Seller Hazards on eBay & PayPal
by Richard @ Bizmarts – July 2015, with periodic updates
Both eBay and PayPal provide greater transaction protections to Buyers than they do to Sellers. So does the Federal Trade Commission, as well as other government agencies. A casual perusal of the online world will yield dozens of cases where Buyers were assisted in addressing claims against dishonest Sellers, especially since 2008. While the process in some cases was lengthy, most cases appear to be settled in the Buyers favor.
However, what protections are available for Sellers against dishonest Buyers? Huh? you ask. Surely Sellers are protected against fraudulent and dishonest online transactions. As in the TV ad for Hertz, the answer is more like “not exactly”. Since eBay transactions are effectively binary, ie: the Seller vs eBay/PayPal, a Seller frequently ends up with less protection than if just one entity were involved. Each entity in the eBay/PayPal segment will convey the impression to the Seller that each is attempting to address the issues, but in actuality is shifting liability to the other partner. They have also gotten much more controlling, almost abusive one could say, in this process.
Some of the ways Sellers are taken advantage of include:
- Buyer claims product was not received from the Seller
- Buyer claims product was not as described in the auction listing
- Buyer overpays for an item with a check, and requests difference be refunded to them
- Buyer threatens to leave negative feedback against Seller if certain conditions not met
- Buyer claims product was damaged in transit
- Buyer removes, substitutes, briefly uses, or damages product on purpose, then demands a refund
- Buyer seeks chargeback from their credit card issuer for a variety of reasons
- Buyer is underage using false pretenses to obtain product
- Buyer has a new account and doesn’t care about their feedback, rating, or standing with eBay or PayPal
- Buyer bids on an item, then does not follow through with purchase, or attempts to impose conditions on how they will complete the transaction
- Buyer requests delivery to a site that does not offer delivery verification, especially for international shipments
In most cases, both eBay and PayPal take steps to protect themselves first, Buyers second, and Sellers last. If there is a problem transaction, the first thing these services do is seize all transaction funds from the Seller’s account, and not just the winning auction amount; but also including shipping costs, regardless of Seller’s clearly stated provision that shipping costs are non-refundable. PayPal does not release the monies they obtained from the problem transaction in listing and closing fees in a timely manner. They can get away with doing this based on the Conditions of Use agreement approved by Buyers and Sellers as a condition of using their service.
It is thus, extremely easy for a Seller to be out the listing and selling fees, out the money received for the product, minus the product, absorb the outbound shipping costs, receive negative feedback, and have to spend several hours dealing with replies, paperwork and email messages about the transaction for a month or more, and in the end coming out with a returned shipped item damaged beyond salvagable condition due to actions by the Buyer or their Shipping Agent, with absolutely nothing positive to show for the transaction.
And the really atrocious element in this is the almost utter lack of effective protections a Seller can put in place to prevent or ameliorate these transaction. However, there are a few thing Sellers can do to lessen the likelihood of being subject to the down side of selling on eBay, and receiving payment via PayPal.
- Do not add a bank account to your PayPal account. Take funds out by having PayPal send you a check instead of direct bank transfers
- Do not keep a balance in your account larger than you would feel comfortable with if it were seized in its entirety
- Pay for eBay fees directly from your PayPal account rather than giving eBay access to another credit card or your bank balance
- Always ship by FedEx, DHL, or UPS, and require recipient signature by an adult
- Never ship anything that does not have a tracking number assigned to it, with full value insurance on the item
- Be extra cautious about drop shipping product, or shipping to a PayPal unconfirmed Buyer
- Try to include product and serial numbers of the item in the listing, and put the onus on the Buyer to confirm the products suitability to task
- Never include objective evaluative comments about the product if it is not new in the factory sealed box
- Use different processes, or accounts, for potential claims based on perceived vulnerabilities
- Never offer a refund, exchange, or adjustment without an explicit release from the Buyer in hand
- Do not waste your money, and time agreeing to Square Trade representation unless your items are new in the box, or is a high dollar item.
- Plan on receiving severely damaged goods back from the Shipper if they pick it up to process a claim
- Understand up front that a product shipped internationally will take at least two months to be returned to you, and it will almost never be in the same condition as it was when you shipped it.
- Forget about receiving effective, timely, or judicious replies from eBay or PayPal to any phone or fax messages you feel tempted to send
- Do not threaten legal actions, or state what you will do. Either do it, and await responses, or don’t waste time/money/effort in what will most likely be a lost cause.
- Acknowledge and understand the eBay will automatically deduct return shipping costs from your account if the buyer asserts an item is “not as described”
- Post your negatives about eBay and PayPal to any and all appropriate venues
- Present your rebuttals with only factual statements
- Don’t be in a hurry to do anything in response. Time is on your side once eBay/PayPal has seized your assets.
- Understand that 95+% of your transactions will be flawless, pleasant, and beneficial
- Immediately add problem transaction buyers to your eBay prevented bidder list
- Forget escrow accounts unless you like living dangerously
- Always allow sufficient time for checks, wire transfers, and credit payments to clear before shipping product
- Beware of any Buyer who is “in a hurry” or requests special treatment
- Understand that the more correspondence you have with a Buyer before a sale indicates it will take that much more time to respond to them after the sale
- If you have a “Nervous Nellie” bidder, you are fairly likely to have a Buyer with “Buyers Remorse”
- A Buyer who pays with PayPal expects shipment to occur almost immediately, and may get “ticked off” if it is not shipped promptly
- Never give out your personal information if you can possibly avoid doing so; especially your SSN# or your Banking Account information
- Do not allow any company direct withdrawal access to your primary checking account, especially if you have overdraft protection
- Come up with a value on your time/effort per episode for a standard chargeback or transaction challenge, and settle immediately if the time/effort value indicates it would be cheaper to settle rather than get involved in defending the claim.
- Act with the knowledge that any oversize shipping carton, or item weighing more than 50 pounds will be handled very roughly by carriers
- And remember, negative feedback can only be attached to Sellers, not Buyers
And finally, keep abreast of changes to the online marketplace. Be pro-active in response to edicts from eBay or PayPal that you discern may adversely affect you or others. Have fun, and don’t let the bastards grind you down !