There's no denying it-- selling on eBay has become a risky business indeed. Sellers have been stripped of rights and protection and have all but been thrown to the wolves. However, if you're an eBay seller, all is not lost. You can sell safely and successfully if you're willing to take steps to protect yourself-- because eBay certainly isn't going to do it for you.

If you're brand new to eBay selling or you're an old hand, please take a few minutes to read over this hub and make sure you're doing all you can to protect yourself, your assets, and your income.

Quick note for average, honest buyers-- this guide is meant to assist average, honest sellers in dealing with bad or "scam" buyers. Most sellers recognize that most buyers are decent, honest people, and it's not you folks that we worry about, nor are you the focus of this guide. Unfortunately, eBay opened the door to fraudulent buyers with the past couple of years' worth of poorly thought out policies. I also fully acknowledge that there are bad/scam/problematic sellers on eBay, but this hub is going to focus on weeding out troublesome buyers.

Secondary general note-- this is long and contains a lot of information.  I tend to be a little verbose at times, but most of what is here really is important information that all sellers ought to be aware of.

PayPal might be the singlemost issue that sellers need to pay the most attention to. Now that eBay forces the use of PayPal for the majority of sellers, we all need to make sure we're following the guidelines laid out by PayPal when it comes to shipping items to buyers. PayPal has some very specific, yet fairly simple, guidelines for ensuring sellers are covered under the Seller Protection Program.

The single biggest mistake sellers make when using PayPal is failing to purchase delivery confirmation when shipping items. I see this all the time on the eBay forums-- a new(or simply somewhat inexperienced) seller comes to the forum, says he's made a sale and shipped the item, but his buyer is now claiming non-receipt("INR"- item not received- in eBay & PayPal jargon) and has filed a PayPal claim against him. He's angry, upset, and confused that PayPal will not accept his postal receipt as proof that he shipped his item. And it's true-- PayPal will not accept a receipt from the post office as proof of anything. In order to be covered under Seller Protection, you must provide proof of delivery, in the form of something that can be viewed and verified online(such as delivery confirmation).

Additionally, if your item has sold for $250 or more, you must use signature confirmation in order to be covered against INR claims.  Failing to do so could turn in to a very costly lesson in PayPal policy.

If you are using a shipping carrier other than the USPS, please check with that carrier what their options for online tracking are.  Both UPS and FedEx offers tracking online, and these numbers should either be attached to the PayPal transaction upon shipment, or available to upload to PayPal in the event of a dispute.

As sad as it is, there are a great many eBay buyers who are wise to this, and will target sellers who fail to use delivery confirmation of any sort.  If you fail to get confirmation and a buyer files an INR claim against you, that buyer will win the claim and you will be forced to refund, leaving you out both the money for the item and the item itself, which in all likelihood, your buyer does in fact have possession of.  Don't let this happen to you!

There are a couple of other important things to know when it comes to using PayPal for eBay sales. First, it's very important that sellers ship to the address provided by PayPal in the transaction details. Shipping to any other address, such as one provided by the buyer that differs from the one provided in the transaction details, will void your Seller Protection. If a buyer asks you to ship to an alternate address, you will need to first ask that buyer to add the new address to their PayPal account before making payment. If payment has already been made, you will need to refund the payment first, then have the buyer add the alternate address and resend the payment(while selecting the address they would like the item shipped to). If a buyer balks at doing this, be wary-- they might not be trying to scam you(I admit to once having my mother make a purchase for me, pay with her PayPal account, and had her ask the seller to ship directly to me; at the time, I was unaware of the address policy within PayPal and didn't realize I was doing something to cause suspicion in the seller, who ended up just shipping to my mother-- no big deal, and I learned something because of it!) but then again, they might be fishing for an easy target. Even if you purchase delivery confirmation, if you ship to an alternate address, the buyer can then claim INR and win, even if your confirmation says it was delivered-- because it was delivered somewhere other than the address provided by PayPal.

Lastly, it's extremely difficult, if not nearly impossible, for a seller to win a SNAD- Significantly Not As Described- claim through PayPal. If a buyer files SNAD, expect to refund upon return of the item(if you don't do so voluntarily, PayPal will do it for you, and you do not want that to happen-- voluntarily is always the better option).  You also need to be careful here, because there have been multiple instances of buyers returning items other than the one that was sent, and in some cases not returning anything at all, yet still receiving refunds from PayPal.  All a buyer has to do is provide PayPal with delivery confirmation that shows "something" was returned to the seller, and PayPal will issue the refund if the seller has not done so already.  "Something" can simply be an empty box or a box containing some old item of theirs they no longer wanted-- meanwhile, they've got your item and your money, and these claims can be extremely difficult to fight in PayPal(though there are ways that are proving to be somewhat successful).

In summary, use what little is available to you as means of protection when dealing with eBay payments through PayPal.  These are all simple steps that can save you a lot of headaches(and money!) down the road.

Starting in June 2009, eBay will be taking over the dispute/resolution process, which so far seems to be spelling out complete disaster for sellers. eBay's new process appears to be allowing for buyers to keep items received and still get refunds, which will be paid out by eBay and then charged to the seller's account. eBay will also be allowing buyers to "destroy" items that are alleged to be fake-- take note if you sell high end or designer items!-- and again will issue refunds upon "confirmation" from the buyer that the item has been destroyed, and again charging it to the seller's account. This process is going to make it extremely easy for scam buyers to purchase authentic items, claim the items are fake, tell eBay they've "destroyed" the item, and receive a refund(which you, the seller, will then be financially responsible for). Since this policy is not yet in effect for the majority of users, it's hard to say just how things are going to play out, however, if this new policy doesn't scare the bejeezus out of most sellers, then they're not paying attention. I will revise this section as needed once this policy is in effect site-wide.

Update, May 14, 2009: eBay has revised the new user agreement to now state that buyers who claim an item is counterfeit must now return said item to the seller, rather than "destroy" it and provide "proof" to eBay of having done so.   This is an improvement, although something about the whole deal still doesn't sit too well with me.  I suppose we again will have to wait and see how this plays out over time.

As a side note, prior to this revision, Titanium level Powersellers were reporting-- not surprisingly-- that eBay's definition of "proof" was to have the buyer sign an affidavit stating they were telling the truth and that the item had in fact been destroyed.  No physical, or even photographic, evidence required.  It'd be shocking were this any company other than eBay, but, well, it's eBay, so nothing particularly unusual there.

With eBay's changes to feedback(dis-allowing non-positive comments for buyers), it has become slightly more difficult to to weed out bad or scam buyers, but it's not impossible. Since a buyer's received feedback no longer has any merit, a seller needs to look at the feedback left by the buyer. You can do this by clicking the buyer's feedback, the selecting the "feedback left for others" tab in the feedback profile. This is the one area where scam buyers tend to give themselves away-- they either leave a disproportionate amount of negative feedback, or they leave "soft positives", often filled with references to refunds or remarks about how wonderful the seller was to deal with when the item never arrived.

An alternate method of viewing feedback left by a buyer is to use Toolhaus. In the very first box, input the buyer's user ID and select "left by". This will pull all negative and neutral feedback that a buyer has ever left. Please note that simply leaving negative feedback for another seller is not necessarily an indicator of a bad buyer, because we're all well aware there are plenty of bad sellers on eBay as well who might have deserved something less than positive. Read any negative or neutral feedback carefully, and look at the frequency of neg/neutrals left. Please note that using this method will not reveal soft positives, so if you're still in doubt about a buyer, read their feedback left for others on eBay.

A note on private feedback-- if a buyer has their feedback set to private, you will not be able to read any of it, including what they have left for other sellers, nor will you be able to pull it on Toolhaus. A buyer with private feedback is a big red flag, generally an indication that the buyer is familiar with how sellers assess potential buyers who have placed bids on their auctions. Those with something to hide will typically switch their feedback to private so sellers will have no idea of who they may be dealing with. My personal recommendation is to cancel bids from such buyers and place them on your blocked bidder list, however, if you're feeling so inclined, you can attempt to contact the buyer before doing so and ask them to make their feedback public so you can review it. Most honest buyers who keep their feedback private for other reasons will acquiesce; scam buyers typically will not. If you get no response at all, cancel all bids from such buyers and block.

There are a couple of caveats here-- first, if you are running fixed price listings, you will have no idea who is making the purchase until it actually happens. You will not be able to "pre-screen" a buyer in the same manner you would if the sale was in auction format, so these methods will not be effective. Second, if your sale is auction format but your buyer is a "sniper"-- that is, they either use a service to or manually place a bid in the very last seconds of an auction-- you will also not be able to pre-screen. However, there are additional ways in which you can minimize your risk.

Regarding leaving feedback for your buyers, my personal opinion is that, in general, you should, even if your buyer is a bit of a pain.  Since you can only leave positive feedback, regardless of how the transaction actually went, the only time I wouldn't leave feedback is if the buyer failed to pay.  Normally, I leave feedback for my buyers at the time of shipment(generally the next day after the buyer has paid, or same day when possible).  eBay has created a bit of a monster in the form of feedback, and while it has always been, and continues to be, a completely voluntary program, some buyers feel that making a purchase entitles them to it, or worse, feel that receiving their next little green donut is the focal point of the entire transaction.  These sorts of buyers are few and far between, and often do not present any other problems, but keep in mind that buyers can still leave whatever feedback they please for a seller, whether it's justified or not.  There ARE buyers who will leave negative feedback for a seller who does not leave them feedback first(or at all).  To minimize the risk of receiving frivolous negative/neutral feedback that isn't actually related to the transaction, it's likely best to just leave your feedback either upon receipt of payment or at the time of shipping.

As mentioned above, there are a few other steps you can take to minimize your risk when selling on eBay.  You can set Buyer Requirements in your account that can automatically block buyers with a history of causing problems.  The first thing you should do is set your preferences to block buyers who have 2 unpaid item strikes within a 12 month period.  This will help to weed out buyers who bid for "sport" and have no intention of following through with payment.  The rest of the requirements listed on the page are at your discretion.  At one point, I was advised to block buyers without a PayPal account, and I did, however, I'm no longer sure that's really ideal.  There are still plenty of buyers who prefer to use money orders or checks(and yes, this IS allowed, and will be covered further down the page), and there's really no reason to deny these.  If you choose to not ship internationally, be sure to check the box to block buyers in countries that you do not ship to(and be sure to match those settings in your listings, or it won't work!).

When you've set up your preferences, be sure to save them, and then look at the upper right hand corner of the page and click Community.  On the community page, scroll down to Discussion Boards.  The boards are an excellent resource for sellers(as well as buyers!).

After everything else, it's still possible you'll run in to problem buyers, the most common of these being those who do not pay for items won. eBay allows a 7 day window in which a buyer can remit payment before allowing a seller to file an unpaid item dispute. My process is the following: an invoice is sent immediately at the close of the auction, including the total price with shipping, and a note of thanks for bidding on the item. If no response or payment is received by the 5th day, I send a reminder invoice containing the same as above. Note that as of recently(April-May 2009), invoices are not being received by buyers, even when eBay displays confirmation of invoices having been sent. I have heard this from multiple buyers in recent weeks, and newer users may not realize they do not need to receive an invoice to actually pay. Remain polite when this happens, as it's not the buyer's fault. And actually, you should remain polite at all times anyway-- your goal is to complete the transaction successfully, with both parties being happy in the end, and that's less likely to occur if you get aggressive or rude with a slow payer(remember that buyers can leave you whatever feedback they desire, and slam your DSR's...).

If things progress to day 8(and yes, it DOES feel like forever!) and I've received no contact or payment, I then file the unpaid item dispute. When things get this far, I find I have about a 50/50 success rate in getting payment from buyers. For those that do not pay, I always issue the non-payment strike at the close of the dispute(you can see how to do this in the case details). Keep in mind that eBay will occasionally reverse strikes issued by sellers, usually simply because the buyers asks them to, however, if a buyer racks up enough of these strikes(exact numbers unknown, since eBay will not disclose this information, but general thinking is around 4), eBay will not only NOT reverse the strike, they will also close the buyer's account. By filing UID's and issuing strikes to those who do not pay, you assist all sellers by helping to remove "sport bidders" from the community. These people waste our time and cost us money, so please do your part. Also remember to add the buyer's ID to your blocked bidder list, so you don't have to go through the same thing again with the same buyer.

YOU CAN ACCEPT MONEY ORDERS AND CHECKS(or cash if your buyer is feeling bold)!  Yes, you really can, though eBay makes it confusing at best as to what their stance on this is.  You CANNOT advertise, in any way, not even subtly, within your listings that you will accept these methods of payment, but, if a buyer sends you a message and asks if you will accept a money order or check, YOU ARE ALLOWED TO SAY YES.  Note that you are not required to accept any payment method other than PayPal, but there are real benefits to allowing your buyers to mail you payment, namely no PayPal fees and no risk of fraudulent chargebacks or INR/SNAD claims.  I personally love buyers who ask to pay by money order(I do not accept checks in general, as my experience with checks is that they almost always bounce-- however, there are plenty of others who have not had this problem, so use your own judgment).  I prefer to accept postal money orders, as these can be cashed right at the post office when I'm there to ship items out.  And while these methods are generally safer for sellers, keep in mind that sometimes checks and money orders can be forged, though I have not personally ever encountered this in 11 years of selling online and having received hundreds of money orders.  I always check a buyer's feedback and feedback left for others before agreeing to accept a money order(and actually, was able to make an exception to my "no checks" policy for one buyer this way).

Please also keep in mind that your buyer is putting a lot of trust in to you by sending you a check or money order, as they have little to no recourse if you fail to follow through.  Be a good, responsible seller-- acknowledge your buyer when you receive their payment and let them know when you ship their item.  This is reassuring to a buyer who has basically blindly trusted a complete stranger.  Additionally, I recommend using delivery confirmation on items paid for by money order/check/cash, even though it's not really necessary, as it's additional reassurance to your buyer that you are honest.  A little bit of effort can go a long way, and you may find yourself with a repeat customer when you prove to them that you're trustworthy to deal with.

There's a lot here to absorb, especially if you are new to selling online or selling on eBay.  Nothing here is meant to scare, only to make people aware.  I have sold on eBay for 11 years, have had thousands of transactions, and have encountered scam buyers exactly twice-- and both of those occurred well before the many poor policies changes went in to effect.  What I encounter more than anything else are garden variety non-paying bidders, which, while annoying, are also relatively easy to deal with.

Finally, your risk as a seller is going to greatly depend on the sort of items you sell.  If you sell in high fraud categories, such as anything involving electronics or designer goods(clothing, handbags, etc), you are going to be more likely to encounter scammers than someone who sells items that are not commonly counterfeited.  It's up to you to decide whether the risk is worth it.

I still believe that eBay is a viable marketplace, and will continue to use it-- with caution, of course.  Scammers can get you anywhere on the internet, though eBay is the one place where they seem to be almost encouraged to come and play.  Of course, if I get burned one of these days, I may well change my opinion... ;)