Internet Auctions

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The growth of Internet Auctions has drawn the attention of stamp collectors world wide as an easy and convenient method of acquiring material for their collections. I have been both a buyer and seller on the E-Bay Auction site for about 2 years and continue to be active on that site under the E-Bay handle john-csa. There is no question that the auction site is a great advance for our hobby. But there are many pitfalls and scams associated with both buying and selling on an Internet Auction. The purpose of this page is to provide some information about these various scams as well as a few recommendations about how to protect oneself from a bad experience in dealing through an Internet Auction site. My only real experience is with E-Bay, so my comments will be confined to that site only. My comments are my own opinions and no one elses, and I have no connection whatsoever with E-Bay except as a registered user. Before proceeding, please bear in mind that the vast majority of Sellers and Buyers on the E-Bay Auctions are totally honest and fair. It is only the few bad apples that cause all these problems for the rest of us.

E-Bay Auctions is by far the largest and most successful of the Internet Auction sites to date. They have a large Stamp and Coin Section with further subdivisions of categories in which to list Philatelic Items. At any given time there are literally thousands of stamps and covers up for sale on a 7 day bid basis. A direct link to the Auction Site is below. A better understanding of the site does require carefully browsing the categories and the listings.

You must register in order to buy or sell on the site. But you can browse without registering. It is easy to register. E-Bay also allows the same person to open a number of different accounts, but a different E-mail address is required for each account. The ability for the same person to open multiple accounts under different E-Mail addresses is the key to the way some of these scams work.

Here is a Listing of some of the various auction scams that have been detected on E-Bay. The listing is in no way complete. There are I am sure other scams of which I am not currently aware. As I find out more information, I will update my listing.

1. Bid Shilling -- The use of shills is as old as the auction business itself. The way it works on the Internet Auction is that a seller lists an item and then either bids on it himself using an alternate account or has some friends or partners bid on the item for the sole purpose of driving up the price. The bids are false bids never meant to be honored whose sole purpose is to drive up the selling price by forcing the real bidders to bid higher. This is probably the most common of the auction scams. It is also very difficult for the ordinary bidder to detect whether or not he has been the victim of a shill scam. Experienced bidders familiar with the system can at times detect suspected shills. Shilling is forbidden by E-Bay and is also against the law in many states; but it happens all too frequently. Some shilling activities that have been uncovered have shown that some individuals have had as many as 5 or more separate E-Bay accounts.

2. Bid Shielding -- This scam does not show itself too frequently, but when it does it hurts both buyers and sellers. In order for the scam to work best, it requires three separate bidder accounts working together (it could be one person using three different accounts or 2 or 3 different people working together). The way it works is this -- suppose a person while browsing the items for sale finds a high value item with a current very low bid. For Example a Recalled Legends of the West sheet which normally sells for $150-$175 retail was just listed and currently has a $10 bid with no reserve. This person then bids $15 and becomes the high bidder. He wishes to protect or shield his bid so that he is assured of winning the item at his $15 bid. In order to do this, he would then place a second bid using another account ID which is extremely high and out of line with the true value of the item (such as $500.00 on our example sheet). Using yet a third account ID, a third bid just under the $500.00 top bid would also be placed thus making the high bid on the item so outrageously high that anyone else seeing the item would pass it by and not bid. The key to the scam then is that the two very high bids are retracted in the last few seconds just before the auction closes thus leaving the $15 bid as the winning bid. The seller gets hurt because he does not get fair value for his item. Legitimate bidders get hurt because they are denied the opportunity to place a fair bid. Bid Shielding is usually fairly easy to detect. A giveaway is when two extremely high out-of-line bids are placed usually within minutes of each other with both being retracted at the last second. The Bid History of each item can be reviewed by anyone. The bid history gives the handle of the bidder and the time that each bid was placed, but the amount of the bid cannot be seen until after the auction closes.

3. Bait and Switch -- A stamp is put up for sale with minimal description but a gorgeous scan showing a well centered beautiful stamp. The description usually will say somewhere in the small print "All Sales Are Final" or "No Returns Accepted." The stamp that is then subsequently sent to the winning bidder is not the one shown in the scan, but another copy perhaps badly centered or with faults.

4. Bait But Don't Deliver -- This scam involves offering often very expensive items for sale which the seller does not own and does not have access to and has no intention of delivering. This scam was recently uncovered and reported in Linn's Stamp News when a seller was found to be offering for sale a C3a (Inverted Jenny) with a winning bid of $35,000. The seller did not own the stamp and had in fact used a photo from a auction catalog which he posted as a scan of the actual stamp. The C3a stamps are well documented, and this particular stamp was actually sold by Siegel's in New York in Feb 1999 to a collector who of course still owned the stamp. The whole scam was uncovered when the winning E-Bay bidder refused to pay any money until he could examine the stamp and examine the provenance (the seller claimed it was an inheritance from his grandfather). In further investigating, the same seller was also offering other expensive items (stamps and coins) that he did not own and using scans of old auction catalog photos. Fortunately the whole thing fell apart before any money was lost. This of course is an extreme case, but it also happens with much lower priced material where the seller simply keeps the money and never delivers the goods.

5. Hidden Faults -- What this boils down to is the misdescribed or badly described stamp. Many times a stamp will have faults that cannot be seen on the scan such as large thins or even tears. These faults are conveniently left out of the description. To illustrate this point, here is what happened to me -- I bought an unused pair of CSA #4 on E-Bay a while ago. The scan looked great and the description was glowing, The seller was a dealership with whom I had never done business with before. When I received the stamps, I found that they had been extensively repaired actually using pieces from another stamp. This was not mentioned in the description and could not be seen on the scan unless you knew exactly where to look and what to look for. I returned the stamps and received a refund without any problem. But the story does not end there. About 3 weeks later, the same pair was again offered for sale by the same seller with the same glowing description and no mention of the major faults. When I E-mailed the seller about this, I was ignored and the item was sold to someone else. The scam here is that items with undescribed faults are sold. If they are returned, then the money is happily refunded; but the item will again be sold perhaps over and over again until someone buys it who does not return it. Some of the most prolific E-Bay sellers engage in this scam, and it apparently cannot be stopped. I am of course referring to dealers or experienced collectors who consistently list misdescribed material for sale who should really know better. Misdescribed stamps listed by sellers with little or no philatelic knowledge is another problem altogether. CLICK HERE for another example of a misdescribed E-Bay Stamp. For yet another severely misdescribed stamp CLICK HERE. For a misdescribed CSA cover CLICK HERE.

6. Fakes -- In the field of Confederate Philately, there are a great many fakes, forgeries, and reprints of both the stamps and the covers. Many times these items will show up on E-Bay listed and described as the real thing. This may or may not be a scam depending on whether or not the seller realizes the item is a fake or not. But there are some sellers out there who do knowingly sell fakes and do not withdraw the items even though they have been informed by others that it is a fake. BEWARE THE FAKES.

7. P&H Scam-- It has happened where a successful bidder on a cheap $1.00 - $2.00 stamp was then hit with an additional $8.00 P&H charge just to mail one stamp. This in my opinion is a real scam as no P&H charge should be so high for one stamp or for one simple mailing. You can easily avoid the P&H Scam by reading the description looking for the P&H charges. If the P&H charges are clearly posted, then you are obligated to pay them. If they are not posted, then E-mail the seller and find out what they are before you bid. If you can't find out what the P&H charges are beforehand, then don't bid. A P&H charge for a single stamp or similar item should really be no more than $1.00. Many sellers will only charge 55c. Larger lots may have an appropriately larger charge. More expensive items where insurance is involved may also have a somewhat larger charge. Just make sure you know what those charges will be before you bid.

8. High Opening Bid Scam -- This is a very simple but sometimes very effective scam aimed only at the uninformed or very naive bidder. It involves listing a very inexpensive stamp or group of stamps or collection with a starting bid totally out of proportion to its true value. As an example, at any given time, one can browse the stamp listings and almost always find a simple used 3c commemorative that one can find in any dealer's 5c box with a starting bid of $9.95. Occasionally a bidder will fall for such a thing. Occasionally such listings are totally laughable like a recent listing of a common cheap stamp that was described as a great rarity with a starting bid of $150,000.00.

Before giving my suggestions on how to protect yourself and avoid some of these scams, there are a few facts that should be known. Any known fraudulent activity should be reported to E-Bay through their "Safe Harbor" site. But do not expect any action and do not expect E-Bay to help you. They may suspend individual accounts of people engaged in Bid Shilling, Bid Shielding, and some of the other scams; but such suspensions are usually temporary. There is also nothing to prevent the individuals re-registering under a different account ID and continuing business as usual. E-Bay consistently takes the stand that all they are doing is providing a venue for the buyer and the seller to get together and therefore has nothing to do with the actual transaction itself. The Internet Auction activity is truly, completely, and entirely a "BUYER BEWARE" situation.

Here are a few suggestions on how to protect yourself as a bidder in an Internet Auction situation --

1. KNOW WHAT IT IS THAT YOU ARE BIDDING ON -- Many of these scams will only work with the uninformed bidder. Do your homework before you bid and know exactly what it is that you are bidding on.

2. Bid only what you are willing to pay for the item. Never bid more than your limit.

3. It helps tremendously if you know the seller and the seller has a known excellent reputation. If you do not know the seller, be sure you review the feedback file on the seller before you bid. Don't bid if you have any doubts.

4. Read the description carefully. If there is no mention of the condition of the stamp or cover, I recommend not bidding. An alternative is to E-mail the seller before you bid and ask questions about the condition or anything else that you feel you need to know. If the seller fails to answer your questions to your satisfaction or ignores your E-mail, then do not bid.

5. In this day and age, all philatelic items up for auction should be accompanied by a scan. It is best not to bid on an item on which no scan is available. -- -- 16 JUN 2000 -- I am now seeing the ever increasing use of digital cameras in order to present an image of the stamp up for auction. These digital camera images are invariably of very poor quality with regard to the ability to see the details of the stamp presented. I would definitely recommend to sellers that a digital camera image of stamps be avoided and that only good quality scans be used. To the bidders, I recommend definitely not bidding if the image presented is of poor quality.

6. You can protect yourself against the Bait and Switch and some of the other misdescribing scams by making and keeping a printout of the actual auction listing including the scan for your own files. It is important that you do the printout before the auction closes because many sellers will remove the scan as soon as the auction closes in order to free up web space for other image files.

7. Make sure there is a Return Policy stated in the description. Never bid on an item which states in the description "No Returns Accepted" or something similar. If no policy concerning returns is stated, then E-mail the seller and find out what the return policy is before you bid. You are safer bidding on items where an "Unconditional Return Policy" is clearly stated in the item description.

8. Never bid without knowing beforehand what the P&H charges will be. E-mail the seller if no P&H charges are stated in the description. If you do not get an answer, then do not bid.

9. Look to see if the seller is a member of the ASDA and/or the APS. Members of these organizations are bound by a Code of Ethics (ASDA Code of Conduct) ---- (APS Code of Ethics). You are likely to have less problems with members of these organizations. And if you feel that an APS or an ASDA member has not been honest or forthright in the transaction, then you have recourse by filing a complaint directly with that organization. Information on how to file a complaint can be found on their respective web sites. (ASDA) ---- (APS).

10. On more expensive items, make sure you know what the seller's policy on certification is. Because of the ASDA Code of Ethics, this should not be a problem with ASDA members. However, with non-ASDA members it may or may not be a problem. If the stamp or cover is of significant value to warrant certification, then make sure you know the seller's policy before placing your bid.

11. I recommend avoiding auctions where the seller requires a cash only payment, and caution in an auction where the seller requires either cash or a money order. Cash is too easily "lost" in the mail, and it is almost impossible to cancel payment on a money order in case a problem develops with the transaction. Pay either by check which can be stopped, or even better use a credit card where charges can be disputed if the goods are not delivered. E-Bay also offers an escrow service which can certainly be utilized when more expensive items are purchased. (2005 -- PAYPAL is now the most common method of payment on E-Bay. Having a PAYPAL account is certainly easy and convenient. But PAYPAL has its own set of problems. I still recommend using a credit card to fund an E-Bay purchase through PAYPAL as you always have recourse through the credit card company itself in the event there is a problem with a PAYPAL payment.)

12. If you make a mistake on your bid, bids can be retracted. Know how to retract your bid if necessary. Remember that if a bid is retracted, a valid reason must be given for the retraction to take effect.

13. Once a bid is placed, it is a contract. Any questions about the item should all be asked and answered before placing a bid.

If you feel you have been the victim of an Internet Auction scam or if the seller has failed to deliver the goods -- what recourse do you have? --

1. Report your problem to E-Bay Safe Harbor , but expect little or no action. However, E-Bay Safe Harbor will investigate allegations concerning possible Bid Shilling and Bid Shielding as these scams are a serious breach of the E-Bay rules. Still about the only thing you can do through E-Bay is leave appropriate feedback to warn other potential bidders about the problem.

2. If the seller is a member of the ASDA and/or the APS, be sure and file a complaint directly with that organization. This may get you some action.

3. If the seller has taken your money through the mail and has not delivered the goods, you have recourse by reporting the fraud to the USPS Postal Inspectors. This will almost always get action because the USPS takes Mail Fraud very seriously. More serious fraud activities can also be reported to local police or FBI under the Wire Fraud Laws. However, they usually only get involved if a significant amount of money is involved and actual damage has occurred.

4. E-Bay has what is called a feedback system whereby both the buyer and the seller can leave transaction related comments about each other -- comments are either praise, neutral, or negative. Unfortunately the feedback system has flaws as negative comments are rarely left for fear of retaliation. But I would not hesitate to leave an appropriate comment if I had been cheated or defrauded. Also bear in mind that some of the sellers with very high positive feedback ratings are known to have used shills or to have engaged in selling misdescribed material and are still persuing business as usual. A high positive feedback rating unfortunately is no guarantee against such things taking place.

5. One of the big pluses that E-Bay provides is the STAMP CHAT BOARD. The Board has a number of extremely knowledgeable and very experienced collectors (and some dealers as well) and E-Bay users who frequent the board on a daily basis. E-Bay does not publish or in any way list the names or identities of individuals that have been caught in any of these scams. But that does not preclude the Chat Board regulars from discussing the scams in open forum and even exposing some of the scammers. You can always visit the board, post your questions and problems, and ask for help. You will always receive an answer. However, you must be a registered E-Bay user in order to post to the board, but unregistered individuals can still scan and read the board. I highly recommend it.

I know this is a long document, and I have finally come to the end because I cannot think of anything else to say at this time. If anyone has any questions or comments or can think of anything that I should add to the listings, feel free to send me an E-Mail.

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