1995 from a folksy, funky cyberspace flea market into a Web phenomenon that's the most visited e-shopping site. Last year, 546.4 million items were listed for sale on the site, up from 79.4 million five years earlier.

While eBay officials say the vast majority of transactions take place without a hitch, company spokesmen acknowledge that the growth in online buying has been accompanied by a growth in online disputes, from simple disagreements over a sweater's color to more serious allegations. And, says eBay spokeswoman Catherine England, fraud also occurs against sellers, when buyers don't pay up as agreed.

Cracking down on such problems has been a hot topic at the annual "eBay Live!" gatherings of buyers, sellers and company executives. This year's, in Las Vegas in June, was no exception: EBay president and chief executive Meg Whitman in her keynote speech ticked off a number of improvements in eBay's online dispute-resolution process.

"We're confident that is going to result in a significant reduction in buyer claims against sellers, which will be great for everyone in the eBay family," she said.

EBay says only 1/100 of 1 percent of the items on sale last year ended up as confirmed cases of fraud. That fraction multiplied by the number of items offered for sale last year yields 54,640 cases, though some company critics suspect the actual number is much higher. The company defines fraud as either a buyer not paying for goods received or a seller not delivering a product or sending one that is counterfeit, damaged or otherwise not as promised.

Ina Steiner, editor of AuctionBytes, an online newsletter that follows eBay and other electronic auction sites, said the estimate does not include many unresolved disputes that exceed the company's time limits for consideration or were not counted for other procedural reasons. It also does not include cases in which customers persuade their credit card company to cancel the charge. And Steiner points out that by comparing confirmed cases of fraud with the number of goods listed rather than the number of actual sales, eBay makes the percentage seem smaller.

Whatever the numbers, consumers can reduce their chances for problems by following a few simple tips, eBay executives and eBay watchers say.

First, use PayPal, an eBay subsidiary that makes online bill paying more secure by acting as an intermediary between buyers and sellers. Consumers give PayPal their credit card, debit card or bank-account information. PayPal then pays for a item on behalf of the buyer without divulging personal financial information to a merchant.

Second, pay PayPal with a major credit card or, depending on your bank's policy, a debit card so you can have the issuing bank investigate claims of wrongdoing. For example, if you report a problem to Visa, the company will do what is called a "chargeback," said Visa USA executive Niki Manby. That means it will remove the charge in question from your credit card -- and, in Visa's case, from your debit card -- while it investigates your claim with PayPal.

If you prefer not to rely on PayPal, insist at least on using a credit card. Again, that will allow you to request a chargeback. Be suspicious of any vendor who won't use PayPal or accept a credit card and "wants a check or money order," England said.

Should you suspect that you have been scammed, there are several steps you can take.

If you used PayPal, fill out the dispute form on the eBay site, which can be found by clicking on the "Security and Resolution Center" button at the bottom of the eBay home page. Follow the instructions, including those asking the buyer to contact the seller to try to work things out. You have to do that, in fact, before you can elevate your "dispute" into a claim, where you are essentially applying for monetary reimbursement from PayPal.

PayPal offers two reimbursement programs. One will reimburse a buyer up to $175 for general purchases, and another refunds buyers up to $1,000 if they bought from a seller who met certain eBay criteria for trustworthiness. In going through the process, there are many deadlines to meet and exceptions to watch. "Buyers have to know what the rules are," said PayPal spokeswoman Amanda Pires.

Since the process can take a while, it pays to think a bit about how strong your claim is.

If you feel you are on solid ground -- say, you want your money back because the purchase never arrived -- Steiner and others recommend that you wait only a couple of days or so before contacting your credit card company to request a chargeback. This will ensure that you don't miss a chance to get the charge erased.

The risk, of course, is that once the credit card company is finished with its investigation, it may not find in your favor and could reinstate the charge. Further, PayPal warns customers that it will no longer process claims once a chargeback is requested. At that point, it is up to the credit card company to sort things out.

Marhefka, the New York woman who bought a desk, didn't contact her debit card company. By the time she went through the eBay resolution process, the deadlines for filing with PayPal had expired. She did go to small-claims court and win, but she can't find the seller. She effectively is out the money.

Dimino, by contrast, contacted Discover Card within a few days of filing his PayPal forms online. Discover took the $100 charge off his account, and he hasn't heard anything about it since, except from PayPal to say his claim with it had been canceled.

Dimino says he has no bad feelings about eBay and blames himself for not checking out the seller more closely. But he also says his generally positive attitude about the whole episode is largely colored by having gotten his money back, and fast.

EBay officials say another strong consumer protection is the ability to leave negative comments about a seller, which other potential buyers can see at the time of purchase. But critics of the system say it's weakened over the years. Aggressive sellers, for instance, can retaliate against consumers who file disputes by leaving negative comments about buyers, which might make other sellers shun them.

At the eBay gathering in Las Vegas, there was much discussion on how to change the system. Some buyers and sellers elect to go to a third-party mediator -- eBay suggests SquareTrade Inc. -- to work out an agreement for both sides to retract negative comments about each other, company officials say. EBay also is considering making it harder for those who lose a dispute to leave unfavorable ratings.

Beyond the comment system, the auctioneer has enlisted the help of brand-name manufacturers to police the site for fake Burberry scarves, Prada or Juicy purses, Tiffany jewelry, or other counterfeit items. "EBay cannot pretend to be an expert on everything," England says.

The company has set up a system allowing companies to contact it about removing a suspicious item. But the system has flaws. Some eBay sellers have successfully sued stores for filing erroneous complaints. And others think eBay could do more. The high-end jeweler Tiffany and Co. has sued the company, arguing that eBay is responsible for the sale of illegal goods through its venue.

Last month, eBay announced it was going to have tougher screening for overseas sellers, where it believes most counterfeit items come from.

And the final tip on protecting yourself on eBay? Just like in the stock market or at a gambling casino, don't buy something you can't afford to lose.