Sending Money To Cyberstrangers
I bought a book off eBay last week.
It's a first edition of a novel, and it's slated to be a gift for a friend.
I'm waiting for a gentleman in Minnesota to send the book to me, as I
dutifully mailed him a check for $15. Let me repeat that in a slightly
different way: I sent a $15 check to a total stranger last week, for an
item I've never seen and cannot be sure really exists. I'm assuming:
- He has the book in question in his possession;
- He is going to send it to me;
- The post office will deliver it to me; and
- If the stranger in Minnesota doesn't send me the book, he won't cash
Granted, I'm only taking a chance with $15. I'm not buying a first
edition of Pride And Prejudice or a personally autographed copy of
the Canterbury Tales from Geoffrey Chaucer's last book promo tour.
That got me wondering. What do people buying big ticket items do?
Furniture, rare collectibles, gemstone jewelry and artwork all show up on
most auction sites. As I write, I've located an original Milton Avery
drawing and a Louis XIV walnut armoire. As far as I'm concerned, anyone
willing to mail a $30,000 check to a stranger for a piece of art that may
or may not be original (or even exist) is completely out of his tree.
According to IDG, of the thousands of e-commerce fraud complaints filed
last year with the National Consumers' League, 87 percent were filed
against online auction sites. Though most of the large auction sites have
some safeguards in place -- such as a rating system for sellers that allows
buyers to evaluate the seller's previous transactions -- it's just too easy
for a low-rated seller to create a new account and start his or her shady
Security issues aside, what about the plain inconvenience? Consider very low-priced items, as well. A collector might buy antique bronze coins
or rough, uncut gemstones. Some of these items might retail for a dollar a
piece. (Additionally, I can't resist mentioning the interesting individual
attempting to sell his used socks for three dollars or the
reality-challenged guy who is offering to sell a U.S. penny forwell, a
penny.) Do collectors in the market for low-priced items really write out
multitudes of checks for a dollar apiece?
It seems so, as until recently, the majority of person-to-person online
transactions were conducted via the low-tech route of a check in the mail.
Individuals, obviously, cannot accept credit cards and the fees charged by
credit card companies may be prohibitive for many small businesses. It is
surprising that it took so long to come up with solutions to these
Enter PayPal, a service offered by
online financial services company X.com. PayPal works by allowing its
users to send money via secure e-mail transactions. Enter a
recipient's e-mail address and a dollar amount into a PC or PDA; the money
is charged to your PayPal account and is then sent to the recipient's
account. If the recipient does not have a PayPal account, he or she is
prompted to register and the money is credited to his or her account.
build an account, a user authorizes PayPal to debit his or her major
credit card account (or a debit card issued by one of the major credit
card companies). You can also use a traditional check or money order,
though with this route you must wait until the check is delivered via
postal mail and the funds clear before you can be up and running.
Receiving money via PayPal comes in the form of a direct deposit to a
checking account, or, if you prefer, a paper check. Online auctions aside,
consider the wonderful practical uses of a service such as PayPal. Parents
can e-mail cash to kids at school, for example. You can reimburse your
friend Fred for the three rounds of drinks he bought the other night when
you had no cashremember?
As convenient as a service like PayPal is, though, it may only protect
the seller by guaranteeing that there are funds in the buyer's account.
What about the buyer who is expecting, for instance, a Louis XIV walnut
armoire and instead receives a pair of used socks? A slightly more
sophisticated service than PayPal is the emerging online escrow market.
Such companies will, in essence, mediate the online purchase and throw in
a few of its own guarantees to protect all parties. It might work as
- Dick has a valuable Scooby Doo lunchbox to sell, and Jane decides to
- Jane creates an account with an online escrow company.
- The company then informs Dick that the funds are viable and
- Dick ships the Scooby Doo lunchbox to Jane, who inspects it
- Jane informs the online escrow company that the lunchbox meets her
- The company then clears the funds from Jane's account into Dick's
If you regularly buy and sell off the Internet on a person-to-person
basis, you may want to consider using an online escrow company. A few to
check out are Internet Clearing
Qpass and iEscrow.
These companies will typically take a small percentage of the purchase
price as a fee in exchange for the guarantees they offer. The good ones
are licensed, bonded and regularly audit funds. Soon, we will begin to see
the rise of online escrow companies that specialize in certain goods:
antiques, for example. Instead of leaving the inspection of a purchase to
the buyer, the item might be actually shipped to the escrow company itself
for inspection by an on-staff antiques expert who can add an extra layer
of guarantee that the buyer is getting what he or she paid for.
There will always be a few risks, even with the services described
above. All that cash bouncing around via the Internet will undoubtedly
attract the attention of cybercriminals. But at least now there is one
more set of checks and balances in place that can guarantee that you at
least get what you pay for.
The author, who is wondering what ever became of her Scooby Doo
lunchbox, may be contacted at email@example.com.