by Jim Marasco, The Daily Record, August 2015

I decided to sell one of my vehicles online recently. It offered a great opportunity to educate my kids about the scams and schemes people will perpetrate. If you’re going to be buying or selling merchandise online, be alert to the risks.

Safeguards to Consider while Selling Goods

Selling an item online usually involves posting a written advertisement, pictures and your contact information to a particular site. Some of the most common sites used include eBay or Craigslist. Specific to automobiles, AutoTrader or Cars.com have become popular. Their commonality is that they all attract the attention of perpetrators looking to prey on naive sellers. While going through the process, consider the following safeguards:

• Understand the Fees – Sites such as Craigslist are free, while others take either a percentage of the transaction price or a fixed listing fee. Make sure you understand what fees are involved and what’s included. If a service like PayPal is going to be used, inquire as to who pays the fees and how much they charge.
• Limit Posting of Personal Information – Take advantage of the email service your site offers to mask your identity, if applicable. Until you vet the inquiries, be cautious about revealing more detailed contact information. Additionally, don’t include ancillary things in the pictures being posted. A prospective buyer doesn’t need to know what other vehicles you own or expensive items present in your house.
• Screen Prospective Buyers – Buyers from out of the area should receive closer scrutiny. Scammers will usually try and hide behind email. Ask them for their telephone number and where they are located. Validate that the number and address are legitimate and research the individual making the inquiries. If using an action website, check to see if the buyer is rated or feedback exists. Inquire how the prospective buyer plans on paying.
• Making the Exchange – Refrain from meeting a buyer alone. Ideally, meeting at a public place is preferred, if the item is transferrable.
• Validate the Payment – Cash is king! However, payment services such as PayPal can easily be set up to receive payments from a buyer. Insist on a bank or cashiers check versus taking a personal check. However, cashiers checks can be falsified. Call or visit the issuing bank with the buyer to ensure the validity of the check being received.

Safeguards to Consider while Buying Goods Online

Most of us have probably purchased goods and/or services via the Internet. However, shopping online from a private seller carries unique risk. To prevent your shopping experience from becoming regrettable, consider some of these precautions: 

• Understand the Fees – Most, if not all sites, won’t charge a buyers commission or additional fee. However, shipping, sales tax, etc. could be charged at checkout. Ensure that these fees are clearly communicated before you complete the transaction.
• Don’t Provide Personal Information – Pay in cash if possible or use a third party payment system such as PayPal. Larger ticket items may require a cashier’s check. Shy away from requests to wire funds via Western Union or MoneyGram. Also, never provide personal bank account numbers or credit card numbers to a private seller.
• Research Sellers – If the site you’re buying from evaluates the sellers, then inspect their rating and the reviews made by other buyers.
• Taking Delivery – If the item can not be shipped, travel with someone else so you won’t be meeting the seller alone.

Common Schemes Perpetrated

As I’ve experienced firsthand, people have no shame in trying to trick and deceive you while pretending to be interested in what you’re selling. Be alert to the common ploys people use while posing as buyers. To illustrate, here is one I’ve recently received:

“Sorry for the late response..I’m seriously interested in buying this and am okay with your selling price. But I’ll like to know why you are selling it because am a boatswain and currently offshore. I really want this for my son you can email me back with your Paypal email address so i can make the payment arrangement. I have a shipper that will come to pick it up from your place as soon as the transaction is completed with paypal..Please dis-regard other buyers as I’m sure to send Payment. Thanks..Kelvin” 

Where’s the Risk?

Some simple research on the Internet found this same ploy used on numerous other sellers by someone with a similar email address. Look for inconsistent grammar (many of these are written by people outside the U.S.) and awkward circumstances that will ultimately complicate consummating the transaction. These fraudulent buyers will attempt to deceive you into thinking that payment is in process while taking possession of your goods (through a “shipping agent”) or accidently overpaying for the transaction and request that you send back the difference via a money order, etc. By the time you learn that their casher’s check is fraudulent, your wire to them has cleared three different banks offshore and is irretrievable. Another variation is that once you provide your PayPal address you receive a “notification” via email from what looks like PayPal alerting you to a deposit made in your account. Don’t fall for the link provided in the email! These are part of a phishing scheme to entice you to click on the link unleashing a virus on your system. Verification of payments via a third party payment service should be made by going on the company’s site directly and logging into your account to verify if payment was actually received. Selling outside the site. If you’re buying or selling on an auction site such as eBay and someone suggests going “outside” the site to complete the transaction to save costs, etc., discontinue communication with them and report them to the site. Any protection offered by the site will be lost once this occurs. Although selling your goods online could be lucrative and a great way to raise money, be prepared for the hassles you’ll encounter. If you don’t have the time to adequately screen candidates, you may want to consider alternate options. James Marasco, CPA, CIA, CFE, is a partner at EFPR Group LLP, Certified Public Accountants and Business Consultants.