Frauds that can be committed by sellers include:
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Receiving payment and not shipping merchandise
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Shipping items other than those described
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Shipping faulty merchandise
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Counterfeit or bootleg merchandise
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Selling stolen goods
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Inflating total bid amounts by bidding on their own auction with a "shill" account, either the seller under an alternate account, another person in collusion with the seller or through the XXLsell service. Shill bidding, including using XXLsell, is strictly prohibited by eBay.
Frauds committed by buyers include:
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PayPal fraud: Filing a shipping claim for damaged merchandise and collecting the money from the shipping company, filing a claim with PayPal for damaged merchandise, and then refusing to return goods. Buyer then has free goods and has income equal to the amount he spent on the item. The buyer may then also call his credit card and perform a chargeback.
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Credit card fraud, in the form of both stolen credit cards and fraudulent chargebacks.
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Receiving merchandise and claiming otherwise
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Returning items other than received
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Fake payment fraud: After winning an item, the buyer sends a fake payment service email which states that the buyer has sent the payment. The seller ships the item and then realizes that the email was fake. The seller has very limited options in getting his item back.
Other controversial practices of users
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Auction sniping, more commonly known as "bid sniping" or simply "sniping", is placing a bid during the last few seconds of an auction such that no time remains for other users to counterbid. This practice is allowed on eBay. Many other auction sites, such as Yahoo! and Overstock Auctions, offer an option which extends the auction by some minutes when a last-minute bid is placed, in order to prevent sniping. eBay's "proxy bidding" feature allows the buyer to specify the maximum they are willing to pay for an item regardless of "snipes".
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Some users try to sell something which, at first glance, appears to be an expensive item at a low starting price and then state in the description that they are paying for an item which is not the one implied (for example, the auction may display a game console box, leading bidders to believe the auction is for a game console, but say in the description that the box is empty). This is not allowed by eBay, but is difficult to enforce once the sale has closed.
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A variation of the above is the sale of wholesale lists. The listing will show a picture of an expensive item, but state in the title and/or description that the item being bid upon is a wholesale list. These lists are only permitted in the appropriate "Everything Else, Information Products, Wholesale Lists" category. Wholesale lists offered in other categories will be ended if reported to eBay.
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Conversely, sometimes very cheap items, like envelopes, are sold for high prices because they come with free airline vouchers or concert tickets, in order not to violate the terms on these items. In similar fashion, some listed items are unauthorized or bootleg recordings violation of eBay policy, but escape removal from the site by listing the item as a "CD insert" or "cover artwork" with an included CD as a "bonus" for bidding. Listings with titles using Leet-speak (such as "B00tleg") also aim to similarly subvert eBay policy.
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Sellers of inexpensive items may benefit from inflating the shipping cost while lowering the starting price for their auctions because some buyers overlook the shipping cost when calculating the amount they are willing to spend. In the extreme case, some users sell items for extremely low prices (usually using the Buy It Now feature) and then make up for it by substantially overcharging on shipping. Since eBay charges their fees based on final sales price without including shipping, this allows sellers to reduce the amount they pay eBay in fees (and also allows buyers to reduce or avoid import fees and sales taxes). This is called "fee avoidance", and is prohibited by eBay policy, as are excessive shipping and handling charges. A danger to the buyer in such cases is that in the event of defective merchandise, the seller may claim to have met his refund obligations by returning only the minimal purchase price. Another disadvantage of inflated shipping prices is that it is more cumbersome for the user to find a cheapest item, since ebay has no function for ranking in total price.
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Spam. Some sellers list large quantities of (normally low quality) items in the wrong category in the hope of gaining wider exposure. For example, a buyer searching for a mobile phone in the "mobile phones" section will find that it is swamped with offers for mobile phone accessories, even though they belong in the "mobile phone accessories" section. This can make it more difficult to find genuine offers of mobile phones. Another spamming practice is the inclusion of incorrect phrases in the item title (usually the names of similar higher quality products) to lure buyers who type in those search phrases. (Wikipedia)