Anatomy of an eBay scam

Despite the feedback system and safety net of PayPal, scams can still go down on eBay.

While indulging in a far too geeky hobby (collecting Transformers. Yes, toys based on the 1980s cartoon, not the component used to alter voltage), I stumbled across something that both set alarm bells ringing, yet also did its very best to mute them by appealing to the bargain hunter in me.

Someone was selling collectables for way under market price, including an extremely rare set of figures (that usually goes for over AU$700) starting at $0.99. No big deal, many auctions begin with a low starting price to entice bidders. Here's where it gets tasty.

Nearly every item had been named incorrectly, and all of them were in the wrong category. This meant they were unlikely to turn up in search or be picked up by trawlers, making them the preserve of the bargain hunter. There were "Buy it Now" items approximately six times cheaper than market prices. The seller's feedback was close to 100 per cent, with only minor complaints about shipping costs, and an item sent in error that was quickly fixed. So why was I hesitant?

Firstly, the description contained nothing but the height of the figure (correct, most of the time), followed by transaction conditions. In these, the seller claimed to own a factory in China, which was unlikely — more likely if the items were legit, then they were the result of employees working unauthorised overtime; knock-offs using cheaper grade materials (unlikely, given the breadth of product on offer); or factory seconds. They could even have been stolen. It's a miracle how the mind tries to rationalise a bargain.

The seller claimed they were new, and even responded within 24 hours to my questions about whether certain things were included.

I ended up letting the auctions go, not having enough time to study the seller properly. The fact that eBay anonymises bidders and restricts access to complete bidding history frustrated my efforts — knowing that someone was bidding from a particular country, being able to see more feedback they had left or knowing they had only ever bid with a select group could certainly help to identify a seller who was gaming the system.

The aforementioned rare figures went for around AU$165, and I wondered if more would arrive.

A week later, they did.

If it's too good to be true, it probably is

Here's where things started coming together as a scam. The seller that had been active since December 2012 and only had 80 feedback suddenly had 266 items for sale at once.

One of those items had a "Buy it Now" price of around AU$50. But that item was also included in another listing that came with four extra figures, yet still had a total "Buy it Now" price of around AU$50. The clincher? The second package also included a figure that hadn't been released yet, would require a huge box, and still qualified for free shipping.

The scammer had gotten greedy.

The coffin lid was welded shut around two days before most of the auctions ended. Another account popped up based in the same city, selling identical items, with identical descriptions and buying conditions.

Around ten days later, the bad feedback started pouring in. The seller had sent everyone a Santa hat, and nothing else.

Why they bothered sending anything was curious. At least one user reported that the seller seemed amenable to a refund — though, I imagine, most buyers would have attempted to recover costs through PayPal, with the seller having already withdrawn funds and cut off PayPal's access to their financial accounts.

This I can only guess at though, because soon after the bad feedback started piling in, this happened:

According to eBay Australia (which reports it hasn't seen a scam like this "since last Christmas"), being able to set feedback to private is a "legacy policy", back from the days when it was mostly a consumer-to-consumer auction site, and people were still getting used to the idea of buying on the internet. It was meant to allow sellers to resolve a dispute privately, then have the bad feedback removed so it wouldn't impact on their reputation.

It also has a built in buyer protection — the seller cannot list any items until feedback is set to public again.

In this case, both this and eBay's feedback system have been deliberately abused by simply continuing business on another account. Deny people the ability to see what the scam was about, and then all you need is the patience to build up the good feedback once more.

The main tactic is to sell cheap, often unrelated items (in this case, diecast and remote control cars, sunglasses and Chinese swords) to accrue good feedback first, then cash in on that goodwill by selling collector's items that don't exist. Switch to new account, repeat. eBay's customer service team has been alerted, and they're investigating now.

Of course scams aren't just limited to eBay, and the general rule as always is caveat emptor. Here's what eBay recommends for safe transactions:

• Pay by a safe payment method. PayPal offers up to AU$20,000 buyer's protection, and credit cards may refund for goods not delivered as per description. Never pay by Western Union, and if the only payment method is direct deposit, this could be a red flag.
• Scammers will ask the user to communicate outside of eBay. Always keep communications inside eBay so a complete history is kept.
• Never share account details (such as passwords) — eBay will not ask for these details.

And here's some additional tips from us:

• If it seems too good to be true, it likely is.
• Be more alert if the seller is overseas.
• If the seller is suddenly selling significantly more products than the feedback in their account (especially considering how long they've been signed up to eBay), be cautious
• Make sure the description is complete, and that the product title is accurate.
• Watch for over-expensive postage. Simultaneously, be cautious of free postage for high cost, bulky items.
• If it's not an obvious second hand auction by a private seller, check the selling history. If the older items don't relate to the newer items, be cautious.
• If the seller has sold lots of low cost items previously, and is suddenly selling high cost or collector's items, be cautious. Good feedback isn't everything.
• If you're not sure, ask the buyer questions that don't include the answer. Eg, "How many screw holes does it have?", not "Does this have eight screw holes like it's meant to?"
• If it still seems suspicious, check that another account isn't floating around with the exact same descriptions by searching for the product title.