An issue known as buyer fraud is becoming a growing concern among online sellers. Buyer fraud is a term used to describe the unethical actions of consumers upon or after making a purchase. These actions have proven to be costly to sellers, but are often of no consequence to the customer.
Naturally, sellers have become very vocal about this problem expressing concerns of being cheated, and believing there is nothing they can do. In actuality, there are practical solutions to buyer fraud that online sellers may not know about. In this article, I will outline the 4 most common problems associated with buyer fraud and how to combat them. When I’m done, you’ll see why online selling is still a great way for sellers to reach customers!
1 | Product Was Not Delivered
One of the most common tricks used in buyer fraud is to contact a marketplace or seller, and claim that a product was never delivered after it was has been received. After making a claim, bad buyers are awarded a refund or a replacement. Effectively gaining a free product or two items for the price of one.
As a seller, this can be very costly. Not only do you lose the sale but also the product.
The best thing sellers can do is be preemptive! Take steps to cover yourself just in case you happen to come across a bad buyer.
One of the most common solutions is to use a tracked parcel delivery service. Meaning you obtain proof of delivery from the customer, usually in the form of a signature. Most people who commit buyer fraud do so online because they believe they are anonymous to the seller. Once sellers remove the anonymity, bad buyers will begin to second guess themselves. While this method is not full proof it is usually enough to deter most bad buyers.
There are also applications, like SkuVault, that have customer service features that can help sellers combat false claims. Sellers who use our software have access to to SkuVault's detailed inventory reports and are able to track and review past sales. SkuVault's Quality Control feature outlines item quantity, type, and delivery. The high level of detail given in these reports are exactly what any seller needs as proof to right any false claims in attempt of buyer fraud.
Overall, it is extremely important to keep accurate records of your products and the delivery process. Whether sellers use inventory software or any other means to keep track of shipping, the important thing to remember is to take preemptive steps to protect yourself.
2 | Return Abuse
I didn't have to do much research to find forum after forum of online sellers who had negative experiences with bad buyers when it comes to return policies. For example, under eBay's money back guarantee a buyer is allowed to dispute a product if it is damaged, is not received, or is not as described in the listing. While this protects the customer, it also has the potential to backfire on sellers.
Return abuse happens when a customer files a false claim and a marketplace refunds that customer’s money. The customer then sends back an item that was not originally purchased from the seller in exchange.
One online seller, Jordan Allison, is an example of just how much of a nightmare this experience can be. Allison sold his cell phone on eBay, and upon arrival the customer submitted a claim that the product was never delivered. After Allison sent proof of delivery the customer said he had received the product after all, but instead of a phone it contained beetroots.
According to an article written on the guardian by Anna Tims, Allison says,
“I had proof – the weight of package and photos – that I hadn’t sent beetroot. But the buyer opened a case against me on eBay. I called eBay and asked if I needed to do anything. It said I would be contacted. A month later I received an email, not from eBay but from PayPal, to say £600 had been removed from my account.”
While policies like these may raise red flags do not worry there are also policies to protect sellers. Seller protection policies are the best weapon to use when fighting a claim against a bad buyer. Buyers who file fraudulent claims are subject to consequences outlined in the Abusing eBay section of the User Agreement. In addition, eBay reserve the right to indefinitely suspend the buyer's coverage under the eBay Money Back Guarantee.
Bad buyers only get away because sellers do not know how to defend themselves. As a seller do yourself a favor and read over these policies and learn how to deal with buyer fraud. In Allison's case, after his appeal had been made The Observer intervened and eBay agreed to refund Allison his £600.
3 | Item Not as Described
Another common practice in buyer fraud is to file a false claims about the item listing. Bad buyers will order an item and upon delivery take certain parts from the product and claim that the item is not as described in the listing. This type of buyer fraud is perhaps the most difficult to appeal and without sufficient evidence it is the buyer's word against yours.
A good solution for this problem is to implement standard procedures to verify the condition of the product for every order. Taking pictures of the product and shipment labels is a good step to add as proof. Using picture evidence is easy to use in single item purchase, but when sellers are distributing in high volumes taking time to take such detailed precautions is not ideal.
It is impractical to record packaging and shipment of every order so instead invoices can be used to prove you bought a product from suppliers in good condition. Record serial numbers or IMEI of products to compare against the returned item. Also collecting contact information from customers can be useful in settling product listing disputes. While you may not get the parts or money back from marketplaces directly you can file criminal charges against bad buyers.
4 | Identifying a Bad Buyer
Wouldn't it be nice if buyers profile came with a warning notice that the customer may be a bad buyer. Well guess what? They do.
Many sites provide feedback for buyers and sellers to engage each other. When interacting with a new buyer do your research. Look at comments that are on the potential customer’s page from previous sellers, and see how much negative feedback is on their page.
Some marketplaces, like eBay, even have feedback left for others. Feedback left for others shows comments the buyer has made to other sellers about past purchases. If the buyer's norm is to give negative reviews, or constantly complaining about shipping problems these are all warning signs that they themselves are the cause of issue and are likely to be a bad buyer.
Some profiles may not have much feedback making it more difficult to determine a customer's credibility. But there is no reason to miss out on a potential new customer so just proceed with caution and always remember to cover yourself.
Increase in Online Selling
Overall, most purchases go smoothly, but unfortunately there are people who abuse the current systems for personal gain.
Postal services around the world certainly do lose packages. It’s an easy thing for dishonest buyers to exploit. Some sellers argue that buyer policies are heavily in favor of the buyer and are easy for bad buyers to manipulate. Making buyer policies more of a liability than an asset, but in reality buyer policies are an online sellers best friend.
How many customers do you think would engage in online purchases without any assurance that they are protected? Not very many right?
Online marketplaces' buyer policies do a great job of ensuring a pleasant buying experience for customers. These policies are designed to protect customers, and are the reason why they feel comfortable purchasing online. Without them there would be no one to sell to begin with.
Now that you know how to protect yourself from buyer fraud here is even more good news. IBIS World research forecasts an 8.6% per year increase in online revenues over the next five years. The internet is only going to become more popular as customers worldwide become more comfortable about the security of their purchases. This is the one area of sales that continues to have a positive outlook far into the future. So keep on selling online entrepreneurs - just remember to learn seller protection policies, be preemptive in covering yourself, and research new buyers!