|
|
Online auctions can be a great way to buy coins, but they can also be
very risky. You can shop conveniently from your home or office any time day or night. There's a huge selection,
and though the selection is skewed toward the bargain priced and aimed at bargain hunters, many big-ticket coins
are auctioned as well. But you can easily get scammed, particularly for any item that can be counterfeited, including
but not limited to coins.
For years the big three online auction houses were eBay, Yahoo
Auctions, and Amazon.com Auctions. eBay was,
and is, far larger than the other online auction sites combined. In 2007 Yahoo discontinued its online auction
business, and Amazon.com and other smaller venues have very little market presense, giving eBay a de facto monopoly.
Unlike most in-person auctions, online auctions typically stretch out over days and end at a specific time. The
highest bidder, when the clock strikes, wins. There are tricks to placing winning bids, and other tricks in maximizing
the bids placed on items you're selling. The strategizing, ticking clock, and winning and losing impart a game
quality to online auctions. Online auctions, in short, are fun.
Fraud
Online auctions, eBay in particular, can also be risky, with fraud common. Time after time counterfeit scammers
have set up shop on eBay, cheating thousands of people over a period of years. eBay does very little to try to
stop this, even to the point of not reading messages sent to it. eBay contends that the rate of auction fraud on
its service is very low. It has reported that only one "confirmed" fraud occurs per 40,000 eBay listings.
That is indeed a low rate -- 0.0025 percent.
The FBI, on the other hand, has contended that the figure is much higher. As a part of its "Operation Cyber
Loss" project, it determined that the rate of online auction fraud is about one in a hundred, or 1 percent.
This is a very high rate of fraud, a whopping 400 times higher than what eBay contends.
The FBI's figure is the one to believe. eBay, whose earnings continue to soar, is very reluctant to intervene in
individual auctions, describing its service as merely a venue that brings buyers and sellers together. Its policy
has been that it won't interfere, for instance, with the auction of a blatantly counterfeit coin that's auctioned
as an authentic coin unless it's contacted first by law enforcement authorities. eBay is very much skewed toward
promoting the interests of sellers -- they're the ones who pay fees and earn eBay its profits. It doesn't even
read the messages sent to it by eBay members informing it of a scam in progress in the majority of cases, instead
just automatically sending back a form message, with eBay itself admitting that it's not able to read most messages
it receives in a message it sent out to big sellers.
Though the vast majority of coin dealers, online and off, are and have always been honest and reputable, questionable
business practices and outright fraud have long been a part of numismatics, among mail-order dealers and flea-market
sellers as well as dealers who sell on bourse floors, in-person auctions, and coin stores. The continued popularization
of the Internet is just exposing more people to numismatic fraud.
Common problems with online coin auctions include overgrading, inaccurate or misleading descriptions, deceptive
photography, counterfeits being sold as authentic coins (with or without the seller's knowledge), and outright
nondelivery of coins purchased.
All the online auction services provide buyers and sellers with some protection against fraud. eBay provides fraud
insurance, but it's limited. It offers up to $2,000 of insurance per item, but only if you use its PayPal online
payment service, and it's good for only a short period of time after the auction's close. With counterfeits, people
typically don't discover they've been had soon enough. This is what counterfeit scammers prey on, and what allows
them to operate on eBay for long periods of time. Some even offer and honor long-term guarantees, knowing that
a significant percentage of naive buyers will never discover they've bought a fake and will never exercise the
guarantee.
eBay, in cooperation with the American Numismatic Association (ANA), formed the Coins Community Watch (CCW) program
in 2004 "to protect buyers of numismatic material" and uncover "repeated behaviors of misrepresentation
of items for sale." This appears to be just a marketing tactic, however, with one report indicating that eBay
has been as unresponsive when contacted by the ANA about counterfeit scam auctions in progress, just as it's typically
unresponsive when contacted by individual eBay members about ongoing scams. What's more, CCW just apes eBay's low
fraud numbers.
eBay recently enacted changes that will cut down on some coin fraud and other changes that will increase it. Working
with the new consumer-minded president of the American Numismatic Society, Barry Stuppler, in 2007 eBay prohibited
the sale of certified coins in slabs other than those of PCGS, NGC, NCS, ICG, and ANACS. This move did generate
some criticism, and the overall policy needs to be tweaked to allow, for instance, for the small but well-respected
Canadian grading company ICCS. But it will prevent a lot of abuse stemming from sellers who have used bottom-dwelling
grading companies to sell significantly overgraded coins at inflated prices.
eBay has enacted other changes recently that will only increase fraud, in a serious way. First, it prevented people
from contacted bidders when the highest bid on an individual auction reached $200. In 2008 it prevented people
from contacted bidders when the highest bid on an individual auction reached $1. It ostensibly did this to prevent
other sellers from contacting bidders and offering them similar items, skirting eBay fees. eBay said it wants to
protect such buyers, but what it really wants is to avoid losing the revenue from such transactions. What's more,
according to the experiences of many on eBay, such side offers have never been a significant part of eBay and relatively
little revenue is involved.
Mostly what the elimination of communication with bidders will do is eliminate a key way that the eBay community
warned one another about counterfeit and other scams in the works. In general such communication is an integral
to the online world, and one of the reasons that Yahoo Auctions failed is that from the start it prevented such
communication. What this means for eBay buyers is that to avoid eBay scams it's now more important than ever to
buy only from eBay sellers you know or sellers recommended by those you trust, that the risk to buying from others
is considerably greater.
Feedback
One protection against eBay fraud is "feedback" -- a way for participants in a transaction to rate one
another and for others to see those ratings. A large percentage of negative feedbacks is a clear signal to stay
away from a particular seller.
But feedback is far from foolproof, and in many ways eBay's system is flawed. The ratings are always skewed positively,
since leaving someone with negative feedback opens you up to receiving retaliatory negative feedback in return,
and many people are reluctant to risk tarnishing their feedback record this way. One trick to avoid getting retaliatory
feedback is to wait to leave feedback until the seller has done so first. Some sellers, however, don't give buyers
feedback until they receive it first. At the latest, sellers should give feedback when the buyer receives the coin
and indicates he's satisfied with it. For sellers, doing this is actually good protection, helping to prevent angry
buyers from leaving negative feedback without first trying to work out a problem that may not be the seller's fault.
However, eBay allows a seller and a buyer to "mutually withdraw" negative feedbacks that they give each
other. So if a seller scams a buyer, the buyer leaves a negative, the seller then leaves a retaliatory negative,
and the buyer decides he doesn't want to have his feedback record tarnished by this negative, the buyer and seller
can agree to remove both negatives from their records. eBay does show you how many feedbacks a seller has that
were mutually withdrawn, and a high number of these is an indication to be careful and possibly avoid that seller.
A high number of positive feedbacks (PowerSeller status, for example) in itself doesn't always indicate that the
seller doesn't sometimes engage in questionable business tactics or even numismatic fraud. An eBay PowerSeller
can have up to 2 percent negative feedbacks, which is a high percentage of deals gone bad to such an extent that
negative feedback was given. There's also plenty of anecdotal evidence that eBay is particularly lenient about
responding to fraud perpetuated by PowerSellers, who through their heavy selling pay more in fees to eBay than
other sellers.
Still, feedback can be of some help, if you look carefully. Read both positive and negative feedbacks. You can
discount negatives when they appear to be retaliatory -- left in exchange for a negative feedback given to them
-- or when the feedback is negative yet the comment is positive -- this indicates the person probably clicked the
negative box when he meant to check the positive box. You can glean useful information from positives when the
information in them is negative. The person in this case is sending a message that he was dissatisfied with the
transaction but doesn't want to get set up for a retaliatory negative.
You can also gain clues by comparing the "Members who left a positive" number with the "All positive
feedback received" number. If they are close, this indicates that seller isn't getting a lot of return customers
and that there's probably a reason for this. A relatively low ratio indicates many repeat buyers.
Another good feedback technique is reading the feedback of those bidding on a coin. If they have a lot of feedbacks,
and if the feedbacks are for buying similar coins, this can indicate they're knowledgeable about the coin or the
dealer, which is reassuring.
But you need to be careful about "shill" bidders, typically friends or business partners of the seller
who bid on an auction to artificially drive up its price. Shill bidders often have a low number of feedbacks and
a high percentage of feedbacks for buying from one or two sellers. Click on Search, then By Bidder, choose Yes
for "Include completed items" and "Even if not high bidder?", and type in the bidder's ID.
This won't be conclusive, however. Newcomers to eBay may feel more comfortable sticking with one seller. But be
careful not to get carried away and bid more than you intended in an auction in which a bidder is involved who
had bid primarily on prior auctions of the seller.
You should think carefully about buying a big-ticket item from a seller with few feedbacks. It's too easy for a
scammer to create new eBay IDs. But buying a more expensive item from a seller with many feedbacks can also be
risky, depending. One trick that scammers use is to sell a number of low-cost coins or other items to build up
positive feedback, then auction off a big-ticket coin and skip town, virtually or otherwise, without sending it.
It's always best when buying an expensive coin to make sure that the seller has sold similarly priced coins in
the past by clicking on past auctions through the seller's feedback. Unfortunately, eBay saves auction pages only
for a limited time, about three months. If a seller sells items only infrequently, eBay provides no way for you
to see what those items are. (eBay's search feature is even more limited. It only permits you to search for past
auctions that ended within the previous two weeks.)
The biggest red flag for scams on eBay used to be private auction, in which the seller prevents interested persons
from contacting bidders. Scammers, knowing that some people will try to contact bidders, would set up a private
auction to prevent this. But now that eBay prevents all such contacts, scammers have a virtual green light, with
no worry that the eBay community will tip off would-be victims.
Hijacked Accounts
One eBay scam involves a bad guy hijacking the eBay account of a seller with a good feedback record by deceitfully
obtaining his password. One possible tip-off during the auction is that the seller is auctioning a pricey item
or items completely unlike those he's auctioned before. Another is that the seller previously only bought on eBay,
never sold. A possible tip-off upon completion of the auction is that you're asked to send payment to a location
completely different from the location listed in the auction. If you have questions about the auction, send a message
to the seller through eBay. If his answer continues to arouse suspicion, don't send your money.
eBay has recently tightened up its security features to try to prevent this type of fraud. Now, if an automated
password-cracking program fails to guess a password on the twentieth try, eBay flashes a code on screen that you
have to type in manually. Despite this safety feature, it's still best to use a password that's difficult to crack
-- a combination of letters and numbers and one that's not the same password you use elsewhere.
Sellers can still be tricked into revealing their passwords to scammers by clicking on a link in an official looking
e-mail message that appears to come from eBay, a practice known as "phishing." They're directed to a
"spoof" site that looks just like eBay but is solely designed to obtain people's passwords. To prevent
yourself from falling victim like this and ruining your good feedback, always go to eBay and related sites such
as PayPal through your own bookmark or favorite or by manually typing in the site's address.
If you have any suspicions for any reason about a coin being auctioned during the course of the auction, send a
message to the seller asking for clarification. If the seller doesn't respond or if you have doubts after getting
a response, refuse to bid. If you've bid on an item in an on-going auction or if you've won an auction just completed,
eBay lets you request the seller's phone and address. With more expensive items, it can sometimes make sense to
initiate telephone contact before the auction's completion. When you request a seller's contact information, eBay
informs the seller of this and automatically sends the seller your contact information.
You can also ask in one of the online discussion groups if anyone has had dealings with a particular seller or
sees anything suspicious about a particular auction. There are many such discussion groups on the Internet. The
most popular group about coins in general is the Usenet group rec.collecting.coins. You can access it through a
newsreader such as Forte Agent, e-mail program with newsreading capabilities such as Microsoft Outlook Express,
or the Web here:
http://groups.google.com/group/rec.collecting.coins
The most popular online discussion areas about ancient coins are FORVM and Moneta-L.
Photos
With lower-priced items, one question to ask the seller is if the coin pictured in the auction is the coin you
would receive, if it's not already indicated. Some sellers put up a generic picture of the coin type, which isn't
necessarily deceptive, but this should be disclosed. Some scammers deliberately send a lower-quality coin of the
same type and year from the one pictured, sometimes stealing photos from other eBay sellers.
You should save the online image of any coin you buy. Sellers frequently delete these images after the sale to
free up disk space wherever they're storing these images, and there's nothing wrong with this, but having the picture
later can be beneficial if there's a problem. It can also be a good idea to save the auction description as well
as the auction terms, whether or not those terms are included in the auction description or provided through e-mail.
Photography can be used to illustrate what a coin looks like or to deceive. Online images of coins that are too
dark or too small or too fuzzy may indicate the seller lacks imaging skills or is deliberately trying to hide something.
Sharp, bright photos of coins in which the fields seem overly smooth may have been manipulated in an image editing
program. One way you can sometimes spot this is by saving the image to your hard disk, loading it into an image
editing program, and looking at individual pixels to see if they've been blurred together. But don't confuse blurring
with JPEG artifacting, which is a result of image compression. With the latter, you see squares and rectangles
(artifacts) of different sizes when you zoom in. Some sellers punch up the color of their coins by using software
to boost contrast and saturation. Some of the major auction houses, in fact, have been sharply criticized for this.
Even good coin images, created without manipulation, are no match for seeing a coin in person. A photo or scan
of a coin can sometimes make a coin look nicer than it is, sometimes less nice. It can hide scratches, flatness,
and wear. It can impart artificial color, luster, and relief. On the other hand, it can accentuate scratches and
minor defects if they catch the light at a certain angle, making them look major. For all these reasons, it's best
not to buy a coin, even one illustrated with a picture, if the seller doesn't offer return privileges.
Guarantees
It's usually good policy to refuse to buy any higher end coins through online auctions in which the seller doesn't
offer the option of returning it if you're not happy with it. If the seller doesn't specify a return policy, email
him and ask. Sellers who claim they're liquidating estates and that therefore all sales are final may be hiding
something unpleasant behind their no-returns policy.
With ancient coins, it's best to buy from a seller who offers a lifetime guarantee of authenticity, particularly
with pricier specimens. There are many fakes of ancient coins out there, and even experts occasionally get fooled.
If you buy an ancient coin, and it's later condemned by an authentication service or by several dealers you show
it to informally, you should be able to return it and get your money back.
One protection with more expensive coins is to ask, before the auction closes, if the seller will agree to use
an escrow service, such as Escrow.com. The way it works is that upon the completion of the auction, the buyer sends
payment to the escrow service. When this payment clears, the escrow service notifies the seller to ship the coin.
When the buyer receives the coin and notifies the escrow service that it is as it was described, the escrow service
forwards the buyer's payment to the seller.
Typically, the buyer pays the escrow service to use it. At Escrow.com, the amount of payment depends on the price
of the item and whether a credit card or other payment method is used, with a minimum fee of $15. Very few coin
auctions involve escrow, however, and because a seller doesn't agree to use it doesn't necessarily mean that the
deal is a bad one.
If you do use an escrow service, you need to be careful about scams involving fake escrow sites, such as Golden-Escrow.com
(meant to be confused with the legitimate escrow service GoldenEscrow.com) and Escrow-is.com. You think you're
sending your money to an independent third party, but you're actually sending it right to the crook. The above
two sites have been shut down, though new fake escrow sites open up. For a list of fake escrow sites and other
auction fraud information, check out SOS
for Auctions. If you do use an escrow site, as a buyer, it's best
to suggest the escrow service yourself and to make sure it's a legitimate one.
Counterfeits
Still another common tactic among scammers is selling a counterfeit, altered, or doctored coin, indicating that
they inherited it from their grandfather or other relative, contending that they know nothing about coins, and
saying that what you see is what you get. Sometimes, though, people not knowledgeable about coins do inherit authentic
coins and try to sell them on eBay.
eBay recently began prohibiting the sale of coins and other items when the seller disclaims knowledge of or responsibility
for their authenticity. But eBay's rules, including this one, are enforced only when people complain about their
being broken, and even here only sporadically, with eBay not hiring enough people to read the e-mail it receives
informing it that a seller is breaking its rules.
An auction with unusually low bidding for an authentic or undamaged coin of its type, date, mint mark, and grade
may indicate that bidders are staying away from it for good reason. The old saw, "If it's too good to be true,
it probably is," very much applies to online auctions. Deals can be had, but you need to be careful.
eBay is fertile ground for counterfeit operations because of its hands-off policies. Large counterfeit operations
involving ancient coins run on eBay on a continuous basis, often out of foreign countries, including Canada, Lebanon,
and Germany. Scams involving the fraudulent sale of counterfeit U.S. coins as authentic coins are frequent as well.
When in doubt, ask around, with the online discussion groups mentioned above being good choices.
Shipping Scams
Be careful about sending payment to sellers from abroad, particularly sellers who ask you to wire money through
Western Union. One common scam, popular among scammers in Russia, Eastern Europe, and Southeast Asia, is for the
seller to tell a skeptical buyer to make out the funds in the name of the buyer's wife or sister, a name not known
to the seller. The seller says that this way he'll be able to check with Western Union to find out that the funds
were sent to him, so he'll ship the coin, but he won't be able to collect the funds without Western Union getting
an OK from the buyer after he receives the coin. A related scam is for the seller to ask the buyer to email him
when he has sent the funds through Western Union but without revealing Western Union's money transfer control number
until he receives the coin.
What happens in the above cases is the scammer claims the funds but doesn't ship. Western Union doesn't require
any information for a recipient to claim funds except the amount of money expected and the origination city, state,
and country.
Another scam involving shipping is the creation of fake shipping sites, such as KLM Express and Prompt Express.
Scammers have used these sites to "prove" that they sent the item and that you can send them payment
for it. After they receive your payment, the sites disappear along with your money.
Miscellaneous
Another trick sometimes used with lower-priced items is for the seller to charge artificially high shipping and
handling fees. Be sure you know what the charges will be before bidding -- if the charges aren't specified, ask.
Sellers aren't allowed to change the terms of the transaction after the auction closes. If they ask for more money
for shipping or otherwise makes changes, email them and politely indicate that this is a violation of eBay policy.
Sellers in the U.S. cannot charge you extra for using a credit card, alone or through an online payment service
such as PayPal. This is a violation of eBay's, Paypal's and the credit card companies' rules. If a seller tries
this, email him and politely point out that he can lose his accounts with these services for such actions.
Another common tactic among cheaters is running three-day auctions, long enough to snag someone but, in the minds
of sellers, not too long so as to attract undue attention.
In Conclusion
The above are all possible warning signs. But not all private or low-feedback or bad-photo or no-returns or no-escrow
or inherited-coin or low-bid or transatlantic or three-day auctions are scams. Try to keep things in perspective.
Thousands of coins are bought and sold every day on eBay without a problem. Some people overreact in fear and refuse
to participate at all in online auctions, depriving themselves of an enjoyable way to build their collections.
Ultimately, with online auctions, knowledge is power. Arm yourself with information like this, and you'll greatly
lessen your chances of getting duped. You can find more at the following Web sites:
Vendio's
Tips and Tactics
Internet Crime Complaint Center
National Fraud
Information Center - Internet Fraud Watch
The Federal Trade
Commission - E-Commerce & the Internet
|
|
