Firstly, if you're new to the internet or to e-commerce, don't let the following advice scare you away from buying or selling online. Rest assured, most internet transactions are conducted without a hitch, and there's a lot of potential profit to be made in online sales. You simply need to be aware of the dangers and the telltale signs of scams, so you can avoid them. A large percentage of internet commerce pitfalls can be averted simply by using common sense and paying attention to your sixth sense. The biggest trap into which sellers and buyers alike fall is blindly trusting something that's TOO GOOD TO BE TRUE.
FOR BUYERS
Scammers usually advertise pricey products, often ones that are in high demand. Anything that's currently popular will have a host of scammers trying to bank off it. This is not to say there aren't also lots of scammers advertising items with lower demand and low-end prices, but generally they go for big money and don't bother with petty cash.
Another commonality of most scam ads is to list items as being in "new" condition, not "used" or "refurbished".
Always be suspicious of incredibly low prices on brand new products. Remember the saying "if it sounds too good to be true, it probably is." Yes, there are great deals to be found and businesses undercut each other's prices all the time, but there is a limit to how low prices can go before the seller would be making no profit or selling at a loss. Keep in mind: most products change hands several times (usually at least three) before reaching yours, and at each exchange, a profit is made (the price goes up). As an example: a product costs $100 to produce. The manufacturer then sells it to a wholesale distributor for $125, who sells it to a retailer/reseller/dealer for $140, who sells it to you for around $180 to $200. That last seller has to sell the product to consumers for more than $140 or he makes no profit. He'll occasionally drop the price to sell the product more quickly, but he won't go too far below competitors' prices, because he wants to make as much profit as he can. Being aware of this process of price markups and profit margins will help you to recognize when a price is too low to be realistic.
Having some positive feedback is no guarantee that the user isn't a scammer. The smarter ones will try to build a little credibility before they start scamming. But generally, they're too impatient to bother.
They most often use a copy-and-paste description for the items they list, usually without even including anything in their own words. Legitimate sellers will do this too, so on its own, it doesn't mean much. Scam ads will usually have a stock photo, but sometimes it'll be an actual seller-snapped photo stolen from a genuine ad.
Ask questions. You might get a feeling about whether a person's a straight shooter or not from the way he or she responds to inquiries.
Scammers will often try to rush you into making a hasty decision, with lines such as "they're going fast", "only two left", "I don't know how much longer it will last."
When everything seems to be on the up-and-up, and you've decided to make a purchase, choose your payment method wisely...
If it's a high-priced item, an escrow service is the safest way to go. Just make certain it's a legitimate company, as most are not. Escrow fraud is very common, and there are new fake websites popping up all the time. Escrow.com is one of the very few real ones. If the seller is wanting to only use a certain site and it's not escrow.com or another you know to be legitimate, it's almost certainly a fake.
More advice about escrow: Don't just pretend you want to use escrow as a test, thinking they'd never agree to it if they were a scammer, because if they're really sly, they'll always say they agree to it, knowing it's possible you're bluffing just to test them and if they pass the test, you might "change your mind" and decide to pay another way. And if you're not bluffing, and really intend to use escrow, they lose nothing by agreeing to it; you put your money into escrow and wait for a product that never comes, after which you get your money back.
For lower priced items that it wouldn't be worth paying an escrow fee to buy, use a payment service that offers buyer protection (i.e. PayPal's Purchase Protection). And if the seller is recommending a payment service you haven't heard of, do your homework to find out if it's real, as there are fakes of those too, of course. Also watch out for counterfeit sites that are created to look identical to legitimate sites. If you click a link sent from the seller to get to a payment site, make certain you're on the real site before logging in or entering any information. If it's PayPal, the url in your browser's address bar should start with "https://www.paypal.com/" or that minus the "www." part.
FOR SELLERS
Accept payments using services that offer seller protection (i.e. PayPal's Seller Protection) against claims that the product wasn't received and against chargebacks (that's when a person tells their bank or credit card company that the purchase was unauthorized and the payment is reversed), and make sure you follow their requirements to be eligible for it. With PayPal, that means having proof of delivery, and when the payment received is $250 or more, signature confirmation.
Once you've received an email notification from the chosen payment service telling you the payment has been made, always log into your account on that site and make sure the funds are actually there before shipping the product, as it's possible the email could have been a fake.
If the item is valued at an amount you aren't willing to risk losing, insure it. Any time you don't could be a time it gets lost/stolen or damaged in transit. Having purchased signature confirmation won't help you then.
Secure your package like it's Fort Knox. The USPS denies many insurance claims on the basis of improper packaging. If the contents are fragile, make sure the box is marked as such, and that the item is bound in sufficient buffering materials to withstand a reasonable amount of jostling. Use proper packing materials to ensure there's no chance of the box coming open when subjected to the friction and rattling that occur during sorting and delivery.
There may be as many scams targeting sellers as there are targeting buyers. One of the most common involves a supposed buyer sending you a fake check (often a cashier's check) for more than the amount of their "purchase" and "trusting" you to wire the rest back to them, as well as ship whatever they "bought" (they might also say someone will pick it up), or do the job they "hired" you to do, or whatever the deal was supposed to be. They often tell you to keep some extra money... Say the sale price is $400; they might send a check for $3000, telling you to keep $500 and send back $2500. Your bank will cash the fake check, so you'll think all is fine until weeks later, when they notify you that the check didn't clear, and they will hold YOU responsible to pay back the money you wired away. The criminal gets away scot-free! This type of scam message is sent in response to items for sale locally, housing for rent, jobs wanted, or anything else requiring the exchange of money.
Please report any scam message you receive, so we can ban the user.
FOR EVERYONE
Be smart, think ahead (ask yourself what could possibly go wrong), and never let your guard down!
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