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INSIDE THIS ISSUE

- bait and switch, still alive and well on the Internet

- responses to last issue - useful sites

Bait and switch still alive on the Net

About half a year ago I discussed my investigation into the sites whose low prices always put them at the top of the search engines. I warned folks that if the price seemed too good to be true, it probably was. If you recall, I mentioned that some of these sites operate under several names, let's call them A, B and C. As A gets a reputation for unsavory practices, such as selling refurbished items as new, it closes down to reopen under another name, D. While that "new" site D is building up a clientelle, the same business now uses site B to perpetrate more fraud. Eventually, B closes and C takes over. Waiting in the wings are D and E. It also seems that a lot of these sites are located in New York.

When I tried to order Toshiba PDR-M5 digital cameras at the below wholesale price advertised on these sites, I could not do so. I placed orders and never heard back. I called numerous times and no one returned my calls or emails. It became pretty obvious what the game was. These sites don't want to sell to someone in New York. When the item develops a problem and the customer sends it in for repair and then discovers that his "new" camera is actually a refurb and no longer under warranty, the store wants to be sure the customer will not be visiting them to complain.

Back in June I tried deal with the top three names on the list, Digital Dog, Best Digital and Digital Buyer. All three sites looked similar. All worked similarly - after placing your order, you had to wait for someone to call you to verify it. No one called or returned my calls or emails. Now Digital Buyer and Best Digital are no longer on the list. In their place are other sites with very similar policies. Digital Dog is still around and wherever you find it, you also find Camerazone and Photospecialists selling the same cameras at the same prices. Visit the site and you will see the identical web page layout except for the colors, the company name and the phone number. Another one that always seems to undercut the competition on price is Compdirect. Place an order, as I did, and you will end up with a phone number to call to verify the order. There is an 800 number that does not work in New York and a 212 number that no one answers except for a few minutes between 3:00 and 3:05 (maybe someone forgot that they weren't supposed to answer it). I told the person that I had placed an order and was calling in to verify. He gave me another 212 number to call. I called that number and gave them the same information. They took my number and promised me a call back. That was the afternoon of December 11. I called again on December 13th. After a long wait on hold, I was told that they were very busy and they would eventually get around to calling me. They never did. Incidentally, both my home and work phone numbers were also recorded with the order I placed. So why are they advertising and creating a web page for orders? Could it be because they want to weed out the local customers and only sell to folks too far away to complain? If you live far away from New York and like to gamble, place an order with Compdirect for one of their digital cameras selling at about $50 less than the wholesale price and let me know if you ever get it and if so, did you get a new, working one? I also tried PopularDigital in New York and after being put on hold for a long time, I was told they could not take my order at this time. I called UniversalDigital in PA and every camera I asked about was out of stock. Someone took my number and promised to call me when they get in more stock. I am not holding my breath. Then I found another site called PrimeTime Digital. The site looked very familiar. A closer look revealled that other than the name, it was a clone of UniversalDigital with the same phone number.

There is a point at which bargain hunting becomes advertising your availability as a victim. Con men rely on greed to make their pitches. When you read about how someone got suckered in a 3-card monte game or buying a television from some guy on a street corner only to discover it was a television box filled with bricks, you wonder how someone could be so stupid as to fall for that. But hundreds of otherwise smart people are falling for the same sort of stunts on the net. A web site is no better than someone standing on street corner. Just because it has nice pictures and a fancy name like Digital Electro Bonanza does not mean it isn't run by a 15-year-old con man out of his bedroom. 800 numbers are readily available and even free from companies like Ureach. When someone goes to these web sites or auction sites and bids $200 on a $500 item, what they are doing is advertising to the con men that they are gullible suckers. I get several emails a week from folks who got scammed on the Net. Almost all of them contain the phrase, "I guess I should have known that the price was too good." So I repeat again, if it sounds too good to be true, it probably is.

Latest Exchangepath news - Exchangepath's own company doesn't trust them!

Exchangepath is the number one rated payment service of crooks with stolen credit cards. Reports of fraud are many times higher than any other service. Auctionwatch.com provides services to auction sellers. Auctionwatch and Exchangepath had a partnership where they offered a free listing day and $10 signup fees if you posted through Auctionwatch and used EP as your preferred payment service. After EP froze thousands of accounts and many complaints came in of fraud and even missing funds, AW has announced that they will no longer offer EP as a payment option if you post an auction through them. What is amazing about this announcement is that AW and EP are both subsidiaries of the same company, CMGI. This is like Citibank announcing that they will no longer accept Citibank money orders. If EP's own sister company won't do business with EP, why should you?

Auction Watch story

Latest Paypal news - banks are refusing to accept Paypal money transfers

A number of folks posted on the forums that their banks do not accept Paypal ACH transfers. I had links to these posts on my site when a reporter emailed me to say that he was unable to verify this information. So I sent an email to one of the banks named, Citizens Bank and then followed up with a phone call. It's true. Citizens Bank will NOT allow Paypal ACH transfers due to a fraud investigation. The email is here:

Dear Mr. Goodman,

Thank you for your inquiry regarding Paypal. At this time, Citizens Bank is not doing business with Paypal. If you have any further questions, please do not hesitate to contact us at 1-800-922-9999, 24 hours a day, seven days a week, and a customer service representative will gladly assist you.

Sincerely,

F. Rodriguez
Online Banking Specialist

I posted this on the forums and some Paypal cheerleaders responded to say that Citizens Bank is acting just like Paypal, restricting them first and investigating second. Paypal's representative on the boards posted that this decision was "mutual between Paypal and Citizens Bank." That's like the boss firing an employee and the employee says "it was mutual." The ACH system has been around for years. It is the system by which banks all over the world transfer money. It is not a trivial move for a bank to go in an restrict one specific company from reaching them. This move was not made friviolously by Citizens Bank against a company that currently handles millions of dollars daily in transactions. As confirmed in the phone call, it was done because of specific complaints from numerous account holders about ACH transfers being made fraudulently by Paypal. Citizens Bank is also not the only bank to take this step. Other posters have named other local banks and credit unions that have taken this step. One poster mentioned that her credit union accepted the Paypal payments she received and then one day informed her that they would no longer be accepting any transfers from Paypal. So Paypal cheerleaders now have to come up with an explanation for why these banks have all decided to lock one specific company out of their system. Paypal themselves have already informed account holders that certain banks can no longer be accepted for verification. Outside of the US, the problem is even worse. Foreign banks can not be used (probaby because they are not part of the ACH system). So the only way a foreign seller can get his money from Paypal, other than having checks mailed, was as a credit on his credit card. Paypal then announced that Mastercard was not allowing these credits to be posted. So what happened? Is it that Mastercard never allowed this and Paypal promised it without checking? Or is it that after some bad experiences, Mastercard has barred Paypal from doing this? There's no way to get the straight story from Paypal. I'm sure they will say "it was mutual." Either way, it shows a company that doesn't know or care what it does. If it's shaped like a horse and it sounds like a horse, it probably is a horse - not a zebra. And if so many people and banks are claiming fraud, then it probably is fraud - not some giant conspiracy against innocent Paypal.

Responses to last issue

I got a number of letters from folks who ran into Paypal problems and many folks who ran into Exchangepath problems. Since most of these are just more of the same, I won't detail them here except to note that one writer is an Ebay power seller with hundreds of positive ratings who just had his business and reputation destroyed by Exchangepath's restricting his account. They not only informed his customers that his account was being investigated for fraud (which was entirely untrue, he was one of the thousands of accounts accidentally frozen when EP discovered they had forgotten to record his address), EP also gave out his home number to callers, so he was beseiged with calls from irate customers. He contacted EP repeatedly to ask them to refund the money they were holding (several thousand dollars, since he sells expensive digital cameras and computer systems). EP did not refund the money and told his customers to hound him, even though he had no control over the situation. He is one of several companies suing EP. You can find the story on Auctionwatch.com and on my site Payment Service Ratings.

I got one letter stating that I am "the biggest jerk in the world" because I don't like Paypal. I didn't bother responding to this one. Since by Paypal's own posts, 4% of their customer base is unhappy, that makes 200,000 people who don't like Paypal. As far as I know, no one has taken a poll to see who doesn't like Paypal the most. Once that is done and once there is universal agreement that dislike of Paypal makes one a jerk, we can revisit this issue (if anyone cares). For now, my definition of the world's biggest jerk is someone who sends out an email to a total stranger to call him a jerk over his comments about another company. It's amazing that some people price their souls at $5.

Another writer posted on Auctionwatch that the very fact that EP generously does not sue me for slander proves what a reputable company they are. To this I responded that 1) slander is for spoken defamation, libel is for written defamation and 2) the very fact that they don't sue me for libel indicates that what I wrote is true. I went at it head to head on Auctionwatch with two EP reps and they were unable to answer the direct questions that I asked. One admitted that freezing the accounts was a mistake and had nothing to do with fraud. When asked why then EP didn't unfreeze the accounts but insisted that each account holder call them (a process which took weeks in some cases), the other responded because the frozen accounts were suspected of fraud. One account holder announced that the only transaction in his account at the time it was frozen was the $10 put in by EP as a sign up bonus. I posted that maybe EP has used a stolen credit card to make the payment. I still stand by my statement that EP is the only service that is even worse than Paypal. Congratulations, EP, for making it to first place.

Someone wrote in to tell me about an escrow service in Canada called escrow.ca. I visited the site and emailed one of the principals. Though I haven't used it myself, this service does seem to be run the way I would like a service to be with human intervention with each transaction. This service seems to be a combination of Bidpay and Iescrow, geared mainly to Canadian-American transactions. They will direct deposit money into several Canadian banks. They will also mail checks to American sellers. Transactions can be done in either US or Canadian funds. If you are in Canada or do business with Canadians, you should check them out at www.escrow.ca.

Some people took exception to my report on ecashpad. Someone wrote in to correct an error I made. I had stated that they pay a referral fee of 5% of the merchant's charges. They give an example that if a merchant does $20,000 in charges per month, the referrer will receive $1,000 a month. They actually pay 5% of what they bill the merchant. They bill the merchant $1 per transaction. So for a merchant to have $20,000 in monthly billings, he would have to be doing 20,000 ecashpad transactions monthly. I think it is highly unlikely that any merchant would be doing this much business. If they used more realistic numbers on their site, I wouldn't have made such an error. For those die-hard folks who think the example given was fair, here's a way you can make millions. Refer customers to me and I will pay you 5 cents per sale. If you refer 1000 customers and each one makes 20,000 purchases, I will pay you a million dollars. I think it says something about a company if they have to use grossly inflated numbers to attract people. I still stand behind what I wrote. I did not say that ecashpad was a bad device. I feel that there is something wrong with the marketing and deployment of this device. I have trouble believing that people who scream when a Paypal sellers asks for 25 cents more if Paypal is used, will spend $65 for the ecashpad so that they can then pay the vendor more securely. And since it now seems that ecashpad is charging an additional fee on top of what the vendor is already paying for credit card acceptance, I don't know how many vendors will use it. Already, there are other companies offering similar devices for free. I have also heard that there are at least two more companies about to enter the online payment arena with a product that may change the way online payments are handled and make them safer for both buyers and sellers.

Is Yahoo Fees-able?

For a long time buyers and sellers have complained about Yahoo. Scam sellers and deadbeats abounded. Crooks banned from ebay and sought by authorities were "selling" openly on Yahoo. Complaints emailed to Yahoo were answered with canned replies that often didn't match the subject. But Yahoo had one thing going for it and one thing only - it was free. As of January 10th, it will no longer be free. Yahoo staff (I think there are three employees) mentioned on the Seller Zone a few times that in order to improve Yahoo, fees would have to be charged. They started charging featuring fees, special charges for having your auctions listed before everyone else's. The site did not improve. Then they started scrambling the order of the listings so that instead of appearing in order of closing date, the order appeared to be random. It was eventually revealled that the order was not exactly random. It had something to do with the seller's rating, the seller's sell-through rate and the conjunction of the planets. But this confusing hodgepodge of listings forced more sellers to pay to be featured so that their listings had at least a chance of being seen. Despite this, Yahoo did not improve.

Yahoo has now taken the step of charging fees. Stupidly, instead of charging fees based on the closing price, where sellers would have paid for value received, Yahoo is charging fees just to list items, regardless of whether they sell. Sellers have long discovered that most items on Yahoo just don't sell. Even many that do end up with a deadbeat bidder who doesn't follow through. Since many sellers are already disgusted with Yahoo even when it is free, I suspect that if Yahoo doesn't change quickly, it will soon become a ghost town. Around January 10th, when the fees kick in, I will be moving my auctions elsewhere. I have already had good luck on the Fairmarket network.

Fairmarket is a company that runs auctions for a number of sites, including MSN, Zdnet, Excite and Lycos. An auction posted at any one of these sites will appear on all of them. Though most of these sites do charge fees, fees are assessed on the closing price only. You can visit my Lycos auctions for digital cameras, smartmedia cards, cdrw drives and media.

Useful sites

www.bigfoot.com - What if you have more than one email address, such as one at home and another at work? How can you make sure that emails reach you at whichever ID you choose to use? What if you want to change providers? Do you have to email all your friends and tell them to start using a different ID? With Bigfoot, the answer is NO. When you sign up for a Bigfoot ID, you get powerful email tools. Forwarding will send your emails to any other ID you choose. Distribution will send them to as many as five other IDs. Now all you have to do is get your friends to use your Bigfoot ID. You can change offices, email systems, Internet providers and Bigfoot will just keep forwarding and distributing your email without you having to notify your friends. I've had my ID for years. The service is FREE. Once you set up your account, you don't have to log in to Bigfoot again (unless you change providers). Now that I have my own domain, I don't need my bigfoot ID. But it will still work and it served me well for many years.

http://www.bfree.on.ca/HTML/index.htm - detailed, well explained HTML lessons online

www.megapixel.net - in-depth reviews of digital cameras.

www.epinions.com - product reviews written by regular folks who have bought and used them.

www.ureach.com - get a free toll-free number that accepts voice calls or faxes. It will notify you of new messages via email or pager. You can get your voice messages by phone or by logging on the website and faxes off the website. This number will also forward to up to three other phones lines. You can now give folks a toll free number to call you in an emergency. Use it to call home when you're out on the road.

I hope this letter contained useful information. Please email ccs@ygoodman.com with any comments.