Auctioneers: Beware of Chargeback Scams

Proxiblog, like auctioneer houses selling coins on the portal, has been receiving emails from so-called potential bullion buyers, asking us to quote them our best prices so that they can purchase the goods with their credit cards. This is only one version of scams that target auctioneers who also may be coin dealers or who deal frequently in numismatics.

We know of at least two Proxibid auctioneers who have experienced thousands of dollars’ worth of chargebacks outside of the portal. We don’t want to disclose how auctioneers are being defrauded, as that can give other scammers ideas; but we do want to share some tips to prevent you from falling victim to these scams.

One Proxibid auctioneer wrote about this experience on a numismatic community website:

“It is definitely fraud and potential theft,” he stated. These so-called buyers “always want to do business by credit card because their scam” involves numerous ways to establish short-term trust with the auctioneer, to the extent that goods are delivered. Then the chargebacks occur down the road.

A Proxibid auctioneer has recommended to us that companies selling coins on the portal document all correspondence, keep photographs of winning lots, and make sure that buyers have to sign for goods received. Most important, auctioneers should be sure to cover the issue of chargebacks in their terms of service.

If you suffer a scam-related chargeback or are defrauded by any other means, you can work with Proxibid to resolve the matter if the transaction took place on the platform.

Jason Nielsen, Vice President of Risk Managemednt for Proxibid, said, “I have worked in this industry for over 10 years and I can tell you that scams have always been an issue. These scams typically happen outside of our platform and most often via email. We are able to weed out many of potential problem bidders via our AuctioGuard risk management system. If they happen to pass our checks we are in a great position to follow-up with the buyer because of the information we obtain before the transaction.”

Nielsen added that least you can protect yourself from chargebacks unlike other payment types. Nielsen recommends that you have the following items ready to supply to the merchant bank, should a creditcard chargeback issue arise:

  1. Copy of the item description.
  2. Terms of the sale.
  3. Online tracking.
  4. Required signature, for all high-dollar transactions.

“In the end,” Nielsen added, “I always tell folks that the saying, ‘If it’s too good to be true, it probably is,’ holds true in most cases” and especially involving email-initiated scams. He also advises to provide any documentation in a timely manner to the auctioneer’s merchant bank. “Rules of the card associations will decide the outcome of the chargeback.”

Remember, some chargebacks are entirely legitimate. Credit cards are only one of many forms of payment that people with bad intentions might use as fake money orders or even counterfeit cash can be an issue onsite.

Another common reason concerns lots sent to a winning bidder by mistake. (Two years ago Proxiblog came close to receiving a mounted moose head because an Alaskan auction house on Proxibid confused lots. Thankfully, Proxibid’s Customer Service intervened!)

PayPal advises auctioneers to consider chargebacks or other loses“among the unfortunate costs of doing business” and to “factor this cost into their business risk model.”

We believe otherwise. We advise auctioneers to use Proxibid to leverage the tools it has and also to get the support you need in case a scam happens. If all else fails we advise that you consult with attorneys, if it makes financial sense.

Proxiblog is an independent entity with no connection to the auction portal Proxibid. Our intent is to uphold basic numismatic standards as established by the American Numismatic Association and the National Auctioneer Association and to ensure a pleasurable bidding experience not only on Proxibid but also on similar portals such as iCollector and AuctionZip.


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