If you sell products online, you probably already know that some buyers are crooks. The trick is figuring out who they are before they scam you. And, since that’s not always possible, it’s smart to take some precautionary measures to reduce the  chance of suffering a costly hit.

Common cons

The simple cons involve buyers who maintain that your product never showed up; came damaged or wasn’t as described. This, the buyer maintains, entitles him or her to a refund of all or a portion of the purchase price. In some cases, buyers say they should get a refund despite the fact that they want to keep your goods.

Fortunately, the solution to these dishonest-buyer cons is equally straight-forward:

  • Stick with established selling sites, such as eBay, that rate both buyers and sellers.
  • Be skeptical of newbies, who have no ratings to show whether they’re legitimate or sketchy.
  • Describe your products carefully and include multiple pictures, that point out any flaws.
  • Photograph the item you’re shipping before and after putting it in the packaging
  • Always opt for shipment tracking and insurance.

If you think your buyer is engaged in buyer extortion — threatening a bad review if you don’t provide a discount — report the buyer to the site. eBay maintains it will boot buyers that engage in this sort of bad behavior. 

Although you’ll still occassionally lose a product to a crooked buyer. These precautions vastly reduce the chance of getting taken. Tom Fredette, who operates two eBay businesses, estimates that he’s cut buyer fraud to less than one-percent of sales. 

Fake checks

Somewhat less easy to spot are the cons that involve bogus payments — seemingly real cashier’s and corporate checks — that turn out to be forgeries. This con is perpetrated worldwide and has hit epidemic proportions, consumer advocates maintain.

The fake check scam has four parts. The hook; the challenge; the solution; and the double rip-off. Here’s how it works:

The hook: You get an email about your listing from an enthusiastic buyer. “This is exactly what I’ve been looking for. I want it! Happy to pay full price. Maybe even a little more ‘for your trouble.'”

The challenge: What trouble is that, you wonder? Ah, says the buyer. “I am currently overseas and don’t have access to my bank account.” Typically the buyer purports to either being in the military or visiting a dying relative. Both excuses are aimed at eliciting sympathy, while making it clear that the buyer could be away for a long stretch.

The solution: But, says the bogus buyer, I have a (pick one) friend/relative/employer who owes me money. He/she/it will bring or send you a check and pick up your item. The check is likely to be for considerably more than the selling price of your item. So, the buyer suggests that you deposit the check and send him/her the difference.

The double rip-off: If you take the bait, you hand the con artist’s accomplice the item you had for sale and you “refund” the excess amount of the check after the check appears to clear your bank. The trouble is the check didn’t really clear. Your bank will eventually discover that the check is a fake and debit your account for the entire amount. That leaves you out the value of your item, plus the full cost of the bogus check.

Why it works: U.S. banking laws require banks to give customers access to deposited funds within a relatively short time frame — one to nine days. But, a well-forged check could take weeks to discover. Even a cautious person might imagine that  the crook’s check cleared, making it safe to “refund” the excess amount when the bank makes your funds available. But the bank can debit your account for the full amount of the fake check whenever it discovers the fraud — even if that happens months later. If you don’t have enough money in your account to cover the debit, you could face bounced check fees — and even bank fraud charges.

Our advice: Paypal works everywhere. Don’t take checks. And, certainly, never take a third-party check for the wrong amount.