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Before the Auction: Creating a Sales Policy

If you have your sights set on becoming a high-volume seller and you want to avoid the potential problems that can arise between you and your future customers, it's critical to sit down and formulate your own sales policy for your auction business. From payment to shipment policies, there are a number of important decisions to make. Never fear, though, we've outlined the most important questions for you.

Methodology
You know you want to get paid for the items you auction; now it's time to figure how you want to get paid. There are several standard payment options your potential customers will expect. The payment methods include personal check, cashier's check, money order, and credit card. Do not offer payment by cash--you will dissuade bidders from participating in your auction. Each payment type has its pluses and minuses.

Weighing Your Options
Personal checks are by far the simplest method for buyers, saving them the trouble and expense of going to the bank or post office to pay for a cashier's check or money order, respectively. On the other hand, these guaranteed payment methods do protect you from bad checks. They also let you ship upon receipt of payment--no waiting for the buyer's check to clear at your bank--and ship C.O.D. (collect on delivery), in which the mail carrier picks up the payment at the point of delivery. Also of note, cashier's checks and money orders provide the buyer with some recourse in the event of a bad transaction. Specifically, cashier's checks sometimes have a stop payment option, while money orders provide the enforcement power of the post office. If you, as the seller, do not complete the transaction, you can be investigated for mail fraud.

Finally, accepting payment by credit card is an excellent option for both you and your buyers. It allows buyers to pay immediately and also protects you against fraud at the point of sale. In essence, your credit card provider will decline the buyer's credit card if his or her account is invalid or overdue.

The Delay
If you accept personal checks as one of your payment options, you should articulate in your sales policy (ideally, a short paragraph that's included in your auction descriptions and end-of-auction notices) if you will not ship merchandise until your bank clears the buyer's check. Be aware that this could discourage some bidders who would rather not wait for items they have won. With this in mind, you might state in your policy that you only require a check to clear before shipment on items above a set dollar amount (the thinking being that you will ship upon receipt of a check if the item is of low value). If you sell low-cost items exclusively, this strategy probably isn't right for you.

Middlemen
Some buyers will also want to use escrow services to complete transactions. Escrow services, such as i-Escrow, TradeSafe, and ICC, protect both the buyer and seller by acting as an intermediary in the transaction. Typically, the payment is sent to the escrow service, which then forwards it onto the seller after a predetermined number of days. Note that escrow services often charge the buyer, not the seller. Be sure that buyers are aware of this if they request an escrow service.

Plastic Money
Another new financial service on the horizon--soon to appear on both eBay and Amazon.com Auctions, thanks to BidSafe and Accept.com, respectively--is credit card verification. This is another financial service aimed at both buyers and sellers. Put simply, these systems allow sellers who do not have a business license and merchant account to accept credit cards. Credit card verification will also attract bidders who prefer paying by credit card as well as protect you against dishonest buyers. The catch: these services are relatively expensive, and the amount charged is a percentage of the item's final value. The question to ask is whether or not you sell enough valuable merchandise to justify the expense.

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