AW Daily - Tips & Tactics - After the Auction: Addressing Bounced Checks

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Here's the scenario: You just got back from the post office, having shipped that prize box of Pokémon trading cards to your auction's high bidder. You're mulling over the witty feedback you intend to give your buyer, when--surprise--you get a call from Don down at the bank. It appears that once-beloved buyer has sent you a check that bounced halfway to Japan. Now, more than a week after the sale, you're out $200. Follow these tips to learn how you can fight back.

Second Chances
Understand that it might have been an honest accounting error on the part of the buyer. If your bank has not done so already, ask to have the check resubmitted to the buyer's bank on the assumption that funds may now be available. With any luck, the check will clear and you'll get paid. Also, send an email to the buyer, requesting payment for the bounced check fees that were passed along to you by your bank (this amount varies, depending on the bank and the amount of the check).

Certified Payment
If your bank already unsuccessfully attempted to process the check three times, send an email to the buyer and request payment for the original item and bounced check fees. This time request that the buyer make payment with a cashier's check or money order, and set a deadline for payment. Also, send a copy of the bounced check to the buyer by certified mail so that you have proof that he or she received it.

Stand in Protest
It is also possible to "protest" a check. If the buyer's bank allows this, the check will be held at the buyer's bank until sufficient funds are available to clear it. After protesting the check, have your lawyer send the buyer a letter, which outlines your action and requests payment of any bank fees.

Scare Tactics
If the buyer is still mute, send him or her a letter by certified mail that says you intend to file a mail fraud complaint with the U.S. Postal Inspectors Service if he or she does not pay by a set date. In addition, tell the buyer you are going to file a complaint with his or her local police department, as well as hire a collection agency.

Long Arm of the Law
If this doesn't get the lax buyer's attention, follow through on your promises. Your local police and district attorney will participate in the buyer's prosecution under the "theft by check" statute. Also, if the item's value is significant enough, you might consider filing a civil lawsuit against the buyer at your local courthouse. And make sure you include a punitive damages award as part of the suit.

Complain
If you'd like to get the word out, file complaints with the Federal Trade Commission, The National Consumer Complaint Center for Internet Fraud, False Advertising, and Breached Warranties, and the National Fraud Information Center. These organizations actively participate in the investigation and prosecution of debtors.

Right to a Refund
Next, make sure you request a refund of your final value fees from the auction site. You not only get back the commission you paid, but you also put the fraudulent buyer on the site's radar. Sites take note of buyers who do not finish sales because it forces them to refund the money they made on the sale. Sites will even ban repeat offenders.

In the Future
To avoid this situation again, consider amending your sales policy. Indicate that you will not ship items until a buyer's check clears. If this is too severe, indicate that you will deliver upon receipt of payment only to buyers with a feedback rating above a certain level. Those below it must pay by money order or cashier's check for immediate delivery. Another alternative: explain that you reserve the right to delay delivery if a buyer has excessive negative feedback.

Creating a Sales Policy
Canceling an Auction
Leaving Negative Feedback