Is this ethical?

dac076 · July 11, 2008 10:42AM

I was approached by a potential buyer on Ebay with an offer, and while reviewing his feed back, I noticed that he had left the following negative feedback for a seller he had bought an item from:

"Charged Insurance,did not insure my shipment,"THE SELF INSURE SCAM"!"
The seller responded that this buyer received the item, but if it had been lost, he would have refunded the buyer's money.

So is it ethical to charge a buyer for insurance, then not buy it from USPS, UPS, etc? Obviously, this buyer had a problem with it.

fc · July 11, 2008 10:45AM

<< I was approached by a potential buyer on Ebay with an offer, and while reviewing his feed back, I noticed that he had left the following negative feedback for a seller he had bought an item from:

"Charged Insurance,did not insure my shipment,"THE SELF INSURE SCAM"!"
The seller responded that this buyer received the item, but if it had been lost, he would have refunded the buyer's money.

So is it ethical to charge a buyer for insurance, then not buy it from USPS, UPS, etc? Obviously, this buyer had a problem with it. >>

hard to say. the item would have to get lost and see how the seller
handles it....

each individual is different. some are ethical and some are not.
the seller simply should have said they self insure and that would be that.

notwilight · July 11, 2008 10:45AM

Clearly it is ethical. The insurance is provided. Technically it is not legal to call it insurance if you are not a licensed insurer. but the real question is: How did the buyer know that the seller didn't have a contract with a 3rd party insurer such as Hugh Wood as many of us ebay sellers do?

--jerry

dac076 · July 11, 2008 10:48AM

<< Clearly it is ethical. The insurance is provided. Technically it is not legal to call it insurance if you are not a licensed insurer. but the real question is: How did the buyer know that the seller didn't have a contract with a 3rd party insurer such as Hugh Wood as many of us ebay sellers do?

--jerry >>

Good question. Maybe he looked for "insured" on the shipping label or stamped on the envelope and it wasn't there, and so he figured the seller just pocketed the insurance charge.

MikeInFL · July 11, 2008 10:48AM

I do not believe it is ethical to offer "insurance" then insure them yourself.

However, insurance provided by a third party (like Hugh Wood) wouldn't apply to the above.

In any case, I believe a seller should be transparent and specify which insurance they will be using to get past any type of issue like the above....Mike

doh · July 11, 2008 10:50AM

<< So is it ethical to charge a buyer for insurance, then not buy it from USPS, UPS, etc? >>

In my opinion is it not ethical. Nor is it very smart. Trying to make a few bucks with the possibility of shelling out hundreds or thousands plus all the headaches that come along with it...yikes.

Edited to add: It would be fine if the seller did have a 3rd party insurer. If that's the case the seller needs to make that point LOUD AND CLEAR in his packaging or invoices or somewhere obvious where buyers can see it.

GoldenEyeNumismatics · July 11, 2008 10:51AM

Ethical? No.

Legal? Sort-of. It depends if it had been advertised whether or not the insurance would have been USPS insurance or self-insurance.

Russ · July 11, 2008 10:54AM

The buyer is a dick.

Russ, NCNE

lope208 · July 11, 2008 10:55AM

I've never heard of "self-insurance" when shipping on Ebay.
How does it work?

charley · July 11, 2008 10:57AM

Self-insurance of U.S.P.S. delivery- is this legal? Is there not a regulatory requirement of some sort-a legal filing with an appropriate Federal/State agency? Respectfully, John Curlis

mrpotatoheadd · July 11, 2008 10:58AM

<< "Charged Insurance,did not insure my shipment,"THE SELF INSURE SCAM"!" >>

Just wanted to point out it's only a "SELF INSURE SCAM" if the seller charges for self insurance and then refuses to cover a loss. If the seller pays off on a claim, he clearly isn't scamming anybody.

JohnMaben · July 11, 2008 10:59AM

It is entirely ethical unless there is intent to cheat the customer in the event of a loss. We self insure all packages under $700 in value, and have paid out in the very few cases where items were lost. If a buyer does not get the item we send them an affidavit to sign and return stating that they did not get it and that if they do, they will return it, then we pay them. Never had a problem with this.

If anything, it is wrong for a buyer to assume the seller would not honor a claim for a lost item that was self insured unless he had reason based on past experience with that seller or knew another buyer that was cheated by that seller.

Edited to add:

I should say however that we say insurance is included in the shipping price, and disclose that we reserve the right to self insure.

John

jobiwan115 · July 11, 2008 11:01AM

<< The buyer is a dick.

Russ, NCNE >>

lol you go, Russ! Straight and to the point.

charley · July 11, 2008 11:04AM

JohnMaben, no legal requirement for this? Respectfully, John Curlis

mrpotatoheadd · July 11, 2008 11:05AM

<< Self-insurance of U.S.P.S. delivery- is this legal? >>

If you call it "self insurance", probably not. I have read elsewhere that there is nothing illegal about offering (and charging a fee for) "guaranteed delivery". Disclaimer- I am not a lawyer, however, so take from this what you will.

JohnMaben · July 11, 2008 11:10AM

The decision to self insure is that of the seller. As long as you are not selling USPS or other branded insurance and then not providing it, there is no wrong doing that I am aware of, and this practice is common in mail order businesses of all types...

charley · July 11, 2008 11:13AM

Thank You. Respectfully, John Curlis

ProofCollection · July 11, 2008 11:20AM

Who says the insurance company has to be a third party?

If you pay for insurance, the seller is on the hook to provide a refund for lost or damaged items - regardless of who provides the funds.

I self-insure all small transactions as the claim process simply isn't worth the hassle for small amounts. That and the fact that I have yet to have a shipment get lost.

mrpotatoheadd · July 11, 2008 11:20AM

As long as I trusted the seller (and why would I be bidding on his stuff if I didn't), I'd prefer self insurance over the USPS variety. I've dealt with USPS insurance claims for losses as both a buyer and a seller, and I'm here to tell you that they're definitely not the "Gold Standard" when it comes to speed or customer service. I'm currently waiting on compensation for a lost registered package from February, BTW.

dac076 · July 11, 2008 11:48AM

<< The decision to self insure is that of the seller. As long as you are not selling USPS or other branded insurance and then not providing it, there is no wrong doing that I am aware of, and this practice is common in mail order businesses of all types... >>

That's true, but mail order businesses will typically quote and charge a flat S&H rate, and then self-insure. With Ebay, insurance (when explicitly mentioned) is often either "required" or "optional", and in either case the buyer is asked to pay an additional charge for it. It was probably this situation that led to this buyer feeling like he paid for something and then did not receive it. In reality, it was in place so he did receive it.

ProofRainbowRoosevelt · July 11, 2008 11:51AM

I don't think it is unethical for someone to self-insure an item. Unless one states they will insure through USPS or UPS, who give a sh*t?

Well if they charge extra for the insurance, I would think that would imply using USPS or UPS insurance. I would consider that unethical.

Frankcoins · July 11, 2008 11:52AM

According to the Federal Trade Commission, it is perfectly proper for
sellers to offer their own "insurance" and even charge a fee for it.

http://www.ftc.gov/bcp/conline/pubs/buspubs/mailorder.shtm

Q: What are our responsibilities if we charge to insure delivery?

A: Instead of directing customers to make claims against the common carriers who may be responsible for losing merchandise, most merchants reship for the sake of customer satisfaction. To pay for these reshipment policies, some merchants ask customers to buy "insurance" or provide it as an option. By offering insurance, the merchant implicitly represents that it will honor any claim of nondelivery by providing prompt reshipment or, if reshipment is impossible, a prompt refund. It would be improper to collect fees from customers for reshipment insurance and not respond promptly and appropriately to their bona fide claims of loss.

seatedcoins · July 11, 2008 11:54AM

<< The buyer is a dick.

Russ, NCNE >>

I agree. If he wanted to, he could of simply asked for a refund on the insurance charge. I forgot to include it once, luckily I remembered it when I got home and refunded it to him.

mrpotatoheadd · July 11, 2008 11:57AM

<< If he wanted to, he could of simply asked for a refund on the insurance charge. >>

Can you ask the USPS for a refund of the insurance charge for a delivered package? If not, then why should an eBay seller be expected to make a refund?

JohnMaben · July 11, 2008 11:58AM

There is an insurance drop down box in each listing when you are preparing the listing and one of the options says "Included in S+H".
This is the option we always select.

doh · July 11, 2008 12:01PM

<< Can you ask the USPS for a refund of the insurance charge for a delivered package? If not, then why should an eBay seller be expected to make a refund >>

Because the USPS actually insured it. As far as the buyer knows there was no insurance on the package. Therefore, in his mind, he paid for something that he never got...a refund would be due in that situation.

JohnMaben · July 11, 2008 12:07PM

<< 

<< Can you ask the USPS for a refund of the insurance charge for a delivered package? If not, then why should an eBay seller be expected to make a refund >>

Because the USPS actually insured it. As far as the buyer knows there was no insurance on the package. Therefore, in his mind, he paid for something that he never got...a refund would be due in that situation. >>

Again, that gets back to if the seller indicated that "USPS insurance" would be provided, or simply indicated that insurance (whithout specificity) was included.

ProofRainbowRoosevelt · July 11, 2008 12:12PM

<< 

<< 

<< Can you ask the USPS for a refund of the insurance charge for a delivered package? If not, then why should an eBay seller be expected to make a refund >>

Because the USPS actually insured it. As far as the buyer knows there was no insurance on the package. Therefore, in his mind, he paid for something that he never got...a refund would be due in that situation. >>

Again, that gets back to if the seller indicated that "USPS insurance" would be provided, or simply indicated that insurance (whithout specificity) was included. >>

Lets say you charge a flat fee of 2.99 insurance included. However you don't pay USPS to insure the item, but you the seller would refund the buyer if the package was lost or damaged. Is that unethical? IMO, I would say no because I never stated I would insure through USPS, but had full intention of refunding the buyer if it gets lost. I do this all the time, but I never thought it was unethical.

mrpotatoheadd · July 11, 2008 12:19PM

<< As far as the buyer knows there was no insurance on the package. Therefore, in his mind, he paid for something that he never got...a refund would be due in that situation. >>

I insure through UPIC and there is nothing on the package to indicate the fact. Are you saying that I should refund my buyers when their packages arrive, should they complain that insurance was not purchased?

BlindedByEgo · July 11, 2008 12:23PM

Self-insurance is perfectly ethical. The buyer is another eBay jerk.

MrEureka · July 11, 2008 12:24PM

Ironically, I'll bet the USPS self-insures.

pheh · July 11, 2008 12:29PM

I self insure every package - I never charge for it. In fact - if a buyer specifically requests insurance, I pretty much have to go out of my way to break my standard shipping protocol and NOT self-insure, and go through the added steps of insuring through the USPS - but I'll still do it, and never complain to the buyer.

mrpotatoheadd · July 11, 2008 12:31PM

<< Because the USPS actually insured it. >>

Suppose you bought something from a seller who insured through the USPS, the item was lost and the USPS refused (for whatever reason) to pay off on the claim. Would you take the loss, or should the seller reimburse you?

coinpictures · July 11, 2008 12:35PM

I recall some heavy discussion about this over on the eBay boards. If I remember correctly, there was contention that as long as the seller had a contract with a 3rd-party insurer (DSI, Upic, etc.) all was well, but if the seller was "self-insuring" (theoretically taking the funds charged for insurance and putting them aside for future claims), depending on which state the seller resided in, they could be in hot water for selling insurance without a license.

I have no clue as to the validity of that contention; just reporting what I remember...

DaveAI · July 11, 2008 12:53PM

I would give the seller the benefit of the doubt. I know many sellers that have private insurance policies that cover mailing coins so just b/c the package doesn't have USPS insurace doesn't that the coin is not insured.
Dave

www.artfulinvestments.com

Bochiman · July 11, 2008 1:02PM

I believe that, if you are talking about ebay rules, then if you offer insurance AND charge for it, it needs to be that of a 3rd party (USPS, etc).
Under ebay's rules, you cannot charge for it and "self-insure".

If you include it in the listing as 1 fee for S&H, then I believe you are ok. You cannot charge $x.xx for shipping + $x.xx for insurance separately.

Outside of ebay, as long as the buyer is willing to pay for it and the seller is willing to stand up if the package doesn't arrive, and replace or refund (buyer's choice) 100%, then I don't think it should be an issue.

notwilight · July 11, 2008 1:20PM

<< I believe that, if you are talking about ebay rules, then if you offer insurance AND charge for it, it needs to be that of a 3rd party (USPS, etc). Under ebay's rules, you cannot charge for it and "self-insure". If you include it in the listing as 1 fee for S&H, then I believe you are ok. >>

I think it was the ebay rules rather the law I was thinking of in my previous post.

Doh, as for the wisdom of self insurance: think is through. If the losses weren't less than the cost of insurance, then insurance companies would go broke. USPS insurance is especially pricey, thus the need for 3rd party insurance companies who charge about half what USPS charges.

Next, if a seller further reduces his losses by using preprinted, barcoded labels, good packaging, delivery confirmation, and other smart shipping techniques. (oh, yeah, don't mark your package "insured" as some have pointed out that means "steal me") then I guarantee that i could self insure for 25% of what the USPS charges and come out ahead (based on past performance).

Next, I DO self insure every package that the buyer doesn't buy insurance on. If you buy something from me and it doesn't get to you, I see it as my job to send you another one or refund your money. So in effect, I'm self insuring there.

Lastly. Did you think of the possibility that the Russ-proclaimed dick may be an insurance scammer disappointed that he didn't get to try to scam. He was hoping the postman would deliver it and forget to have him sign and he could file a claim (probably the cause of MOST usps insurance claims).

As for those of you who voted unethical, I don't understand at all. Unless someone adds the phrase "and he doesn't pay in case of a loss" I can't see any ethical issue. Those who said he "pockets" the insurance don't seem to think he's providing anything. He's providing insurance. I guess you just don't trust anyone who would lower himself to become an ebay seller.

--jerry

Connecticoin · July 11, 2008 1:32PM

<< Self-insurance is perfectly ethical. The buyer is another eBay jerk. >>

Correct. The buyer is a dick.

BAJJERFAN · July 11, 2008 10:22PM

<< 

<< Because the USPS actually insured it. >>

Suppose you bought something from a seller who insured through the USPS, the item was lost and the USPS refused (for whatever reason) to pay off on the claim. Would you take the loss, or should the seller reimburse you? >>

The contract was between you and the seller so the fact that the USPS refuses to honor a claim filed by the seller is immateial because as a seller you still owe the buyer a replacement or a refund.

Connecticoin · July 11, 2008 10:59PM

<< Ironically, I'll bet the USPS self-insures. >>

As they should. Most large organizations self insure huge pools of risk.

IrishMike · July 11, 2008 11:05PM

My thoughts are this, if you are selling on ebay and self-insuring then you should disclose the fact. The general public is going to assume that an outside agency is insuring it if you don't so why aggrevate them by not disclosing it and having them receive a package that isn't insured. By the definition of insurance which the public generally accepts you run the risk of pissing someone off. I've seen it happen in the past before title insurance was used that home buyers had to sue the attorney who provided the opinion as to marketability which was a common practice. All is well and good if the attorney was alive and still in practice and had E&O insurance. If he didn't or wasn't alive then the home buyer was screwed if the title turned out to be defective. Odds are that the insurance company i.e. USPS in going to around a lot longer than the seller.

If you self-insure and don't disclose it then its at best misleading and depending on how you define ethical, it could be unethical. Over the years on this board the most common definition of ethical has been if I do it then its ethical, but if I don't and others do it then its unethical.

I'd sure hate to buy an expensive coin and have the seller cross over after they sent the coin and I never receive it. Well in most cases I'd hate it.

(for the anal retentive this is a joke)

notwilight · July 11, 2008 11:05PM

So I think we can assume self insurance is legal, probably ethical, and a common practice by many ebay sellers but many formum memeber buyers are uncomfortable with it and if one self-insures they are risking negative feedback.

Those who aren't comfortable with self insurance, are you be more comfortable with John Maben self insuring than with a little guy like me?

--Jerry

Frankcoins · July 11, 2008 11:07PM

<< I recall some heavy discussion about this over on the eBay boards. If I remember correctly, there was contention that as long as the seller had a contract with a 3rd-party insurer (DSI, Upic, etc.) all was well, but if the seller was "self-insuring" (theoretically taking the funds charged for insurance and putting them aside for future claims), depending on which state the seller resided in, they could be in hot water for selling insurance without a license.

I have no clue as to the validity of that contention; just reporting what I remember... >>

That was argued by people who called their Allstate agent for advice. Of course, shipping insurance is not the same as
life, health or auto insurance regulated by the states and requiring a license.

We have insurance through PIPinsure but unless they see that Post Office "Insured" stamp, we still got accused
of not insuring the package

We finally found a solution to the complainers...

notwilight · July 11, 2008 11:08PM

<< I'd sure hate to buy an expensive coin and have the seller cross over after they sent the coin and I never receive it. Well in most cases I'd hate it.

(for the anal retentive this is a joke) >>

Insurance has nothing to do with increasing the chances the coin will show up. The "Insured" sticker is often referred to here as a "Steal Me" sign. The question is, who will reimburse you if your item is lost. Well, that's not it either. The seller will reimburse you. The question is, do you want to wait for the seller to make an insurance claim before reimbursing you. --jerry

IrishMike · July 11, 2008 11:23PM

I've never had to make a claim but doesn't the buyer have to file as they are the one's out. Why would you not list in your auction that you are self-insuring? To me that is the question that addresses the ethical issue not any waiting period. I've always believed that if you going to charge for something that you disclose exactly what it is that you are charging for. Ever sign a contract at a car dealer and see that they have added about 20 things that you have no clue about then ask the F&I guy what they are and you get nothing but a song and dance story? This is one reason why the public gets aggravated about non-disclosure. Its the reason why you have to give disclosure statements to customers whey they apply for a home loan. Hidden fees abound everywhere and as the public becomes more aware of this they get more inquisitive and get riled up easily when something as silly as self insurance isn't disclosed and they receive a package indicating no insurance when they paid for it.

Just disclose the fact and be done with it.

MrEureka · July 11, 2008 11:33PM

<< Ironically, I'll bet the USPS self-insures. >>

As they should. Most large organizations self insure huge pools of risk.

And small businesses shouldn't?

I'm with Russ.

goose3 · July 11, 2008 11:33PM

Simple, I'd bet that most of the sellers that claim to "self-insure" yet do not disclose such openly within their listings probably do not. It's a simple way to recoup your fees. If someone calls them on it, they simply claim I self insure.

If you are going to use that instead of USPS then make that very clear within the ebay listing. If I pay for an item and add for insurance I expect to see USPS insurance on that item unless I am told otherwise beforehand or the auction clearly states so. The "Oh I self insure" BS after the package arrives for 1.47 doesn't fly with me.

Also, isn't "self-insurance" much cheaper than actual USPS insurance?...........yet I have seen sellers charge the same rates.

Ebay has become nothing more than people trying to squeeze every last cent out of a buyer any way possible and then trying to justify it when called on it. Like Stman has always said, keep your stuff at home, don't list it, and wait for the people to come knocking on your door requesting to buy it.

Walmann · July 12, 2008 12:12AM

It may be as Russ said that the buyer is a dick, but dicks are the ones that often stick it to you.

Using the term "Insurance" and then being the insurance provider, may at some point come back and cause the seller great grief.

First each and every state have laws regarding insurance, some of the issues that these laws deal with are ambiuity of terms, express warranty, representation and warranty and financial representation laws. By just merely stating that you providing insurance for additional cost and then being an insurer, the seller better be prepared for much grief if some "dick" decides to complain to some state regulatory body even if they are made whole again by the seller.

It may be better to drop the term insurance and simply state what you the seller are guaranteeing : delievery of the item sold, undamaged by shipment. Otherwise using the term insurance you may be putting yourself on the line for a number of unintended issues. Even that simple statement of being undamaged can cause possible headache and financial loss if you are dealing with an extreme "dick", but at least you will not have the concern that state regulatory bodies can easily be brought down upon you.

I've been in insurance for over twenty years and call vouch that when a loss, no matter how small is involved, some people have expectations that involve more than being made whole again. There are also people that are either unhappy themselves and love to spread their way of life to others or simply enjoy creating distress for others. Always best to give these people as little potential ammunition as possible.

lordmarcovan · July 12, 2008 12:17AM

Nothin' wrong with self-insurance, as long as it is clearly stated up front.

Charging USPS rates for it, though, and not mentioning clearly in advance that it is self-insurance, that's a bit sleazy.

The buyer overreacted a tad, I think, but had a right to be a little bit miffed.

19Lyds · July 12, 2008 12:25AM

As long as the seller can replace the item with a similar item of equal value, sure!

If I have two 2007 proof sets and sell one, charge insurance and the package gets lost, I always have the other one send out.

However, I now have no defense against the recipient if they lied about receiving the package and could very well end up having a two for one eBay sale.

BAJJERFAN · July 12, 2008 12:56AM

<< As long as the seller can replace the item with a similar item of equal value, sure!

If I have two 2007 proof sets and sell one, charge insurance and the package gets lost, I always have the other one send out.

However, I now have no defense against the recipient if they lied about receiving the package and could very well end up having a two for one eBay sale. >>

Then you need to have smoe sort of tracking to ensure that your buyer received it. For a USPS claim will the USPS accept DC as proof of delivery if a claim is made?

Is this ethical?

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