Avoid Cons and Frauds When Advertising Online

Although there are many different internet scams (fraud), there are a relatively small number of scams associated with advertising or selling online. The following is a guide to avoiding problems when advertising online, written with the advertiser or seller in mind (scams which target buyers is a separate topic).

Non-Payment

One of the biggest problems is non-payment. One should ensure not only that payment has been received, but also that it has cleared (whether it be a cheque, credit card payment, or other).

In the case of items which are sent by post, a related issue is buyers claiming that they have not received the item (or received it in a damaged condition) and consequently either refusing to pay or demanding a refund. Although items can be damaged or lost in the post, this is relatively rare and much less frequent than the number of buyer claims. Consequently, one should consider in advance how one will handle such claims. In addition, although it is an additional expense, the use of registered mail can largely avoid this issue. If you post items on a regular basis, one needs to determine if the additional cost of registered mail is more or less than the cost of ‘lost’ items, in order to determine from a business perspective if this is the best solution.

E-Mail Theft

When selling online you will usually be required to provide a contact EMAIL address. Although the website where you are advertising may be perfectly honest, such websites are often scanned by fraudulent software programs which try to obtain such EMAIL addresses by any of the following 3 methods:

Going through the advertisements to find any EMAIL addresses which are within the advertisements themselves.
Automatically completing the contact form and sending it with a general question (e.g. ‘Please provide more information about your item for sale’). When you reply, they collect your EMAIL address from the reply.
Getting through the website’s security to access the database when the contact EMAILs are stored.

Once they have your EMAIL, they may either then use it for SPAM or fraud themselves, or they may sell on the list of EMAILs they’ve obtained to other people who use it for SPAM or fraud.

Since even the largest and most honest websites may be the target of such fraudulent software, one should always protect your EMAIL address. Never use a business or personal EMAIL for selling online. Obtain a free temporary password (e.g. from Google GMAIL or Yahoo) which you can use for the advertisement. That way, if it becomes the subject of SPAM, you can simply throw it away and get another (which may not be easy if you used a business or personal EMAIL address).

As an additional step, you may wish to advertise only with websites which provide a contact form, so that you do not have to place your EMAIL address within the advertisement. Note that EMAIL addresses which are published within advertisements are more likely to attract SPAM.

Over-Payment

In this scam, the buyer pays more than the price of the item and asks you to refund the difference. For example, if an item cost $100, he pays you $150 and asks you to send back $50. He may say that he overpaid by mistake, or he may give some other excuse.

The basis of the scam is that the payment to you is fraudulent. For example, it may be a counterfeit cheque (even a counterfeit cashier cheque), or it may be using a credit card which has been stolen or a PayPal account whose login details have been stolen. Consequently, if you send back the overpaid amount, the buyer will simply take the money and you will find out later that the cheque or other payment is not valid and you are out of pocket this amount.

To avoid this:

Never pay money to a buyer. Cancel the original payment (e.g. return the cheque or cancel the credit card payment) and ask them to make a new payment in the correct amount.
Always wait until payments have cleared and are deposited in your bank account before providing goods or refunds.

Advance Payment

This scam is similar to the above scam in that the other person tries to get you to send money to him. The difference is that rather than pretending to have over-paid you, the scam is based on promising to pay you but giving some excuse for needing money from you to complete the transaction. For example, they may claim to be a foreign buyer and request money for legal fees or to open a local bank account. This fraud is normally used on expensive items, where the seller may be willing to pay a substantial amount in order to help complete the sale. However, after you have ‘advanced’ the money, the other party will simply take it and disappear.

The way to avoid this scam is exactly the same as for the previous scam: never pay money to a buyer, even if it is just an advance.

Private Meeting

People advertising high value items (e.g. a house) have been contacted by people saying that they want to buy the house but need to meet with you at another location (e.g. a hotel in a foreign city or country) to make the arrangements. There are a number of different scams which can then occur, from your house been robbed (as they know when you will be away) or a straight-forward scam (e.g. they try to purchase the item in cash, using counterfeit money) or an attempt to get you alone and force you to give them money.

To avoid this scam:

Even if you are desperate to sell the item in question, ask yourself if the offer is reasonable. Someone who offers to buy your house simply from an online advertisement, without ever seeing it or even trying to negotiate the price, is unrealistic. Further requests, such as meeting in a far away city rather than locally, just add to the unreality of the entire situation.
When meeting strangers, always do so in a public place (e.g. a restaurant) and never in an isolated area (e.g. a hotel room). If possible, have a friend with you rather than going alone.
Find out who you are dealing with. Ask them their names, where they live and so on. If they are genuine people, they shouldn’t mind telling you about themselves.

Identity Theft

There are a number of scams in which the other person tries to get financial information about you (e.g. your bank account or credit card number), along with personal information so that they can use your identity to access your money or purchase items.

Many financial institutions have a small number of personal questions which they use to identify people. Typical questions include your date of birth, your full name (including middle names), your mother’s maiden name and so on. Consequently, if someone obtains this type of information from you, along with a bank account number or credit card number, they may be able to contact your bank or credit card company (by phone or through an online account) and pose as yourself.

They are a number of reasons which they may give for asking for this information. For example, they may ask your bank details so that they can transfer money to your account and then say they need the personal information for administrative or security reasons.

To avoid such problems, be careful what information you provide. Try to agree a payment method which involves providing the minimum of information. If you suspect that your details have been compromised, contact your bank or credit card company to discuss the situation and make the appropriate changes to number or security questions.

Premium Rate Telephone Numbers

A premium rate number is charged at a higher rate than normal, with some of the money being paid to the person owning the phone number. A common example of this is sex-chat lines, where one can be charged several dollars per minute, with the fee being split between the telephone company and the company which has that phone number. In theory, it is a way for a company providing a service via telephone to receive revenue for that service. It is often used by technical support services.

It is possible for someone to obtain one of these premium rate phone numbers (either in the same country as you, or in another country) and then reply to your advertisement with a request that you phone them. They may say outright that they intend to buy something from you, or merely that they have questions. Once you phone them, they will try to keep you on the line as long as possible or arrange for further phone calls. You may be unaware until you receive your phone bill how expensive these calls are, but by the time you find out and complain, the person at the other end has taken their share and run.

In recent years the telephone companies have put in additional checks to prevent this type of fraud. Consequently, it is now relatively uncommon. However, you may still wish to confirm that a number is not a premium rate number before engaging in long conversations. If you dial directory assistance, they can likely check this for you. Alternatively, you could check that the number is listed as a normal residential number by checking the white pages or the online version thereof. The simplest solution is simply to conduct the sale conversation by EMAIL.

General

Remember that any potential buyer is a stranger. You should never give them money, no matter how reasonable and convincing their story is (remember that practiced con men or women can be very good at this) or personal details except those which are relevant to the item being sold. For your personal safety, do not meet strangers alone or outside of public areas.

If potential buyers make strange or suspicious requests, or behave in an odd fashion, be careful. If they don’t seem like genuine buyers, they probably are not.