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Imagine you are selling an expensive item online, and you want to make sure that the people who bid are qualified to purchase it. Knowing that the bidder has put aside 10% of the expected selling price in a third-party account might make you feel more protected, particularly if you knew that the winning bidder would forfeit their deposit if they failed to complete the transaction.
eDeposit has created such a service for sellers called BidDeposit. This is how it works:
Sellers require bidders to deposit 10% of the expected selling price of an item with eDeposit before being allowed to bid on the item. Once bidders have funded their eDeposit account with the required BidDeposit amount, they are allowed to participate in the auction.
During the course of an auction, the buyer's bids are either "held" or "released" within the buyer's eDeposit account, depending on whether the buyer is winning the auction or not. These "holds" and "releases" happen as the auction progresses, and a buyer can see the holds and releases occurring in real-time by checking his or her eDeposit account.
When a winning buyer finally emerges from an auction or sale, all of the losing bidders' BidDeposit funds are released and made available again for use. However, the winning buyer's BidDeposit funds are held for the seller until the buyer has paid the seller for the item being auctioned.
BidDeposit is not an escrow service (although eDeposit offers escrow services separately). Therefore, it does not give buyers and sellers protection beyond giving the Seller the guaranteed 10% deposit from the winning bidder (less fees). And eDeposit will not get involved in disputes unless the escrow service is used.
There is a charge to sellers for using BidDeposit. Sellers pay 5% of the BidDeposit amount or $25, whichever is greater, with a maximum fee of $500. If an auction draws no bidders, eDeposit will refund all seller fees, less service fee equal to 10% of the original fee. (For example, if a BidDeposit equals $100, the seller's fee would be $5. If the auction draws no bidders, the seller would pay 10% of that fee, or 50 cents.)
Bidders pay a fee only to fund their eDeposit accounts, and if they pay by cashier's check, money order, or with a personal or company check, there is no fee at all. There are additional fees if you choose to use eDeposit's payment and escrow services. For more information on fees, visit https://www.edeposit.com/docs/help_fees.cfm?ab.
eDeposit says that by requiring BidDeposit on auctions, sellers are protecting themselves against bidders who can't afford to pay and discourages fraudulent buyers. The company says BidDeposit also helps buyers, since only qualified buyers are bidding against them.
BidDeposit is available on Bid4Assets.com and through eDeal.com and its network of 200 auction sites. The company is working with eBay and uBid and hopes to be available on those sites in the future. The service is best used on items with an expected selling price of at least $500, according to eDeposit.
The U.S. Marshals Service uses BidDeposit on the auctions they place on the Bid4Assets.com auction site. The service auctions high-end items seized in the course of law-enforcement activities. They have sold Rolls Royce, Maserati and Ferrari automobiles. Len Briskman, Acting Deputy Chief for Business Management, Asset Forfeiture, for the U.S. Marshals Service, says using BidDeposit "eliminates the tire-kickers." To the best of his knowledge, there have been no cases of deadbeat bidders on auctions using BidDeposit.
David Cutler, a spokesperson for eDeposit, recommends BidDeposit only on high-priced items because of the fee structure. He said his company is exploring ways to reduce the costs to make it more accessible for lower-end items. And just before press time, Cutler said eDeposit is lowering most of the fees next week.
For more information, visit http://www.edeposit.com?ab.
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