Hartford Guarantees eBay Sales

By Gary Mogel

NU Online News Service, Nov. 21, 10:27 a.m.EDT?Sellers on the popular eBay auction Web site now havea surety bond product to guarantee their terms of sale and providepeace of mind to potential buyers.

Hartford Financial Services Group has teamed with BuySafe, anAlexandria, Va.-based technology start-up, to adapt the surety bondapproach to guaranteeing Internet sales transactions.

Mike Frechette, vice president of Hartford Ventures, theHartford, Conn.-based insurer's venture capital arm that investedin and partnered with BuySafe, noted that the new product is gearedtoward eBay "power [high-volume] sellers" looking for increasedcredibility in the market.

"We guarantee the sales terms, such as ?money back guarantee ifnot completely satisfied,' or whatever the terms of sale in theeBay ad are," Mr. Frechette explained. "We don't guarantee thequality of the items purchased."

He added that eBay requires that each ad include a terms of saleprovision.

Hartford acts as the bonding company for these transactions,underwriting the bonds and providing the claims service. Limits upto $10,000 per item and $50,000 per seller are available.

Steve Woda, a founder of BuySafe and a former USF&G suretybond underwriter, had the idea for the start-up after "gettingburned" in an eBay transaction involving the purchase of a $400computer. That incident, according to Mr. Woda, gave him the ideato apply his surety training to the online sales arena.

"The essence of surety is that it helps people who don't knoweach other transact business," Mr. Woda said. "It provides anobjective third-party to guarantee the transaction."

Mr. Woda explained that BuySafe pre-qualifies sellers who applyfor the bonds by investigating their credit history and otherfactors. If they are accepted into the program, the BuySafe sealwill appear in their eBay ads.

"We make certain that the buyers either get the product as perthe terms of sale or we pay them back their purchase price," Mr.Woda continued. Mr. Woda noted that, while BuySafe can reimbursethe purchase price to the buyer, it cannot force the seller to handover withheld merchandise. Hartford's Mr. Frechette pointed outthat was the reason the program does not pursue the rarecollectibles market, where buyers are focused mainly on getting theitem and not their money back.

As with any surety transaction, the bonding company can attemptto collect its losses from the principal?in this case the sellersof the auctioned merchandise?who fail to perform, Mr. Wodasaid.

eBay did not return calls for comment on the BuySafeprogram.