I recently came across a great article that related directly to this topic. I thought I would share it with you. Now before I go on, it should be noted that the views expressed here are those from the original writer. It just happens that I agree with many of the ideas shared. I have seen it too many times where the seller sits back and relaxes opening themselves up to becoming a fraud victim. By the time they figure it out, it's usually to late and they're out product, money, or end up with a returned item that wasn't theirs to start with.

Majority of sellers attempt to deal with the situation in a manner they think is appropriate, only to find that fraud investigations will take a great deal of your time to follow up. Most sellers will decide that they do not want to invest the time and chalk it up as a loss. The FRAUDSTER wins again. Prevention is the best cure.

Now before I continue, there is a positive regarding all this. Of all frauds committed, internet fraudsters are less likely to get away with it when compared to all other frauds. The internet is a tool used for fraudsters to commit but is also a great tool for law enforcement to use in tracking them down. I'm not saying that every fraud is solved, but rather, the potential to track the fraudster down is high. 

So here's the situation:

You the seller, suspect that something's going on...your transaction with the buyer aren't going as smooth as they should...you suspect fraud...What should you do?

PREVENTION:

What you could have done as a seller prior to reaching that point.................

Protect yourself by:

• Describing your item as thoroughly and accurately as you can. Include pictures, measurements and, most importantly, any flaws or damage.
• Include your return policy in your auction listing. This helps your case in the event that a buyer demands a refund but doesn't return the item first.
• Ship only to the buyer's address listed on the Transaction Details page.
• Retain proof of shipping and delivery. THIS IS WHY I ONLY SHIP WITH INSURANCE. YOU SELLERS OUT THERE THAT NEGLECT THIS TO SAVE A DOLLAR ARE ASKING FOR HEADACHES. WHAT STOPS YOUR BUYER FROM ADVISING THAT HE NEVER RECEIVED THE ITEM AND THEN OPENING UP A FORMAL COMPLAINT WITH EBAY AND PAYPAL. IF YOU'RE LIKE ME, YOU WILL WANT TO SOLVE THE ISSUE AS QUICK AS POSSIBLE TO AVOID THE POTENTIAL NEGATIVE FEEDBACK (feedback threats and blackmail are a whole other topic) YOU'LL PROBABLY GIVE THE REFUND. NOW YOU'RE OUT PRODUCT AND MONEY.
• Keep as much information as you can about the transaction and your customer, including emails and other correspondence. RETAIN IT FOR AN EXTENDED PERIOD OF TIME, UNTIL YOU ARE SATISFIED THAT THE TRANSACTION HAS BEEN COMPLETED TO BOTH PARTY'S SATISFACTION.
• Make every effort to know your customer and respond promptly to any customer service requests.

But if the worst occurs, and you suspect you've been had, then these are your options for reaching a resolution.

Fraud Resolution Options

Contact EBAY/PAYPAL

*** Tip ***

Remember that eBay only provides a forum to buy and sell:  It will get involved in disputes to provide lines of Communication. It will not act as a mediator, it will not collect money owed, or force someone to complete a transaction. Your safety is first and foremost up to you.

Some other ideas are the following:

1. Try phoning the buyer and resolving it over the phone. Telephone diplomacy can be highly effective in dissolving a tense situation.
2. If it is a payment issue, contact the service that was used to send or receive payment.
3. Contact local law enforcement in your area as well as the buyer's area if you suspect fraud with intent. REMEMBER THAT YOU MUST CONTACT LAW ENFORCEMENT IN THE AREA THAT THE OFFENCE WAS COMMITTED. TOO MANY TIMES, PEOPLE CONTACT THEIR LOCAL POLICE ONLY TO BE TOLD THAT THEY WILL NOT INVESTIGATE B/C IT DIDN'T HAPPEN IN THEIR IMMEDIATE AREA.
4. File a complaint with the Internet Fraud Complaint Center ic3.gov. Give as much information as you have to help them resolve the situation. NOT SURE IF THIS IS AVAILABLE FOR CANADIANS
5. Contact your shipping company. If you have shipping insurance, then a missing/damaged parcel should be covered. You should also retain proof of delivery where possible.
6. File an Unpaid Item with eBay to request a Final Value Fee credit.

Purchase with Fraud Intent

One area that eBay does involve itself in is fraud allegations. This is to protect the eBay marketplace itself. A high number of fraud incidences would be a death sentence to eBay.

So, if you think that a buyer purchased your item with intent to fraud, then you can report the buyer on the eBay Receiving Payments page.

These are the circumstances in which you can contact eBay and report the buyer:

• If the buyer paid or attempted to pay with a stolen credit card.
• If the buyer sent an online or credit card payment that was denied, withheld or not received after you shipped the item.
• If the buyer sent a check or money order that could not be cashed.

See defrauded sellers for more information and helpful links.