Law Office of Craig Jordan
990 S. Sherman
Richardson, Texas 75081
(214) 855-9355
(214) 855-9389 (fax)
craig@warybuyer.com
Advice for eBay Users
I love eBay. I've bought and sold all kinds of stuff there, but it can be a dangerous place. As either a buyer or a seller, you have to be careful about how you use the service, and in particular its Paypal subsidiary. I've posted a few bits of advice that should be helpful to both buyers and sellers.
You should spend time reading about both eBay and Paypal's programs for protecting buyers and sellers. I don't discuss them here, because they change too frequently for me to keep up with, but you should try to keep your transactions within the scope of their protection programs as much as possible.
Advice for eBay Sellers
Your primary risk is not getting paid for merchandise that you've shipped. Most sellers deal with this risk by not shipping until payment is received. However, this may not be enough if you allow your buyer to purchase with a credit card. As detailed in my "Warybuyer Guide to Credit Card Errors and Chargebacks", buyers have the right to seek refunds from their credit card companies when they have disputes with sellers about goods they have purchased, and the credit card companies will make refunds even if you, the seller, don't want them to. When that happens, the liability for the refund comes straight back to you. If you have your own merchant account, the amount of the refund will be deducted from your account. This could happen several months after the transaction is completed, as buyers have 60 days from the date they receive the first statement with the charge on it to make a billing error claim and banks can take a while to process those claims.
If you accepted payment through your Paypal account, the amount of the refund could be deducted from your personal bank account. As I write this in June of 2004, the standard Paypal agreement authorizes Paypal to deduct any chargebacks from your Paypal account, and if there aren't sufficient funds in your Paypal account, from the bank account that is tied to your Paypal account.
If you use Paypal to regularly sell things, you should not keep funds in your Paypal account any longer than necessary. Transfer them out as soon as they come in. You should also consider setting up a separate bank account for your Paypal account that you keep at the lowest possible balance. Shop around for an economy checking account with low fees and link that account to your Paypal account.
Advice for eBay Buyers
If you read the section above on advice for sellers, then you know that you should always use your credit card when you make an eBay purchase. If you use Paypal, don't accept the default option to have the payment deducted from your bank account. Always pay by credit card.
As a lawyer, I always hedge my advice. I like to say "In most cases," or "generally speaking," before I offer advice. There is one instance when I don't:
Do Not Ever Buy A Car On eBay From Someone In Another State!
Now, before you fire up your email program to send me a message about how you got a great deal on a great car through eBay, let me explain why I give this advice.
There are lots of ways you can protect yourself when you are buying a car on eBay. You can hire a third-party inspection service to check the car out before you send payment. You can pay with a credit card. You can only deal with licensed dealers. You can ask the DMV in the dealer's home state for copies of complaints against the dealer. You can get your insurance agent to run a CLU report on the car's VIN. Those are all important things to do, and if you are going to ignore my advice, I recommend you do them. However, if all those things fail and you are stuck suing a car dealer halfway across the country on a used car deal, you are in a bad position.
You have two choices about where to sue: in your hometown or the dealer's. While it's cheaper to sue in your hometown, once you get a judgment there, you'll have to hire a lawyer in the dealer's hometown to collect it. If you are able to find 2 lawyers who will take your case on a contingency basis, you will wind up paying a double fee, which could leave you with a recovery of only 20% of the amount of your judgment, assuming that you can successfully collect it. If you sue in the dealer's hometown, you can reduce the fees, but you will have to deal with the expense of traveling 2-4 times to attend lawsuit related events, typically depositions, a court-ordered mediation, and trial, if necessary. In Texas at least, you can't be reimbursed for those expenses.
In short, filing suit against a car dealer in another part of the country is not a very good idea. Even if you win, you are very unlikely to be made whole.