How fraudulent sellers operate on Amazon

Mail order fraud is nothing new. There’s the apocryphal story from the 1950’s, and probably earlier, of the newspaper advert for Ever-lasting Slug Killer, “guaranteed to kill slugs indefinitely”. Respondents received two rocks, with instructions to place the slug on the first one and hit it with the second.

Consumer protection laws in the 1970’s and European distance selling regulations have rendered this kind of scam difficult. If the product you deliver isn’t what it’s cracked up to be, or even if it is, the purchaser has the right to reject it when they see it. Therefore there’s no point in delivering tat; you might as well not send anything. Ebay has been plagued by such scams, and there are now plenty on Amazon too.

To combat this, Ebay has policies that mean if the buyer complains, the seller doesn’t get the money. This has lead to the reverse-scam, where bogus buyers order something and then claim it didn’t arrive, and this has put a lot of sellers off using Ebay.

Amazon has a similar dispute resolution procedure, but in my experience, has a team of people with functional brains who can tell the difference between a wrong’un and a victim. Eventually.

You can see two common forms of scam on Amazon: Crazy price and Non-delivery.

Taking the second first; given that you don’t deliver the goods, how do you get the money? Without actually testing the theory I can’t prove this works, but I imagine it goes something like this:

  1. Set up as a seller, and pretend to be somewhere like China – long distance shipping.
  2. Find big-selling products and list them yourself, but at a slightly lower price than the other sellers.
  3. Wait for the orders to roll in, and then delay. Firstly, don’t ship immediately and then when you do, set as long a delivery window as allowed.
  4. Run off with the money.
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This works because of step 3. Amazon doesn’t allow you to report a seller when you spot something merely suspicious, so they can keep selling stuff for several weeks before Amazon has the chance to investigate. The complaints procedure only allows you to report non-delivery AFTER the last date specified by the bogus seller when they ship it.

The thing is that bogus sellers like this are possible to spot before this. The extended delivery time is a first warning, and you can then research the range of products sold and how plausible it is that they’re cheaper than anyone else for the same product. Picking the cheapest supplier is a perfectly reasonable thing to do, especially when there are several scammers offering similar prices for fast moving items. Who would check further?

The other scam involves putting small items on at a crazy price, often a hundred times their real value. It’s quite conceivable that someone in a hurry wouldn’t notice they’d bought a small item at completely the wrong price. I’ve been noticing these sellers for several years, and out of public spirit, I’ve reported them to Amazon staff and they’ve disappeared shortly afterwards, with a note thanking me for bringing them to their attention.

Having never fallen foul of a crazy-price scammer, I don’t actually know how the problem gets resolved if you do buy something. Under contract law, if you’ve agreed a price and they’ve delivered your picture hook for £120+£50 delivery, you don’t have a claim. I see nothing Amazon can actually do about this, other than refund the buyer out of its own pocket and strike the seller off. Amazon’s lawyers may have something more creative.

However, even if the scammer only has one sale before being shut down, if that nets them £200 it’s going to be worth it.

As for the non-delivery scam, I don’t know how possible it is for the criminals to get away with the money. Amazon can’t hold on to it indefinitely, and will have to hand it to the seller at some point. Even if Amazon holds it until the latest delivery date, people aren’t going to flag it as fraudulent immediately – especially as the latest delivery date could be months later.

It ought to be fairly easy to spot these bogus sellers automatically by heuristics, and it’s high time Amazon put some effort in it. Perhaps they’re making so much money they’d rather write it all off.

eBay security problem in February – just noticed!

Well, it had to happen. Today eBay announced a serious security compromise. Apparently someone’s got hold of employee login details that allowed access to databases containing customer names and contact details, together with a password hashes.

Should anyone be worried?

Well, a hashed password isn’t a password but it’s possible to crack, especially if it was a weak one (i.e. a word or two words conflated, with a digit on the end and possibly a full stop). eBay says that there’s no evidence of anything fraudulent transactions. Yeah, great. The problem is going to come when people have used the same password elsewhere, like on their PayPal account, bank account or somewhere important – armed with their contact details and a crackable password, those people could be in real trouble.

eBay is due to email everyone very soon to ask them to change their password. It’s called shutting the stable door once the horse has bolted – this data may have been in the hands of the criminals for a couple of months now. You don’t need to change your eBay password; you need to change the password on every system that used it.

The sooner this antiquated means of verifying identity was replaced by secure public certificates, the better – by the punters won’t understand how those work.

So what does this mean? Your password was secure but now it isn’t? No. It was only secure before if you trusted the eBay employees. And a find upstanding bunch they are.

Next, of course, the scammers are going to spam everyone with phishing eBay credential change emails. And when this hits the news, who’s going to disbelieve it. eBay really needed to manage the news dissemination better.



eBay are now worse than whores – ask any business seller

eBay are whores”. That’s was the verdict of an American friend and regular eBay business seller.

“How so?”, I asked. He went on to explain that eBay and PayPal would do anything for money, and everything imaginable had price attached which you had to pay if you sold through them. My friend was a typical right-leaning free market American, and I had to smile at his complaints about big business doing what it does best. If he wanted to sell his collectable items in an on-line auction it had to be  through eBay, because eBay has an effective monopoly on buyers. eBay was simply obeying the laws of supply and demand; charging the customer (that’s the seller) the maximum they were willing and able to pay without scaring too many away. With an effective monopoly it’s hard to scare them that much.

Since then eBay’s use of its monopoly power has taken a very dark turn indeed, in response to one of their biggest problems: Criminals use eBay. Most of us have bought something through eBay and discovered the seller was less than honest, and eBay feels that this situation is going to adversely affect their revenue in to the future. Recently they’ve declared war on rogue traders, but it such a clumsy manner their actions are immoral and possibly bordering on the illegal.

A few years ago I started hearing complaints from eBay sellers who’d given up moaning about high commission rates in favour of how eBay was making it very easy for buyer’s to defraud them. This started with PayPal, the no-longer-so-optional money transfer system now owned by eBay that sellers are pressured in to using. If a criminal orders something, pays using PayPal and once they’ve got the goods decides to complain (or claim the goods never arrived), PayPal takes the money back from the seller, with no effective mechanism for appealing. As I understand it, the seller has to prove that the buyer received the goods before they get their money, and this just isn’t realistically possible in many circumstances.

PayPal and eBay hardly invented mail order fraud, but they’ve made it very easy for the criminals. Banks would investigate in the case of such a dispute, but by all accounts, eBay does not. All the seller could do was leave negative feedback against the buyer, so future sellers were forewarned and could make up their own minds about dealing with someone.

In the latest twist, sellers can no longer leave negative feedback about buyers, effectively allowing buyers to lie and cheat as much as they wish with no risk of exposure or other consequences. Sellers have to quietly absorb the loss while the criminal selects his next victim.

You may think this is as bad as it could get, but now eBay has implemented what it calls “Detailed seller ratings”, aka DSR. Basically buyers can (anonymously) rate sellers out of five for things like accurate description and delivery time. If a seller gets, on average, less that 4.6 out of 5 then they encounter difficulties with eBay. Sellers have told me that they receive letters saying that they “need to improve”, followed shortly afterwards with having their accounts suspended indefinitely “to protect buyers”. Does everyone apart from eBay see the problems here?

Firstly, there are some very strange people out there. If they don’t like what they bought they’re going to give the seller a bad rating for everything.

Secondly, many people are unlikely to give anyone 5/5. At one time, my job was reviewing things. I did it every day, and I’d never give anything 100% unless it was incapable of improvement. With eBay the next step down is 80%, which by normal standards is very good indeed. However, on eBay’s DSR system, if someone gets to many 80% ratings their account gets suspended!  At one time I didn’t know that, so I’d routinely give everyone a score of 4 unless there was something extra-special about the service. Most people writing a review would do the same.

Finally, this is a recipe for scamming. Supposing you and a competitor were both selling the same thing into a niche market. eBay was excellent at niche market products, once. Unfortunately, in this cut-throat  online market place, if you’re not the cheapest you’ll lose the business, but if you sell at rock bottom you make no profit. So what can you do? eBay has the answer – simply ask a few of your friends to buy items from your competitor and then give them consistently bad DSR scores. eBay will shut them down for you, with no right of appeal, and the way is now clear for you return to your full profitable prices. In the good old days you had to hire a bunch of thugs to beat up your competitors and burn down their premises  now you can get the same effect with a few clicks of a mouse. If someone else appears selling the same thing, they’ll have a “unknown” rating anyway, so a couple of bogus purchases and they’re out of business. This works; I’ve seen the victims and I’ve seen eBay’s attitude to doing anything about it.

Sellers are in a very difficult place. If eBay closes their account, they’re out of business. It’s high time eBay was taken to court over this matter, that of putting British companies out of business for no reason. Unfortunately eBay is hiding behind a flag of convenience. Although it says “” on the web site, they’re operating through Luxembourg (and challening the profits through Switzerland to avoid UK corporation tax). Taking them to court isn’t going to be easy.

In the USA, where the jurisdictional is less murky,  there have been several class actions against eBay In response, eBay has altered it’s user terms and conditions such that everyone has to agree not do this any more.

I think it’s high time that eBay developed a sense of responsibility towards the countries that are allowing it to operate. It enjoys a effective monopoly position, yet companies needing to use it are ruined at the whim of a some faceless functionary within eBay, who might be in any part of the world. Power without responsibility is always a bad thing. If that’s not enough to make our government take action, they should consider industrial-scale tax avoidance scheme eBay is employing.