Let The Ebuyer Beware

By Jean Chatzky

Blakely Smith, an ad-sales rep from Philadelphia, was trying to hold down the cost of her upcoming wedding, so she did what a lot of cost-conscious brides are doing these days. She shopped for her wedding dress on eBay. And she found it: a beautiful Monique Lhuillier design that was lacy and sophisticated and everything she had hoped for. Smith started bidding. And hoping. And bidding again. At the end of the auction, unfortunately, her bid of $2,400 wasn't high enough to meet the seller's hidden reserve price. That meant the dress didn't sell. Smith was disappointed. Until she received a message from the seller--or, rather, someone she thought was the seller--agreeing to accept her bid but asking her to conduct the transaction outside eBay by wiring the money to a Western Union office. In her excitement Smith didn't stop to think that the arrangement sounded a little fishy. She jumped. And she got scammed. She wired the $2,400 and got no dress in return. Only a heartless--and brazen--message from the scam artist copping to the fact that she'd been had.

Smith isn't the only person to have been burned in an Internet auction--not by far. According to the list of top consumer complaints to the Federal Trade Commission for 2005, released in January, Internet-related scams accounted for 46%, or 316,000, of all fraud gripes last year. And the percentage of Internet frauds with "wire transfer" as the reported payment method more than tripled from 2003 to 2005.

If you like to buy things on eBay and other online auction sites, as I do, here's what you need to know to protect yourself:

STICK TO THE SITE. If you receive a response inviting you to do business outside eBay or whatever site you're using, the smart move is to decline. Even smarter: don't enter into a correspondence at all.

AVOID WIRE TRANSFERS. Use secure payment systems like PayPal for small-ticket items. For more expensive items, use a legitimate escrow service like Escrow.com in which your money is held by an intermediary until you've inspected the merchandise.

DO YOUR HOMEWORK. Always carefully check the seller's feedback ratings. You want to see dozens of positive messages attesting to his or her reliability. Also, make sure that the merchandise is pictured. You want to see what you're getting, preferably in scale and from many different angles. Finally, pay particular attention to shipping arrangements. Who's paying? How much will it cost? And does the cost sound reasonable?

COMPARE PRICES. Look at recent auctions of similar items. If you see that the same thing sold for about the same dollar amount, you can generally expect that to be the market price. Buyers who don't compare prices risk overpaying or--like Smith--getting taken. Some crafty sellers use friends and associates to get a bidding frenzy started and then let you know--after the auction has closed--that the other bidders have defaulted and you can get the item for your "bargain" bid in the middle of the range. In that case, of course, your bargain bid is no bargain at all.

46% Percentage of fraud complaints in 2005 that were Internet related

HOW WE USE EBAY o Total value of the items purchased on eBay last year (up 30% from 2004): $44.3 billion o In 2005 eBay sellers listed more than 1.9 billion items for sale o At any given time eBay buyers can choose from more than 50 million items in 50,000 categories o More than 724,000 Americans report that selling on eBay is either their primary or secondary source of income