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Online Buyer's Guide
The more than Complete guide to buying and selling online


By: Michael Pye
<mpye@ix.netcom.com>

The prices of new computer models and peripherals seem to be dropping daily. Ten years ago, an 80 megabyte hard disk went for over $1300. That same $1,300 will now purchase a whopping 4 gigabyte hard disk -- and they'll throw in the rest of the iMac for free. Yet even with all these great prices, many people want an even better deal, an ever lower price. These people are turning to online classified ads. From the Internet to online services such as America Online and CompuServe, people are selling their wares to total strangers, site unseen.

While you can get a decent deal on used equipment from the various mail-order companies (such as Mac Warehouse), you can get absolute steals through person-to-person online classifieds.

Through the online classifieds you can both buy and sell previously owned equipment, discontinued new equipment, or the latest and greatest. Those willing to stay one step behind the technological edge can reap enormous savings on their computing purchases. There is, however, a risk. Even though the majority of people dealing in these online areas are well-intentioned and honest, there are always a few rotten apples lurking about. While there is no perfectly safe way to make a deal through online classifieds, there are several steps you can take to minimize your chances of being the victim of fraud.

This article describes, in great detail, steps you can take to make a safe deal. However, most people do not, and will not, follow all the advice contained herein. Selling in the online classifieds is usually a very fast-paced operation. If you take too much time trying to buy or sell an item, you'll often lose out while others cut in line ahead of you. However, you'll have the comfort of going to sleep at night knowing you didn't get taken for a ride - even if you did lose out on that $500 466MHz G3 with all the trimmings.

The Basics of Buying and Selling

Many of the steps detailed in this article may seem obvious. However obvious they may seem, you would be amazed at the number of people who willingly ignore them. The reason is they usually don't want to lose out on a great deal. These are usually the same people who complain about being the victim of on-line scam artists. Here's an overview of steps you can take to make a safe deal:

  • Keep a complete record of the entire transaction. Things to keep track of:
     
    • A copy of the original advertisement
    • All e-mail between the parties involved
    • Summaries of phone conversations
    • Dates and proof of mailing
    • COD receipts
    • Check number or cashier's check receipts
       
  • Be sure each party has the other party's full name, address, and phone numbers - both home and work numbers.
     
  • For very expensive items, use a sales contract.
     
  • Use COD. Above all, never pay for an item in advance.
     
  • Insist that the package be insured for the full replacement value and that proper packaging be used. While it may be tempting to shave off a few pennies in these areas, don't.
     
  • When the package arrives, open it in front of the delivery person. If that is not an option, open the package in front of one or two friends or co-workers.
     
  • Finally, if a deal looks too good to be true, it is.
     

 

Finding Current Prices of New & Used Equipment

Be sure to check current prices of equipment before you advertise. Many sellers use the price they paid a couple of years ago as a guideline. That is the main reason why they do not receive any responses to their ads. Prices are falling every day. Don't bother charging a price based on what you paid when buyers can get newer and better equipment cheaper. Here are some ways to find the right selling price:

  • Scan through posts by others and see what they are charging for the same item.
     
  • Check the yellow pages of your phone book under "computer equipment - used" or "resellers". Call a couple of them to find out what price they would buy for, and a couple to find what price they are selling similar equipment for. The middle value is about right.
     
  • Check the ads in Computer Shopper, MacWorld, Byte, and other computer magazines.
     
  • Call the manufacturer, and ask about the price, or ask about a store that sells the equipment, and get the price from them.
     
  • A good rule of thumb is: Start with the lowest current price you can find for similar NEW equipment. Take 50% off for the base used asking price. Adjust this price up or down depending on such things as condition of the item, age, whether it includes original documentation and/or packaging, whether it is still under warranty (and how much time is left on the warranty), whether the manufacturer is still around, and whether or not you can still get support for the product.
     

 

Placing a Classified Ad

The Subject Line: Most people just scroll through a list of subject lines and only read the interesting items. Keep in mind that there are thousands of ads -- of which yours is only one. If your subject line isn't interesting, your post will be ignored.

Examples of good subject lines:

  • SALE: PowerMac G3, 466MHz, 512Mb RAM, 9GB HD, 21" Monitor - $499.
  • Mac Plus-loaded, 300 baud modem, AppleWriter printer, $25.
  • Books 4 sale: C, Networks, Internet, WWWeb + many more.

Examples of bad subject lines (guarenteed to be skipped):

  • Stuff for sale
  • Software - Cheap
  • Lots of Computer stuff, etc.

The Body of the Ad: Be very specific in your ad about what you are selling, its age and condition, whether the warranty is still in effect, how much you want for it, and whether the price is firm or if you are willing to negotiate. The more specifics you include, the less mail you'll get asking these questions. State clearly whether the price includes shipping and, if it does, be sure to allow yourself a reasonable amount to cover the cost. Do not advertise equipment that you cannot ship within a reasonable amount of time.

Before you ship the item, have it securely packaged. Insurance is strongly recommended. Payment terms should be whatever you and the buyer are comfortable with, and commonly include options such as COD (Cash on Delivery) or payment upon receipt and inspection.

Although this should go without saying, make sure to get the buyer's phone numbers (both home and work numbers). Arrange a time and call the buyer. This confirms both the deal and that you can get back in touch with the buyer should the need arise. Don't be offended if the buyer wants to take steps to protect his position since he probably doesn't know you.

Once you have made a deal, follow through on it immediately. Nothing angers a buyer or seller more than delays and excuses.

Answering a Classifed Ad

Respond to an advertisement in a prompt manner. (The item may well not be available if you don't!) Be sure you understand exactly what condition the item is in before you buy. State clearly your terms, offers, and intentions and follow through on them.

As computer equipment and electronics are generally bulky and fragile, allow the seller a reasonable amount of money to package, insure, and ship your purchase properly.

Although this should go without saying, I'm going to say it once again - make sure to get the seller's address and phone numbers (both home and work numbers). Arrange a time and call the seller to both confirm the deal and confirm that you can get back in touch with the seller should the need arise. While you are probably buying equipment sight-unseen from a relative stranger, remember that the seller needs to protect his position as well.

Payment Terms

Use COD. While it does cost extra for COD, it's worth every penny. Also, if possible, specify that you want payment by cash or cashier's check. Buyers should always pay by cashier's check, not cash, unless it is a very small amount.

While using COD and cashier's checks certainly help, you are still not perfectly safe. There are a thousand ways for the buyer or the seller to commit fraud. Despite the safety precautions mentioned here, you basically trust that the other party is honest. This is a risk you always take when buying and selling through the mail. If you cannot afford this risk, then the online classifieds are probably not for you.

With the arrival of color printers, a new type of COD crime started - issuing phony cashier's checks. (Heck, people are even using computers and color printers to pring their own money!) Under UPS contracts, they are not responsible - and will not pay you - should their driver accept a reasonable-looking cashier's check. Federal Express rules are probably similar. If the thief is caught, they will definitely end up in trouble, but it's often difficult to catch them.

There is no official way to delay the payment to give the buyer time to examine the equipment. Banks do not issue post-dated cashier's checks, and do not take responsibility for delaying payment on post-dated personal checks. If you write a post-dated check, you trust the seller to wait until the due date.

If you are dealing with a company that will accept your credit card, be aware that most credit cards will stop payment to a vendor if you request it and have a good reason.

Never give your credit card number to an individual!

Never agree to pay half the money first and the other half after receiving the merchandise. Although this may sound reasonable, it is an ideal way to commit fraud. Either the seller may take half the money and never ship, or the buyer may get the shipment and not pay the rest of the money. The seller can't go to court since he has no proof of fraud - the buyer can show his check for half the amount as proof of payment.

Be aware that the buyer can refuse shipment of the package. You may want to try getting the buyer to pay for shipping in advance. It can also be written into a Sales Contract that the buyer will pay shipping costs - both ways - if he backs out at the time of receipt. Yes, it's legal and it will stick. Packages can be returned, COD or not, and this is a risk all sellers take.

There are a few people and businesses [brokers] who will keep a cashier's check made out to the seller until the buyer is satisfied with the merchandise. Some will do this for free, but most will charge either a flat fee or a percentage of the total sale. I have no personal experience with brokers and am not able to recommend them. However, if such a broker is used, make absolutely sure that an explicit three-way contract is signed by all parties. Don't do business without one.

Sales Contracts

For extremely expensive items, the buyer and the seller should sign a written agreement. The agreement should contain a description of the equipment, addresses and phone numbers, any conditions, such as "the equipment must be in working condition" or "If dissatisfied, the buyer will return the equipment and pay 2- way shipping". There should be two copies of the agreement with the dated signatures (faxed signatures are considered legal) of both parties on both copies. In addition, the contract has to specify that each party gets something of value in exchange for what is given to the other party. It should also mention the specific dates things are supposed to happen. Beyond that, it should cover whatever each party wants covered.

To be legally acceptable, such an agreement should be notarized. This is quite easy to do, and it would be useful if you ever need to go to court. Following is a brief sample agreement.

CONTRACT OF SALE

______________, hereby known as the "seller", and

______________, hereby known as the "buyer", agree to the following:

Seller will ship ___________________________________________ (full description of item) by (UPS, Federal Express, COD, etc.) insured for ________ on or before __/__/__ to: Buyer's address

The equipment is shipped in good working condition and, barring damage caused in shipping, is guaranteed to be received in like condition. (More details if desired.)

Payment is to be made through the shipping company's COD service by Cashier's Check at the time of delivery.

In the event that the buyer refuses shipment, except for suspected damage during shipping, the buyer agrees to pay for all shipping costs incurred by the seller.

(signed and dated:)

Seller:______________ __/__/__

Buyer:______________ __/__/__

The more expensive the piece of equipment, the more likely you will want to use a contract. Such a Sales Contract, especially if notarized, is considered a legal document and will hold up very well in court. In most states, once signed, if the deal does not go through (such as the seller getting someone else to pay more for the item and reneging on the first buyer), the offended party has strong legal rights to collect damages. Don't let this scare you off though. Just deal in an honest and straightforward way and everyone will be happy.

Buyers: Be aware that it's quite possible the seller can get someone else to buy the equipment without this extra hassle. This may mean that you'll lose out on some good deals, but you'll be safer in the end. Also, don't immediately condemn the seller as a thief if he shies away from such a contract - especially for inexpensive items. He may just not want the bother and believe the item can be sold without a contract. However, be VERY wary if the seller refuses to sign such a contract AND continually offers the same item for sale.

Sellers: Be aware that yours is not the only game in town and that the buyer can possibly find a better deal elsewhere. In the time it takes to negotiate a contract, the buyer may find the same item elsewhere for less - in which case, you're out of luck (unless a completed contract was signed and you want to be a pain about it). However, if you are offering a popular item at a reasonable price, you should have no trouble finding a buyer eventually.

Packaging & Witnesses

First, be sure you have a complete list of all items that will be shipped, how many boxes were used in total, and what's included in each box. Numbering the boxes (1 of..., 2 of..., 3 of..., etc.) can be helpful. Also, be sure to make a note of the serial numbers of any items expensive enough to have them. After you are done packing and mailing the items, mail a confirmation letter to the buyer containing all the details above, which shipping company was used, when the buyer should expect delivery, and the payment that the delivery driver will be expecting.

Double-check your address that you e-mail to the other party and double-check the address on the package. And always include your return address so that the package or payment is returned to you if it cannot be delivered.

The seller should attach a packing list on the outside of the box, describing the contents. Pack and ship stores (such as Mail Boxes Etc.) sell little plastic sleeves for just thir purpose.

For more expensive sales, it's a good idea for both the buyer and the seller to have witnesses - friends, neutral co-workers, etc., during the entire process of testing, packing/unpacking, and sending/receiving the package. This will help in case someone sends you a box of bricks or a dead computer, and you need to go to court to settle the dispute.

The price of the item sold should be enough to cover decent packaging and insurance. Don't skimp here or you may very well be sorry later. Use the original factory packaging if possible. If that's not possible, consider one of the pack and ship stores. Pack the item securely and wrap it in bubble wrap, styrofoam peanuts, newspaper, etc.

Don't use string or rope on the package at all - most of the shippers won't take it. Use strong packing tape - preferably reinforced with fibers. NEVER use scotch tape or masking tape. Also, don't tape a piece of paper to the package for use as a label. Either get a real label to stick on, or even better, write the addresses on the package itself with a permanent marker.

Always insure the item for its full replacement value. UPS and Federal Express automatically insure items for up to $100. Additional insurance is usually less than $.50 per $100 insured. When you're shipping a $2,000 computer across country, an extra $10 of insurance is worth it.

Shippers & Shipping

US MAIL

The US Postal Service is good for books, manuals, and software, but not recommended for sensitive electronics or time-sensitive shipments. They do have mail fraud inspectors who can possibly help in case of bad checks or parcels containing bricks instead of a computer. They do not have an option for cashier's check only CODs, so that's a big minus. Another minus is that they have limited COD services. [In fact, not all branches even know that the they offer COD at all.] Pluses are that they are the only service that ships to P.O. boxes and that they have a good 2 pounds in 2 days for about $3 service (which will probably take 3-4 days if the package goes across country).

United Parcel Service (UPS)

The most frequent complaints against UPS are that they either leave the package outside your door when you don't want them to, or they don't leave the package when you do want them to. You can sometimes get around this by leaving a prominent note on your door for the driver, or by calling the UPS office ahead of time. The best thing you can do is to call UPS and find out what their delivery policies are in the buyer's area.

If it is their policy to leave the package outside the door, and you don't want them to, the seller can pay an extra dollar and put a "signature required" sticker on the box. If they still leave the package without a signature, you have a right to complain and will fare much better if the package is stolen.

Another frequent complaint about UPS is that they sometimes seem to use your package for football practice. Be very sure you don't accept any package that appears to have been damaged in shipping.

I have heard several complaints about people receiving their COD money 3-4 months after shipping the package and getting UPS to trace what happened to the money is not very easy. The most delay occurs when payment is made in cash. Cashier's checks come back a little faster. [I have first-hand practical experience with UPS in this matter. It isn't pretty.]

UPS is inexpensive, but you may get what you don't pay for.

Federal Express

In some cases, it isn't much more expensive than UPS Air [especially for FedEx 2nd day delivery rates], and they return the money very quickly. FedEx also has much better customer service compared to US Mail or UPS. They never leave a package without a signature unless you ask them to, and if the buyer isn't home, they call back and ask when and where to deliver it.

For CODs, FedEx calls the buyer before delivering the package to make sure he will have the exact amount for the COD. Another plus is that they do not accept cash at all, but do accept cashier's checks.

Finally, if they mess up in any way, they refund the shipping charges. For some people, this is worth the extra money. [Cost estimates: a typical desktop PC shipped 2nd day COD from coast to coast and insured for $1,000 costs about $40. A typical modem shipped 2nd day COD from coast to coast and insured for $200 costs about $20. The COD payment will be returned within two working days of delivery - and often the very next day.]

To ship COD packages by Federal Express, you must have a Federal Express account number. This is simple to obtain: call 1-800-238-5355. A major credit card is needed. Federal Express does this to assure themselves that they'll get paid for shipping both ways if the package is refused. For the buyer, however, this also is a guarantee that they'll be able to locate the seller after the deal is made.

DHL & Overseas Shipping

DHL is the shipper of choice for overseas shipping.

One thing to be aware of about shipping your equipment oversees are the electrical requirements in the buyer's country. These come in two forms: One, the electrical sockets in many foreign countries will not accept the plugs from U.S. equipment. Two, the power supply of the equipment must be able to work with the power source in the country to which you will ship. The first problem can usually be solved with an adapter. The problem of the power supply, however, is more serious. While some computer models come with international power supplies, others do not. Additionally, peripheral equipment is even less likely to have an international power supply. Your best bet is to be sure of the equipment's power requirements and make sure the buyer understands and can deal with them.

Finally, although this usually isn't a problem, be aware that some very high-end computer equipment cannot be shipped from the U.S. to certain countries. If you have doubts about what you are selling or where it's going, contact the U.S. State Department.

Shipping to Canada

Get a guide from Canada customs on what is duty free, etc. Computer equipment (manufactured in the US) should be duty free; however you will have to pay G.S.T. (Goods & Services Tax, 7%) on the "declared value" of the goods.

For shipping, use the US-Mail, Federal Express, or DHL. The US-Mail may incur a slightly higher shipping fee on the US end of things than UPS, but the lack of hassles and brokerage costs more than make up for that.

Federal Express and DHL are excellent alternatives for shipping to Canada. All the same rules apply as far as G.S.T. (Goods & Services Tax) but FedEx offers customs brokering at no extra charge. In addition, FedEx should be a lot faster than US-Mail.

The Package has Arrived

DO NOT ACCEPT ANY ITEM THAT LOOKS LIKE IT WAS DAMAGED IN SHIPPING. If you do refuse an item that appeared damaged, notify the seller at once.

If it looks as if the package may be damaged and you want to accept it anyway, have the driver note "possible damage" on the shipping receipt or log. This will be an immense help in dealing with the shipper if the item actually was damaged.

After you give payment to the delivery person, request that they watch you open the package. Most are quite willing to do so.

They won't hang around while you set up a whole computer system and run it through a series of diagnostics, but they'll usually wait until the package is open.

Then quickly verify that everything looks like it's in the condition you expect it to be in. If anything appears to be out of order, make sure you get the name of the delivery person so you have a witness, if necessary. If anything appears to be obviously damaged, have the driver write a note in the logbook that the contents appeared damaged - and sign it.

The seller has no legal responsibility if the item was damaged in shipment (although he should certainly offer what help he can). The buyer must file a claim against the shipper. Be aware that there is a time limit for filing a damage claim, so do this as soon as you possibly can. If your item arrives looking badly damaged, refuse it. If the damage was concealed, call the shipper immediately (this is why it is such a good idea to open the box in front of the driver). Once you file a damage claim, you may be visited by a "claim handler". If, in the opinion of the claim handler, the item was not packaged properly, they will likely deny your claim on that basis. [Refer to Packaging & Witnesses above for more information on proper packaging.]

As soon as possible after receiving shipment, you should thoroughly examine all items shipped and make sure they are in the same condition in which they were advertised. If you can't get an item to work, do not just return it to the seller. First, call or e-mail the seller to both inform him of the non-functioning item and to see if he has any suggestions. It is possible that you may have simply made a mistake in setting it up.

If the item is truly not working, you may be able to get the seller to agree to a refund. This, however, is the stage where most complaints are made and few are resolved. The seller will insist that everything was working perfectly before shipping so why should he suffer a loss because of shipping damage or the buyer's mistakes in setting it up? Meanwhile, the buyer is convinced that he's been had and that the seller was intent upon this from the beginning. This is why getting the exact specifications of the items shipped was stressed previously. At this stage of the game, it's a little late and very difficult to come to terms that everyone will be happy with. The details of all communication between the two parties will be the only thing you have to go on to decide, and get others to decide, if fraud has been committed.

If the seller does agree to a refund, the buyer should not expect his money back until the item has been returned. Once received, the seller should double-check the serial numbers of all items to make sure they are the same ones sent (you did remember to note the serial numbers before shipping, didn't you?).

Whether the items were received in good condition or not, it's always polite to send a message to the seller confirming receipt of the package. [Sellers: if you do not get such a confirmation, be sure to e-mail the other party and inquire about receipt and whether the item arrived in working condition.]

What to do if You are a Victim of Fraud

Keep the channels of communication open. If you feel something is amiss, send e-mail to the other party -- several times if necessary. If there is no reply, assume the mail is not getting through, and call and talk to him (remember, you should have gotten the phone number!). If you do not have the phone number, post a message to him on the area where the original ad was placed with his name/e-mail address on the subject line. (However, there is no guarantee that the person will see your message.) Many problems and misunderstandings can be fixed by simple communication. Also, if you have any trouble getting the equipment to work, you can take the seller's advice and help before you decide to take further action.

If the suspected fraud continually resists all communication, send both e-mail and a registered notarized letter giving all the details of the transaction, that you suspect fraud, and what steps you intend to take if the matter is not cleared up within a given amount of time. This will sometimes jar the other person into fulfilling his part of the deal.

Checks & Stopping Payment

The buyer can sometimes stop payment on a cashier's check. You must check with your bank first. Most banks will stop payment only if the check is lost or stolen. Some banks, however, do not even care to ask. Note that it is illegal to stop payment on a check unless there is a good reason for it. If the seller has witnesses to prove that the equipment performed as advertised, he can cause a lot of trouble for the buyer if the buyer stops payment on a check.

One good idea (for the buyer) is to have the package delivered on a Friday. Then, spend the weekend checking it out so that, if necessary, you can try to stop payment on the check on Monday.

Contact the "Authorities"

Send e-mail to the people in charge of the online classified area informing them that it is being used for fraudulent deals, and explain the situation in detail. If the fraudulent party is using a different online system or is using a site on the Internet, contact the postmaster or system administrator of that site. Often, for university sites, the system administrator is kind enough to pass the case on to the campus police. On Internet systems, the address of the postmaster is usually postmaster@machine-name, where machine-name is from the buyer's/seller's e-mail address (ex: postmaster@youareafraud.com). If that doesn't work, try contacting the system administrator at root@machine-name. In one case where this was done, the would-be fraud was an employee at a university computer center and co-worker of the system administrator at that site. The information was passed along to superiors and, after a bit of fast-talking to save his job, the check was in the mail the same day.

Contact the Real Authorities

If the package was sent through the US Postal Service, contact your local Post Office to see to see if anything can be done about mail fraud. Also contact the Attorney General's office at both ends of the transaction. Although e-mail is NOT legal evidence, not everyone knows this so you might as well try to use it. (Several people have been able to get a bank to stop payment of a cashier's check by showing them the e-mail of the transaction.) Ideally, you should have some written evidence of the fraud, such as a COD receipt, bounced check, signed contract, etc.

If the fraudulent party is a business, also contact your local Better Business Bureau or a consumer protection agency.

They Skipped Town?

There are a few ways to track down someone who has recently moved:

1. Send mail with the label "Correct Address Requested, Do Not Forward."

2. Contact the Post Office about getting a copy of the actual change of address form. This usually costs about three dollars.

3. Cole National Lookup Service at 1-900-288-3020 provides nationwide name, telephone number and address information. They also can provide change of address and nearest neighbor information. The charge for this service is around $3.00 for the first minute and $2.00 thereafter. This can help both before the deal - to confirm information, or after the deal - to help in collecting your half of the deal. When dealing with very expensive items, it is a good idea to verify all information given by both parties. Several scam artists use public telephones as their "base of operations" for a particular deal. This service would let you know that before-hand. I'm told it typically costs about $5.00 to check out any number. [I haven't tried this number in a few years and can't currently dial 1-900 numbers from any of my phones, so the number may have changed.]

Your Day in Court

The only legal way to force payment is to sue the individual, get a judgment and then garnish wages, levy a bank account, or put a lien on property. You can normally only sue out-of-state individuals in your state if they have regular and continuing contact with the state - such as a business or second home in the state. Otherwise, you would have to travel to the state where the fraudulent party lives.

Warranty Policies

People looking to buy new Apple equipment should be aware of Apple's policy regarding warranties. In order for Apple to honor a warranty, they require the original dated sales receipt from a legitimate Apple retailer. Although a registration card is provided with the equipment, this is not used as a proof of purchase for the purposes of repairs under the warranty. Be sure the seller agrees to furnish such a receipt as a condition of the sale.

If purchasing another brand, make sure you know the warranty policies before-hand.

Toll-Free Shipper Information

  • Federal Express: 1-800-463-3339
  • United Paarcel Service (UPS): 1-800-742-5877
  • DHL: 1-800-225-5345
  • United States Postal Service: Contact your local Post Office

The Bottom Line

By now many may be scared off the idea buying or selling equipment through the online classifieds. However, realize that for every deal where fraud is involved, several hundred others occur where all parties are happy with the results. The percentage of deals involving fraud is actually quite low. In addition, if the few people who were the victims of fraud had followed the advice given here, that percentage would shrink even more.

People buy and sell in online classified areas every day without trouble. Although you are never completely safe from fraud, you can definitely minimize your chances at being one of the unlucky few. It's up to you to protect yourself. Let the buyer (and seller) beware. If a deal looks too good to be true....


Created: 09/30/98
Updated: 11/09/02


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