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Dealing with Damaged Goods

A guide to handling damage and loss claims, before, during and after

Sometimes there’s a bit of post-sale trouble that can creep up on sellers in the form of damage or loss claims. Someday, some time, one of your buyers might receive a broken item from you or, worse yet, might not receive the purchased item at all.

Despite your best efforts, damage and loss happen. The good news is there’s plenty you can do to prevent such mishaps and avoid the potential grief of sorting out an auction gone awry. And, if such a damage or loss claim comes your way, discover what you can do to save a transaction that’s on the verge of going terribly wrong.

An ounce of prevention

Before considering what you’ll do after an item you’ve sold arrives at your buyer’s doorstep damaged (or doesn’t arrive at all), consider the things you can do to prevent loss or damage to protect yourself and your buyers ahead of time.

First, consider the value or rarity of the item you’re selling. If its final purchase price rivals your monthly mortgage payment, consider using an online escrow service. For a nominal fee, you can open an escrow transaction that provides protection to both buyers and sellers.

Using an escrow account ensures a seller that a valid payment has been made by the buyer before goods are to be shipped. Buyers are also protected, because they can fully inspect an item before their escrow funds are released. Certainly, this method acts as a solid stop-gap against any loss or damage claims. Further, a seller who initiates an escrow transaction demonstrates a willingness to guarantee a buyer is fully satisfied for big-dollar purchases.

Be sure your sales policy is very clear about how you manage returns and refunds

Next, be sure your sales policy is very clear about how you manage returns and refunds. In the case of damage claims, be sure your policy is explicit regarding how you and the buyer will work together in the unfortunate event that an item becomes lost or damaged in transit (usually dictated by the package carrier’s damage claims process).

Your sales policy should detail how such claims will be managed and how you will work with both the buyer and the carrier to resolve the problem. Understand the carriers’ processes and integrate those details into your resolution policy, preferably providing details of a potential timeline that can set a buyer’s expectations in case a claim needs to be raised. By making your policy absolutely clear before your buyers buy or your bidders bid, you’ll establish an incontestable foundation to stand on in case such trouble should arise.

CYA—cover your assets

Since it’s ultimately the carrier that will be involved if a damage or loss problem occurs, make sure you clearly specify your carrier of choice and the shipping method you’ll use to ship purchased items. Most items can be shipped safely using normal standard or “priority” type methods.

If an item being shipped is valuable, rare or otherwise expensive, consider using a quicker means of delivery to be sure it spends as little time as possible in transit. Be sure your buyer agrees to pay the shipping fees. And, to keep ahead of any potential disputes about the method you’ll use, specify expedited shipping methods that will be used for particularly pricey items within your item listing.

Then be sure to offer insurance and tracking services. Sometimes these will be included within the price of expedited shipping methods but, if not, strongly encourage your buyer to pay the nominal additional fees to ensure safe delivery. (Note that on eBay, sellers are prohibited from asking buyers to pay for optional shipping insurance, though rolling the additional coverage into a reasonable handling fee is highly recommended and can go a long way toward promoting buyer trust).

If the buyer elects to “save a buck” and opts out of such protections, be sure you’re clear that the buyer will assume responsibility if the package is damaged or unrecoverable. Some sellers will cover such situations, regardless of whether the buyer purchased insurance or tracking service, in an effort to provide 100-percent satisfaction. You’ll need to decide if that will be your policy as well.

Purchase delivery confirmation when you ship goods, just to remove any suspicion from the situation

Trust, but verify

Simply put, phony loss and damage claims have been on top of online fraud scams for more than a decade. Be sure your sales policy also includes a stipulation that you’ll need to inspect a damaged item before any refund can be given, especially if you’ll pursue restitution with a carrier. And if you worry you’ll be unable to verify a claim that an item never arrived to its intended recipient, purchase delivery confirmation when you ship goods, just to remove any suspicion from the situation.

Collaborate and communicate throughout a claim

Most often, the seller will be responsible to file the loss or damage claim. This is especially true when insurance or tracking services have been purchased. The carrier will require proof of the damage (inspection of the item) before paying out a damage reimbursement. At that time, the carrier will also inspect the manner in which the damaged item was packaged to ensure it was done properly to make the trip safely, thereby warranting the carrier pay the claim.

Different carriers have different claim procedures, so review them carefully ahead of time. Be sure you follow the carrier’s process precisely and ensure you get clear answers and reasonable expectations from the carrier’s claims representative. Be sure to have clarified this potential claims scenario within your sales policy, as previously mentioned, and keep the communication flowing between you and your buyer until you reach final resolution of the matter.

A broken item, not a broken relationship

Finally, recognize that nobody wants to go through a loss or damage claim. If you’ve followed the previous recommendations, you’ll be in the best position possible to avoid any such problems. Even so, in the event of damage to or loss of an item, the better you communicate before, during and throughout such a situation, the better you’ll fare in soothing a disappointed buyer.

Accidents do sometimes happen. When they do, take timely action to assure and attend to your buyer. Through your genuine concern to rectify the situation to your mutual satisfaction, you and your buyer can resolve the problem, and likely find good reason to transact again.

About the author

Dennis L. Prince
Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay...and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues. Opinions expressed here may not be shared by The Online Seller and/or its principals.

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