Ask Nick: It's Foolish to Pay Extra for Insurance

[Ina]

Nick says it's foolish for buyers who use a credit card to pay extra for insurance, what do you think? See Nick's column in today's AuctionBytes-Update.

http://www.auctionbytes.com/cab/abu/y203/m09/abu0103/s03

[cpflds]

I won't ship anything fragile unless the buyer pays for insurance...period.

I understand that the customer has recourse through his credit card company if the item is damaged, but I won't leave myself open to unexpected charge backs. The buyer pays insurance or I don't ship.

I'd rather handle a damaged shipment through regular channels, and I think most customers feel that way too.
_________________
Lenne
Copperfields Antiques -- www.copperfieldsantiques.com
The 1919 Weaving Company -- www.the1919weavingcompany.com

[Tradguy]

Cpflds -

I don't see a problem with that - you are simply making insurance part of the shipping/handling. For more expensive items I might also require a higher shipping rate that includes delivery confirmation.

I think wording is important - I've found that if I break out insurance or delivery confirmation as seperate costs, buyers often want to waive them. So for bigger items I just say that s/h is whatever, and that includes tracking, confirmation, and insurance.

I think Nick's point, however, is that as a buyer, you are not obligated to purchase insurance in order to assure safe delivery, assuming it's offered as "an option" or as I often see - as a "waiver of liability". When a seller states in their TOS that "we are not responsible for items lost or damaged in the mail" - the fact is, they are completely responsible by Ebay rules (and paypal, if used). Even if the package is damaged by the shipper, it's up to the seller - not the buyer - to resolve the problem. To make this even clearer, assume for a minute that the buyer purchased USPS insurance. The buyer has nothing to do with the contract - he is simply buying insurance for the SELLER, who is making a contract with the shipper. If the shipper fails to deliver or damages the package, it's the seller that must go to the shipper to be compensated - and it's the seller that recieves the compensation. The seller generally needs to make good with the buyer long before things are resolved with the shipper - either by a full refund or re-shipment of the goods.

When the buyer pays for goods from the seller, the seller is under contractual obligation to delivery those goods in a timely fashion and in the condition they were described as at the time of sale. The seller can charge upfront whatever costs are associated with safe delivery - but the actual safe delivery of the product is still the responsiblity of the seller.

This all boils down to this. The seller is always responsible for safe delivery - period - whether there is insurance or not, and regardless of who pays for the insurance. As a seller, if you want to require insurance and/or delivery confirmation as part of the sale, you can. But if you make insurance optional, you cannot waive your liability if the buyer chooses not to take it.

So Nick is basically right on the money - as a buyer you should never pay for optional shipping insurance. You're covered no matter what.

Rich

[texas_wholesale]

Nick states in his article that if a buyer uses their credit card through PayPal the seller has some obligation under "credit card law" to see that the product reaches the buyer. First off, I've never heard of the "credit card law." There is no act after doing a search on Westlaw entitled the "credit card law." This must have been something Nick dreamed up. Second, when a buyer pays PayPal, they are agreeing to the terms of conditions of the PayPal site. They are not purchasing a product, they are purchasing cash through PayPal which is forwarded to the seller. Once PayPal has completed their service of forwarding the money, the have lived up to all the agreed terms of the transaction and the card holder has no recourse against PayPal or the seller for failing to deliver the merchandise in good condition.

Nick goes on in his diatribe to accuse sellers who charge for insurance of being "money grubbers." This type of defamatory personal language shouldn't be allowed in the Auction Bytes newsletter. I didn't know that Auction Bytes was a forum for Nick to defame and belittle his competition on ebay. Perhaps I signed up for the wrong publication.

--JT

[aprilday]

Check with your shipping company. I use usps almost exclusively and they have told me that once the package leaves my hands it is not my responsibility for loss or damage. If the buyer purchases insurance it is my responsibility to send them the insurance receipt and let them submit a claim. If they do not purchase insurance (which is always an option in my auctions) then it is their loss. I always purchase insurance for items over $20.00 when I am buying or if they are fragile. However if a seller does not offer insurance then they are taking the responsibility of your package arriving safely upon themselves. This information came from my local usps office.

[felixlady]

this is one of my ebay pet peeves - the predominant philisophy that once seller ship they have no further responsibility.
No other similar sized busness makes this claim!
I always waive insurance for nonbreakable items. I do sometimes
purchase it for breakables because I have found that lots of people out there do not know how to pack breakables. I have had my fill of breakables thrown into a box, and then the seller insisted it was well-packed, when there was no way it could have made it to my house intact.
What about those sellers who REQUIRE insurance? Should
we boycott them? Then there are those who spend $1.30 of my money to insure a $5.00 item - what are they thinking?
I totally agree that the time spent to file a postal claim is not worth it. Their system is based in the pre-technology era - everything requires a trip to the post office. Their system is
very flawed. Personally I have found that the post office does not pay insurance claims unless they are persistently tracked. It took me over a year, on two separate occasions, to get them to pay for
the value of Express shipments sent abroad and lost!

[Tradguy]

JT:

I would guess that Nick was referring to the FTC's Fair Credit Billing Act which also covers credit card fraud and protects buyers from being billed for services or products not recieved.

There is also the FTC's "Mail or Telephone Order Merchandise Rule" - which everyone that sells online needs to be aware of - that's where the famous "30-day rule" comes from - you must ship within 30 days or you must get consent of the buyer to allow the shipping delay AND you must allow the buyer to cancel the transaction at no cost. So again, if the seller doesn't obtain some proof of delivery, they can get snagged by this rule as well if the buyer claims the items were not sent within 30 days.

Nick should of been more specific I guess

Both of these acts are in addition to Ebay or Paypal protections.

You might also check on that Paypal contract. According to Paypal's TOS, none of paypal's policies supercede normal credit card protection - although paypal does reserve the right to cancel or revoke a buyer's account if they do a charge-back. The wording of this section seems to indicate that they will work with the CC company to resolve claims.

From paypal's TOS:

"The Buyer Protection Policy does not replace or reduce any other consumer rights Users may have, including reversal rights that may be granted by a User's credit card issuer. PayPal is the merchant of record with respect to all credit card transactions made through the PayPal service to purchase goods or services. As such, we afford customers the rights and privileges expected of a credit card transaction. You acknowledge that PayPal does not control the outcome of any reversal decision initiated through a User's credit card issuer. "

Paypal goes on to say that they "encourage" users to use paypal's dispute resolution process - but probably as part of their agreement with the CC companies - they cannot stop you from using your CC directly for a chargeback.


April - that's interesting - my usps office says just the opposite. In fact, if you go to the USPS website, you'll see that they require the SENDER (Seller) to make the filing and provide proof of non-delivery by obtaining a letter from the addressee (Buyer). I don't even see any provisions where the buyer can make the claim - if they can, it's not mentioned anywhere. I have no doubt that your post office employee said what they said - but I think the issue goes beyond basic postal rules. USPS isn't the last word in whether a buyer has recourse if they get damaged goods - the buyer can still file with ebay, paypal, or their cc company - all USPS cares about is what their liability is

I still think, all in all, that Nick was on the money.

Rich

[areyoukidding]

Nick, Nick, Nick, You're very self assured on this topic. Unfortunately you are way off base!

Amazon, Dell, Apple, etc. typically ship with UPS or FEDEX and they charge a fixed shipping & "HANDLING" fee.

Oh, did I say that terrible, don't mention it on eBay, four letter word, "HANDLING" fee? Hmmmmmmmmmm?

When ordering from most companies outside of eBay and even some on eBay, a fixed shipping & "HANDLING" charge is set! What do you think that handling charge is for, Nick?

Try charging a handling fee on eBay and listen to the cacophony of nay sayers both in your email and in lost sales!

As far as the legalities go Nick, I can't say because I am not a lawyer nor can I afford to hold one on retainer for my personal use. The law is confused at best.

What I do know is that you're in a position to give your opinion and it appears to me that you have an axe to grind on this issue.

What you choose to do and say is fine. We live in a free country.

What I suggest to you is actually having all of the facts before you speak.

Nick, If the terms of service or agreement say "not responsible for lost or damaged goods with out insurance!" It stands because you have entered into a contract by bidding! You have agreed to insure or not insure and to accept the consequences of your choice and action!

Perhaps the contract law attorney you keep on retainer can help you with this one.

I and others think that it is important to realize that eBay does not work like the rest of the world.

Instead of isolated CEO'S who live in ivory, yes men towers, we have real people who care about their customers and try to do the best they can because in many cases, their livelihood depends on it, either in whole or in part.

In particular, the buyer thinks he is being ripped off at every turn if shipping seems to be high or an extra charge is fixed due to extra work or care in packaging, so most sellers charge actual shipping and everything is out in the open and not hidden by a handling fee.

Some shippers are even willing; in the real world, to print shipping labels that do not have the price on them so that a fixed charge for shipping can be inflated. The theory behind this is that it will not raise the customers ire.

Hmmmmmmmm?

Ok Nick, I wish you good luck and prosperity 'cause you'll need it.

I, like others have questioned your editorial content in the past, especially when advancing and embracing ideas that are clearly unethical or at the very least in bad taste.

I, as other writers here, also question why auction bytes insists on retaining a questionable scribe!

Best wishes, David
_________________
feel free to respond to my comments!

[eeb]

[quote="Ina"]Nick says it's foolish for buyers who use a credit card to pay extra for insurance, what do you think? See Nick's column in today's AuctionBytes-Update.


Sorry, you may be correct legally, but, from a practical viewpoint phooey! I ship everything USPS insured. Over a five year period I had two instances where a buyer said the package was never received and two instances where it was alledged to have been received damaged. In both cases I told the buyer to file a report with the Post Office and that I would then submit any verification (receipt etc.) that they needed. In all four cases I NEVER heard from them again. What does that tell you? It tells me that FRAUD is not just a problem with sellers but with buyers as well. SO! No insurance equals NO SALE.

[bluehole]

I usually agree with Nick, but in this case, I think he is suffering from a severe case of Powerselleropia. For those of us selling less than 30 items a week, a different attitude is necessary for success. My biggest problem on eBay is protecting MYSELF as a seller. My buyers have plenty of protection, but I have only what I provide for myself.

First, let me say that I have 100% positive feedback, which reflects my attitude toward my customers. However, there are a few rotten apples out there, and I have my own way to deal with them.

Other postings have some fallacies. One is that for USPS packages, the seller must file the claim. Not true. Either the buyer or the seller can file a claim. The other is that the seller is responsible for delivery...not true. If you ship by UPS, for example, it is the responsibility of the buyer to file a claim and keep the packaging, etc.

I "self-insure" because of cost and value, so if a buyer wants to add a belt to the suspenders, then they will pay for it. I have refunded, without question for a few of my shipments, simply because it was easy for me to do, and the customers are very happy. But, I have also had a few that I believe said they didn't receive the package and put a chargeback through PayPal. PayPal covers their butt by saying that you must have proof of delivery, which means several hundred extra dollars a year to buy. Some buyers will get free merchandise.

So, for us small operators, it is common sense. I insure and/or buy insurance/confirmation based on what I don't want to lose. The buyer doesn't know this. For those that want to pay for insurance on a $5 item, then that is their problem, not my gouging, and I offer them that security blanket, but it costs me more recordkeeping and labor. Before I started offering optional insurance, some would send the money anyway.

Caveat Emptor?

[eeb]

[quote="bluehole"]

Other postings have some fallacies. One is that for USPS packages, the seller must file the claim. Not true. Either the buyer or the seller can file a claim.

Absolutely correct. Just think about it, if the buyer receieves a damaged package, WELL OFF COURSE, he/she has to show it to the postal authorities and make a claim. How could the seller make the claim???

[jka]

Nick,
No matter what you charge for shipping someone gripes! Yes, I charge extra for insurance. I used to include insurance in the shipping price. I had lots of people gripe about that. Now I charge less for shipping and have the disclaimer at the end of the description that after I mail the package (I get delivery confirmation) and they don't purchase insurance, it's their problem. Most people don't buy insurance. I have fewer complaints about shipping costs now. I think most of the complainers don't ever ship packages themselves or they would know what shipping costs are. Then you have the whiners who think we're all becoming millionaires off shipping or ebay! (Please!!)

After selling on ebay for a while, you can start to tell who is a constant complainer or the ones who are new and just don't know the routine. When I get a complainer, I use block bidders and problem solved.

I have had packages lost in the mail. Fortunatly those persons did purchase insurance. The post office processed my claims on the spot.

I, too, have had people claim they never recieved packages. When you tell them to go to the post office and they will have to sign papers, you find out quickly who's telling the truth.

I have bought and sold quite a bit on ebay. I have only run across one seller who never shipped items I bought from him. I am using my credit card dispute resolution on him. I have had alot of non paying bidders.

[mdspawpaw]

Hi Nick-
Love your 'straight-shootin' column!
My problem occurred last year...a buyer purchased a purse from me and paid 65.00 plus 6.60 shipping.
When she got the purse she said it wasn't what she wanted. I tried negotiating with this woman, about buyers remorse etc, etc. she wanted me to send her another color...(I tried to tell her it was the ONLY purse I had to offer.) To make a long story short, she filed a complaint with safe harbor... she finally agreed to accept 1/2 a refund, she then turned around and filed a complaint with her credit card company, then in turn issued a chargeback against my Pay Pal account. (Claiming never to have received the product)
I provided Pay Pal with delivery confirmations, letters from her agreeing to the refund and stating she had received the purse etc. etc. I was still charged a $10.00 chargeback fee and the 65.00 eas deducted from my account. I tried to get some satisfaction from Pay Pal and was told they can't argue with the Credit Card company. So this purse ended up costing me a small fortune...the woman not only got the purse but she got $100 too.
So PROVING a buyer received an item and going through the proper channels doesn't always work in your favor.
Janet
PS- On top of that she left ME a negative feedback

[eeb]

[quote="mdspawpaw"]Hi Nick-
product)
I tried to get some satisfaction from Pay Pal and was told they can't argue with the Credit Card company.

SO......What you do is complain directly to YOUR credit card company.

[nancyrr]

Greetings!

As a customer buying things through various auctions
such as ebay, I try to bypass most of the insurance
problem by asking the auction seller to ship me the
item via UPS.

This way, I AUTOMATICALLY have $100 (Maximum)
worth of insurance. The item is AUTOMATICALLY
TRACKABLE via the UPS website (www.ups.com),
so I don't have to wonder WHERE the item is and
I can keep an eye on it daily. This allows me to
be certain that I am HOME when the tracking shows
that it has arrived in my city. I like to be home
when UPS delivers anything and this allows me
to do that.

Having the feature of TRACKING your packages
also allows you to see if a problem has developed.
For example, the package makes it to your city
and then doesn't get delivered! You can then call
up UPS and perhaps figure out what is wrong sooner
and finally get it shipped to you sooner.

Tracking also helps to keep auction sellers on their
toes because I ALWAYS ask for the UPS Tracking
Number. When I do this, it is more likely that the
product is shipped out on a timely basis. If
you can't track the order, then HOW do you know
if the seller has even shipped it?

And I suppose it also gives the seller more PROOF that
the product was actually delivered so there are
few if any questions if the buyer actually received
the package. If a customer CLAIMS that they didn't
receive a product, yet UPS states they DID deliver it,
except for packages STOLEN at residences, it seems
that the customer would look pretty much like a liar!
I suppose the best way is to request that UPS get
the SIGNATURE of the customer. I think this would
be an excellent idea for more valuable packages!

I suppose you could also consider FedEX. Their website
states 'FedEx liability is limited to $100'. So I assume that
this means they insure each shipment up to $100 without
any extra fee. I use FedEX whenever I want to guarantee
that a package arrives on time (Next Day or 2-Day). I
have found them to be more reliable in terms of Next Day
or 2-Day shipping than UPS.

Anyway, just thought I'd mention this as a lot of people
don't consider how convenient it is to have up to $100 worth
of insurance built into the regular shipping charge by using UPS or
FedEX. And if your merchandise is valued at more than
$100, their additional insurance rates seem fair. And to
get FREE TRACKING is really nice. The last time that I
tracked a USPS package, I found it to be useless. I never
did see any progress of the package. Only after it arrived
did they show any tracking INFO. Maybe it was a glitch?
I hope so!

Obviously, if you bought something of very low value,
you can always ship it via the cheaper USPS route. But
each person has to decide what is of value to them and
whether they want to ship it via USPS for a cheaper amount
or via UPS which costs more but has insurance and
tracking thrown in. Besides, is USPS really much cheaper if
you add in insurance, verification of delivery, & (poor) tracking?

Almost everything I buy through ebay, I ask for it to be
shipped UPS. It is less of a headache than USPS and
more likely to arrive in one piece, as long as it is packaged
well. HOW a product is packaged is really important
and I wish more ebay sellers realized this. Some do and
others really shouldn't be selling via auctions because their
packaging 'techniques' prove they don't give a hoot about
the customer. If a product is not packaged properly, then
I won't be ordering from that auction seller again!

Lastly, regarding how much an auction seller charges for

* Shipping,
* Handling, and
* Insurance

I, as a customer, pay EXTREME attention to these charges.
If they seem unfair, as in GOUGING, I IMMEDIATELY GO
TO THE NEXT AUCTION ITEM. If someone else pays the
unfair S&H&I price, well it just proves that P. T. Barnum was right.
But, I ONLY deal with sellers that charge FAIR prices for
these things. I realize that 'handling' costs the seller some
money. If it costs the seller money for the box and plastic
bubbles, etc., well, that is what protects what I bought and
I expect to pay a REASONABLE amount of money for it.
I think it is just plain common sense.

Nancy