eBay Fraud – Protect yourself!

Dollar Flipper eBay Tips

Fraud on eBay seems to be one of the first things that  people mention as the reason for why they don’t want to sell online.  It can be scary and intimidating. “What if I sell something, and they just say they didn’t get it?”


eBay fraud is real and happens occasionally. There are some things to look out for, and I’ll go over some pointers on how you can avoid it!  I’ll finish up with how often fraud’s been attempted on me, an “eBay power seller”.

eBay Fraud Methods

Lets look at some of the common methods that the wanna-be criminals are going to try on you.  I’ll follow up each method with some ways to protect yourself and handle it.

1. The Fake Return

You sent out the first and they sent back the 3rd.... Close enough?

You sent out the first and they sent back the 3rd…. Close enough?

Let’s say you sell some snazzy video game. It happens to be a newer one.  You’ve tested it, and it works great.  It sells quickly, and you rejoice in the pile of money that’s now sitting in your PayPal account.

Then the message comes from the buyer.  “The game won’t work.  The disc is scratched. I want a refund.”

Now what?  Let’s say that you accept returns.  You give them your mailing address, they pay to ship it out, and look at that, the disc you receive is scratched to hell.  But you KNOW you didn’t ship it like that.

At this point, there’s nothing you can do.  You’re out the money.  You’ll have to refund them the rest!


For most items, you can cover yourself by taking AS MANY PICTURES AS POSSIBLE!!! Even if this is a video game disc, take a picture of the shiny side and include it.  You’ll have to do it at an angle, but you can use that as proof that you did not ship them the disc you received.

I try to be honest and transparent when I list.  If there’s minor scratching, I disclose it.  For example, I had a game which tested fine (booted up the game, went into the 1st level) but had some scuffing.  Customer received the game and was upset that it started freezing when he got past the 1st level.  After some back and forth through the eBay case system, we eventually came to an agreement that I would pay back the money minus the cost of the disc originally (only bought it for $1), the shipping, and the packaging.  This is not ideal for the buyer, but it’s also not ideal for me either.  We both didn’t get what we wanted – the hallmark of a comrpomise.  Because we were able to work it out, I avoided the negative feedback, and he got most of his money back without having the hassle of packaging the item, paying for shipping, and getting it to the post office.

2. I didn’t receive it!

This one isn’t as popular as it used to be.  USPS has done a great job with updating their tracking system.  Back in the day though, someone would tell you “I didn’t get the item you sent.”  They could open a case and you would just be crap out of luck.  Nothing you could do about it.


Now though, PayPal has implemented seller protection.  As long as you can prove that your item was delivered by USPS to the address specified in PayPal, you’re covered!  First class and Priority mail automatically have this included. If you ship an item through media mail, you’ll only have to pay an extra $0.20, so it’s well worth it!

3. Different Address?

“Hey, this is a gift and I’d like to send it to an address that’s different than the one in my PayPal.”  Sounds legit right?  Well, it’s not!


Never send your item to an address other than the one in PayPal.  If you do, then you aren’t covered by their protection policy.  Just let the buyer know that it’s against your policy and PayPal’s to ship to an address other than the one listed in PayPal.

4. My account was hacked!

If only you got this notification!

If only you got this notification!

Usually, right after your awesome item is shipped, you get a nice little message.  “You need to return that money right away!  It’s going to somewhere I didn’t authorize!  MY ACCOUNT WAS HACKED!”  Right buddy, and you just happened to notice it after it’s already on its way.  Convenient…


When someone says this, I like to make things REAL for them.

I let them know that because the transaction and shipping went through multiple states, this would be a FEDERAL CRIME. I link them to the United States Secret Service which has a nice little FAQ to handle identity theft (which is also handy if this actually does ever happen to you).

To sum up the, the Secret Services recommends the following for identity theft/hacked account/unauthorized transaction:

  • Get a police report right away
  • Contact your credit card company
  • Call the fraud units of Equifax, Experian, and Transunion

Additionally, I tell them that they must open up a case in PayPal and/or eBay.  I let them know that there’s no way I’ll be sending any money until PayPal specifically tells me to.  As long as I followed the PayPal recommendations (wait till PayPal clears the money and ship it to the address on the PayPal account), I’m covered by them.

Stating that the this type of fraud is a federal crime and requiring a copy of a police report seems to deter people from continuing to pursue a false claim.

Fraud Attempt Likelihood

Here’s where I’ll calm your fears a bit.  I don’t think eBay fraud actually happens a lot. Anecdotally, fraud has only been attempted on me twice, and I’ve sold hundreds of items.

Here’s the key information about the items I sold:

They were both Apple iPhones.  One was an iPhone 3GS, and the other was an iPhone 5.
In both situations, the contract fees were up, phones were unlocked by me, and they sold for a hefty sum (over $200).

This is where the would-be-criminals see an opportunity for $$$.  The two methods that were used on me were the “I didn’t receive it.” and the “my account was hacked!”

In both situations, I noted that mail fraud/identity theft are federal crimes.  In the “I didn’t receive it,” I let them know that USPS says it was delivered, so claims would have to be dealt with by usps.  The weirdest part about this transaction was that they actually gave me positive feedback prior to saying they didn’t get the phone!  He wanted me to re-open the transaction (I don’t even know how to do that) so he could start an eBay case.  I told him I would go through that effort once I saw the copy of the police report.  Not surprisingly, I never heard from him again.

On the “my account was hacked!” attempt, the user always used a different name than was on the paypal account (even in his gmail address).  PayPal waited over 24 hours to confirm that the money cleared (normally it goes through instantly), and I made sure to include signature confirmation and insurance.  I mean it was a phone with a hefty price tag attached.  The extra $15 was well worth the peace of mind.  I gave him my usual “this is a federal crime” spiel (can’t believe I got to use that word in context!  check that one off my list) and he complained that he doesnt’t even live in Tennessee (where the phone was shipped), so there’s no way he can mail the phone back.  I reminded him that he’d only messaged me and that if he really wanted to get this fixed, he needed to open an case with PayPal and/or eBay.  Interestingly, here the shipping address was a confirmed address on PayPal.  Once again, haven’t heard back from him!

I guess the moral of the story is that some people are looking for a quick and easy buck.  As long as you take your precautions, you will be fine.  PayPal and eBay have policies that protect you in these instances and provide official channels for dispute resolution – always insist on making things official.

How about you?  Has someone has tried to pull a fast one on you while selling on eBay?  I’d love to hear what happened and how you handled it.

-Dollar Flipper

Image Credit: Lotus Head, NY TImes, Robert