EBay might not be your first stop for investments, but it could be: the online auction site sells everything from gold bars and raw nuggets to antiques and art. The trick is to know the difference between paying a reputable seller and a guy in Nigeria who will take your money and disappear.
The new eBay bullion centre is a handy way to buy gold coins, bars, Krugerrands and other investment items. Just make sure you don't get caught out.
EBay likes to say that only one transaction in 40,000 ends in a confirmed fraud case. With online auctions now selling investment items, too, scammers have even more incentives to find inventive ways to take your money.
In the past couple of weeks, for instance, a US businessman was sent to prison for 12 years; he'd fleeced hundreds of buyers after selling US$1.5 million (Dh5.49m) in goods he did not have. The month before, a British con man was given a four-year sentence for doing much the same. And not far from where I live, a man named Nico Smit is beginning his four-year stretch for fraudulently selling non-existent jewellery.
In most cases, the victims of these fraudsters were overwhelmingly new to online purchasing. Scams work best with inexperienced buyers. Many a tale of woe begins like, "I wanted the new iPad and I saw one on eBay so I joined up ..."
Right now, it's possible to buy a signed Irma Stern drawing on eBay for $100. Last year, Bonhams in London sold a Stern painting for £2.4m. The eBay seller of the Stern drawing does not actually claim it is authentic; instead, he shows a photograph of the signature, but does not actually say, "This is a Stern". A neat trick to cover himself from any liability once a customer inevitably discovers he has paid for a fake.
The best defence against online fraud is experience. So your first purchases should not be big-ticket items. Even if they are what you joined for in the first place. By the time you progress from a $1 purchase to something a lot pricier, you should be familiar with the seller-rating system, understand shipping charges and all the other quirks of online buying.
The more money you need to spend, the more digging you need to do. Approach a transaction like a forensic auditor. Check the sellers' ratings. A reputable online bullion dealer should not have less than 99 per cent positive ratings.
Give yourself time before making a decision. Do not leap into a bid because the item is near expiry. Rather lose it and wait for the next time something like it comes up. Snap decisions are a sure way to get burnt.
Because you are essentially handing money to a stranger, be sure that the deal is transacted in a way that you feel comfortable with. Never use a bank-to-bank transfer or Western Union. EBay will be very quick to refund PayPal transactions in response to a complaint, so you have some measure of protection should the deal go wrong.
Shipping is a source of endless grief for buyers and sellers. Most sellers will state their postage charges, but these are usually in-country; US rates apply to Stateside buyers. For purchases made from within the UAE, for instance, the process can get a lot trickier.
Not only will the cost vary greatly depending on whether your item is shipped surface mail or airmail from abroad, some sellers will only use couriers for international transactions. Make sure you understand the costs involved before bidding.
And if you are ordering from a country outside the UAE, exercise a little patience with the arrival time. A lot can happen to a package on its journey to your doorstep.
Customs officials, for instance, could easily hold back an item for inspection, causing delays.
This last point is especially applicable to the UAE; just because an item is legal in the US or UK, does not mean it is legal in the UAE. So resist the temptation to order goods that will invite official scrutiny.
Ultimately, it takes a dose of common sense when buying online. There are good deals and most traders are legitimate. Auction sites live by the sales their members make, so it's in their interest to put a stop to scammers as soon as they are detected.
Online buying is the cyberspace equivalent of trawling a flea market or souq, only without little old ladies who will haggle the coins out of your pocket.
Gavin du Venage is a business writer and entrepreneur based in South Africa
