caveat emptor - Marketplace Scamming Prevention

[Slashmaster]

I'm going to put together a guide to help protect both buyer and seller from scammers. These are some tips I've learned over the past four years regarding eTrading and eMarkets on forums such as these. Perhaps you'd like to share your tips with me as well? I think together we can help educate both buyers and sellers to help reduce the amount of scamming we'll see in the future.

A guide like this can never be all-inclusive. Please use your best judgment when goods exchange hands.

AS A BUYER
You have money in your pocket. How can you take steps to make sure it doesn't go into the wrong hands?

- Buying Artwork: What do your prospective artist's examples look like? You're going to want to see a well-rounded set of examples and hopefully a paper trail of your artist's existence here on the net. The average artist will have a few prior examples of work they've done in the past (ie: items or pets) as well as a portfolio like DeviantArt. One of the most important things you can do is check for consistency among the artist's examples. Does it look like the examples were all drawn by the same hand? How long have they had their DA account? Is it active?

- Buying Artwork: Can your future artist procure you an on-demand sample? The nice thing about VPC is that it requires artists to draw the mascot to prove that they are the artist of their examples. You can request that they do this, as it brings no benefit for you if they draw VPC's mascot and it will help establish buyer-seller trust across the board.

- Buying Artwork: Is your future artist going to produce? This means, more or less, will the artist produce what was requested of him, or will he run off with your money and not give you anything for months (if ever)? One of the best ways to avoid this is staggered payment. Let's say you want an artist to produce you 10 pets at $10 each, making for a total payment of $100. Instead of rendering the entire payment to the artist upon discussing the project, render the first $10 to the artist upon receiving a sketch of your first commission. If you or the artist feel uncomfortable with that, consider rendering the artist $5 before the first commission is started, then $5 after the commission is completed. Repeat with each commission.

- Buying Artwork What's the VP site paper trail of my artist? Some artists have been with VP forum sites like these and have established a reputation as safe sellers. Other artists may be new, or you may not be familiar with them. Check their username on other VP forum sites (as well as their post history on this one) to see how their business has been going in those places. If your artist has worked for another person before in the VP industry, ask for references to make sure your artist is safe to work with.

- Buying Anything Are you documenting your commission with the seller? If the seller seems to check out, make sure you keep a detailed documentation of what is expected of each party. Signed contracts cannot always be useful to you, as many sellers and buyers in this market are not adults and cannot sign a contract without a parent, but documentation is always a must, especially for large projects. See if you can get documentation of both buyer and seller agreeing on the following: What is being produced? What is an example of the quality of production you as buyer expect? When is the product to be delivered? What compensation will the seller receive? How will this compensation be awarded? Ensure that your seller sends you the agreement between buyer and seller from the PayPal address that they would like the payment from.

- Buying Programming Have you gotten a third party perspective? One caveat about programming is that while the seller may produce what is expected of him, it may not be in the quality your website needs in the long run. The best thing you can do to reduce the need for recoding is to have your prospective programmer's work checked by a programmer in your community who has demonstrated great knowledge on the subject. Ask your community helper to check for quality and efficiency.

- Buying Anything How does the seller want the payment delivered? PayPal is a very helpful tool to send money to someone you don't know, and it offers you a lot of protection. If you have been keeping good records you can often bring those records to PayPal in the event of a problem. One thing, however, to approach with caution when paying a seller online are the following modes of payment: "Gift" option via PayPal or a wire transfer (such as Western Union). When you pay Via PayPal, paste the agreement between buyer and seller in the "comments" box ("Message to Seller"). This will give PayPal employees tangible evidence to review upon receipt of your complaint.

- Buying Programming Is your programmer documenting the work he has completed? This is especially important if you are paying the programmer in any lump sum, or the production is not on a per-feature basis. Make sure that your programmer is logging every bit of work that he completes in a task sheet that you can review. Ensure that the work on the task sheet matches the work that you both agreed would be completed for the payment.





AS A SELLER
You're looking for some extra cash and selling the fruits of your talents. How can you take steps to ensure your buyer will not leave you unpaid?

- Selling Commissions What's your buyer's track record? Similar to a tip given above, check your buyer's username on all virtual pet forums you can think of, as well as request references for a buyer you do not completely trust. Has the buyer purchased anything there and had a successful transaction with another seller? If so, you can talk to the seller(s) and determine how your buyer is to work with. If the buyer is incredibly nitpicky, flaky with payment, or doesn't pay at all, your fellow sellers will tell you.

- Selling Commissions How, and when, are you getting your money? Some buyers are less than willing to pay a percentage up front, but to be safe, you should require some amount of payment in good faith that the work will be completed. The amount you should consider requesting is the value of your WIP (it may be a sketch, it may be an ink - whichever works for you). That way, if the buyer flakes after you present the WIP, you will have received payment for the work you did so far. As with another tip above, you will likely want to use PayPal to receive your funds. Make sure your buyer is using the "Service" payment option to reflect the product you are selling. Ensure the buyer pastes the agreement between buyer and seller in the comments area of the payment to ensure PayPal has tangible evidence to review in the event of a problem. Also, make sure that the buyer sends you this agreement between buyer and seller from the paypal address that your payment will originate from.

- Selling Commissions Are you taking steps to record the buyer's acceptance? Suppose you decide to go ahead and complete the buyer's first commission, then you show it to the buyer and the buyer does not find it satisfactory. This is what staged WIPs are useful for. Show the buyer the sketch, the ink, the flat colors, and the final product (or how many stages you feel comfortable with for a new buyer) and obtain the buyer's acceptable to each stage. If the buyer confirms the lineart stage then decides they want some different pose in the final stage, you can kindly tell them they already confirmed the artwork at that stage already. Ensure the buyer is aware that these stages will occur before payment passes hands - you will show them X, Y, Z stages and confirmation of those stages means you will not go back and change the accepted content.

- Selling Commissions What are the agreements of the sale? Make sure, especially in this market, that you and the buyer are clear about what rights the buyer will have to the artwork. For example, on sites like DeviantArt, your money will usually only buy you the production of the artwork, and you will not have any right to display it, sell it (this involves putting it on your commercial site), etc. without the artist's permission. If your buyer expects exclusive rights to the work, ensure this is discussed, as well as what it means to both of you. Do you not want the buyer to turn around and re-sell your work? Include that stipulation if it pleases you. The most important thing is both buyer and seller are on the same page regarding rights to the work. As well, if there is a deadline on the work, ensure both have agreed what will happen if you cannot meet the deadline (refund? some free art?).


PAYPAL IS YOUR FRIEND*
If you have landed yourself in a sticky situation, how can you use PayPal's resolution center to ensure an acceptable resolution is made?

- Both Buyer and Seller So you have those records, right? Your records are the most important thing you have in the event of a PayPal dispute. Render the records to the PayPal employee through the resolution center that shows your half of the story. Remember, it's important to have an agreement between buyer and seller that outlines the expectations from each party. Remember when I suggested to have the buyer send it from their PayPal address and the seller send it from the PayPal payment received address? This will show paypal that it's the actual owner of the PayPal account who requested it.


*Sometimes



Do you have any ideas of tips to add to this worksheet?

[nobackseat]

Slash,

Amazing post!

When you pay Via PayPal, paste the agreement between buyer and seller in the "comments" box ("Message to Seller").

Pure genius.

I would like to add that programmers can go by either by script or by the hour. Be prepared for either, and programmers should have a good idea of the price of most features beforehand, as to be as accurate as possible.

Who is going to pay the fees? Make sure you agree on this, so there aren't any misunderstandings. Who do you think should pay the fees most of the time?

NBS

[Slashmaster]

fees

I had a post on that too.


Here's something for you to think about.

It's rather common practice for sellers on sites like these to request the auction winner or commissioners to pay the PayPal fee. This requires the buyer to pay extra money on top of the amount the auction win or commission was finalized at (for example, for a buyer purchasing a $20.00 product, the buyer must pay a fee of $0.91). However, PayPal's TOS states this:

4.5 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.

PayPal User Agreement
https://cms.paypal.com/us/cgi-bin/?c...locale.x=en_US


What do you think? Do you think "buyer pays the fees" violates their TOS? Do you think it's an acceptable "handling fee" as defined by the legal agreement between PayPal and seller?

Share your thoughts.

[MegaCreomon]

If someone is asking that the buyer pay the fees, and using those exact words, they can be reported to paypal and possibly have their account shut down. And you'd best hope you don't have money in there if happens, because if Paypal still doesn't care after you've explained your case, you'll never see that money again.

As an artist, I will never ask a customer to pay my fees for me. Paypal is a service that I am using for my "business", thus is it on me to pay the fees for using said service.
As a commissioner, I won't commission anyone who asks me to pay their fees for them. They may have awesome artwork and even be worth the few extra dollars, but that paypal fee just says to me that they want me to pay for their user expenses on top of the expenses for their work and time.

Nambroth explained nicely in this Artists_Beware comment: http://community.livejournal.com/art...49577#t8549577

[Drea]

4.5 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.

I think this is referring to charges outside of the paypal fees, such as a $2 fee to "cover paypal fees" if that makes sense.

Might I also suggest that the following be considered: It is good (in my mind) to have terms stating what happens when payment isn't made or art/programming isn't received in the timeframe understood. After I waited for payment for months from some buyers (when it was supposed to be only a few days) I added it into my commission terms that if the buyer does not complete payment within a week of the work's completion, a fee of $1 per day would be added on if they wanted me to continue to "hold" the work for them (meaning if I wasn't going to auction it off.) I also state that if a payment delay is anticipated, I will be lenient as far as the fee goes and more willing to accept late payment with no fee.

What are your ideas on this? It has been extremely helpful to me in situations when buyers expect a delay; it gives them reason to contact me and discuss it instead of simply not contacting me and leaving me to wonder what is going on.

[Jamaalie]

love the * bit xD

I would say that buyer paying fees is a surcharge, because it's literally an extra charge they have to pay added after the price they are buying it for.
But I don't think there's anything against estimating what the fee will be, and setting sb that little bit higher than you usually would to cover it.

[Slashmaster]

But I don't think there's anything against estimating what the fee will be, and setting sb that little bit higher than you usually would to cover it.

A lot of people cover the fee by raising the price a little across the board - which means you'd pay $11 instead of $10 whether you're paying by PayPal or check or anything.

[webbelart]

some buyers pay it automaticly withouth me asking for it , also I never ask them to pay the fee.. but yes I curse the fee.. got to pay paypal a fee..then I got to pay taxed and 6.5 to the office I work with >..> rrrrrrrrrrr

[Slashmaster]

some buyers pay it automaticly withouth me asking for it , also I never ask them to pay the fee.. but yes I curse the fee.. got to pay paypal a fee..then I got to pay taxed and 6.5 to the office I work with >..> rrrrrrrrrrr

Based on the stuff you've mentioned about your taxes, I just have to express I am glad I don't live in Belgium. XD It sounds hellish.

[Tragedy]

As an artist, I will never ask a customer to pay my fees for me. Paypal is a service that I am using for my "business", thus is it on me to pay the fees for using said service.

I strongly disagree with this statement. I don't feel that I should have to accept a lower price for my art because the transfer method requires a fee for their service. I have always asked for buyers to cover Paypal fees and I have never once had a problem with it. In this transaction between artist and customer, there is an exchange of virtual goods for legal tender. My method of transferring the virtual goods to the buyer is via e-mail- there is no charge or fee for a free e-mail service. The buyer's method of transferring the money is by Paypal. Because that is their service of choice, I feel that the buyer should cover Paypal fees. They could opt to send a cashier check or money order, but there are usually fees for using them as well, and a much greater delay because the money is not received instantly.

Paypal fees greatly effect smaller sales between multiple customers. For example, if three people purchase $1 items from an artist, the 2.9% fee isn't what kills them, it's the $0.30 fee per transaction. In this scenario that artist is going to lose about 34% of what they should have earned- where they should have come out with $3.00, they will only have kept $1.98 after Paypal fees.

Of course the artist could compensate for Paypal fees by raising prices, but then others are going to be less inclined to buy because of the increase, even if you come right out and say "My prices are higher to cover Paypal fees" (and this statement might still be against Paypal's TOS). It's much easier to show the price they are paying for the art and include Paypal fees in later so the buyer can see the breakdown and feel more comfortable that they know exactly what their money is going toward.

I only ever ask exactly for the amount that will cover Paypal fees, which is 2.9% of the total (3.9% outside of the United States) plus $0.30 on every transaction. A lot of the time buyers overpay, just because they like to spend an equal amount (if the total is $16.29, someone might send me $17). There are way around Paypal fees- you can use the gift option (which I don't like to do, because it seems fishy if you are sent gifts a lot). Last time I checked, I believe that money transferred instantly via Paypal credits (i.e. you already have $200 sitting in your Paypal account balance that you use to pay for things) to other personal accounts will not charge a fee. However, I use a premier account for art sales because personal accounts only allow five credit or debit card transactions per year. I don't know if the rules have changed recently or not, but this is the way I remember things working.

In my opinion, Paypal fees are similar to sales tax (if you guys' states have sales tax). It's a percentage of the cost tacked on at the end of each item when you're ringing it up at the register (my state is 6% sales tax). It's not included in the price of the item and 99% of the time the seller does not cover it (I've only seen one local furniture store claim that they "cover sales tax" and I thought it was weird).