Feedback Padding Spoofing by Crooks Frauds and Scammers

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How Crooks and Scammers Fake eBay's Feedback System
eBay's feedback system is the target of many scams, complaints, and much abuse and misuse. We suggest a fairer system, but doubt eBay will ever adopt it, because they never listen.

How Scammers and Crooks Cheat the Feedback System.
It is well known that fraudsters can and do cheat the eBay feedback system.

1 The First Stage
The first stage is simply to set up multiple accounts, or get friends to do so.

2 The Second Stage
The second stage is to build up a high feedback score, with 100% positives, by buying and selling very low priced items between each other. These can be as little as 1 cent or 1 penny per item.
Doing some simple arithmetic, for 100 accounts to each buy 100 from each of the other members (actually you would need 101 accounts), would cost 5 cents or 5 pence in eBay selling costs times x 100 x 100. This equals $5 or £5 cost per account, total investment - $500 or £500 for a total of 100 accounts each with a 100% positive feedback of 100.
The scammers could build up their score using genuine sales of something low cost such as e-books, and it could be well worth their investment selling these as "loss-leaders".

3 The Third Stage
The third stage, if the crooks are smart, is to wait at least 3 months, so that the item listings on which the feedbacks were made are no longer viewable. This way any suspicious potential buyers cannot see that the transactions were all for 1 cent each.

4 The Fourth Stage
If the crooks are really smart, or really doing a professional job preparing for a big time killing, is to seed their feedbacks with a few higher priced items, perhaps spaced over a few weeks. This would necessitate some more accounts being set up. These could be for genuine purchases or sales, or could be complete fabrications like the first 100 transactions.

5 The Fifth Stage
The fifth stage is to "go live", and start offering high value goods, perhaps krugerrands, computers, cameras, electronic goods, cars, motor-bikes, computer software, perhaps high volumes of CDs or other popular consumer products.
Take in plenty of money either as full payments or deposits.

6 The Sixth Stage
Supply fake goods in the case of software or CDs, and keep it up until the first few complaints start arriving. Even then, they may offer refunds or replacements with the genuine article in order to keep the scam going a little longer. Possibly supply no goods whatsoever, and stall the buyers, alleging cheque clearing caution, or producing fake despatch notes, anything to lengthen the amount of time which passes before somebody starts blowing whistles.

7 The Seventh Stage
Disappear, move house. or change identities.

8 The Eight Stage
Either retire if you made enough money out of it, or repeat the process enough times. Live in or move to somewhere like China, Nigeria, Russia, although if you make enough, move upmarket to somewhere like Monaco or the Cayman Islands, where there are kind tax regimes.

Possible Deterrents
eBay do have a fraud department. They do appear to monitor a number of sellers who start to sell high volumes of goods, especially if the increase in volume is rapid, and will suspend accounts where they feel there is suspicious activity.
They do however appear to be pretty well incompetent. It seems general knowledge, and we have been told on numerous occasions, that most "Powersellers" have had their accounts suspended one or more times, mainly because of this incompetence. We will give one example from first hand experience, ours...

Our Experience
Our company has been selling coins and bullion since before 1964, well over 40 years. We are properly incorporated, file annual accounts, and our current turnover is around £10 ($20) million per annum. We registered with eBay in 2001. We started slowly, mainly offering £10 to £50 repeatable items. It took us some time to set up an administrative system for our eBay sales, which take about twice the work compared with our normal direct sales. Once we thought we had got it about right, and had installed and trained some semi-dedicated eBay staff, we started to offer many more items, and also increased the price levels, for example 500 krugerrands in one lot which equals about £170,000 on current values. One Sunday, when our office is closed, at about 4 a.m. UK time, when we are in bed asleep (we do not trade 24/7), we received an e-mail from eBay demanding that we reconfirm our personal membership details. Even if we had seen them, we would probably have assumed it was some kind of phishing scam. This was followed about half an hour later by a second e-mail telling us that since we had failed to respond to the first e-mail, that our account was suspended. A third e-mail followed telling us that they were sorry this had been done in error!
It took us hours of telephone calls and work before our account was de-suspended on the Monday, and we got no satisfaction or good explanation from eBay for their mistake. At the time, we had about 260 auctions running, each with an average of about 10 bidders. One of the most annoying aspects of this is that eBay automatically e-mail all the bidders, to tell them the account is suspended, and advise them not to complete any transactions. It is not surprising then, that about 2,500 people, all potential customers, think there is something bad about us, and we firmly believe that under the circumstances, eBay should have e-mailed all the bidders to state clearly that it was their fault and not ours. Their initial negligent suspension, and subsequent failure to publish an apology and correction is in our opinion defamatory. Perhaps we could and should have sued them, the main problem with this it that legal action is very expensive, and should not be undertaken lightly against people with more money than yourself. As we estimate eBay to have about 4,000 times our resources, we have not yet taken any action.

Other Points
A crook, in our situation, would probably have some fake invoices ready, to supply to eBay, who would probably then permit him to continue for a few more weeks. It seems to happen often enough, according to press reports, following which an eBay spokesperson always says that the vast majority of eBay members are honest, and member should follow their advice on how to trade safely.
If each fake account could sell £100,000 worth of non-existent goods, the scammers could make £10 million in a very short time. A very tempting amount for anyone!

Authenticated Membership
One improvement which eBay could easily make would be to require all members to be authenticated before joining. This could be done by supplying various ID documents, and making a sample transaction through their bank account. eBay already do this at their PayPal subsidiary. To withdraw more than a specified amount ($500?), you must authenticate your account by first sending them a small amount £1 or $1, then them sending you one or two small random payments totalling less than $1 (or £1). You then supply them with the details of the incoming payments, amounts and reference codes. This provides bank account identity, through which you could be traced if necessary. We suspect eBay will be reluctant to implement this system because many people are inherently lazy, and would not bother joining. eBay works as a money making business for its owners partially because almost anybody can join easily and without the bother of an identity check!

Weighted Feedback
One solution to this problem which would also improve the entire feedback system for everybody,  would be to change to a value weighted feedback system. Very simply this would take into consideration the value of each sake, and feedback, so a transaction for £1,000 would carry 1,000 times the feedback of one for only £1. This would kill the above scamming system stone dead almost overnight. It would also make the system better in that all members, both buyers and sellers could form a more reliable estimate of their trading counterpart. It probably will not happen because eBay are so entrenched in their existing system, and seem to take little notice of the considerable criticism which can be found in any of a number of these guides.

Contact Details and About Me Pages
eBay are wary about members publishing their full contact information on their listings and "About Me" pages. The reason for this is that they try to discourage members from contacting each other, so that they continue to deal with each other via eBay listings. eBay issue fire warnings about dealing "off eBay" as being unsafe, and to some extent they are right, but there must be plenty of other honest members who would be better of dealing direct. We strongly suspect that the real reason eBay discourage contact information is that members would learn they could deal direct with each other safely, and more cheaply without eBay getting their rake-off.
As often, eBay's rules about providing contact information are quite ambiguous.
We, as a well-established reputable company would welcome all opportunities to publish all our contact and background information, which would include pointing potential buyers to our own websites. Other dealers, including all the shady back street dealers, crooks and scammers must welcome the anonymity which eBay encourages.

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