eBay fraud is in the news again. The headline reads: “Three eBay Fraud Rings Dismantled in Romania.” Romania must be a hotbed of Internet-scam artistry. Just a few years ago, a headline read: “Small Romanian Town Gets Rich Through eBay Scams.”
They must be fast learners in Romania. The first attempts at eBay fraud included selling a MiG fighter jet and a local Town Hall. I suppose the rings soon learned that there were only so many suckers for big-ticket inventory.
In the current scam, ads were posted on eBay and craigslist offering a variety of merchandise, ranging from cars to electronics. Internet users were defrauded of about $20 million. The busts were a coup for the Romanian National Police and the FBI, who made about 90 arrests in 117 raids on nine towns.
eBay fraud is a myth
Now, forgive my obtuseness, but I can’t find anywhere in the article where it says that eBay scammed anybody. So, why does the headline declare “eBay Fraud”? The words “eBay” “eBay Fraud” and “eBay Scam” appear so often in the media that one would think that eBay is used only by con artists and the feeble minded.
Apparently, the nearly 3 million successful daily transactions completed via eBay fails to be the stuff of headlines. In spite of the alleged $20 million per year that eBay spends on fraud protection, consumers in search of “something for nothing” continue to get scammed by con artists looking to make a quick buck. I guess Forrest Gump’s mama was right: “Stupid is as stupid does.”
Such scams are not new; they simply are more accessible to average citizens who get a little greedy. The arrests in Romania are just another chapter in the ongoing saga of Internet fraud. Scams like these make headlines, and headlines sell newspapers, magazines and web traffic.
Of course, fraud exists wherever there is opportunity and greed, and there always has been plenty of both in the art and antiques businesses. The public perception is that art and antiques are “valuable,” but average consumers don’t have the tools or expertise to properly evaluate either. Hence, they are easy prey for con artists.
Fuzzy photos and misleading descriptions offered by some online sellers make proper evaluation risky, if not impossible. Items that were sold yesterday as “guaranteed to pass expert scrutiny” are discovered to be fakes by today’s technology.
Reputable dealers will own up to their past mistakes. Delaware’s Winterthur Museum, a former DuPont estate that specializes in early American paintings and decorative art, recently came clean about some of the fakes in its exhibits. In a collection of more than 1,000 silver pieces attributed to Paul Revere and his contemporaries, more than 75 percent were found to be early 20th century fakes meant to deceive collectors.
Winterthur scientists also exposed forgeries of George Washington letters, portraits by Charles Wilson Peale and a Thomas Jefferson desk. The DuPont family relied on their curators and archaeologists, but if they were fooled, the rest of us are certainly disadvantaged.
Fast-forward from the early 20th century to the early 21st century, and forgery is a thriving Internet business. No longer the exclusive purview of one-man shops, antiques and antiquities forgery have become cottage industries accessible to anyone with a creative flair and an Internet service provider. Using local materials often acquired from archaeological sites, small manufacturers in Peru, Bolivia and elsewhere are making remarkably accurate copies of actual artifacts. Selling these “artifacts” on eBay is more profitable than digging around in ruins for days and then passing their finds through a long line of middlemen.
Repeated headlines and forum posts exposing online scams and frauds create an atmosphere of distrust regarding eBay. Also, some users have expressed that the “feedback” system on eBay is an unreliable indicator of the trustworthiness of a buyer or seller. Most of us are reluctant to give (well-deserved) negative feedback to a buyer or seller for fear that we will get (undeserved) negative feedback in return. Having a high positive feedback rating is greatly desired by eBay buyers and sellers; few want to risk taking any action that will negatively affect their feedback ratings.
eBay fraud protection benefits everyone
The distrust of eBay as a marketplace has spread like a virus and infected all online sellers, including you and me. Distrust — and trust — are pervasive ideas. Annually, the Edelman Trust Barometer measures the public’s trust of businesses, governments, and countries worldwide. Edelman also measures the economic cost of mistrust (a “trust tax”) and trust (a “trust dividend”). No specific barometers are given for the antiques trade or online selling, but there is a clear corollary between trust and consumer response.
When your business is trusted, 51 percent of consumers will believe positive information about you after hearing it only one or two times, but only 25 percent will believe negative information about you. When your business is not trusted, 57 percent of consumers will believe negative information about you after hearing it just once or twice, and only 15 percent will believe positive information about you.
There is a direct relationship between trust and your bottom line. Risk is one determinate of price; high risk lowers prices, and low risk raises prices. Lack of trust implies higher risk, and higher risk equates to lower prices for all online sellers. In the words of Columbia Business School professor John Whitney: “Mistrust doubles the cost of doing business.”
John F. Kennedy said, “A rising tide lifts all boats.” The reverse is also true: An ebb tide lowers all boats. Surely we, as antiques dealers, are all in the same boat. We all contribute to the public perception of the trustworthiness of online buying and selling. When a giant like eBay is associated with scams and frauds, it hurts all of us.
eBay’s Fraud Protection Program is a response to the atmosphere of distrust. Without trust, a loyal user base cannot be established, and without loyal customers a company cannot grow.
Let’s give credit to eBay for making an effort to sort all of this out. Its efforts to control fraud help all of us as online sellers.
Previously published in Antique Trader Magazine