ReliaBlog

Hidden Bidders and Trust

While talking to a customer over our website's Live Chat feature, they mentioned that they are planning on shifting their sales efforts away from eBay and focusing more on their own website.  However, they re-iterated what seems to be a growing trend, especially for larger sellers on eBay—using the platform as a means of marketing. 

The client I spoke with fingered fraud as the impetus for their changing usage of eBay.  For them, eBay is becoming a marketing tool as opposed to the be-all-end-all of the online auction industry, as it was previously.

Granted, eBay has made a few changes recently that are supposedly aimed at battling this problem, but let's look for a second at their true effects.  Today let's dissect the new hidden bidder policy.  What is designed to decrease the amount of second chance offer fraud, is actually decreasing the amount of trust buyers will have in sellers.  Trust between buyers and sellers on this platform is already a huge hurdle with the highly publicized cases of fraud, and hiding bidder IDs will just stand to make it worse because of shill bidding.  Whereas before this change buyers could see who they were bidding against, now they are in the dark.

One of the attractions of eBay in the first place was that buyers enjoyed the "game-like" quality to bidding.  It spoke to the competitive spirit in all of us.  Watching your bid, seeing if someone beat it and then beating them in the last seconds by only a few pennies…  Now the face of the competition (I always imagine what people are like from their eBay IDS—admit it, you do too!) has been removed and it's like playing chess against a computer, limited in the amusement factor.

Does the value of hiding bidders' eBay IDs outweigh the detrimental effects?  Doubtful.  Other policies and changes would provide greater impact on the platform (and will be discussed in future postings) and actually attack fraud one eBay.  But with the company performing a balancing act to stay afloat, they'll continue to issue changes that far from rock the boat. 

Spring Cleaning - How I Got Cleaned Out (part one)

Two weeks ago, I started my spring cleaning. Part of my process is making piles. I make a pile of trash (usually the largest), a pile to sell, a pile for charity or to otherwise give away, and a pile of things that need to be put away somewhere. Most of the contents of the pile to sell went up on eBay, and resulted in me listing about 10 items (so far).

I should probably do this cleaning process more often, since 8 of the 10 items sold, and I made about $300. Not bad. However, I now have found out that I really didn’t make $300. In the days since the auctions ended, I have had problems with 2 of the auctions. That is a pretty big deal, considering that 2 auctions makes up 25% of the sold items. I had 2 different problems. Here is what they were and my analysis.

One item sold and was immediately paid for. It was a Franklin-Covey binder and sold for about $50. I received the payment right away through Paypal. The address was not confirmed, but it was for a planner, was only for $50, and the email name matched the shipping name, so I figured what the heck? The person had 30+ feedback and no negatives, so I shipped the item. I got an email from FedEx on Friday that the item had been delivered. Later that afternoon, I got an email from Paypal saying that the payment had been reversed. Paypal took the $50 out of my account, leaving me with a negative balance. I then got an email from Paypal saying that if I didn’t transfer more money to cover the regular balance, I’d lose my merchant rate that I’ve had from years of use. All this in a day. Wow. I tried calling the buyer, but the phone number was disconnected; I tried looking the buyer up in the phone book online, but there was no listing. I emailed Paypal and they sent me a short email saying that I had no seller protection since it was an unconfirmed address. Nothing. The money and item are gone.

All of a sudden, the $50 felt like a lot more money to me. Although when I was sending it, I thought the risk was low and $50 was an acceptable risk, now I wish I hadn’t done it. I could have surely re-listed the item and gotten $50 from a buyer with a confirmed address. But, I was careless, and now I lost my item and my payment.

ReliaBid would offer me recourse in this situation. I could submit the buyer and the address to ReliaBid and the debt collection agency would probably find this eBay non-paying bidder and help me collect on the unpaid item. But, I also made another careless mistake, one which is a bit embarrassing to have made as CEO: I didn’t have the account I used signed up for ReliaBid! Oops. Big oops. With ReliaBid costing only 25 cents for every $100 of business I do, my cost for these transactions would have been 75 cents. That is like a 75 cent insurance policy for my $300. And if I had been signed up, I would now have some options. But, because I was not signed up and the seal was not in my listing, ReliaBid can’t help me. Not even since I am an employee. The seal has to be in the listing for ReliaBid to offer collections. We get so many inquiries about whether ReliaBid can collect on an unpaid item or non-paying bidder without the seller being a member and having had the seal in the listing. I made the same silly mistake myself and it cost me $50. Well, actually it cost me more, because I had a problem with a non-paying bidder in a second item I sold. But, I’ll save that for my next post, later this week…

$3500 Raised for EFF, Big Value in Consultative Advice

Last week the auction which Scott Beale, of LaughingSquid, placed online to raise funds for the Electronic Frontier Foundation (EFF) closed on eBay. The auction raised over $3500 for the EFF. I was really excited to see the money raised, as well as to see that the auction ended with a legitimate bidder. I spent a lot of time on the phone working with Scott to get this item sold and to make sure that we avoided fraud and ended up with a winning bidder. I'm glad it worked out.

I hope we get to work on other charity projects in the future. I've been working so hard on building ReliaBid, I haven't had the chance to do much charity work or community service lately, and this reminded me that I like and miss doing so. As I said, I hope ReliaBid has the opportunity to work with more charity eBay auctions in the future, to help them avoid online auction fraud.

The opportunity Scott gave me to work with him on this also brought to mind just how valuable the ReliaBid Distinguished Clients Program (DCP) is. For sellers that do a high volume of sales ReliaBid's DCP offers not only discounted fees, but also access to an individualized account manager that will help the eBay PowerSellers with advising & strategy.

This is the sort of service I provided to Scott, working through different problems and creating adaptive strategies to deal with them. We have an entire team at ReliaBid that does only that for eBay PowerSellers as part of our service offering.  While to be a PowerSeller you have to be somewhat savvy on eBay, ReliaBid still has a collection of industry best practices and an intimate knowledge of how to best fight fraud and can use all of these tools to help our clients succeed. I feel like this is an often overlooked part of our service, but with Scott's auction, it was actually the most valuable thing we provided.

Charity auctions interested in receiving ReliaBid's protection please feel free to email us.

Shill Bidding on eBay

Researchers at Carnegie Mellon University (CMU) have been developing a software solution designed to recognize fraud in online auctions. Specifically, it will analyze bidding patterns to look for shill bidding. What will the impact of this new software being developed by researchers at CMU be on eBay?

If released to the public, members of the eBay community could potentially see if sellers are driving the bid price up with shill bids. Shill bids are bids that the seller enters, or that are entered on the seller's behalf, in order to drive up the final bid price. When shill bidding is successful, the shill bids are overbid by a legitimate buyer. Shill bidding schemes have become increasing complex on eBay, with sellers using multiple accounts to enter shill bids on their items to increase their profits. A practice unfair to buyers, shill bidding, can be hard to spot, but now this software may make it easier for buyers to steer clear (and report) auctions from sellers that are involved in shill bidding and fraud.

Of course, the greatest utility of this software would occur if eBay were to adopt it and implement it on the enterprise level, weeding out shill bidders and sellers that fraudulently inflate their final values. However, it is because eBay takes a percent of the final value of an item that it seems unlikely that it would be in eBay's favor to adopt this solution. Should the software prove successful in reducing shill bidding, it would ultimately drive down the final values for many transactions, and subsequently reduce eBay's profit on those transactions.

Another potential issue with adoption of an anti-bid-fraud solution is eBay's existing difficulty providing quality customer service. While one would hope that should an anti-fraud solution be implemented, it would be one that works, nothing is 100% and it should be expected that there will be some mistakes.  With numerous complaints already from people within the community who feel eBay's Customer Service is a bit lacking, what will this added influx of reported individuals, some of whom may be legitimate sellers, do to an already taxed communication system?  It would not seem implausible that innocents would be caught in such a dragnet.

It is reassuring to know that there are developers out there who are looking into a solution for this problem.  But, like most other security solutions, it will need to be adopted at the enterprise level to be truly effective.

Protecting Charity

As I was reading the news this morning to stay in sync with the happenings of the tech world, I was really interested to see that Scott Beale, of Laughing Squid, was auctioning off one of the expensive Windows Vista Laptops that Microsoft has sent to popular bloggers, in an attempt to get their opinions. It created (an unnecessary) mini-scandal when MS did this. I think that the idea of Microsoft sending out nice laptops pre-loaded with Vista, before the release of Vista, is a good idea. I think it was poorly executed though. There was an uproar in the blogosphere that MS sent gifts to bloggers to bribe them, and then a further outrage that some bloggers would consider keeping the laptops. I found this especially interesting because I come to ReliaBid from Gartner, a firm that prides itself on analyst objectivity and has a very strict set of rules to assure that. I don't expect all bloggers to be purely objective, unless they declare themselves to be objective journalists. And even today, I'm sorry to say, it frequently feels like objective journalism, even, is somewhat dead. Microsoft sending computers? People accepting them? Not a big deal in most cases...

Rather than become embroiled in a debate, Scott chose to auction his notebook for charity. I think that is great. Not only am I a fan of the charity- the Electronic Frontier Foundation (EFF), but I think this was a great way to turn the situation into one where all sides win. However, when I looked at the auction I was disappointed to see that there were apparently some fraudulent bids. I reached out to Scott and offered him ReliaBid's service free of cost, to help reduce bidding fraud and to get the EFF their donation quickly and without incident. We're happy to be helping out!

Online Seller Would Make Dog the Bounty Hunter Proud

One woman has taken receiving payment for the items she sells on eBay to the next level.  Connie Lang of Naperville, Illinois recently made a cross-country trip to track down her money after selling her family’s RV camper in an online auction for $11,000.  The winning bidder sent a deposit check for $500, which cleared quickly and thus assuaging any doubts Lang, a new online auction seller, had about the transaction.  Two weeks after a driver came to Lang’s home to pick up the camper and drive it back to Albuquerque, where the winning bidder, Ken, lives, Lang found out from her bank that the check for $10,500 bounced.  After a few additional weeks of run around from Ken, Lang decided to take matters into her own hands.

By gathering all of the details she knew about Ken, Lang managed to piece together a very accurate picture of the situation—Ken was to be receiving a bank loan soon for a down payment on a new house.  From the details she acquired from their discussions, Lang knew the name of his bank, and through a bit of detective work, determined the day and time when Ken was scheduled to meet with his bank loan officer to receive payment on his house loan. 

A quick call to the airlines and a few frequent flier miles later and Lang was landing in Albuquerque filled with a vigilante’s determination to receive payment for her camper.  Arriving at the bank and sitting in the lobby with an oblivious Ken and his daughter, Lang made small talk while waiting for him to be called.  When the loan officer called Ken forward, Lang rose and introduced herself as well.  After explaining the situation to the bank loan officer, Lang received a check for the amount owed, plus $100 for her troubles, from Ken’s house loan.  Within 24 hours of leaving Illinois, Lang had flown to New Mexico, received money from her non-paying bidder and headed home.

While this is a bit of an extreme case—most sellers do not travel cross-country to receive payment on their items—it is still a very common problem in the online auction marketplace.  Most online sellers have become accustomed to a portion of their items going unpaid due to non-paying bidders and have accepted this as a cost of doing business.  Imagine if every seller tried to physically locate and in-person demand their money from their non-paying bidders—the time and money they would spend doing this would destroy their companies. 

For suggestions on how-to avoid these cross-country missions to receive payment for your goods, please feel free to contact our seller support team.

eBay Moves Away From Neutral Position

eBay has recently made a decision to take an active stand against fraudulent sellers of high-demand goods this holiday season.  eBay has decided that they will take actions to reduce fraud in auctions of PlayStation 3 and Wii gaming systems set to take off later this month.  With the launch of these two hot gaming systems during the second week of November, eBay has posted restrictions on who can sell these items.  EBay is asking sellers to prove that they have the actual items before being permitted to list the products on the auction platform.  Sellers must have a feedback rating of over 50 (98% positive) and may only list one of each console as pre-sales before the items are released.   Other requirements as outlined by eBay include:

• The seller must only accept payment through PayPal
• The pre-sale item must be listed in the 3, 5, 7 or 10-day formats, and cannot use Buy It Now.
• The listing must include a photo of your pre-order receipt in the description.

If eBay is willing to essentially monitor and restrict those who can list these items, is this a course that they are willing to take for other high fraud categories?  Many sellers would be interested in seeing similar restrictions placed on items where counterfeit goods flood the market, such as high-end designer name clothing and accessories. 

However, if eBay was to start requiring this type of confirmation of authenticity prior to a listing being permitted, there may be as many negative ramifications as positive.  For instance, although the move would help to weed out the marketplace of fake goods, the red tape it would create might further hinder sellers from growing their businesses most effectively.

eBay Attempts to Combat Email Phishing Scams

In an attempt to help stop users from falling victim to eBay phishing scams, the online auction company has launched a new private email feature. The way eBay's new email service will work is that messages sent via eBay's private messanging service will be delivered to members' selected contact email rather than to their "My Messages" folder on the eBay site. Numerous phishing scams have taken eBay members' login information by replicating emails sent by eBay to members. These fake emails ask members to follow a hyperlink to sign into eBay to receive either a message or update their information. Hyperlinks included in the email take eBay members to a different site designed to look like an eBay login screen. Information inputted by eBay members is then stolen causing their accounts to be hijacked and information stolen.

The new emailing system by eBay will allow messages to be sent from members' own email clients by attaching anonymous email addresses to the messages. EBay will then re-route the messages to their intended recipient. This new anonymous email system will help to simplify the question/answer process for high-volume sellers by allowing them to respond directly to buyers.  A similar anonymous messanging system is used by craigslist.org, a company in which eBay owns a 25 percent stake.

Previously, eBay launched a campaign to combat phishing/scam emails by sending all messages from email account "UseTheYellowButton@ebay.com". A yellow button displayed in the email would hyperlink the recipient to a login page where they were taken to their "My Messages" in order to respond. For high-volume sellers who receive hundreds of emails a day, this process is overly time consuming. Also, if individuals were to respond to these emails via the reply function, the messages would not be forwarded on to the correct person from the UseTheYellowButton@ebay.com account.

Gone Phishing

A new study conducted by two professors at Indiana University concludes that more individuals fall victim to phishing scams each year than previously thought.   Markus Jacobbson and Jacob Ratkiewicz found through their study that phishing fraudsters may be experiencing up to 14 percent response rate on their scams.  This number is significantly higher than the 3 percent response rate reported by the Gartner Group.   

This is particularly relevant within our marketplace because of the sheer volume of eBay-related phishing scams. Recently, ReliaBlog covered the story of the newest eBay phishing scam that plays upon the fear of identity theft by suggesting to receipients that it it believed their account has been hacked. This same tactic is now being used by scam artists trying to gather PayPal information from users. The phishing email that victims receive states that an additional email address has been added to their PayPal account and provides them with a link to follow if they want to dispute this email address addition. So as always—beware of fraudsters!

For more information on the IU study or to read the study, please visit http://www.informatics.indiana.edu/markus/papers/ethical_phishing-jakobsson_ratkiewicz_06.pdf.

On the Lookout for New Phishing Scams

A new phishing e-mail has been increasing the frustration of auction sellers and fooling even experienced eBay users into giving up their account information to frausters. The e-mail poses as a message from eBay-- informing users that their account has been suspended due to security concerns, and that the account has been suspected of hacking by online criminals. The appearance of the e-mail is actually quite sophisticated, and with users often panicking at the thought of their account being suspended, this anxiety often leads them to immediately providing the information requested prior to reaching out to verify this information with eBay.

The overwhelming increases in these phishing e-mails suggest that more and more users are being fooled, and thus they are here to stay. Although initially buyers were the most targeted of these groups (with fake second chance offers, etc.), sellers are not firmly on the radar, and offer a much more lucurative target. Always double-check that any alert you receive is also included in "My Messages" when you log-in to your eBay account, and if it's not there, contact eBay immediately-- and not using the e-mail address in the body of the e-mail you receive!