eBay: A haven for scammers

7 ON YOUR SIDE

SAN JOSE, Calif., Nov. 26, 2007 - With 82 million people actively using the site, eBay is a huge target for scammers out to make a quick buck. A recent survey by consumer reports found nearly half the 2,500 people surveyed experienced some sort of deception using eBay.

Despite the complaints, a vast majority of those surveyed rated their satisfaction with the auction site as high.

Both users and the San Jose based company remain concerned however that any fraud on the site could hurt both the company and its users.

Jonathon Davis of San Jose enjoys entertaining -- entertaining with his music and his movies.

The film student got excited when he saw the computer he needed for editing selling on eBay at nearly half the retail price.

"I was thrilled. I was just stoked. That may have blinded me from maybe taking a second look at what was happening," said Jonathon Davis.

That was his first mistake. It's clichéd, but true. If something is too good to be true, it probably is.

The seller asked Davis to e-mail him directly to arrange the purchase, and he did.

That turned out to be mistake number two. eBay warns its customers never to communicate with a seller outside normal eBay channels.

Davis received a second e-mail, complete with logos from eBay, square trade and western union.

"So it's all there. And it said the money was insured and it has all these steps. It looks so legitimate that I fell for it," said Davis.

He was asked to wire Western Union $1,100 dollars to the seller, and he did.

That was mistake number three. eBay says never wire money to someone you don't know.

Davis lost the $1,100 dollars. He sent the seller, and got nothing in return. He turned to eBay for help, but they couldn't help him because he didn't follow the company's warning or advice.

"And they say we usually don't encourage people to do transactions that are not on eBay so you shouldn't have done that. Basically, that's it. There's nothing we can do for you," said Davis.

Those who pay with eBay's own pay pal service are covered up to $200 dollars. Those who buy from seller's who average a 98 percent approval rating from at least 50 buyers are insured up to $2,000 dollars.

The buyer protection program paid out $126 million dollars in claims in 2006. But eBay offers no protections to those like Davis who don't use pay pal.

The company says it doesn't take these scams lightly.

"We consider trust to be at the heart of everything we do at eBay. Without trust, frankly our business doesn't work," said eBay Vice President Matt Halprin.

Every time somebody like Davis gets scammed, that trust is jeopardized.

In fact eBay's annual report warns its shareholders that customer complaints or negative publicity about the company's customer service could diminish use of its services.

Its annual report also warned about the substantial number of complaints made to government regulators about both eBay and pay pal.

"If I could get five minutes with every member, I'm sure we have almost no problems at all," said Halprin.

With 82 million active users and $60 billion dollars a year traded on eBay, the stakes are high.

San Jose police give eBay's security efforts high marks.

"I feel eBay and pay pal are very serious. They're fraud investigation team is always very cooperative," said Officer Kirk Wilson from the San Jose Police Department.

eBay employs a security team of 2,000 people which polices the site 24-7. Its Web site includes warnings and tips on how users can use the site safely.

"Read feedback. Read the comments, not just the score to see what people are saying. Communicate with your seller. Talk to them. Get to know them a little bit," said Halprin.

But how easy is it to find those tips on eBay. We conducted a little experiment asking passersby to find the warnings posted on both Craigslist and eBay.

First eBay.

Joanna Redding: "I'm having a little trouble."

Mary Cartwright: "I really can't find it"

Elise Westphal: "I don't know where to look. It's not in the search."

Alex Vaughan: "It's not very obvious."

Bagg Monster: "I'm having some difficulty."

Alex Vaughan: "Here we go. Security and resolution center."

It took an average of 70 seconds to find the security warnings on eBay. Now lets try Craig's list.

Joanna Redding: "Oh, its right over here."

Mary Cartwrigth: "There it is. I found it"

Alex Vaughan: "I got it."

Elise Westphal: "It's like right there on the front page."

Bagg Monster: It's right there. Got it."

On average, the warnings were found on Craigslist in less than 10 seconds, seven times faster than eBay.

Here may be the reason: The link to the security page on eBay is on the bottom of the home page in small lettering.

The link to the scam page on Craigslist is in larger letters near the top of the home page.

"We wanted to err on the side of warning people and make sure we made the warnings as prominent as we could," said Craigslist CEO Jim Buckmaster.

It's important to note a survey by consumer reports found 70 percent of eBay users are highly satisfied with their experience.

"Most people thought they were getting a good deal," said Consumer Reports senior editor Todd Marks.

But nearly half had complaints about the condition of merchandise being overstated, merchandise being shipped late or communications with eBay being poor.

"They want eBay to communicate more with them. They could take steps to do that, I think they'll be headed in the right direction," said Marks.

John Vogel of San Jose says he became frustrated when he tried to alert the company of suspicious activity on the site.

"I first started e-mailing. All I got back is 'those standard I don't know the name of those automated mails that are just automatically sent.' I got tired of that," said John Vogel from San Jose.

eBay says it's serious about improving.

"I think eBay can get better. I do think we can continue to do a better job and focus on improving customer experience," said Halprin.

You can find some good bargains and hard to find items on eBay just make sure you take the precautions mentioned in our story, and your experience should be a good one.