Benchmark Reviews

Monday, 02 April 2012

How to Cheat eBay Sellers and Scam PayPal

When eBay Buyer Protection is abused, PayPal punishes honest sellers with bad policy.

Most people are familiar with eBay, the web community with an endless catalog of items ready and available for purchase from across the globe. Like many who browse the auctions, I've needed to purchase a hard-to-find or out-of-production item and found it listed by hoarding collectors and International sellers. I also occasionally use eBay for selling random unwanted items to help fund the upgrade or repair of another product. After nearly three-hundred transactions spanned over ten years my overall experience has remained positive, but very recently my opinion of eBay and its online banking service PayPal have significantly changed.

Packed away in boxes and long forgotten, I had been sitting on hundreds of old video games, software programs, and operating system discs that had been updated or upgraded through the years. One box led to another, and I eventually discovered dozens of brand new vintage radio control car parts purchased almost twenty years. As a result of this difficult economy and my buried treasures, I visited eBay in hopes of turning old merchandise into cash for new projects. So after spending hours observing how supply and demand dictate the final auction price, and how inventory trends effect the outcome, I was able to begin selling these miscellaneous items on eBay for a small profit.

Selling on eBay has opened my eyes and I've learned a lot in such a short time. For example, never sell it all at once. If an old or rare item is auctioned only a few times per year and then several are suddenly listed all at once, a formerly limited supply has just been flooded with inventory that reduces product demand along with sale price. I've also learned to let bidders and buyers fight it out by offering very low auction starting bids, because if there's enough demand the price will quickly exceed the expected purchase price. Unfortunately, I've also learned that not everyone on eBay is honest and forthright, and many policies are abused in their favor.

It may not surprise you to know the world is filled with bad people, and eBay openly welcomes them. As the world's premier ecommerce portal, people flock to eBay to prey and profit on the unwitting. Some bad buyers or competing sellers may bid on and win your auctions, without ever making payment, thereby eliminating available inventory for several weeks until claims are opened and closed. But as a result of being a publicly traded company with an ongoing drive for increased revenue, eBay strives to keep activity levels high so shareholding investors are impressed, and so they seldom punish members in violation of policy. Of course, I had to learn this the hard way.

Very recently I began selling off some of those old items, which have been out of production or unavailable for many years and considered rare. The bidding was fun to watch, and it was always a pleasant surprise to see an item go from collecting dust to collecting payment. I would package my items in padded poly mailers (purchased from eBay sellers), and place the adhesive shipping label directly over the sealed flap. I knew the item was sealed and protected, expecting that in the worst case USPS might lose my package in the mail (which happens way too often), but then postal insurance would help cover it. Well, I was wrong. The worst that can happen is that the package actually reaches the buyer, nullifying insurance, and then they make a claim.

While eBay does try to make a small effort and weeds out repeat offenders, their financial clearinghouse sister-company named PayPal does not. So when I packaged an item on Saturday morning and drove it off to the Post Office in hopes of impressing a buyer having only three previous eBay transactions with an especially prompt delivery, I was unprepared for the open case notification that came two days later indicating an unopened yet empty package was received. Apparently a printed shipping label with the package weight and tracking number aren't enough to defend my position, so I responded to the claim that a full refund would be given upon return of the claimed 'empty envelope', and then patiently waited.

Weeks later the buyer wrote to me using the email address PayPal reveals to them (and thus bypassing the eBay message system), telling me the item was found loose in a bin and delivered. I was relieved, and messaged the buyer to kindly close the claim. As a precaution, I submitted a screen shot of the buyers email into the still-open PayPal claim, expecting it to become moot once the buyer logged in and pressed the button to close the case. This didn't happen, and a few days later PayPal charged my account for eBay's listing, shipping, and selling fees along with their own payment brokerage fee, and then refunded the buyer his entire paid purchase cost. I was stunned.

I have since learned that PayPal has a policy to automatically side with buyer whenever an empty envelope claim is made, even when USPS delivers the parcel without a damage/open package notice, and even if there's evidence attached to the claim that clearly reveals that a buyer has received the item. So I called PayPal and spoke to a case specialist and two supervisors, but none of them showed any interest in the details of my case. They made the bottom line very clear and simple: unless the buyer manually reports the item as received and then closes the claim, they get their money back and can keep the claimed 'empty package' and item sold to them. Just imagine the impact this policy has on legitimate sellers who are scammed out of their goods by over-protected buyers.

While discussing this policy with PayPal, I proposed a hypothetical situation where a dishonest buyer purchases a very expensive item such as jewelry from an honest seller, and then abuses their buyer protection policy to claim the package arrived empty. I was told by the PayPal supervisor "it is our policy to side with the buyer in empty envelope case". It's sad to imagine a tiny one-person business laboring to produce and sell product for the smallest profit margin, only to have eBay and PayPal slap them with a payment reversal in addition to seller fees and expenses associated with cost of goods and shipment. I am hoping for more awareness with the publication of this story, so that PayPal might revise their policy to look at evidence provided by the seller and shipping agent rather than disregard them in favor of automatically siding with the buyer.