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CONSUMER WATCH

EBay newbies: Beware scams

Sites for auctions and classifieds are prime territory for fraud. People who need the money are vulnerable.

October 26, 2008|David Colker | Colker is a Times staff writer.

Looking at your spare furniture and seeing dollar signs? Wondering how much that ornate/ugly set of gift dishes from Aunt Martha could be worth?

Welcome to the economic meltdown, where folks who have never before used the EBay auction site or Craigslist online classifieds might be looking for ways to generate extra cash by selling household items.

Alternatively, people who find themselves stretching dollars could turn to these Internet services to buy used instead of new.

But beware. EBay, Craigslist and similar sites are scam territory. Though the vast majority of person-to-person online transactions come off without a hitch, scams are pervasive enough that both sites publish online warnings.

Newbies need to be especially careful, said Ina Steiner, co-founder of the AuctionBytes online newsletter.

"When people start to sell things because they need the money," Steiner said, "that's when they're the most vulnerable.

"If they're the victim of a scam, it can be devastating."

The EBay auction site used to take mostly a hands-off approach to scams perpetrated by sellers or buyers. Its basic position in the early days was that the site provided the means for auctions to occur and collected fees for that service. The actual deals were made by humans who had to sort out problems themselves.

But negotiating a solution between two strangers -- who might be a country or even several countries and an ocean apart -- can be dicey.

This led to bad feelings among people who got burned, and EBay, which makes a substantial part of its income on seller fees, could no longer be a mostly disinterested party.

"If they don't protect consumers," said Rich LaMagna, a security consultant who does work for EBay, "it's not good for business."

Beginning last week, EBay took one of the most dramatic consumer protection steps in its history by switching to all-paperless transactions. Now, the only acceptable forms of payment for most transactions are credit cards and the PayPal and ProPay electronic processing systems.

The paperless system wipes out check and money-order frauds as long as sellers and buyers follow the rules. The switch to paperless also, perhaps not coincidentally, is a possible money maker for EBay. PayPal, which collects fees from sellers on the transactions it processes, is owned by the auction site.

But there's an additional incentive for consumers to use PayPal. The electronic processing service guarantees many of those paperless EBay transactions, allowing the buyer to get a refund if the deal goes sour.

Unfortunately, the rules about which transactions are covered -- and for how much -- are buried in legalese on the EBay site.

"Like everything with EBay, it gets complicated," Steiner said.

EBay spokeswoman Dana O'Neill said the site planned to fix this by posting a user-friendly version of the rules soon.

Generally, hard goods -- with the exception of cars and other motor vehicles -- are at least partially covered. Airline tickets and services are not.

Some items are covered in full, others for up to $200 and still others up to $2,000. Not even O'Neill could explain which items fall into which category, but the promised plain-spoken explanation on the site is supposed to sort it all out.

Refunds won't come quickly. Even if you received a damaged item or nothing at all, there is a required negotiation period during which buyer and seller are supposed to try to work it out between themselves.

On Craigslist, which resembles an old-fashioned classified advertisement service, there are no site-provided protections or guarantees. It's strictly buyer and seller beware.

Updating the cliche of cliches: If it looks too good to be true, click on the back arrow.

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david.colker@latimes.com

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BEGIN TEXT OF INFOBOX

Online buyer beware

EBay and Craigslist can be a scammer's playground. Security experts and the sites urge users to take precautions.

Account hijack: Scammers use automated word generators to try to break into EBay accounts. Use a combination of letters and numbers, and make your password at or near the maximum length to help defy them.

Local shopping: Craigslist recommends dealing only with local buyers and sellers. But when picking up something from a stranger, it's a good idea to take along a friend or two.

Don't wire: Never wire money to a stranger; it's irreversible if the deal goes bad. Be especially aware of the scam in which someone sends you a check for too much money and then asks you to wire the overage back. The check will bounce and your money will be gone.

Offsite: When using EBay, be wary if someone suggests you finalize a deal away from the site, even if you're offered a bonus to do so. Away from the protections that credit cards or PayPal offer, you could be scammed.

Sources: Craigslist, EBay

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