Thinking of Selling on eBay using Paypal? Think Again | Hacker News Reader

Thinking of Selling on eBay using Paypal? Think Again

codenerdz.com

989 pointscodenerdz388 comments

The only logical conclusion that can be made from eBay's and Paypal's policies is that they no longer want small sellers to use them. They want professional sellers to sell from their site, people who are used to dealing with chargebacks, etc, and can foot the bill when it comes to chargebacks/fraud. They want to facilitate BUYING from regular people, but make SELLING by regular people very difficult.

There is no other explanation for getting rid of buyer reputation and providing no protection to sellers. They only want people who don't care about buyer reputation, and have deep enough pockets and the expectation that chargebacks and fraud will occur. If they deal with these larger customers, this increases their selling volume (and fees) and decreases their support costs.

Of course. If you look their website now and their SEC filings, it is clear that eBay is not any more "garage sales on internet with auctions". It is more like discount store.

Are there any of YC companies building "garage sales on internet"?

just wondering how would you expect or how do other companies currently avoid fraud. The costs associated or added with constantly investigating fraud would almost seem like a deterrent in making a system useful.

If you look at Paypal's 10-K, they assume an automatic writeoff 4% of their revenues due to losses from chargebacks.

Almost seems like Paypal is making an effort to transfer that cost from their books to sellers.

I really don't know. For example, as MVP they could actually manually verify accounts (verify Facebook login, friends on that account, etc.). Also, at the beginning, maybe to allow only people in same city to do transaction. I know it is hard, but somebody much smarter than me could do it.

Chargebacks are a part of doing business any time you accept credit cards, whether paypal is your merchant provider or not.

The problem here is Visa/MC/Amex etc. Since you almost have to accept credit card payments these days, you're stuck with their terms. Since the banks all provide credit through these card providers, there's very little competition.

There are numerous ways to virtually eliminate CC fraud but the card providers aren't interested in taking those measures, and neither are the big retailers. They are happy to accept the ~5% loss on chargebacks, because credit card users spend something like 30-40% more per transaction than cash payers.

What we need is a competitor that disrupts credit cards altogether, not just merchant processing. Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy. Cards are obsolete anyways. The processing side is obsolete, we don't need terminals that dial into a central processing machine, we can use the internet. The credit side (banks provide the credit line you get on your card, not Visa/MC) will take a bit more work, but we can combine it with the rise in peer to peer lending: you seek a credit line from a crowdlending site, not Chase bank.

If the OP were the merchant for the credit card transaction, he would have provided the extensive documentation described and I have no doubt at all that the chargeback would NOT have gone through. (The evidence of previous fraud would probably have led to closing the card account also.)

But the OP is NOT the merchant... PayPal is. I do not think that the fundamental problem in this case is the credit card system. (Although there certainly are OTHER problems with the credit card payment system that make it tempting to disrupt - but nearly impossible to disrupt because of entrenched powerful interests.)

Exactly! Paypal is the middleman here and they are preventing me from going directly to the credit card issuer and providing them with extensive documentation proving fraud.

Not only that, they are making it extremely inconvenient to have any sort of communication with them

Something is beyond wrong if a verbal "not as described" lets them keep the object. That's such an obvious scam/abuse there should be a legal issue with it, if paypal is not pursuing actual proof. They are acting in bad faith because their contract/terms of service is not even plausibly verifiable. The CC company requires an affadivit to issue a refund; if Visa gets wind of this guy with 5 refunds to the same card/provider/etc (thats 5 perjured affadavits) it should be a verifiable problem with paperwork. Paypal should be in the business of verifying this; not denying it. Its so basic as to be beyond belief. Apologies for preaching to the choir.

If the seller accepts returns, would that solve the problem? I apologize of the OP mentioned whether his item was returnable -- I did not see him say that.

What we need is a competitor that disrupts credit cards altogether

http://www.dwolla.com

ACH chargebacks are even worse than CC chargebacks, from the perspective of being able to fight them.

As soon as a payment touches any of the existing networks, it's at risk. The only way to fix it completely (or at least significantly improve the situation) is to have a system that's completely isolated and properly secured; i.e. every payment authorization requires true multi-factor authentication.

This is the thing that drives me crazy. It's the 21st century, so just about every major bank in my country provides two-factor authentication for their customers to use their own on-line banking facilities and numerous similar alternatives are available as well. And yet if a company sells someone something, there is still no guarantee that when the money hits their account they actually have it short of real legal action to show that they must give it back. Moreover, because someone else might get stuck with that responsibility if the merchant bails, merchants have to jump through absurd hoops and accept all kinds of crazy one-sided terms just to get into the game.

I wouldn't mind so much if consumers were actually advised of their ability to use these chargeback facilities, but apart from Direct Debits it seems almost no-one gets told about this here in the UK. Certainly no bank or credit card service I used had ever told me before I started running businesses and seeing it from the merchant's side. The one time I got screwed as a consumer and a chargeback would have helped because it wasn't really worth the time/hassle of figuring out the courts' small claims procedure, I didn't know I could do that so the merchant won by default anyway.

So right now, the do-I-have-it-or-don't-I question over funds is a huge burden for merchants here, yet the supposed protection it offers to consumers here is mostly illusory as well. Nobody wins from this kind of arrangement. The entire payment services industry needs to die and be replaced by something fit for the 21st century, where you simply can't transfer money electronically without robust proof of who you are, and you can't accept money electronically without robust proof of who you are, but given such proof transfers are final as soon as they are confirmed. Is this really such a crazy idea?!

It's interesting that you mention Dwolla. Their approach is indeed to prevent fraud rather than charging back after it happens, but when people look at the hoops that Dwolla makes them jump though (linking a Facebook account, etc.) they usually go running right back to credit cards.

I think you're completely missing the point, because there's a large grey area that requires human intervention in deciding if fraud occurred. The larger the volume the larger the resources needed to review every single claim.

Bitcoin enables decentralized digital wealth transfers.

No chargebacks, escrow services for dispute handling, deflationary currency. Need I say more :)

all features, not bugs :)

You know what they say, some people's bugs are other people's features :) Well... actually I think noone says that, but they should start...

> Eliminate VISA and MC, who are basically skimming 2.5% off our retail economy.

This claim doesn't make much sense. For example, an economy with RGDP 150,000 units, of which 2.5% go to Visa/MC, is not worse off than one of RGDP 130,000 units, of which 0% go to Visa/MC.

That's a false dichotomy – there's (at least) a third option – a service that doesn't skim so much off the top – 2.5% made sense when credit cards were a rarer payment method, used only for a small fraction of transactions.

Now, nearly everyone has and uses multiple visa or mc branded credit or debit cards, yielding trillions in transactions, making billions for Visa/MC.

In short, they've grown much more profitable due to their scale and none of that has value has been returned to businesses or consumers in via rate reductions, AFAIK.

> there's (at least) a third option – a service that doesn't skim so much off the top

I don't disagree with this at all. But I don't read the comment I was responding to as having come from the thought process of

"If Visa/MC charged a 1.5% cut instead of 2.5%, the economy would be 1.5% more productive than it is now, which means that, compared to that more enlightened hypothetical world, the non-Visa/MC portion of the economy is only 97.5% what it should be."

If you think credit is related to the size of the economy (and I do), you need to ask, where did that 2.5% number come from? Saying that Visa's entire fee represents nothing but a drag on the economy is very much of a piece with the historical loathing of merchants and usurers, who, as anyone could see, did not create value.

I should also point out that, if the assumption you start with is "the drag on the economy (relative to potential) from credit card fees is equal to the amount of those fees", you should quickly notice that the directionality is wrong.

In my example example, cutting fees to 1.5% (from any level at all, interestingly) requires the economy to expand by 1.5%. That's not a coincidence -- cutting fees to 0.1% would require the economy to expand by 0.1%, except that that's completely implausible; cutting fees further should cause the economy to expand more, not less.

With that in mind, it might make sense to measure against the hypothetical where credit card companies offer their services for free, but even then there is no obvious relationship to the current level of their fees. I have to stand by my assessment that saying Visa/MC are skimming 2.5% of the economy doesn't make sense. How'd we get that number?

That is correct

Still, money handling/cheque handling has costs as well.

Cheques are much more prone to fraud, money has some fraud cost (% of fake money, not sure how it is, but it's not that big) and costs of handling and moving the money (hence, cashback reduces this cost)

Shameless plug - trying to help marketplaces with that problem with Credport (https://www.credport.org/).

The same way AirBnB does it: verify everything (phone, email) and provide social context ("You and the seller have 2 friends in common on Facebook"). You could go a step further and remove as much anonymity as possible.

Of course, there are other ways to stop fraud which you'd want to do as well.

paypay already has your credit card and banking information. I think its more about having staff investigating it. For example in this type of story it may be clear, but otherwise its your word vs theirs type situations. With volume of sales, and probably the number of transactions, I imagine its not cheap.

Facebook has the infrastructure and population coverage to facilitate provide this service.

They could charge for "Verified by Facebook" services. Hell, they could replace eBay and PayPal while they're at it, not to mention AirBnB, CraigsList, etc.

They're stumbling around looking for a business model as it is, I don't know why they don't get into this. Sure, easier said than done maybe, but if anyone can do it, it is Facebook. Becoming the one site that has the single largest repository of known internet identities within it is the hard part.

I've said the same thing for a couple of years. Their Oodle marketplace is anemic, despite having the ability to combat fraud issues in a way eBay, Craigslist, etc will never be able to.

So bizarre to me they don't move into in a serious way. ecommerce

In the instance of online auction marketplaces, you could create an escrow system where the seller ships the good to the auctioneer's warehouse (with some practical limitations) who verifies condition and that the good is legitimate (not stolen). Buyers pay money to the escrow company (e.g. Ebay) who ships the goods and send the money to the seller. Any chargebacks go against the escrow company who also happened to have validated the good and can use TOS/Legal Agreements to fight the chargeback on grounds of item quality. In this situation, they could also probably finagle a decent relationship with the CC processors to streamline the process and weed out fraud.

Is that workable? Quite possibly. Is it probable? Probably not.

Edit: Spelling

Yardsale meets your description and is YC backed.

Yardsale does meet the description of "garage sale on the internet", but in the Craigslist sense more than the old-eBay sense: it's for selling stuff locally, not for selling worldwide and then shipping it. For some things that works fine, but for long-tail items with niche popularity I found the old ebay quite useful, because you could reach a non-geographically-constrained audience, increasing the odds that someone somewhere would want your obscure thing.

Nowadays I sell niche music and books on Amazon Marketplace, admittedly, so one chunk of that market is spoken for by a strong incumbent.

"Yardsale does meet the description of "garage sale on the internet""

How do you figure?

There is no other explanation for getting rid of buyer reputation and providing no protection to sellers.

I disagree. Back in the old days when I used to use eBay before they removed buyer feedback, it was considered unwise to ever leave a seller negative feedback because they might turn around and leave you negative feedback in retaliation. By removing buyer feedback, it allows buyers to leave unbiased seller feedback without fear of retribution.

One could argue that seller feedback is much more important than buyer feedback because the buyer has to pay first and then trust that the seller will ship them the item as described in a timely fashion. Ideally, the worst thing a buyer should be able to do is not pay, in which case the seller just has to start over and re-list the item in a new auction. It seems like the problem here isn't a lack of buyer feedback so much as a lack of due process for chargebacks, which ends up enabling fraud.

I always thought the right solution to this problem was to wait for both parties to submit feedback before revealing the feedback.

A bad seller (or buyer) could avoid negative feedback just by never leaving feedback, meaning the buyer (or seller) would never be able to publish theirs.

oDesk gets around this by having a time limit on when feedback can be left. If one party fails to enter feedback, then it posts the other's feedback anyway.

Parties can lobby to have the other person change the feedback, but only if they lobbied party wants to. Seems like a workable system to me and allows each to be honest without consequences like eBay's original system.

That's genius. eBay could really learn from that. Removing buyer feedback entirely is a really big hammer.

Then you place a time limit on submitting feedback. Say you have 1 week-1 month. Still not perfect since it sounds like in the posted scam he didn't find out for over a month, but it might help in many cases.

E: Also just had another idea. You could have a way to edit your feedback after the original deadline in case of fraud. If you open up a dispute like the one posted then Ebay could review the edit's on a case-by-case basis.

Online sites like eBay, always want to reduce their personnel costs. Dispute resolution should be a last ditch effort that exists to identify loopholes in a system that should ideally NEVER need dispute resolution.

They need to balance that cost reduction with lost revenues from the perceived worse service.

Interesting idea, but it still wouldn't have helped in the case of the post-transaction chargeback, as described in the article. The scammer would likely still get a positive review (because the seller had been paid) only to discover the scam weeks after the fact.

If you made public details of things like chargebacks and other conflicts after the event that might help.

This agrees with my entire point, which is that eBay has shifted towards a buyer-oriented site. They offer asymmetric protection for buyers over sellers. Buyers know more about the sellers than sellers know about buyers, making it much more buyer-friendly and more risky for sellers.

I completely disagree. I use Allegro.pl(which is like Ebay,but actually was first to the market in Poland and is absolutely HUGE there, Ebay tries to establish itself in there but is without any chances), and both parties can leave feedback - and I have over 7500 reputation, both for selling and buying, and I have left more than a few negative feedbacks for a seller, only one of which resulted in a counter-negative feedback - and it was removed within a few days after I complained to customer service. Oh,and for the payment methods - they work with every single bank in Poland, accepting quick, instantaneous bank transfers directly from your account, no credit card needed,no need for shitty PayPal - but if you want to they will happily accept any credit card. Or as a seller they keep your money in your Allegro account, and pay it out to your bank account daily - without any additional fees. I have personally had so many problems with PayPal that I hate that company wholeheartedly.

Allegro.pl is a good example of how you can get auctions right. I think they watched eBay closely and drew conclusions — they place a HUGE emphasis on fighting fraud.

As a result, it works extremely well. I have >150 transactions, both as a buyer and as a seller, with not a single problem. Oh sure, there is fraud, but it's marginal, and crazy stories like the OP's are unheard of.

This is why eBay, in spite of many efforts, is still pretty much nonexistent in Poland, while Allegro's traffic is booming.

What way are they handling fraud?

Well for start, buyer needs to send the item back.

What stops the buyer sending back an empty box?

I would imagine the buyer doesn't get to charge back until the seller has the item again?

If the reason is that you might get negative feedback in return, why not make both parties submit feedback blind and only publish the feedback once both parties have submitted it? (and make it not editable)

I really like this idea.

The other thing I'd add is that basic information about conflicts should be made public on someone's record, along with a high level outcome (and possibly additional comments from the parties involved) so these things can be part of someone's decision making process.

Having recently sold an iPhone on eBay and been concerned about problems like this, I wish eBay would allow non-professional sellers restrict bids to professional buyers.

Thousand times this. Their buyer filtering options are laughable.

If they were to let me limit sales to people with certain types of addresses, purchases of certain value, a reasonable number of feedback, etc, that would be very helpful in reducing a chance of being defrauded

eBay makes money off the listing fees. They don't care whether you get your item or not.

If you never get your item, you stop buying, so people stop selling, so people stop using ebay ...

If they allowed that, almost all sellers would do it for security, and then there would be no ways for buyers to get any feedback.

In fact, when I was placing my first bids on eBay, some buyers would cancel the auction or retract the bids because they didn't trust me. I understand their position, but how are you supposed to get feedback if sellers won't sell you anything?

Right, which is why they should only allow non-professional/low-volume sellers to make this restriction, that way new users can still buy from pro sellers to get some reputation, or people selling in odd-ball domains where such a restriction overly harm the seller.

If you sell, say, more than 500 items a year, you turn into a professional seller and you can't be as restrictive, but you are doing enough business for the occasional scammer to not make a large impact.

Of course, I think eBay is harmed relatively little by scammers like the one in the OP; so I can see why they haven't done much to prevent it at risk of loosing real business.

How many sellers would use a multitude of accounts to get around this restriction?

To play devil's advocate, how could similar businesses make better decisions? For example, buyer/scammer "A" sends money via credit card payment to seller "B"s paypal/dwolla/freelancer/etc--"C"s account, who then withdraws the money to his bank. Buyer "A" then files and successfully gets a chargeback from the credit card company, who debits company "C".

Now C is wrongfully in the red, and they need to make it back somehow. Their only options? Either get it back from B's account or take the hit--which can really hurt smaller companies and startups.

What would you do in company C's position? It seems that the real bad guy here is the credit card company, TBH.

I sort of agree, but again, Paypal is also enabling this to continue by refusing me the chance to bring my case to the credit card company.

Short of legal action, they would not let me get the contact info for the buyers credit card company in order for me to deal with them directly.

I agree. The consistency of their changes that always disadvantage small sellers, reveals intent.

But I don't agree with your suggestion that eBay-PayPal is doing this just because they are greedy. I think eBay-PayPal is run by people who take the Elite viewpoint - they dislike that the Internet is giving so much freedom and empowerment to the common people. And they want to reverse that.

Ebay originally provided a new and wonderful thing - a facility for individuals to trade easily with each other worldwide. I think that eBay has for a few years now been doing their best to destroy this capability, without being too obvious about their intent.

Another comment I have, is that eBay's practices are a very good proof of the social evils that result from software method and business practice patents. If others could provide a trading service that competed with eBay, but was sane and helpful to customers, eBay would be out of business so fast they'd wonder what hit them. (And same for PayPal.)

Ebay needs a competitor.

I stopped selling things like this on eBay a long time ago because I do not sell things frequently enough to keep up with the scams du jour.

My local craigslist is where my for-sale items now go. Sure, I may get a little less than top-dollar for an item, or it might take a little longer to sell, but I'm never left with some after-the-fact dispute where I have no control (note: I'll only accept cash).

eBay was fun while it lasted, but then it became a giant flea market with basically semi-pro retailers looking to sell things, and a whole bunch of random scammers. Intermixed in all that was the occasional legitimate "amateur" seller.

For the very few times I've purchased something on Ebay in the last few years, it's always been from "pro" sellers with storefront type setups. The hassles of dealing with amateurs selling poorly described items, taking too long to ship, etc. was also not worth the "deal" I was getting.

A true "amateur to amateur" auction type sales website is an area begging for competition...

Shameless plug; we've built one for automotive enthusiasts: https://www.styckyd.com

Our target is to serve the C2C market and make shipping less painless as well as eliminate some of the risk on the buyer's side. With the current climate for buying goods online companies serving the space are at risk for opening themselves up to scams like this one by buyers. The reality for anyone accepting credit cards is that you're at the mercy of the buyer.

What's the value prop for "make shipping less painless"? :)

Because we're targeting consumers, they're less familiar with shipping than businesses. Our system provides buyers with accurate shipping costs and prepares labels for sellers when their parts have been purchased.

All they have to do is put it in a box and drop the package off.

This also means that we can eventually grow each seller's addressable market within our system as we'll handle cross-border shipping on their behalf.

I think grandfather comment is poking fun at your (presumed) typo: your earlier comment should probably say "making shipping less painful" rather than "making shipping less painless."

Oh my. You are correct. Long day.

How do you pronounce that?

My mind read it as "stickied".

I had read it as "Sticky-D", which didn't evoke the best imagery. Yours is much better.

I think "Sticky-D" is a much better interpretation. It is got "swag" or "je ne sais quoi" for the more literate crowd. But "stickied" makes me think of old ladies and post-it notes.

Correct.

We built it to integrate with vBulletin forums: https://partners.styckyd.com

Our brand name is taken from "stickying" a post on a forum.

To me, it looks like Stuck Kyd (kid). The link underlinining combined with the lack of other vowels is messing with my brain. (Also, I tend to read things from the last syllable to first when learning how to pronounce.)

You need to get a proper domain name if you are serious about this as a business. Go get $10,000 and buy stickypost.com if you still like the name. Look at the comments in this thread discussing what it means.

Maybe. The domain name isn't perfect, I'll admit, but it's far from the key thing standing in the way of the success of the product.

Lynyrd Skynyrd called...

stick-id, maybe?

just like it's spelled.

Pretty sure its "Stock Yard"

But it's not.

That's how I read it initially. Letters didn't match up perfectly, but with the weird, shorter name, I didn't give it much thought.

"stick it"?

Secure Tading? Is that a typo or something I'm not familiar with?

Dude, why can't I just browse a bunch of products for sale? That's all I want to do, I don't want to sign up to your site. I just want to see what's listed and possibly buy some parts. I'll probably check back again tomorrow if I see a few interesting things, probably in my lunch break at work. I've been thinking about getting a Garrett 3071 turbo kit but haven't given into the temptation yet -- but probably after seeing one listed for a few days I might cave in and buy it on impulse.

But I won't, because I don't want to sign up to be able to window shop...

and I stopped looking at your site after about 15 seconds as a result.

https://www.styckyd.com/search

Being terse in this post bc I'm working atm and don't have much time.

a) Link either doesn't exist on main page or isn't immediately apparent enough.

b) Consider this page - http://www.boostclassifieds.com.au. Today is the first time I've seen it - visually it looks horrible and potentially untrustworthy. If I may say so, your site looks freakin' incredible. But on their site, the first thing my eyes land on is a gigantic list of categories. It takes me FIVE seconds to find the link to "turbos and superchargers" and one click later I'm where I want to be, looking at what I want to buy. Which I guarantee I'm doing right now - in fact I've spotted a couple of GT280RS that look pretty good to me.

I had to navigate through so much shit to find the search page and look for turbos on your site that I didn't actually want to bother.

Thanks for that feedback. Not terse at all.

I'm having trouble with the balancing act. I definitely need to improve the searchability of the site. At the same time if I put everything front and center it'll become pretty apparent that we don't have many listings yet. Will that just turn people away? I'm not sure yet, I don't have the data to say.

I'll think more on this.

Yes, not having a lot of listing will definitely turn people away.

But so will a site with no listings at all, as yours appears.

The first thing you should do is split the site: A big "For sellers" / "For buyers" right at the start, then each group can navigate their own section. Perhaps a third button to talk about what you do, what's special about your site.

Hiding essential text is nearly always bad

You've gone too far in the style over substance balance.

The site has so much style it's unusable. And what's with the B/W photos? They look horrible. Even on the detail page I have to mouse over it to get color.

People go a site like yours to get stuff done, not to chill out and look around.

P.S. I apologize if I sound too harsh, I'm not always good at giving criticism online.

For some reason the URL and page say "search" on them...

> A true "amateur to amateur" auction type sales website is an area begging for competition...

Really? Because this is the area eBay started in, and they pivoted to more "online retail" than "online yard sale" because (surprise!) there is a lot more money in retail. Really, eBay is more today's Viaweb than an evolution of either p2p sales or auctions.

While it's true that eBay pivoted to a more profitable niche, their original niche was still quite profitable: they were a successful IPO and pulling down cash back in the days when most sellers were regular people. So if they're abandoning that market to focus on a more lucrative one, it might [1] leave an opening for someone else to focus on it, and make good, even if not eBay-sized, profits.

[1] With all sorts of uncertainties I haven't properly investigated, such as whether there's been a significant shift that would make old-ebay-style auctions much less profitable today than they were 10 years ago.

Since this is meant to be HN:

There's a lesson to be learnt. If you want to build a niche, build one that anyone can access. Better still, build a niche which stops people being locked out. Later on, you can screw the unwashed masses, and turn it into a B2C channel. See - Youtube, eBay, the iApp stores, the internet in general.

Yes, really.

Keep in mind a LOT has changed since the beginning. When eBay did that pivot, there were far less options for small retails sellers to put their products online easily and efficiently.

Ultimately, I think it would be near impossible to serve both markets well. eBay certainly serves the amateurs poorly, so that area is ripe for competition (IMO). Maybe serving the "pro" market would be bigger overall, and maybe even more profitable, but an "amateur eBay" executed properly would make someone a metric fuckton of dollars.

I'm the same, just don't want the hassle of eBay/Paypal scams. Unless it is a very specialist item for which I need to reach a large audience, which I have very little of worth any value anyway.

You may say you get less for your money than through Craigslist(/Kijiji/Gumtree) but after eBay and Paypal have both taken their cut I often find it is not a huge amount of difference!

I think a marketplace that you could plug into an existing website would be incredible.

Eg. If you have a website / forum devoted to say knitting, being able to simply plug in an auction commerce application would be quite nice.

Does anyone know of such a site? I recently came into possession of a deceased relatives various stuffs, and have a bunch of semi-recent semi-old computer parts to sell off, but have been hesitant to use ebay for this reason, but I don't live anywhere a local Craigslist would work (yay for rural).

Last time I checked, I don't think craigslist was the place to go to avoid scams.

eBay has a fairly reliable system in place, even if there's occasional issues. craigslist is filled with scammers.

OP here. Interestingly enough, my conversations with Paypal became more and more surreal and I felt more and more powerless with every one in the end. I had a trail of information and there was evidence of multiple fraud, but I never felt as powerless as I did after my phone calls with Paypal.

I am in contact with the police captain in the small town where the item was shipped, but I have very little faith in their ability to recover it.

I will file a local police report as well and try to appeal with paypal.

Meanwhile i want everyone to be aware that the so-called Seller Protection is totally worthless, since thats how Paypal chooses to pursue a legit fraud case.

If you really want the money back, sue the guy. File a miscellaneous action in Ohio and then use subpoenas to acquire his real address/billing info.

Contact the state AG and local federal AG's as well, just for kicks.

Note that if you go to file a small claims action, you will actually have to be present in Ohio. They require in-personam jurisdiction.

(You do have the option of filing in local federal district court against the person, but this is very expensive)

You can't sue a fake identity

Actually, you can (John Doe lawsuits).

Besides that, most of these scams are not that sophisticated as you see in spy movies. You subpoena a few folks, and you get the identity.

It usually turns out to be a 16 year old, but you still get it.

Serving a subpoena to "General Delivery" is problematic at best.

Sigh. He paid through paypal, remember. There is apparently also a credit card provider, and the credit card provider claims to have handled the dispute. Which means they either heard from this guy, or ...

Again, it's just not this complicated. It's expensive and time consuming, but rarely complicated.

Sigh or not, you are sighing to someone who already went through this (me) and was told by the Las Vegas Police that it was a dead end. The buyer used a fake name and hijacked someone else's paypal account (or claimed such had happened to him). So, you are right on two out of three counts: it was expensive, time consuming, and complicated =D

I wish it had been easier, trust me!

There is a credit card involved.

Presumably the OP has an address where he sent his iPhone. Not sure as IANAL, but he theoretically could sue a Doe at a given address and subpoena for an identity.

Don't scammers typically use some innocent person's address and pick up the shipment from their doorstep while they're at work?

The scammer had it sent General Delivery. For those not familiar with the term (it's not used commonly these days), it's possible to have something shipped General Delivery to any post office, then walk in and pick it up. See https://www.usps.com/manage/forward-mail.htm for more info. This seems like one of those arcane system hacks that's ripe for abuse.

He/she presumably had to show some ID and sign something to get the package, but I'm betting that the ID was fake.

You think general delivery is also his credit card billing address?

Do you think he walks in with different fake ids every time he does this?

Do you think he also uses different credit cards with paypal?

Or do you picture him as a nomad, like the old guy from Kung Fu: The Legend Continues, traveling the country collecting fake ids, credit cards, and iphones?

If he is super-master-ninja and all else failed, do you think it would be more or less expensive than court to honey pot him, ship him a box of rocks (or something that takes continual pictures and uploads it instantly) in a very bright pink package, fly super-economy to the place he is supposed to pick it up, and then sit in the post office a few days waiting to see your package picked up, and take pictures of the guy and his car plates?

Unless of course, he only uses public transportation to cover his tracks (or steals random cars every time he needs to travel to the post office!), and wears facial disguises, sunglasses, and a hat to make sure no camera gets a good look at him. Never the same motel room twice, always paying cash, blah blah blah.

Reality: It's actually very hard to hide when your fraud requires picking up physical items at a known location.

It's easier to hide remotely, but not so much otherwise. Even remotely, i'd put 20 bucks down that given only the info the seller has about the guy, 4chan or reddit could find in 2 days or less.

Dude, funny reply, but I never said that he was un-findable. The parent suggested sending a subpoena to the shipping address, which isn't likely to work in this case. Also keep in mind that the OP doesn't have the guy's credit card number, PayPal does -- and I bet they are not handing it over.

Sorry, I was in a snarky mood :) It seems every 2 months there is another popular blog post about how impossible it is to be a seller and how there is just no way to deal with the fraud. They act like once it involves more than email or phone, it's all impossible.

But, yes, sending to shipping address is unlikely to work.

Paypal will turn over the info if you subpoena them (you will have to open a miscellaneous matter in california and subpoena them there, but this is not a big deal).

If you are law enforcement, they will turn it over much faster, but unlike Google/et al, they generally do not object.

In fact, here's a great example of this: http://docs.justia.com/cases/federal/district-courts/califor...

"Google has not produced documents, paypal has" :)

They are in a pretty different position, so i can't blame them. Your bank would turn over records in response to a simple subpoena as well.

Unlike your bank, Paypal will give notice and time to object to the guy, but if he objects, he will have to do so in court (and then you'd know who it is or otherwise be able to sue them directly as a doe, and so it won't matter), or paypal will turn over the records.

Thanks for your comments Danny.

You make this process seem so simple that im eager to learn it.

Can you outline steps necessary to subpoena paypal without having access to an expensive legal letterhead(that comes with an hourly legal bill attached) and to actually follow through this subpoena into getting requested documents.

I was able to get a phone number for supposedly a legal department, but I was told in so many terms to only have a lawyer call them. Im sure if pressed, paypal would give out their legal teams address.

Being a lawyer, I can't really give you actual legal advice on how to do this stuff without you being my client, but i can explain a very very generalized process.

Note that if you are not a lawyer, you will end up spending some time reading rulebooks and filling out forms that lawyers know how to fill out. There are usually legal aid folks/etc in most state courts that can help.

So let me give you an example process (Again, this is not legal advice, just an example process):

1. Open a small claims case against the pseudonym of the paypal person (to be filled in later), or what they claim their name to be if you have it, in the state you believe them to be in (assuming that state allows subpoenas in small claims. If not, you may have to open a real case in their district court, which is more expensive and requires more paperwork). This will require service of process, which will be initially hard, but there are fallbacks in case the person is deliberately making themselves unreachable, like publishing service in newspapers, etc.

2a. Start by getting a subpoena from the small claims/etc court, see if that's enough to get what you want. They may want a subpoena from their local court. In that case

2b. Contact the relevant court for paypal (northern district of california, I believe), and get them to issue an out-of-district subpoena. For the central district, you can see the exact process here: http://www.cacd.uscourts.gov/court-procedures/filing-procedu...

It should be roughly the same process for northern district (the form numbers are the same, though the form content will say northern district instead).

Note that the envelope should be addressed to you.

They will assign a miscellaneous action number, and mail you an endorsed subpoena.

3. Send a copy of the endorsed subpoena (keep the original since you are likely to end up playing mail tag a few times) to the address paypal provides. Again, i don't have this address handy, but as a registered corporation, you should be able to lookup where they receive service of process. They are required to have a registered agent that accepts service of process.

If they fail to respond, file a motion to enforce the subpoena (this is covered in the URL linked above in the case of northern district, if it's another local court subpoena, they will have a similar way).

They do have a fraud investigation team which you could contact with the subpoena first, and see if they will respond. They may work only with law enforcement.

Again none of this is legal advice, there may be intermediate or more steps, i'm not responsible if the steps are not right or in the right order, or if following these steps causes you to lose all your legal rights, etc.

Is IANAL some new Apple product?

"I am not a lawyer" https://en.wikipedia.org/wiki/IANAL

(Unless you were being facetious, in which case, carry on.)

Sue Paypal. It's an obvious scam, and they are, for some strange reason, ruling in favor of the scammer.

Sue them for your money, for the time you spent dealing with them. Check out small claims court limits in your state, and sue them for the maximum.

I bet you will win with all the documentation you have.

But didn't he agree to all this in the terms and conditions?

ToS are not always enforceable.

https://www.techdirt.com/articles/20120907/15424120313/barne...

http://www.mashedreport.com/2010/07/29/website-terms-of-serv...

https://www.techdirt.com/articles/20090508/0212134792.shtml

Though there have been cases where ToS were enforced.

No idea if you should sue or not, but surely in this case it would be the credit card company who didn't investigate the chargeback who is the culprit, Paypal is somewhat beholden to their investigation. By just approving any chargeback and not doing any investigations to appeals they are abusing the system

You're assuming that Paypal didn't purposely withhold any provided proof of scam, to avoid further action on this issue. That appears to be exactly what Paypal did.

Unfortunately Paypal refused to provide the credit card company info in this case

Poster can file suit in his local small claims court, and then enforce the judgement in Ohio afterwards. No need to travel to Ohio to file the suit.

Has PayPal gotten their money back from you yet?

Not yet, but im risking it big time with collections.

Pretty sure that's a losing battle for you. If you can get the money back somehow later, then all the better, but I'd settle with PayPal for now. Ask for a money order next time, cashing it before sending the item.

That is exactly what happened with me. The way they hide behind poor communication and offshore CS reps is amazing. I'd receive answers to my emails that had nothing to do with the content itself, recommendations to check a FAQ in response to three hours of phone calls with detailed information about the incident, etc.

I'm happy you are publicizing this, but the thing is, this is happening everywhere, to all kinds of people, and eBay/PayPal are not doing anything about it.

After striking out with appeals and the Better Business Bureau, I believe the only way forward is to pressure the FTC through our government representatives.

> I believe the only way forward is to pressure the FTC through our government representatives.

+1, this. Please, please file a complaint about Paypal/Ebay with the FTC about this. Enough complaining, and they will be forced to change or leave.

Have you tried contacting the PostMaster for that city? They should be able to assist you in finding the owner of the P.O. Box. From there you can start the motions for filing charges or a lawsuit.

It's not a PO Box, it's General Delivery (https://www.usps.com/manage/forward-mail.htm). There is no owner, but you may be able to get the info they recorded when the person showed up (undoubtedly fake).

Wouldn't doing something like that (providing fake ID at pickup) be considered Mail Fraud? I seem to recall mail fraud investigations having really big teeth.

IANAL (I've said that a lot in this thread), but I believe so. Actually, I think it may be mail fraud in any regard, if he's using the US Mail to take delivery of his booty and you can show that he had prior intent to commit this scam (which is why he didn't have the packages shipped to his home address). So, maybe the right place to start is with the Postal Inspector, especially since this guy seems like a repeat offender with the same MO.

FYI--what you describe is not limited to eBay. I sell software through PayPal and I have been defrauded by someone who downloaded, marked it as "Significantly not as described". Once they did that, my money was pulled. I proved the buyer still had my software installed on their site, PayPal refunded my money, the buyer contacted their credit card, PayPal pulled the money again.

PayPal can be gamed in many different ways, but the credit card is the buyer's shield that even PayPal can't defend against. :(

Unfortunately it's been a while since sellers have been protected on Ebay. A few years in fact. Live and learn.

That's a variant of one of the oldest scams in the book on EBay. Removing seller feedback actually fixed the issue, at least for buyers.

Back in the day, the formula for an EBay sell-side scammer was to:

1 - Setup a phony account, or network of accounts.

2 - start selling small value things to each other. (Postcards, keychains, digital pictures, etc) Leave positive feedback, including nonsensical feedback (ie. My laptop works great, A++++ for a $0.99 recipie).

3 - Wait a few months for the active links to the auctions to be de-activated by EBay

4 - Start selling a dozen high-value items like laptops. Ship nothing or empty boxes.

5 - Withdraw funds asap.

Now the same scheme works, but only in reverse for high-value items that have immediate cash value.

Solution: Never use EBay for anything.

Ebay works great for buyers now, it just sucks for sellers.

I buy on Ebay all the time, you can find all kinds of things there really cheap.

Have you ever tried to get your money back after getting scammed as a buyer?

Several times, and for each and every one it was as easy as filing a complaint and having the money refunded to my paypal within a few days.

I ended up getting a knockoff XBOX game and it was pretty painless to get it refunded from ebay.

"Item not as described" is the secret passphrase. Seller has absolutely no recourse. I've never tried it as a buyer, but as a seller it's been 100% effective in the scammer getting their money back from me.

What I don't understand is why using this passphrase doesn't obligate the buyer to return the item.

THIS.

Except, I suppose, how do you validate THAT?

If I'm the seller, and you send me back an empty box or an old iPhone 3GS, what do I do then?

Just also tell them, "Item not as described".

Item not as not as described

I had an issue, as a buyer, very recently. The item was not as described. I was frankly flabbergasted how quickly and decisively eBay worked in my direction. A little too quickly. (There were issues with my purchase that could have been fixed with a partial refund, but instead I got everything back, while I still have the item. I actually feel a little bad about it, like I don't want to use eBay again, even though they probably think they made me happy.)

Exactly. It doesn't make sense unless eBay just considers all sellers to be high volume resellers who write off small item losses as part of doing business.

If they actually had to devote much resources to investigate our claim, they would probably lose money on the transaction.

But, really, it's okay to lose money on some transactions, especially if you reduce buyer/seller stress on other transactions.

I have, eBay ignored all my complaints and requests. Never got anything but the odd automated 'we have received your report' emails. I'll never use eBay again for any reason.

Make a credit card chargeback

Never been scammed as a buyer in hundreds of transactions.

Yes. I received some counterfeit DVDs many years back and I ended up getting my money back from PayPal.

Actually, I have. I got a knock-off memory card once. I threatened the seller with all kinds of things (basically send the feds after him), and he sent me the money back. Didn't even need to involve Ebay/PayPal.

Regarding #3, it's shocking that Ebay feel the need to remove all auction information after a few months. Is hard drive space that expensive?! The Ebay site is a remnant of the 90s, it's crazy they're still a viable company.

They've overhauled it recently, but due to the amateurish look and text of the offers they probably can't shake that 90s feeling

"Solution: Never use eBay for anything."

That is just plain silly... I'm "paranoid" and don't want to be ripped off $500 or $1000.

Biggest I was ever scammed was $70 (it's ok, I can stomach that).

So I don't use eBay for big transactions which I have no recourse on in case something bad happen (e.g. I'm not a famous blogger so it's unlikely eBay / PayPal would ever help me like they helped OP).

But I do still use eBay a lot:

- for tiny transactions / items I really want that are cheap (e.g. some cheap but rare to find obsolete hardware I need to fix one of my old-but-cool printers)

- for big transactions where I can go to the seller's place to pay in cash and take delivery of the item.

Saying "don't use Ebay for anything" doesn't make sense, even if you're paranoid.

Since you shipped via USPS, the buyer has committed mail fraud. Call the US Postal Inspection Service, they are federal agents with no jurisdiction issues as the local police will have.

http://en.wikipedia.org/wiki/United_States_Postal_Inspection...

Edit: USPIS Wikipedia link

This is an excellent idea. The USPS really doesn't look kindly on mail fraud.

A few years ago I sold an Android phone on eBay. A scammer bought it, claimed it was broken, and filed a claim with PayPal. The guy sent me back a different phone of the same model that was indeed quite broken. I appealed to PayPal and lost. I got screwed in this case, but frankly I'm not sure what PayPal/eBay is supposed to do about this sort of scam. Dude even swapped the sticker with the serial number from inside the case.

Out of curiosity, if the sticker was the same how did you know for certain that the broken phone was a different phone?

Mine had a small but distinctive scratch on the back. The sticker was also off-center and poorly applied. Though I did briefly question my sanity. I suppose I don't know for certain, though the phone was working when I mailed it.

The buyer's profile showed he was frequently buying and selling cell phones, both working and broken.

It's hard, as a paranoid person I try to document things as much as I can, filmed tests, clean pictures, filmed packaging process. It's not perfect but for what it's worth, I had an issue on priceminister (european website) involving an old motherboard being flagged as failing by the buyer, they were thorough and rejected his claims after all. Nothing major it was 20$, but it's good to see that some websites go the other way too.

I'm the same. I sold a few things on eBay a few months ago, nothing of great value, some old Nokia 8850's I had lying around and 2 Raspberry Pi's I had purchased but not used. I photographed everything, against a verifiable backdrop (in this the BBC website on my monitor) and filmed the product in use and put it up on Photobucket so that the upload was also time stamped. No problems whatsoever with the sales, but you know, just in case!

I actually did film my opening of his return package because it was very obvious at that point that I was getting scammed. But I was expecting an empty box or a brick or something, not a similar phone.

The Paypal dispute system is a joke. I had a simliar experience with a $300 laptop. The condition it came in was NOT as described. I tried to get the seller to refund, but he just ignored my messages. Unable to contact the seller, I opened a dispute case and I took photos, documented the entire thing, and even did the dispute message system (and the seller didn't respond once to my complaints within the dispute system).

After 3? weeks of no response, I clicked escalate button to firm up the dispute and push it to Paypal so they could decide. I thought I had a clear cut case -- photos, documentation, 21 days of seller not even trying to defend himself.

Seller, upon getting the final warning, finally replied with a message along the lines of "I offered a refund but buyer never contacted me" with no proof... and Paypal voted in his favor.

Fuck Paypal.

Does Paypal have a messaging system like eBay? Whenever I've had an eBay dispute (rare), I always communicate using their messaging system so they can see exactly what we are saying to each other.

Yeah. When I referred "Dispute Center" above, all the messages took place inside Paypal's internal dipsute center messaging system.

> " If youre thinking of selling an expensive item on eBay, think again. "

I would say, this type of fraud is exclusively targeted at cellphones, ipods, netbooks etc. If you're selling something like an antique grandfather clock, you should be fine. Of course anything that requires collection, or couriering is going to be more traceable and secure.

I have sold hundreds or maybe thousands of items on eBay. The only one I ever had a problem with was trying to sell an old iPod. As soon as it was listed the scamming started by fraudsters.

>If you're selling something like an antique grandfather clock, you should be fine.

Paypal orders buyer to destroy antique violin:

http://www.regretsy.com/2012/01/03/from-the-mailbag-27/

One bad incident out of millions doesn't set a precedent.

One could say the same thing about OP's post. Yet, it isn't unique by a long shot.

I've also given up on selling via CL because of the scammers. Now I donate to the local Goodwill or other charity (women's shelters want cellphones, for example), and take the tax write-off.

Could explain how buyers could scam you using Craigslist? Just make it cash only, no?

I think it isn't that you end up getting scammed on craigslist, but that 9 out of ten replies are from scammers. It creates annoying overhead in sorting them out.

-- Hi! I am buying this as gift for my Son. Are you firm on the price? Email me back please,though, you may send me a text on the number below because I am hearing impaired but I think email is the best for me. -- Hello, i saw your listing on craigslist and Am wondering if the item is still for sale. Please do let me know if I'm still able to purchase as i am willing and ready to make purchase,get back to me with the condition asap.Thanks

Somebody on another site got paid in counterfeit bills on a used iPad.

No, because most cellphones/iPods etc will be subject to scammers.

These devices are absolutely simple for scammers to work with. They're high value, cheap to post, and can easily be swapped with phoney/broken identical devices.

I think you're misusing the word "precedent" here. This absolutely does set a precedent but whether it constitutes a trend or policy change is debatable.

It's just that the scamming is more common with iPhones. There are many public cases where the similar scam was pulled as the buyer returned an "item not as described" as an empty guitar case full of rocks/synth box full of books/etc.

Unfortunately, buyer protection is just as bad!

I recently bought an item on Ebay from an Ebay shop in China and paid extra for EMS shipping because I needed it fairly quickly (less than 2 weeks). The seller sent using a non-EMS method that barely got to my door in time, and it was the wrong item completely! When escalated to Ebay, they would only refund the item and original shipping fee and only if I sent back the item and paid for my own shipping to send it back.

I later learned that the seller was out of stock for the item, and figure that they must have sent the wrong item purposefully (since you're not supposed to be selling something you don't actually have).

But there's no way to actually contact Ebay support, so there was nothing I could do. Really going to avoid Ebay from now on because of that poor experience. No protection on any side.

This happened to me once as well - there's no eBay dispute resolution process for shipping scams. If you spring for an extra $20 shipping cost to get it express, there's nothing, absolutely nothing, stopping the seller from shipping it media mail and keeping the $19. EB/PP will tell you to get bent as long as you get the item.

I had someone do this to me a while ago on a laptop. As usual, Paypal and eBay were utterly useless. I marked the guy all ones on his shipping ratings, but considering this was a high volume seller, the effect is probably nonexistent.

This would only work in major cities, but I always thought there was a business in having a physical escrow service aimed specifically at selling small, high-value items. You sell an item online, deposit it with the company (who takes a small cut; you could even mail it to them), who then pass it on to the buyer when payment is confirmed. The company can confirm it's in working order, and take some photographs for proof.

Much more pleasant for both buyer and seller. No more news stories of people getting mugged after an online ad, no more scammy eBay purchasers, the lot.

This would be a great value-added service option for the Post Office. Deposit money in an account, have it shipped to a local post office, postal worker witnesses the acceptance and opening of the package, if everything is kosher, the buyer signs a release and the money is leased to the seller.

USPS already provide "witness" services for packages that are picked (for free!), just add an escrow account for 1 to 5%.

Still doesn't help you, which postal employee is going to sit for 1/2 hour while you test your iphone and make sure it connects to your computer etc? They can only say, "yup it looks like an iphone", not whether or not it works.

Most things can be tested pretty easily and quickly. This would reduce fraud considerably, since you'd have to come up with an item that would pass a cursory inspection, but still fail later. Not at all easy to do.

escrow.com does exactly that.

I used escrow.com for a big purchase on eBay (over $5,000) and it worked perfectly.

I'd recommend contacting all the carriers that this phone is compatible with, and tell them that the phone has been stolen. Give them the IMEI number, serial number and whatever else.

If you can get law enforcement interested in the case (highly unlikely, but who knows), they should be able to issue a search warrant, and get the location of the phone from the carrier. If they can track it down to a residential address, then they may be able to find the actual person.

It would be helpful if the other sellers also had remotely trackable items. Regardless, you'll want to be coordinating with them on the item descriptions.

The fact that it wasn't actually stolen makes this seem a little risky.

It would be considered a form of shoplifting wouldn't it? (Honestly curious here)

I'm not a lawyer or a police officer, but doesn't this sound more like fraud?

IANAL either. BUT, I know a guy who had his car stolen through fraud. The fraudster gave him a bogus cashiers check (and his bank took over a month after deposit to alert him that the check was bogus).

His car insurance paid out on a theft claim. I'm sure there were more details to it, but I've never heard of "fraud insurance" as part of an auto insurance policy.

FYI (everyone): US Post Office offers a money order verification system to avoid bogus transactions like these. I've gone so far as to choose a meeting location around the corner from a post office location and insist on a money order from that location.

https://www.usps.com/shop/accepting-money-orders.htm

It's not shoplifting. It's fraud. But yes, this phone was totally stolen.

Meanwhile, as a purchaser on Paypal, you only get 45 days after the day of the transaction - which caught us out last week.

We ordered some stuff from (at least theoretically) a reputable company. We had to pay about 2 months ago, but kept getting emails telling us that the stock hadn't arrived yet and to just be patient. Then a couple of weeks ago, they told us that they actualy didn't have the stock and that we'd have to get a refund. But they were refusing to respond to any of our requests for the refund, so we contacted Paypal and they told us that we'd missed out on the 45 day window and they couldn't help us.

The company we ordered from eventually (after over a week of chasing) paid up, but if they hadn't we would have been left high and dry by Paypal.

I pay for stuff once in a while on PayPal. However, I do not maintain a cash balance with them, nor do I have a linked bank account. I have only my American Express card linked to my account.

A few years ago, I ordered some dirt cheap magazine subscriptions on eBay. I had done the same on eBay once before without a problem, but that was before the scamsters caught on.

You see, there is an inherent vulnerability with magazine subscriptions: they are not expected to start serving until approximately eight weeks after you order them. That's plenty of time for you to give positive feedback and a crooked seller to make more sales. It's also beyond that 45-day window you mention.

In the event, a couple of months passed. No magazines. I checked the magazine subscriber service sites and found that no subscriptions had been entered for me. I had paid on PayPal, via my American Express card. The action I took was to dispute the charge on the Amex website. It didn't occur to me take up the matter with PayPal first, so I didn't run into the problem you had. In any case, the chargeback was resolved in my favor.

Not long after that, eBay stopped allowing subscription sales on their site.

This happened to me. I ordered something, it took time to build and then by the time i figured out something was up i was out my cash. paypal wouldn't do anything. still trying to get it back over a year later.

I don't have much sympathy for this seller.

- General Delivery is a big red flag, paypal confirmed or no.

- You should check buyer feedback in advance, not afterwards.

- don't leave feedback until you have the cash in your own bank account.

- For expensive items, don't just get signature confirmation, pay the extra few $ for insurance. I insure anything over $50, for two reasons: you can claim against the insurance if the buyer alleges the goods are damaged/missing, and if the buyer is scamming then the insurance means they're trying to commit fraud against the carrier, who are more likely to prosecute it aggressively. This is also why I prefer to ship via the post office. Sorry, but if you shipped an $850 item without insuring the shipment, you're foolish.

The problem with accepting PayPal or CC payments is that you can withdraw the money from your PayPal account immediately, but they can still issue a charge-back up to 180 days later and your PayPal account will be deducted that amount. For remote transactions, money order by mail or Bitcoin are your only safe, non-reversible options as a seller.

Hence the insurance.

I fail to see how is the insurance would have helped in this case. No one disputes that the package was delivered successfully.

Well if you put the right thing in the box, and the recipient says that he got the wrong thing, couldn't you therefore argue that the package was tampered with?

I don't see why USPS should pay out for what is clearly fraud by the buyer.

Sorry about the slow reply. The idea is that the buyer has to cooperate with the insurance claim, if their chargeback is to succeed; otherwise Paypal/the CC company would ask why not. If they submit something in writing which is materially false, then they're committing fraud against he insurance issuer, which is in a rather better position to prosecute than I am if a pattern is detected.

For this reason I always use my own photos of the specific item I'm selling on an auction, and do the shipping calculation in advance so the buyer pays - and so that the auction page include the shipping weight. Sometimes this costs me a few $ if the shipping calculator is slightly off (eg I've forgotten to allow for the size/weight of the packaging) and the insurance costs me a few $ as well. But if the buyer ever says the 'item is not as described' then I have a good excuse to claim on the insurance, who will ask for the buyer to submit what was received.

You're blaming the victim for the fraud. It's not his fault. He followed PayPal's guidelines.

Note, I think PayPal are in many cases some sly devils doing some nasty things, in this case it sounds like they went to bat, had the credit companies say 'nope' and that's that. Credit card companies will usually go in the favour of the buyer, because technically the buyer is them. This is an odd, and bizarre situation, but its why you always should buy fancy items on credit cards, as the credit companies don't like their money being mucked about with. The situation is heavily broken though, scammers on every side, the only option becomes taking legal action and that's very much a minefield.

Seller Protection should protect the seller in the case of obvious fraud like this regardless of what the credit card company says.

Definitely, it seems super obvious to us that fraud has occurred and that's the long and short, to the credit card companies all they can see is that they might be severely out of pocket. They will generally fight back against it, and side with their money. It sucks.

I doubt Paypal presented any of the evidence provided by the OP.

Stop using eBay and Paypal.

If you look, you can find stories like this every week since about 1999. This sort of behavior isn't new yet eBay continues to grow.

Because it works for most people most of the time. That is why I continue to use eBay as a buyer.

Especially for sellers with thousands of sales. They would get no benefit from scamming you even if they could because bad feedback = lots of lost sales.

I've been scammed selling on eBay and will probably never sell there again, but if I did I'd want a cheat sheet of scam countermeasures. Here's a start based on the OP's safety checklist (points 3 through 5), comments in this thread, and my own experience.

1) Try not to sell on eBay. Perhaps Craigslist or another marketplace will work instead. Unfortunately, people in low population density areas are kind of screwed without an online marketplace.

2) Block all buyers from countries other than your own. In massive markets like the US, gaining a few more potential buyers is not worth the increased risk of fraud or loss during shipment. Perhaps in smaller countries this rule won't work as well.

3) Only sell to people with significant positive feedback.

4) Only ship to CONFIRMED Paypal addresses.

5) Require Signature Confirmation for items over $250.

6) Don't accept PayPal; require money orders for payment. This might scare off potential buyers. However, it has the benefit of taking PayPal and credit card chargeback schemes completely off the table.

7) Don't ship General Delivery.

If you do 6 you'll sell exactly 0 items.

Rule number 1 for buyers: Don't pay with a money order, always use a credit card.

You're only thinking about protecting yourself - but you also have to actually attract buyers.

I agree. A few other commenters suggested this on this thread, but personally I can't imagine buying anything requiring me to send a money order.

Have you called an attorney? If you have one that you're on any kind of friendly basis, I've generally found that you can get a quick read on your case (30 minutes' worth of time) without any cost.

IANAL -- first and foremost -- but I would think the best tactic may be to go after PayPal to get them to discharge your supposed debt to them, given that you've already swept the money out. Their seller's assurance contract terms would seem to be vague around what is required for the item to be determined "not as received" -- also, as you mention, there is a a pattern on behalf of the seller -- is EBay/Paypal acting dilligently to protect your interest in return for your seller's fees and auction fees?

LOL! What attorney would give a crap about a $500 phone? The sad truth is that in this system of ours, you can screw someone for up to $50-100k and get away with it because that's the minimum potential damages amount that would pique a decent attorney's interest.

What attorney would give a crap about a $500 phone?

A class-action attorney?

The attorney will make millions, the guy will walk away with a coupon for 5% of his next Ebay purchase.

There has been some success recently in suing corporations in small claims court. There is an argument that a genreal delivery address should not have been 'verified'.

Class action suits are less about getting restitution and more about forming a large enough clue-by-four to beat misbehaving companies with

The point of a class-action suit isn't for the victims to recoup damages. It's to force the corporation (in this case, eBay) to change some sort of behavior that a suit from a single person wouldn't have been able to accomplish.

Jaded much?

I think that depends a lot on what you mean "a decent attorney". Sure, a partner at Proskauer isn't going to take your call, but in my experience, the nice woman with the office down the street might be glad to help you put together a plan, critique your demand letter, etc. This kind of "decent attorney" is willing to work with you on the small stuff, in the hopes that you'll come back to her in the future with bigger business, and refer your friends and family as well.

A piece of advice -- as you mature and your life becomes more complex, it's not a bad thing to have a good relationship with an attorney. Here are some situations that have come up in my life:

Reviewing my ISO and non-compete agreements when I took a start-up job

Getting my security deposit back from a landlord who would not pay up

Reviewing the sale agreement for same start-up 10 years later

Representing me at closing when I bought my first home

Advising me when my bank "misplaced" a $10,000 deposit for over a month (they cashed the check but didn't credit my account)

Discussing will and estate planning when my first child was born

For all of this, and probably some other things I'm forgetting, I probably paid him less than $2,000 total -- and half of that was in closing costs on the house.

More recently, a different attorney (I moved) handled another landlord-tenant dispute for me with a couple of letters to the landlord's attorney, and never even sent me a bill.

I think your experience may be atypical. But it's great to hear such a positive story.

I have had similar experiences with attorneys that are single person practices or a partnership. As the firms get larger, they are less likely to miss any minutes of billing. In fact I am meeting my lawyer tomorrow for lunch, I am sure I will pay and I am sure I will not get a bill for his time. I am also sure that we will spend an hour talking about a small legal issue that I need advice on. URSpider is correct, it is good to have a friendly lawyer.

I tried to sell an expensive camera through eBay and after a month I gave up. Twice the auction completed and the person that won tried to scam me. I decided to go the Craigslist route and sold it in a few days to someone that I met at a local bank and we were both happy.

eBay were not very good, in my case, either. I spent hours on the phone. It was clear that the person that won the auction bid up to insure they won it. I'm pretty certain I had legit buyers at lower bids, and I would have been happy to sell at those bids. The reason I even tried a second time was that I didn't know about the ability to exclude certain buyers. For the second auction I tweaked all the knobs that massively restricted the auction to only the safest buyers. I don't know what happened, but someone with an account that was a few hours old won the auction. I think it was the same person that won it the first time. I called eBay again and they voided the auction after a few days.

It was a really horrible experience and I'll never use eBay to sell anything ever again.

just an FYI, guys. Due to virality of this post and the waves of support on twitter, I got phone calls from both paypal executive offices and ebay's fraud teams that not only did resolve my issues, but also hinted at a serious effort at apprehending this fraudulent individual.

Its very unfortunate that it took this community outcry to get this far. Im currently working on a "post-mortem" overview of my what happened in the past few days resolution-wise and ill post it on my blog.

Tech-wise, its pretty amazing how much load a static octopress-based blog hosted for free on github pages would handle.

Also im pretty glad I chose to host the pictures on picasaweb. Hosting them on S3 would turn out pretty pricey :)

care to share with you what the stats are on your hosting arrangement? Im sure we could get a lot out of a debrief.

I wrote up a post-mortem here:

http://news.ycombinator.com/item?id=4883468

Paypal is the most fraudulent company that I've done business with. There for I never sell anything anymore using it, purchase is ok but also risky. A friend of mine purchased an engine part on ebay but received a brick insted. Paypal then refused to give the money back because he had signed it out.

In total I've lost 1000's of dollars due to Paypal just handing it back to the fraudster. It doesn't matter what you say or what evidence you got. Me personally have never won a paypal dispute as a mercher.

My recommendation to other people, I know its a loss of customers but LibertyReserve, bitcoins or old fashion bankwire is as safe as it gets.

Apparently all your friend had to do was raise a claim as "item not as described"...

But yeah, I get your point and try to avoid eBay as much as possible, although sometimes, very rare now, I have no choice. It eats me up inside when I do though :-(

I actually wrote about this 6 years ago when eBay first started leaning their policy towards protecting buyers at the expense of the sellers. I went from selling things on eBay regularly to never using them for anything. Especially an iPhone or any new "hot" item you will be inundated with scam bids. And as an additional slap in the face you can't even give a buyer negative feedback anymore so what's even the point of feedback? It reminds me of when the post office, in response to long lines, resolved the problem by removing all clocks.

I know this was in reaction to scammers placing fake auctions but eBay basically threw out the baby with the bathwater with their buyer protection policies. The scammers just moved to the buyer side where they enjoy lopsided protection.

This is my post from 2006 - a variation of the scam, but the seller protection is equally non-existant: http://verysimple.com/2006/08/13/ebay-laptop-scammers-part-i...

Don't know if they're any good but the Economist just wrote up EcoATM (http://www.ecoatm.com/) which lets you sell used phones at kiosks. You show up with your used phone and put it into the machine, which can apparently verify its make/model and condition, and lets a network of buyers instantly bid on it. If you choose to sell, the kiosk keeps your phone and you leave with cash.

In the UK, I'd recommend:

http://www.moneysavingexpert.com/phones/mobile-recycling

Which will link you to a whole bunch of reputable bricks and mortar companies who'll buy your old phone.

Social Engineering adapted for Paypal scamming. This is yet another proof of that Paypal Seller Protection is basically worthless.

I sell things very rarely on eBay - recently I got an old Laptop at a garage sale that I realized I had no use for and went ahead and sold it.

Thankfully everything went well (I think the period for chargebacks has expired), but I had this awful feeling for a long time after the auction that something dodgy would happen. Every time I sell, I feel like I'm playing Russian Roulette.

Like a lot of the other commenters, I'm not sure why more hasn't been done to help the sellers out. Shouldn't it be clear that it's a scam if a buyer does a CC chargeback, given that it's easy enough to file with Paypal? Also, wouldn't giving sellers the option to only accept payment via a bank account help?

It sucks to be among the most gullible 1% of buyers or sellers in a marketplace, weighted by sales volume.

In first-world markets, overall fraud is around 1%. But since experienced buyers and sellers learn to avoid it, the least experienced ones absorb most of the losses.

Whether you're in the most gullible 1% depends on who else you're competing with. For example, if you're selling a used car, you have to be fairly dumb to be in the most gullible 1% since lots of regular people do the same.

But the vast majority of iPhones on eBay are sold by sophisticated, professional, full-time merchants. So unless you have inside knowledge, you probably are in the most gullible 1% of iPhone sellers on eBay.

I'm stuck with $680 in chargebacks on paypal.

One gamer used a bank account to deposit funds into his account. 2-3 months later, he uses that same bank account, then files a chargeback for $680.

Even though he'd used that same bank account months earlier, on the same site without filing a chargeback somehow this time around he won the chargeback dispute.

I have no idea how that is common sense possible

I would have expected David Marcus (PayPal CEO) to chime in by now but apparently not.

Counterparty risk is definitely a hard problem to solve but this situation seems easy to solve: if the buyer is complaining "not as described", there should need to be some sort of attempt to return the item (at seller's expense or split).

It's not even that hard. If Paypal has someone who supposedly bought 4 iPhones in quick succession and all 4 were "not as described", either he's the single unluckiest person in the world (in which case Paypal should get rid of him, in case his bad luck is infectious), or he's a scammer, in which case Paypal should get rid of him.

if the buyer is complaining "not as described", there should need to be some sort of attempt to return the item

Exactly. I'm extremely confused as to why this does not appear to have been brought up by any of the parties in the OP's case.

What good would that do? The scammer would just "return" a broken phone, or a piece of roof tile, claim that was what they received, and the victim has now paid for shipping twice.

It would help figure out how to resolve the situation at a modest cost (the cost being an important factor in reducing groundless claims).

I sent him a tweet (the only contact info I could find) yesterday. He responded later last night. He's looking into it.

https://twitter.com/davidmarcus/status/275853590080417794

The absolute, 100% way to solve this is to let sellers decide who can bid/buy on their items. If I can say "Only users who have been on ebay X months/years with Y feedback" that is such a major awesomeness. It also puts the control back in my hands. Maybe I dont get as much money when I sell a item, but I have way less risk of getting fucked.

Also, it would not stop new ebayers from being able to buy things. eBay could 'eat the risk' or make them guarantee if a seller set up his auction that way.

You can already do this on eBay, the sellers with Y feedback thing

http://pages.ebay.co.uk/help/sell/buyer-requirements.html

More specifically: http://imgur.com/xvAYd

But it still doesn't get round the way this specific scam works, see post from Spooky23 above for a great explanation.

Unfortunately that only lets you block people with bad feedback. You cant say "you cant buy unless you have 10+ feedback"

Most scammers have no bad feedback, they are just new accounts with 5-10 positive feedback for bogus items.

Yes you can, what do you think "Block users who have a feedback score equal to or lower than X" means? X can be set to 10 if you want.

That imgurl I linked to was directly from my eBay account.

The only options on it are -1, -2 and -3

Yes, you're right, I didn't check! This never used to be the case. Now that is stupid!

I know a lot of people write it in their posting, only users with 10+ feedback.

While I'm sure that there are probably thousands, if not tens-of- and hundres-of, perfectly happy and valid sales of high-value electronics on eBay every day using Paypal, I would rather give something like that away as a Christmas present than try to sell it on eBay.

This seems like a credit card/bank problem, it's not unique to paypal.

I was thinking about upgrading my phone and ebaying the old one. After reading this, I'm thinking maybe I'll go the craigslist route, or one of the online trade-in deals.

Does gazelle have this same issue? I'm not sure if Gazelle the company buys the product and sells it, or if they just connect me with a buyer like ebay does.

You could try Swappa (http://swappa.com/) I haven't used them personally, but a friend did and had positive feedback.

Swappa's great, but it still goes through Paypal. Probably a better crowd on there than EBay though and they allow negative feedback.

Another vote for Swappa. I bought a phone using the service. As pdubs said, it still goes through PayPal but the site employees keep an eye on the transactions and there are reviews and negative feedback.

I just looked up an iPhone 4s 32gb unlocked. Gazelle offers about $215.

Swappa.com had six for sale, with asking prices averaging around $450 (there was an outlier at $360).

A quick look at Craigslist Boston shows recent asking prices of $380 to $550.

Of course, I don't have data on what prices the Swappa and Craigslist sellers are actually getting.

I think, if I were really lazy, I'd sell to Gazelle. Otherwise, I would use Craigslist, cash only, meet in a public place.

Everyone who's been in the internet for a long time know that there are dozens of sites for people to go tell their "got screwed by paypal" stories. Why paypal has always been the most used site for online transactions? That i don't know.. I know i would never use it.

Maybe because people who have bad experiences tend to want to publish them more than people who have good experiences. I sold a damaged iPhone 4 (listed as such) on eBay+Paypal earlier this year. I got paid, the buyer was happy, and I did not write a blog post about it.

Im with you, i sold a number of things without problems, but I did it assuming that if I follow the rules of Paypals Seller Protection, i would be covered. This is not the case here. I now know that Seller Protection means nothing to the fraudster in the know

Seems to me that those good xperience come down to old fashioned luck. Don't use PayPal or eBay - simple!

I had an issue with Paypal (outside of eBay) a few years ago and since have given up on anyone I can't work with my credit card company directly against.

I bought a few car parts from a shop who ended up shipping me only half my order. I contacted them, they re-sent me the same half a second time (so I had 2 of the same item, but no 2nd part). Contacted them again. Received the same item a third time and was fed up at this point. I had paid duties on each item to receive the package to only find I had more worthless parts and contacted PayPal for a dispute.

Turns out the only proof the seller had to provide was proof that there was a package shipped. No proof of contents or receipt or anything.

Learned a valuable lesson that day.

Vlad, I had a similar thing happen last year with an iPad. I even went through a complaint with the Better Business Bureau, and appealed it, but PayPal is able to hide behind their fine print.

I think the only way to protect ourselves from this is to limit the accounts to which our PayPal accounts are linked. They automatically-deducted $900 from my bank account upon the charge reversal, and I was unable to prevent this.

By the time you get Paypal's resolution, the scammer is long gone and local law enforcement will tell you it's already gone. This whole situation is monopolistic and I don't understand why the FTC is not doing anything about it.

(also posted as a comment on your essay)

Did Paypal steel your money? If you are a California resident you can file a complaint right now and get a response within 5 days from the Department of Financial Institutions. In California, Paypal may only hold your funds for up to 10 days only. Paypal has rules which they must comply with as a licensed money transmitter and this department enforces those rules. Fill out the online form today. You could have your money released within days! I did it and it works.

https://dfi.secureprtportal.com/dficase/programs/eComplaint/...

People abusing Buyer Protection on eBay is nothing new, and has been getting out of control. But saying you should sell on eBay using something other than PayPal is just not realistic. People expect to pay with PayPal.

This article goes into my "arguments for Bitcoin" pile. More sellers need to recognize the risks involved in doing transactions through PayPal/any other credit card processor and protect themselves.

There just needs to be an easier way to buy bitcoins. I added it to my gamerholic site and a couple users were just confused on where they can buy coins. You have to click one link after another.

No, the current ecosystem of Bitcoin is just fine. You have to click one link after another because you just don't _know_ anybody who has bitcoins.

One day you will get robbed by one of these exchanges, and you will blame bitcoins (or the bad man) and swear to never work with Bitcoins again. But they will be just one link in a chain of exchanges that you've trusted each one, hundreds of times, to bring you music and movies for bitcash, and nobody will write an article about it.

I am a small volume user but I have never been scammed by anybody in Bitcoin, except for that Bitscalper fellow.

So what's the quickest and easiest way to buy bitcoins?

It depends on where in the world you are. http://howdoyoubuybitcoins.com/ may be helpful.

I'd vote mtgox, but they actually require to see your voter registration to allow trading into US dollars, my local currency, and I haven't furnished it. As well as state issued photo ident. You can buy them from me! I will accept either document as authentic proof, otherwise in #bitcoin-OTC on Irc.free node.net they are rather partial to the Gpg key as the mode for proving identity and tracking of scammers.

Don't you want to upgrade your currency, to the one where charge backs can not ever be issued against you, and its the whole world and science that keeps your money safe from hackers?

Bitinstant.com is the easiest. Just create a pending transaction on theie site (give them one of your bitcoin addresses, and tell them how much you want to buy) They give you a bank account #, and you just walk into that nearby bank with cash, fill out the deposit slip, and wait about 30 mins.

And what about if the OP here was the buyer, and received a broken phone?

Then what?

It's easier to find a seller to trust than a buyer to trust.

Edit for accuracy: It's easier to verify the trustworthiness of a seller than that of a buyer.

Shouldn't the item be shipped to dispute resolution (or their agents). On confirmation of the ID of the item (eg IMEI match or serial number or whatever) they can asses the item against the description.

If the item matches then return to the complainant (buyer) at the buyer's cost + add a service charge. Seller keeps all their money. Buyer's account marked for fraud watch.

If the item doesn't match then refund the buyer with a chargeback, return item to seller at the seller's cost + add a service charge. Seller loses their money. Seller's account marked for fraud watch; selling fees increased.

Items not paid to be returned can be sold on to help cover admin costs for items that buyer's or sellers do not want returning.

Note that in the OP ebay claim to have assessed that the items didn't match the description and so buyer protection is invalidated. But they haven't checked and so are defrauding the seller in respect to this claim.

If only eBay accepted Bitcoin. Though that would open the door up to a host of new scams which eBay would be equally slow/unable to respond to and when they do, would probably only enable the scammers even more. Bottom line is no one there seems to give a shit anymore. Just stay away from that cesspool

I thought my case with a virtual product, and a clear fraudulent act was bad. After hearing about this, with a physical product, it makes a local electronics dealer seem much more appealing.

The only way I would sell an expensive piece of electronics would be via local Craigslist, in person, probably for cash that I'd prefer to witness the buyer withdraw out of an ATM.

Just like anything else, selling in person to a stranger is not without risk either. I wonder how the frequency of robberies associated with Craigslist sales compares against eBay fraud like this one. Personally, I'd rather get hit with a chargeback than a baseball bat.

Sure, but I wouldn't ask the buyer to come to my house at 2 in the morning, nor would I agree to meet him in that alley behind the biker bar, either.

I'm curious why you think you should see the buyer actually withdraw from an ATM? If I was a buyer and the seller asked to follow me to my ATM, I'd be concerned.

I actually probably wouldn't do that, but it would be a pretty good hedge against receiving counterfeit currency.

ah... I had not thought of the counterfeit money angle.

There are better ways to hedge against that.

http://www.amazon.com/s/field-keywords=counterfeit+money+pen

Fascinating, back in the way back time when Ebay was first starting, the only way I would sell something was payment in advance, but check. Further the check needed to clear my bank before I would ship the merchandise. This was a pain but it was the only way to do business if you wanted to avoid fraud. Paypal made this so much easier, they would carry the risk if it was a 'certified' account.

The whole "not as described" is an impossibly giant and stupid loophole.

Back to asking for checks I guess.

Funds from bad checks can be pulled from your account even after the check has 'cleared'.

cf. 419 scams.

To be explicitly precise, Wells Fargo will not honor a 'stop payment' on a check which has settled. The settlement date is not the same as the 'hold' date, they may release funds prior to the settlement date if you are a good customer, with the understanding that if the check is subsequently refused by the originating bank, or is shown to be invalid, the deposit will be reversed.

The most common scam that trips people up is the 'over amount' check where a "cashiers check" for more than the amount purchased is sent with the instructions to deposit the whole thing and just send back another check with the overage. When the check finally 'bounces' the check sent has already settled and you're out the amount of the overage (and possibly the item).

In this way writing a check is exactly the same as handing the person cash, once both banks agree the funds from one is in the other and the accounts are all updated, assuming it wasn't in error, and the other party doesn't have special privileges (there is an exemption that governments can pull back funds) the only way to reverse that transaction is a lawsuit. Well at least according the commercial banker who handles my business account at Wells Fargo.

I have no faith in PayPal as a payment processor any more. There's these problems, problems with PayPal placing random account holds etc.

They really don't want business from the little sellers any more.

Heres the issue (and a opportunity for a startup?) - eBay remains the main place to sell second hand goods.

There are other options (craigslist, amazon) but the fact is it takes longer to sell and still flush with scammers.

What does the solution look like? A costco style paid membership with more information given back to the user? Ability to 'vouch' for yourself via facebook/twitter/etc. ?

With all of this, its still chicken and the egg. Hard problem to solve.

Bitcoins (no chargebacks) and a preference for buying through friends of friends on social networks (almost like a darknet) could be worth looking into.

Bitcoins tip the pendulum too far in the other direction; there needs to be a way for a buyer scammed to reclaim their money in the case of a seller scam. (And that's not even getting into the instability of the currency.. I'm a fan of bitcoin and I can't imagine using it in a serious enterprise)

A third party escrow service that examines all goods for compliance with their description and then sends them on could be a useful tool..

To jump on a point totally unrelated to the post's complaint but related to selling smartphones, I've found that if I'm selling electronics (especially generation-behind iPhones for the family) I can do much better than eBay, even before you discount both their listing fee and paypal use fees. And there's comparatively no risk.

For cash: gazelle

For slightly more cash (usually just a few percent), in the form of a gift card: amazon trade-ins

Gazelle is worthless and preys on the poor and uneducated. You get less than 50% what you would from selling on ebay.

http://www.gazelle.com/iphone/iphone-4s/at-t/iphone-4s-64gb-...

http://www.ebay.com/sch/Cell-Phones-Smartphones-/9355/i.html...

Which in this case is zero, because eBay is rife with scammers preying on the *well-educated?

Gazelle and Amazon present almost zero risk to the seller, hence the price differential.

The chance of getting scammed like this on eBay is less than 2% (maximum chargeback rate)

Hence you are better selling 100 iPhones on eBay and taking the hit for two then sell all 100 on gazelle and not.

That's not quite genuine. You need to look at probability of a scammer winning your auction, not the probability that a scammer still has room under his/her chargeback cap. And even after that, I somehow doubt that those statistics are satisfying to the person who lost 100% of their money after selling 100% of their phone inventory (one phone).

If you plan to sell 100 iPhones, you are absolutely right.

If you are selling an iPhone and actually need the money, a 2% risk of being left with neither may be worse than just getting 50% of the money, safely.

2% is a way higher number than reality. The amount of fraud on eBay is well, well below a 10th of a percent.

Selling on craigslist and gazelle does not solve the issue. It could be lost in the mail or you could be robbed. Il take a 99% chance at getting twice my money than a 100% chance of getting half. To each his own though./

It's heavily skewed by category. For every Macbook or iPhone sale that goes awry, 10,000 Beanie Babies are traded between elderly housewives without incident.

It's less than 2% in the aggregate across eBay, but it's probably significantly higher for small high-value electronics like recent smartphones, especially if you're a small seller relying on eBay to detect scammers.

I would think selling on Craigslist for cash would be a much better option if you live in any sort of city.

I sold my iPhone 4 on Gazelle. I know I could have got more through Craigslist or eBay, but it wasn't worth my time.

With eBay I have to photograph it, write it up, list it, answer ridiculous questions about shipping it to the 3rd world and take payment in the form of casino chips mailed to me in a few months. Then I have to deal with the buyer, ship it, and the whole time I have to be worried about scammers. All the time I'm competing against companies that are listing 50 iPhones a day because that's their fulltime job and my account hasn't been used in 4 years. I wouldn't buy from me in that circumstance.

With Craigslist, things are a bit worse. Not only do you get occasional scammer emails, but I have to meet the person to physically sell the item. I've had people stand me up numerous times, be continually able to schedule, etc. And when I do meet up with someone, they could give me fake money, or just steal the item, or refuse to buy it meaning I have to go through the whole thing again.

With Gazelle I got a perfectly fair bid. I hit accept and in a day or two a box showed up on my door. Put the phone in it, dropped it off at a UPS store, and in a few days I got my Amazon gift card. No weird fraudsters, and I spent a total of about 10 minutes of my time. In return I got a price I was quite happy with, an easy experience, and I was able to use the money to help support my Amazon habit.

Worst case scenario, Gazelle could have said no and shipped the phone back to me. I wouldn't be out any money (unlike if I paid for eBay shipping), and I could have sold it on Craigslist.

If you were willing to take $250 less for saving 5 minutes time, by all means. Most of your complaints are made up though (casino chips, third world, etc.. )

I dont use craigslist, so I cant answer to that. I find the eBay process mostly fine, with the exception of not being able to specify who can bid/buy. If they did that it would be a way more reliable experience.

Unless you're a regular eBay seller, selling one phone on eBay is going to eat up a lot more than 5 minutes of your time. And that's the whole point - eBay is terrible for selling newish electronics unless you're a frequent eBay seller like yourself. To the point that people will willingly accept $200 less (eBay fees!) to avoid it.

It was two years old and it wasn't in great condition. I priced it out and I think it cost me about $50 or so, which was worth it for the total lack of hassle.

The complaints for eBay etc. are exaggerated, but they are a problem. The last few times I listed things on eBay it didn't matter that I set the item to only be sold in the US, only paid through PayPal, etc. I got messages from people offering to buy it if I would just ship it out of the country and accept a money order. Then there are the messages offering to buy it if I contact them directly and cancel the auction so they can save the fee. You see that kind of stuff now and then on Craigslist too.

The amount of time and hassle I saved was worth far more than $50. If it had been $250, I would have certainly gone with Craigslist.

isn't that the point, you're paying a premium for security.

For the UK there's http://www.envirofone.com/ or http://www.mazumamobile.com/ or http://www.fonebank.com/ amongst others.

I've used the first 2 with excellent results. Obviously you get slightly less than selling on the open market, but you don't have to deal with scammers, and get the cash quickly and without issues.

You can get much more on Ebay or Craigslist than Gazelle or Amazon trade-in!!

The limiting factor is the buyer's reputation with his credit card company. If he is repeatedly doing chargebacks people hopefully a credit card company will notice and not take his side or better yet, not issue him credit. The idea is that credit card companies also do not want to have this person as a customer, and probably this is a new scam he dreamed up, not an ongoing one.

Why would the credit card issuer not want that customer? Each time he issues a chargeback, they're getting paid a chargeback fee by the merchant (PayPal). It could even be profitable for the bank.

I'm surprised that people still use ebay, I gradually moved to Amazon marketplace/trade-ins 5-8 years ago and reading this, I'm glad I did.

So what's a good alternative to the evil empire of eBay/PayPal? In the UK (where PayPal is the only valid way to pay for anything on eBay) there is just Gumtree, which is not an auction site and many categories get barely looked at (and those that do are swarming with scammers too), plus a few small auction sites that have so few users it's not worth bothering.

I used gumtree in Australia to great effect a little while ago.

You may not get quite the same price you could through ebay, but you don't have any fees so I'm pretty sure I cam out ahead. That and transactions were completed in person for cash. When one of my items (WiMAX router) didn't work correctly for the new buyer I offered to go round and help and give a full refund if I couldn't get it working (it started working thankfully).

The weird thing about gumtree was the rapidity of response - I put a microwave oven on there a midnight on a Saturday night, and got three email responses within 15 minutes. They didn't follow up the next day, leading me to think perhaps they were drunk or stoned prospective microwave owners, but it still sold within 12 hours.

Perhaps I was too cheap, but it was an 'everything-must-go' emigration situation.

Read the comment text. Checked the userid. Was not disappointed.

All is discovered! Flee at once!

PayPal screwing over their users? That's new!

In all seriousness though, PayPal does need to get their act together. I've lost easily lost a few hundred through various transactions over the past couple years because of things like this - But there are so few options that are available to the mass public that it's hard to move away from them as a seller.

The problem with Paypal/Ebay should be referred to your State Attorney General. If enough people complain your state Attorney General could file a lawsuit against Paypal/Ebay. The way I read this is that Paypal/Ebay does not have the appropriate mechanisms in place to protect sellers from fraudulent chargebacks and the seller loses out even when the case is clear that the chargeback is fraudulent. The message appears to be that, "sorry, we agree with you the seller but since the buyers bank agreed to the chargeback you are out of luck." In my view the State AGs should force Paypal/Ebay to take the loss in the case of fraudulent chargeback thus providing an incentive for Paypay/Ebay to fix the system. The seller protection policy should be that as long as the buyer received the proper product, you should get paid for it regardless of fraudulent chargebacks honored by the buyers bank.

I've read all of the comments and believe the consensus is basically:

- It's a lot cheaper for ebay/paypal to let the scammers rip off people than it is to go after them, even when the facts clearly identify the scammer

- Casual sellers are both less able to detect fraud and are more greatly impacted by it

- The feedback mechanism is insufficient "insurance" against fraud

- "Seller protection" and "Buyer protection" are not suitable insurances against the kind of fraud that actually occurs

- The vast majority of transactions are legitimate

- The selling prices on ebay can be substantially higher than Gazelle/Amazon, or other reputable channel

- Fraud will undoubtedly occur in some cases

How about if a 3rd party sold real buyer or seller insurance? They would be in the business of identifying scam-like behaviour from buyers/sellers, help you to avoid fraud it can detect, and ultimately insure you from loss. Not sure how much the premium would need to be in order to make this work, but seems like an interesting idea.

Don't read TechCrunch, don't sell on Ebay, think twice about Apple... Today's HN headlines make me a bit depressed... :(

Yep, this is why on the rare occasions that I sell anything on eBay I write in the item description, and enforce, a rule that only accounts over 3 years old with more than 100 feedback are welcome to bid. I'm sure that shrinks my market and depresses my price but better that than being scammed.

The OP says he "Only sells to people with significant positive feedback", "Only ships to CONFIRMED Paypal addresses", and "Requires Signature Confirmation for items over $250"

Does ebay policy allow this? I thought the seller had to sell to the winning bidder, regardless of buyer's feedback, etc.

Those are flags you can set in your sale, regarding feedback at least. If someone has negative feedback, or lives outside of a list of countries, or has unpaid item strikes, the user won't even see your sale.

Confirmed address is a paypal policy you can also turn on, which forces the seller to use their paypal confirmed address when checking out or none at all. If someone wins and they ask you to ship elsewhere, you say no. Which sucks because the buyer might ding your DSRs (detailed seller ratings), which determine your ebay privileges, search ranking position, fees...

(Whoever decided that buyers should be exempt from negative feedback needs their fucking head examined)

Signature confirmation is an option you set with your shipper.

You cant set a flag for having little or no feedback, only bad feedback.

So if I am a brand new ebay account with zero feedback, I can still buy.

Its annoying.

>(Whoever decided that buyers should be exempt from negative feedback needs their fucking head examined)

It's the best decision ebay ever made. The seller is in a much better position to rip you off than the buyer is (as others pointed out, this scam is only possible for goods that you can convert back to cash). It used to be impossible to leave negative feedback for bad sellers, because the hit to your own reputation cost more than just eating the loss.

Fundamentally, is this a problem with eBay/PayPal or how credit card companies deal with chargebacks (and eBay/PayPal simply having to parrot the same model)?

As part of a large OTA, I've dealt with credit card chargebacks in the travel industry and it's really not pretty. As soon as a chargeback is received by the bank, you, the merchant, are presumed guilty. It's up to you to prove your "innocence". The buyer can simply claim one of the many frivolous reasons without providing an iota of proof and you'll be stuck with providing reams of paperwork - chargeslip, e-ticket, boarding pass, verification from airline that the passenger boarded the plane, etc. etc.

This sounds like time for a small-claims court case. Take Paypal to court. Given the evidence of fraudulent transactions, I would say there is a chance they could lose. And, if nothing else, it will cost them at least the $600 to pay for it.

The same thing happened to me with a BlackBerry a few years back. Somehow my Paypal account was limited immediately afterwards, and thus my eBay account was limited by virtue of connection.

I have no respect for either of these companies.

Interesting read. I had no idea about this scam and it appears I am right in the middle of one. Mind you, the item I sold is nowhere near as expensive. Lesson learned though, and I wont be using eBay any time soon.

If this happened to me, small claims court.

Small claims court requires you to be physically present in almost all states. You also have to sue in the state they reside, not where you reside (there are a few exceptions, none of which are remotely applicable here)

He may be able to pull off filing remotely with a few friends, but at some point he's going to have to fly/drive to ohio and show up, have a place to stay, etc.

This happens all of the time. Paypal is caught in the middle, and the credit card company almost always decides in favor of the buyer. It's because they're trying to provide the same service for both EFTs and credit cards, and those work very differently in the real world.

Unfortunately, PayPal sticks the user with the cost in this case. It would be out of business I'd imagine if it ate the cost.

Whenever someone pays for something with a credit card using PayPal, you automatically lose all of your protections if they dispute it through their cardholder. They just act as a passthrough.

Sounds like a problem with the credit card system rather than Paypal, since it appears the customer used a credit card. If you sold iPhones via Stripe, you're still liable for the same chargebacks.

We are actually developing a marketplace to help with cell phone fraud. We currently allow users to accept payments via paypal, google checkout, or amazon payments and expect to introduce Stripe Connect payments in 2013. This is only a start to preventing fraud but we have more features still being tested including a feedback system that we hope will work better than eBay's does. This thread is very helpful in determining what people want in a peer to peer marketplace.

Our site is still very new but we are open to criticism. cellsolo dot com

No group action possible ? such a pattern can't be left unprotected ...

Have you seen the updated PayPal terms of service? Claims to group actions are automatically relinquished.

Nope, as lame as it is, I didn't read them and I find this rule very surprising.

Being the grinch that I am, I stopped giving any feedback at all for buying or selling on eBay. The principal being if anything ever goes wrong, feedback is your only weapon.

After a seller started harrassing me by telephone after I gave them neutral feedback for shipping crap (not negative because they did refund me after I sent it back) I stopped giving feedback altogether. Never again. I avoid ebay altogether now for anything of value, and avoid paypal for everything.

I do the same. Sometimes sellers harass me to put feedback tho. I filter it, but still, interesting.

Did Ebay / Paypal forward the fraud information onto the bank?

Did the police do anything?

It really sucks that the seller took the hit. Who should? The credit card companies? The banks of the scammers?

Credit cards and Paypals both take a piece of a transaction fee and creating an illusion of a safety net is cost of doing business to them. Paypal has a much better chance of having direct contacts with fraud departments of other institutions than individuals do, so they should take it upon themselves to sort it out.

Of course Im not being objective here, but their Seller Protection wording could be a lot more forthcoming in communicating the lack of protection for this case.

The scammer should take the hit.

It is a problem when you consider a buyer has usually 6 months to do a chargeback and you have 60 days to leave feedback and cannot change it later.

The same thing happens to me the other day with a "item not as described" claim. Fortunately, the item was of much less value. Still pissed me off.

What was the item?

Can someone explain to me how you can have a general delivery as a confirmed PayPal address? Seems a bit silly that PayPal would allow this.

It would be interesting to contrast the same policies for other similar services (ex. Amazon Marketplace).

Sorry you're out that much money because of scam.

It's a tough problem, but without a third party to monitor the transaction there can always be scams when it's your word against his.

When the buyer made the chargeback, why isn't he forced to return the item?

Isn't this the obvious step that is missing from the whole equation?

No he was not. He went straight to his credit card and they took his side.

I had no chance of appealing because Paypal would not disclose the Credit Card issuer contact info to me so that I could contact them directly

He went straight to his credit card and they took his side.

Took his side as far as the chargeback, OK, I can see that. It's not very encouraging, but I can see it.

But took his side as far as keeping the item and getting his money back? That I don't see at all. How is that possible? And how would PayPal, and eBay for that matter, not expect a return?

What's to stop buyer from claiming the box contained a pair of old headphones ('significantly not as described')? The problem is the buyer is being taken at their word; forcing a return of bogus items won't help.

Yes, I can see that being an issue, and as a seller, you would want to somehow document what was actually shipped, otherwise the buyer could indeed ship back a bogus item.

But to not even raise the question of a return at all? That doesn't make sense to me.

You would have the opposite problem.

Even if the buyer sent back the original item, the seller could always claim that he received just a brick.

It's all just borked, pretty scary selling any one of items on ebay once you realise this :-(

Can you call up your (father's?) provider and report the phone stolen? Aren't those IMEI's blacklisted? If so, that might make it difficult for the buyer to unload. I guess you could also threaten to do that to said buyer, first, to see if that provokes anything.

Either way, a bummer of a story. I've had my own issues with eBay and rarely check there except for infrequently needed (cheap) odds and ends. I hope it works out.

I think the Consumerist would love to run a piece about PayPal facilitating mail fraud. You should tell them your story.

And it's not only seller protection that is lacking. Twice I've bought broken items that eBay & PayPal refused to let me return (one was a smartphone with broken touch, the other a kindle reported as lost/stolen).

They really, really suck. Sadly, there is little alternative to eBay.

As an ecommerce merchant, I've frankly come to view the whole chargeback thing as excessive and unfair buyer protection. The customer really is not always right - but the staff at merchant banks and PayPal seem to operate under the assumption that he/she is.

ebay will go into oblivion in a few years. The current generation barely uses them. As the last generation users slowly fade away, they will see the business dwindling. Add to it incompetent management who stifle innovation.

Why on earth anybody would be dumb enough to sell an iPhone 5 on eBay is beyond me.

These kind of stories is EXACTLY why I will never sell anything on eBay...

Thanks for all the support guys! I wrote up a post-mortem here: http://news.ycombinator.com/item?id=4883468

it includes some fun site stats

> the buyer’s credit card company decided in favor of the buyer.

How is this PayPal's and not the credit card company's fault? Couldn't the same thing happen to anyone accepting credit card payments?

Is this behaviour of PayPal possible only in USA, or it also applies to EU countries? Does EU regulations enforce some additional protection mechanisms for both sellers and buyers?

I'm also wondering this. Most of the stories I hear are of issues in the USA/Canada rather than the EU. I bet we get our fair share of scams too but it'd be nice to know if there are any other protections (especially in the UK).

Just my 2 cents, i've sold two smartphones on eBay and not had any issues. I once did have a scam buy-it-now where they'd asked to ship to a foreign country but was able to relist quickly and sell to a legitimate buyer.

I remember when eBay changed their policy so that sellers could no longer leave feedback, absolutely ridiculous. And I wouldn't trust PayPal as far as I could throw them.

I did recently buy some old equipment for ~$250 on ebay from an amateur seller. I'm not sure what eBay can do, except charge higher fees and provide some insurance.

In US you don't have the "pay at delivery" system? E.g. the postman gives the item to the buyer in exchange of the payment, then the post office pays you.

It's called "friendly fraud":

http://en.wikipedia.org/wiki/Friendly_fraud

Cute name, serious problem.

I learned a long time ago never to sell expensive goods through Ebay. It's a bad time waiting to happen.

Efforts and time required

I think this problem goes a bit deeper and it is something I have been wondering about.

When I send a letter or a package and want to be sure it was received, I can rely on tracking or I can go the extra mile and request a signed return-receipt. Now all I have is confirmation the letter or package was handed over and someone confirmed they got it. They can still claim when they opened it, it was nothing but empty pages or a couple of stones - and there is no proof I actually put an iphone or important documents in there. There is nothing that guarantees both the seller AND the buyer that the actual item was very well in there and it was just as advertised in the auction and there is no easy way to prove it either.

From a legal point of view, how could you solve this? Let a third, independent and reliable party handle the transaction for you? Or do you pay a notary to certify that you actually packaged the iphone and that it's condition is as advertised?

Polish Post Office provides a service solving this very problem: the sender can marked the parcel with ``recipient opens the parcel in presence of mailman before payment and can return it right away without payment if she so wishes'' option. This optional service is quite cheap, at about 10% of general shipment fee methinks. The other downside is that recipient have to pick the parcel, either at doorstep or at the post office; it cannot be left in the mailbox.

On polish market, `allegro.pl' -- rather than eBay -- is the dominant auction/garage sale platform, and it is somewhat common to request such option when ordering from sellers without reputation. There is some abuse of this system, but it seems low enough.

This sounds fantastic, both the option and allegro.

I had a good experience selling someone a quite pricey item with cash-on-delivery and I don't think the buyer would have had much chance to rip me off there; of course as a fraudulent seller you could just send them the above mentioned stones or a cardboard box labeled "macbook pro" (which was prominently done to get back at a scammer).

It's like this in China also plus alipay holds the money in escrow.

TIL that the Polish post office offers services that the US Postal Service does not. I wish the USPS had the "Recipient opens" option.

> Let a third, independent and reliable party handle the transaction for you?

I thought that party was eBay.

> I thought that party was eBay.

Initially you would think so, yes; but they never receive and check the package neither do they actually receive the money, per se, since paypal is a "different" company and seller or buyer might choose a different form of payment.

It'd be nice to have a 3rd party receive the package, open and photograph it, even try it out, then package it back up and send it off to it's recipient. BUT... The USPS needs to introduce 3rd party interception in order for this to work. Otherwise buyers would be paying double postage + the cost of interception and checking.

Add Amazon to your list. It's much worse.

-You can't block scammers -Buyers can return an item for any reason (even a year after they purchased it from you). 99% of the time, Amazon will let them keep the item and refund them. This happened to me many times. -If you get banned, they will keep your money for 90 days. Banning is based on automated robots that look for patterns. You have no recourse. All Amazon associates will tell you to use their email support system. The email support system is manned by either scripts or reps that will only respond with canned answers.

Ebay isn't nearly as bad. I've had claims filed against me a few times by various people and as long as I had the tracking number, I won the claim.

As someone who made amazon thousands of dollars, I got tried of being treated this way. The only reason they can still continue this behavior is because they are the biggest marketplace.

It's hard for competitors because you need the traffic.

The whole tech culture is also to blame. I'm sure there have been a LOT of great alternate ebay, paypal start ups who just didn't get traction. Bloggers won't talk about you if you haven't raised a million and you won't get much traction on google without bloggers or spending major bucks.

My Dreamybids.com site for example, is an awesome service that uses the quibids model. It allows anyone to host their own auctions for products or services. Meaning a graphic designer could auction $200 of services. 10 people pay $20 to participate in the auction, one person wins and gets $200 of graphic design for $20.

Good luck getting traction with that if you aren't in the tech crunch, mashables, stanford, in club.

>10 people pay $20 to participate in the auction

That doesn't seem like an auction and to be honest I don't really like the idea either.

Then you are part of the innovation problem. You could be the one auctioning a service instead.

It doesn't really sound like an auction - more like a raffle. i.e. If 10 people pay $20 but only one wins it...

I actually looked at making a site like this for selling my house a couple of years ago. Fortunately I did some analysis before building it as in NZ it came under the gambling commission rules. This meant that I could only build a site like this if I donated all the proceeds to charity - unfortunately that was against what I was trying to achieve so never went through with it.

Quibids is one of the scammy-iest "auction" site abound. It's name is called Penny-Scam Auction

The gist for those that do now know: you buy bid-packs. A bid costs .60$, per BID. This doesn't matter if you "win" the item. If you do "win" (gamification abound), then you pay what the bid was brought up to. The other scam-note is that bids increase usually by $.01 so you see shit like "XYZ WON AN IPAD FOR 2.73$ !!!". While in reality, the "winner" pays $2.73+$40 in bids, along with everyone else to get the permission to bid.

If you type in quibids in google, the top auto-fill is SCAM. Just go look it up.

Btw UnFundedHype: I hope your scam of a business fails, and fails hard. You know better than this shit.

I can get just as many links for ebay and craigslist "scams"

It's no different than a gaming tournament where you pay a $10 entry fee.

You'd keep yourself from popping a vein if you just asked how does yours prevent the headaches of quibids.

Everything I didn't like about quibids I removed from dreamybids.

1. There are plenty of ways to get free bids, you don't even have to buy 1 bid.

2. One of the auction formats, everyone in the auction gets x amount of free bids. Each bid the final price goes up x amount of cents. At the end of the auction the winner pays the final price, if you didn't win the auction it costs you nothing since you never bought bids. Like this free auction http://www.dreamybids.com/contest.php?id=332

3. You can host your own auctions. So even if you did lose $50 in bids, put up an item of your own and make your money back. If we collect 30% more than the retail price of the item, you'd get 50% of the overage, so you can make way more than you would from selling an item on ebay or craigslist.

4. There are some great gamification tools that allow you to freeze the bid of the next bidder, or buy the timer down, or block a power bidder from joining an auction. Also once the auction starts new participants can't jump in.

Asking questions keeps you from being theamazingidiot

That's not an auction, that is a lottery, a raffle basically.

It is, and in most US states, is heavily regulated, something I don't see addressed by the OP (who in another post makes some veiled reference to Real Money Trading of in-game currencies, another "sketchy" industry).

This the kind of "innovation" rather similar to lottery, and I would rather it did not exist at all.

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