You pays your money and ...
Written: Aug 21 '02
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Ebay is not an auction house or even a garage sale - it is a craps shoot.
Auctioneers are required to be licensed because they have very specific legal responsibilities with respect to the transactions they oversee. In the case of a garage sale one can examine the merchandise, judge the sellers integrity and one also knows where the seller lives.
Ebay lacks all these attributes - they take no responsibility for the sale, just matching vendor to customer, and despite the dubious on-line evaluations one has little idea of the parties' integrity, the items' quality nor the whereabouts of the parties.
Method of payment is my biggest problem with eBay. Let me explain how credit cards, such as Visa and Mastercard work for comparison. When you present a credit card to a vendor for a purchase you are protected from fraud and contract breaches in the transaction. The terms vary from state to state, but if I pick up the phone and order a $2000 PC and the vendor fails to deliver the item or delivers a wrong or defective item I can simply refuse to pay the bill, write to my credit card company explaining the nature of the problem and this is usually the end of my involvement. My total liability in cases of fraud or theft are limited to $50 (in my state), and usually this charge is waived. The merchant is protected too. Once he runs my credit card number and receives authorization he will get paid even if I don't pay my bill. The cost for this system varies from around 1.5 to 3.x percent of the transaction cost and of course the credit card companies only allow qualified vendors to bill these cards. The problem is that individuals selling a few items cannot bill credit cards agents for their sales.
Now let's consider PayPal - eBays more popular payment agency. With PayPal one agrees to allow a credit card billing or bank account access by PayPal based on a personal authorization. The vendor receives the money prior to the completion of the transaction and PayPal's contract with the purchaser avoids any liability on PayPal's part for transactions that go awry. Yes there is insurance but it is limited to a fraction of the value up to $200. If I order a $2000 PC using PayPal and I receive a defective item of nothing at all I am looking at a $1800 loss instead of a $50 loss when using a Visa or Mastercard. Yes I could sue the vendor, but this a impractical for amounts of a few thousand dollars in juristictions hundreds of miles distant. PayPal is a hokey amateurish method of transaction that should IMO only be used for trading cheap (under $200) items. For such small amounts one may as well put a check or money-order in the mail and hope for the best. PayPal seems to charge amounts comparable to credit cards and the net effect of their service is to divorce credit card purchasers from their protection while retaining protection for the vendor. There is nothing fraudulent or dishonorable about PayPal's described method of operation, but they clearly diminish the buyer's protection. I don't like this arrangment so I've never used PayPal, but there are numerous online forums of disgruntled PayPal users (buyers and sellers),
search for example:
http://www.paypalwarning.com/legal_actions/
or examine
http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2605840,00.html
What is needed is an escrow account management system what is cheap and efficient. Many b2b auctions use these. The escrow agent, similar to PayPal insures to the vendor that funds are available(frozen) in the buyers account for the purchase, but the transfer of funds await the completion of the transaction - for example shipment and examination of the goods by the purchaser. The details are somewhat complex, but effect is that both parties are protected.
I think eBay is a great system for connecting buyers to sellers. What is still lacking is a means of accomplishing SAFE transactions at a distance. If your eBay vendor is one of the very few to take Visa/MC - all is well. If the amount is small and you are willing to risk your money via PayPal or money-order - then have at it, but you are a gambler at heart - not a buyer.
I'll refrain from discussing the issues of people addicted to auctions and of used items at these high risk bid sales selling well above their retail/safe-vendor price. There are bargains here - but very few.
Recommended:
No
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About the Author
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