Web Informant #198, 12 May 2000:
The auction is now open

http://www.strom.com/awards/198.html

This past month I became one of the millions of people to buy and sell merchandise over eBay. What took me so long, you might wonder? Well, it was my daughter. For weeks she had been bugging me about getting a fancy watch. I resisted, saying that it was took expensive. (Of course, the argument that neither my wife nor I owned a watch of any equivalent expense wasn't persuasive.) Finally, out of desperation, she asked me "What if I just get it on eBay? Then I (meaning me) could save lots of money?" Being a sucker for the clever technology solution, I caved, and within nanoseconds after granting permission she was off searching the site. Within an hour, she had located an auction for the right watch (color, features, and all) and was ready to place a bid. All I had to do was supply my email address. We were off and bidding!

After a few days watching the price go up, things started to get interesting for her. She began to see that what initially was a tremendous bargain became less and less so as bids came in and the price crept up. Of course, she was caught up in auction fever - and I knew that there we were buying this watch whatever the price. So when the auction closed and we were the high bidder, the fun began. Of course, she had neglected to read the fine print - there were additional charges for shipping. And she didn't realize that in this age of the Internet the watch wasn't on our doorstep within minutes of the close of the auction. But these are details. The watch arrived, she was happy, and I managed to save about $15 or $20 from buying one in a legitimate store.

So now that I was an experienced eBay user, I started thinking about trying the selling side of things. Again, my daughter provided insight and motivation when one day she was visiting my office and noticed an aging Radio Shack Model 200 computer lurking about. She loves to play with some of the older stuff I have in my backroom, which is now called "her" office. Why not try to sell it on eBay, Dad? A quick search gave me listings of many people who are still interested in this computer. And while it had some nostalgia value (after all, it was my first portable and still was in working condition), I figured I could write a column from the experience and test out some of the newer payment technologies that eBay has instituted. And here we are.

One of the issues for eBay users is how money moves from buyer to seller. If you pay by check, you as the buyer have to wait until your check clears the bank and for the mail to move it across the country before you get your goods. Makes sense, but that means that there is this period of time when you are out the cash and still have no stuff, which can be nerve-wracking even if you are a very patient adult.

eBay has begun to work with a number of different electronic payment vendors, including PayPal, X.com, and Billpoint to fix this. Billpoint, which I used, is an electronic bill paying service that deducts the funds from a buyer's credit card and deposits directly to the seller's bank account, taking a small fee in the process. (Billpoint charges 3.5 percent of the transaction price plus 35 cents, which is very favorable when compared to the charges most credit card companies have.) The process takes a couple of days. Having an electronic payment system is one way to cut down on buyer anxiety and shorten the time from auction completion to product delivery. It also brings some air of legitimacy to the process, since the service checks to make sure that the buyer and seller have legitimate accounts. All the transaction notifications are done via emails, and I was amazed how easy the whole thing was. My buyer submitted his payment instructions quickly, and within a few days the funds were supposed to be in my account.

The only trouble I had was I forgot which account I had set up with the service, so I was looking in the wrong places when I got my credit card statement and getting a bit nervous myself about where my windfall from the Model 200 sale went. But that is my own operator error, not the fault of eBay or Billpoint. It took three days for them to deposit the funds to my checking account, which is about what they promise on their site.

What I found out by being a buyer and a seller on eBay is that the self-policing aspects are good ones, provided you both have a good idea of the merchandise involved. There is this very involved rating system that is used to investigate the history of both sides in the transaction. Both my seller of the watch and my buyer of the computer were diligent about posting positive comments about my transactions, and as I explored eBay further I saw explicit information warning potential buyers that they would be "punished" for submitting rogue bids or not following up a winning bid with actual payment. Of course, I wasn't trying to pass off some artwork or body parts, just sell a 15-year old computer. But now I want to comb my attic for other eBay goodies. After all, I've got that electronic accounting system all set up now. But first there is this small matter of a commission I promised my daughter as part of recommending the computer to sell. Too bad I can't settle that bill electronically. Maybe she'll take an IOU.

N.B. After this essay appeared, I received many comments. Here is one, from long-time correspondent "Mike Canalli "

David,
Well I'm a seasoned Ebay participant of dozens of Ebay purchase
transactions, 80% of which sellers bothered to recognize my diligence in
mailing payment within 1 day of the auction close. It seems Ebay is a bit
like scuba diving or private pilot; It's great until you have a bad
experience. The rating system is not all that perfect, because there are
ways that both buyers and sellers can obscure bad behavior. I like old
radios, video gear, clocks and technical books, my wife likes old kitchen
things, antique records and my kids find Pokemon and computer game stuff
on-line for dad to buy also. We buy a lot less now that we have been stung
a few times. Our observations is that the rules are overwhelmingly on the
side of the seller. The majority of the risk is borne by the buyer.
 
Here are my top ten reasons why:
 
1.  The seller controls the description of the item exclusively, Where the
buyer has no ability to examine or test what is offered. That nice photo of
the rare cathedral radio rarely shows any unflattering angles or defects.
Uniformly, the descriptions are weasel worded. There is a whole hackneyed
vocabulary:
 
"Cord is frayed, so I didn't test it" means: "I don't want to tell
you what is wrong with it"
"Nice addition to your collection" means: "I have another one just
like it in my collection; mine is in better condition"
"Nicest item that I have seen" means: "Legally I can't be
held liable for my overstated or misleading opinion-only facts can be
considered misleading"
"Sold in as is - as found condition" means: "It is broken"
"All it needs is a bit of polish" means: "Corrosion does
not show in the fuzzy picture"
"Mint" or "Restored Condition" means: "Nice addition to your
collection" (see above)
 
2. Ebay represents its customer, the seller - just as a Realtor actually
represents the seller in a home transaction. They have no financial
interest in protecting buyers. Buyers never pay Ebay, only sellers do!
 
3. The Ebay ratings system has loopholes. Although the instructions on how
to use the ratings system are included at the close of every auction,
sellers are not obligated to follow the sequence. Sellers are supposed to
report on how well a buyer met their responsibilities immediately after the
item is shipped. This notifies the buyer that they have met their
responsibilities to pay promptly and serves as an acknowledgment of
payment, with notice that the item is shipped. Buyers report on
satisfaction when the article is received, thereby also acknowledging
receipt.
 
Disreputable sellers can often not report feedback until after a buyer
reports. This goes un-noticed with positive transaction typically, unless a
buyer has a complaint. Then the seller can threaten to return negative
feedback, if the buyer complains formally: It is a form of extortion,
 
4. The Ebay service "Safe Harbor" is in a triage mode. In the example
above, I reported a seller who literally threatened me "If less than
positive feedback is left, it will be returned period." after he offered a
take it or leave it marginal adjustment on a misrepresented article. A
simple solution to this type of extortion is to not allow sellers to report
feedback on a buyer after the time of shipment (all the buyer's
responsibilities are complete at this point). Even after escalating the
issue to management, Safe Harbor would not consider this or any other
adjustment to the process to prevent this form feedback extortion. Most
likely, they have too much to do just keeping firearms, submarines, refugee
rafts and body parts off the listings.
 
5. Sellers can arbitrarily refuse to complete a transaction with a buyer.
If the buyer has any negative feedback, is a new bidder, or perhaps if they
have blue eyes - the seller can contrive a reason to move on to the next
bidder on the list.  There is no equivalent right of a buyer to back out of
a completed auction, if say, communication after the auction closes
concerns the buyer. Indeed many sellers routinely report negative feedback
on buyers if the transaction does not go through expeditiously - even
though it only costs $1 to re-list an auction and there is a whole list of
other bidders recorded for each auction.  Given that there are so many ways
for a buyer to get screwed out of much more than $1, this seems an unfair
posture for sellers.
 
The justification for this is that a reluctant buyer can waste the time of
a seller. What about the buyer's time wasted following an auction, just be
outbid at the last second. Or what is a buyer's time worth to chase down
compensation from a seller, especially when a seller makes positive
feedback a condition of any settlement.
 
6. The costs of packing, shipment and insurance are borne entirely by the
buyer.  This means any undisclosed defects less than the cost of return
shipping - are not worth the trouble of returning the article - IF the
seller will even accept it back. Sellers are aware that they can hide or
disguise some level of defect for this reason. In many dozen transactions,
I have only one where the article was actually better than the description.
 
7. In cases of outright fraud, the Post Office can take years to get
compensation.  Ebay offers insurance, yet who rates its effectiveness? Is a
rating made public?
 
8. Typically the buyer pays for the shipping. The seller arranges shipment.
When there is an insurance claim to the shipper - guess who gets the
insurance check. Clue: it's up to the seller to be honest about it. And
typically the shipper points to the seller as having packed the item
improperly, so there is no insurance payment. Caveat Emptor.
 
9. Sellers, doing a formal business on line can presumably sue anyone who
unjustifiably reports negative feedback for impact to their reputation and
livelihood. Ebay reminds you of this, if you consider reporting negative
feedback on any seller.  Private citizen buyers can't do the same if
negative feedback impairs their ability to purchase, because there is no
way to calculate the value of a rejected transaction. Not even Judge Judy
would hear the case either.
 
10.  Ebay does not permit feedback to refer to another site (URL). This
prevents a buyer from detailing the degree of a sellers misrepresentation
or unprofessional behavior to other unsuspecting buyers.  You get
approximately 40 characters to make your case. Try explaining that the
seller's pictures were selected to conceal defects by cleaver angles
without a picture of what you actually received alongside the picture from
the seller's description.
 
You have auctioned off an open can of worms here. See if your readers can 
come up with a top ten for buyer's misbehavior. Your pal - Mike Canalli

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David Strom
david@strom.com
+1 (516) 944-3407
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