EBay cracks down on fraud

EBay plans to expand its new buyer-protection programme and take a number of other measures to combat fraud on its site, which has become a popular target for online scam artists.

Starting this autumn, the online auction giant will allow PayPal sellers in good standing to offer purchasers a $500 buyer-protection plan, covering items never delivered as well as merchandise that doesn't fit the seller's description, eBay said on Friday. The new plan, available to sellers in the United States and Canada, will cover about half of all listings on its site and requires no payment, the company said.

To be eligible for the plan, sellers must have feedback on at least 50 previous transactions, and 98 per cent of the feedback must be positive. The plan supplements the current $200 buyer-protection program that covers nearly all transactions on eBay, the California, company said.

In addition, eBay said it's taking steps to deter fraud involving spoof email and eBay account takeovers, two growing problems in recent years. The company has stopped allowing people to plug email addresses into its member look-up tool to view eBay user IDs and account histories, said eBay spokesman Kevin Pursglove. Scammers had used that feature to find relatively inactive members who were unlikely to check their accounts often, making them ideal targets, he said.

eBay also plans to crack down on deadbeat buyers starting next month by limiting the number of bids a buyer with nonpayment complaints can make. Currently, eBay may suspend the accounts of buyers with three or more complaints lodged against them. Under the new policy, the company will warn the offending buyer and may limit their bidding activity after the first complaint, Pursglove said.

The company also is testing a new "immediate payment" system through its PayPal online-payments unit. The system works by automatically charging the buyer's credit card or bank account on fixed-price transactions for certain quick-turnaround merchandise such as concert tickets, the company said.

In another recent move to crack down on fraud, eBay last month hired former White House cybersecurity chief Howard Schmidt to the post of vice president of security. These efforts come as internet scams present an ever-pressing problem, with online-auction fraud ranking as the most common type of internet-related complaints tracked by the Federal Trade Commission. The FTC received about 51,000 complaints regarding online-auction scams in 2002, representing about $37m in losses, officials have reported. That number probably represents just a fraction of the actual number of rip-offs that occurred, they said.

Alorie Gilbert writes for CNET News.com