ITEM LOST IN POST: WHAT TO DO?

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EBay depends on a reliable postal system to function effectively and on the whole most sellers are reliable and trustworthy.  Unfortunately there are always a few rotten apples in the barrel, so to speak, and it is best to know what to do in case you're unlucky enough to encounter one of these individuals.  Some sellers will blame the postal system for the occasional or even frequent disappearance of supposedly shipped goods.  There are ways to avoid this situation.

AVOIDING IT BEFORE IT HAPPENS:

The key to a happy online transaction is buyer feedback.  My personal approach, as a seller, is to take the delivery of the item as MY responsibility.  I cannot control the postal system, but I do choose to be accountable for the item sent through that system.  As such, if an item is "lost in the post", I will fully refund the buyer or post a replacement item if I have another available, at their discretion.  As a result of this I have a very good feedback score (100%!) and this is not a matter of chance.  I HAVE lost some items in the post; in my 6+ years of selling on eBay I have had 3 items not reach their destination.

The truth is that the postal system in Australia (or any other country for that matter) is EXTREMELY reliable.  If a seller is claiming items lost in the post with any frequency at all, you need to consider the possibility of a scam.  As always, buyer feedback is the key to determining whether a seller is on the level or not.

Paying by PAYPAL gives you the best chance of avoiding a scam on this front.  PAYPAL and eBay are owned by the same people and as such PAYPAL offers some degree of buyer protection against scams on eBay.  It's not perfect, there's no guarantee you'll get your money back, but paying with PAYPAL at least identifies the payment with the item in question.

IT'S ALREADY HAPPENED; WHAT DO I DO?

If you've paid by PAYPAL, contact their claims department.  If you've paid by direct deposit, try to cancel the payment or contact your bank directly.  It's a hassle for sure.  Either way, make SURE you leave appropriate feedback so other potential victims are spared the hassle you've had to endure.
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