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eBay starts antifraud measures

The Internet auctioneer introduces five initiatives in an effort to reduce fraud, stop the sale of illegal materials, and stymie those who try to misuse the site's trading system.

Internet auctioneer eBay introduced five initiatives today in an effort to reduce fraud, stop the sale of illegal materials, and stymie those who try to misuse the site's person-to-person trading system.

eBay's antifraud effort will include a program for user identity verification, a ban on sellers buying their own items, up to $200 in insurance, a policy against "deadbeat bidders," and a feedback forum akin to a Better Business Bureau center.

eBay will use the services of Equifax to verify user identities for a $5 fee. Verified eBay User, the voluntary program, slated to start in March, will encourage users to supply eBay with additional information for online verification. By offering their social security number, driver's license number, and date of birth, users will qualify for the highest level of verification on eBay.

"eBay has zero tolerance for fraud," eBay CEO Meg Whitman said in a statement. "We have committed and will continue to commit resources to have the most comprehensive programs in order to keep eBay a safe harbor for online person-to-person trading."

eBay said it has created new mechanisms added to its existing ones to help complete successful transactions, research complaints, and work with law enforcement agencies to investigate, arrest, and convict fraudulent buyers or sellers on eBay.

The Feedback Forum will allow registered buyers and sellers to build up their online trading reputation. The Feedback Forum provides users with the ability to comment on their experiences with another individual.

eBay also plans to offer insurance underwritten by Lloyd's of London by March. Users will be covered up to $200, with a $25 deductible. eBay and Lloyd's said the program will be at no cost to eBay users.

For items more than $200 or when either a buyer or seller feels the need for additional security, eBay recommends escrow services. With an easy to access link to a third-party escrow service, both partners in the deal will be protected.

The company is also implementing a shill bidding policy--where a seller bids on an item with the intent of driving up the price of the item without any plans to purchase it.

eBay is also implementing a policy against dead beat bidders--those who do not honor their winning bid. To help protect sellers, a first time nonpayment results in a friendly warning. A sterner warning is issued for a second time offense with a 30-day suspension for a third offense and indefinite suspension for the fourth offense.

eBay also plans to clearly identify which items are in violation of laws, statutes, ordinances, or regulations. These items include live animals, human relics and remains, bulk email lists, and other items.

Susan Grant, an Internet fraud specialist at the National Consumers League, told the Wall Street Journal the group gets about 400 complaints a month about Internet auction fraud.