Yahoo! Initiates Buyer Protection Program

Internet powerhouse Yahoo! announced Monday that it is launching the Yahoo! Buyer Protection Program to safeguard customers at both its Yahoo! Auctions and Yahoo! Shops sites against fraud. The new coverage is backed by Lloyd’s of London and offers buyers up to $3,000 (US$) in protection.

“Yahoo! Buyer Protection Program is yet another layer of protection we are offering consumers shopping within the Yahoo! network,” said Tim Brady, Yahoo! senior vice president of Network Services.

The company said that sales through Yahoo! Shopping and Yahoo! Auctions have skyrocketed by 300 and 400 percent respectively since September 1999. During the first nine months of this year, more than $3 billion of online transactions were enabled on Yahoo!’s e-commerce platform, including Yahoo! Auctions.

Yahoo!’s Generous Protection

The Yahoo! Buyer Protection Program will provide coverage on all auctions with a closing price between $25 and $10,000.

The coverage protects buyers whose purchases never arrive or are materially different than what is described by the seller. Not covered under the program are exchanges that violate Yahoo!’s Terms of Service or instances in which the buyer or seller has a negative rating.

Standard protection, which is offered automatically on all auctions, provides security for up to $250 with a $25 deduction. Premium protection, which protects winning bids of up to $3,000 with a $25 deduction, is available if the buyer and seller use Yahoo!’s PayDirect person-to-person payment system to complete the transaction.

Purchases made through Yahoo! Stores are protected for the full value of any item up to $750. The level of protection increases to $1,000 when consumers use Yahoo!’s Wallet, a service that allows them to store their personal billing and shipping information.

Yahoo!’s protection program is generous when compared to eBay, which offers $200 in coverage, and Amazon, which provides $250 in coverage, but only when buyers make purchases through certified auctions or zShops.

The Need for Protection

The proliferation of services such as Yahoo! Shops and Auctions has eased the way for con artists to defraud victims. The top two Net crimes for 1999, according to the National Consumers League’s Internet Fraud Watch, were auction fraud and non-auction sales of general merchandise. Consumers lost over $3.2 million to Internet fraud in 1999, with the average consumer loss being $580.

The U.S. Federal Trade Commission (FTC) reports that cases of auction fraud have escalated from 100 in 1997 to over 10,000 in 1999, and those numbers represent only the incidents where the fraud has been reported to law enforcement agencies. Many buyers choose to simply write off their losses because of the small dollar amounts.

The average amount of a victim’s losses to auction fraud, according to the Internet Fraud Watch, is $293.

Fighting Internet Fraud

The proliferation of Internet crime has led many U.S. states, including Texas, to develop specialized crime bureaus. Reid Whitliff, Director of the Texas Internet Bureau, told the E-Commerce Times that “currently the most prevalent form of Internet fraud is auction fraud.”

Whitliff added, “The Internet has allowed criminals to remain anonymous and thus harder to detect. These factors make it harder for law enforcement to catch these criminals.”

Whitliff also said that the Internet allows criminals to jump jurisdictional boundaries with relative ease. To track such offenders, the FTC has established a national Consumer Sentinel database, which includes details of complaints logged by a variety of law enforcement and consumer protection agencies ranging from the United States Post Office to the National Consumer League.