How fraudsters are endangering consumer-generated listings.
It seems lately everyone's keen to get into the online classifieds space. Microsoft has released details about its plans (though not an actual product) for something code-named Fremont. Google has launched its "Base," which allows people to upload a wide variety of information -- including classifieds listings. Meanwhile, companies like Indeed, Oodle, and Simply Hired work to build their businesses by aggregating classifieds. These new entrants pose a threat to all current players, including newspapers and craigslist.
In some ways, it makes sense that classifieds are hot in a Web 2.0 world. They're the ultimate in useful consumer-generated media (CGM). But hidden among classifieds' possibilities are perils.
Consider my brother's case. He's a pretty Web-savvy guy, even if he is an Aggie (I'm a Longhorn and pretty proud to be one, especially this week). During recent months, he went online to sell one car and buy another.
He listed the vehicle, an orange Jeep, on cars.com. He then received an inquiry from what seemed to be a serious potential buyer. From his Zip Code, the potential buyer appeared to be in California. The fellow told my brother he was wary of buying online because he'd been burned in the past and sent along a list of detailed questions about the car's condition. One of these queries was whether the price was negotiable.
My brother thoughtfully considered whether he should drop the price and dutifully answered each question. He decided to lower his asking price and hit send on his email client.
The first red flag went up when the guy agreed to pay the original amount, not my brother's lowered asking price.
"What? If I offered to lower the price, why would he offer to pay the full price? That was the first red flag. That's weird," my brother told me.
What followed were a series of communications in which the purported buyer proposed to have someone else send a money order for a higher amount to my brother (the "refund" for the earlier deal in which the guy had been "burned"). My brother was then supposed to send the balance to this buyer -- his "change" -- via Western Union. It was a concocted plot worthy of a Nigerian scammer.
Then one evening, my brother called a number the fellow had provided -- which appeared to be in the Pacific Time zone -- and woke someone up from what seemed to be a deep sleep. You probably wouldn't be surprised to learn the guy didn't immediately seem to know what my brother was talking about when he mentioned the Jeep. He got it together just long enough to say he was still interested in buying. Then the connection went dead.
Similar hilarity -- with comparable time-wasting consequences -- ensued when my brother sought to buy a vehicle online. Listings with enticingly low prices turned out to be fakes. Apparently, fraudsters recycle previously placed ads (complete with VIN numbers and pictures) to try to entice buyers into using fraudulent escrow services.
"You think, 'I don't want to waste my time sifting through this,'" my brother said. "And they're [classifieds listing services] making money off it."
Fraud is nothing new, and folks like these have probably been plying their trade on sites like eBay since the dawn of the Internet. But the proliferation of classifieds online, especially from free classifieds providers that presumably don't have the money or infrastructure to aggressively police listings, will only usher in an era of increasingly more such scams.
The way my brother describes it, practically every other ad (though not those placed by dealerships, natch) was fake, and he developed a good eye for them. He even phoned one of the classified providers and went through ads with someone. The conversation went something like, "See this ad? It's a fake. This other one? Fake, too." The woman he spoke with seemed to be surprised, he told me. No wonder. If you're making money from people placing these ads, wouldn't it be tempting to turn a blind eye?
Only in the short term, of course. Because if experiences like my brother's are as common as they seem to be, people will soon stay away from online classifieds in droves. Free services that hope to make money from highlighted listings are doomed, too. First of all, many highlighted listings, in my brother's experience, are placed by scammers.
"They [scammers] would do premium listings with really good pictures. You were really kind of pumped about it," he said. But then something would raise a red flag, and he'd realize he was wasting his time.
It only takes one or two near misses, either on highlighted or normal listings, to turn a person off. Why participate in a marketplace where you always have to be watching your back?
It's a tough situation, because classifieds players and would-be classifieds players obviously aren't responsible for users' bad behavior. But those bad guys are poisoning the well, in much the same way spammers did to email marketing.
Here are a few ideas for classifieds players to address the issue:
Will fraudsters kill the hot online classifieds business? If publishers and aggregators don't take the problem seriously, they just might.
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Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.
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