Log in

ISM Article

How To Avoid Internet Auction Fraud

1 Nov, 2001 By: Buyers Laboratory, Inc. imageSource

How To Avoid Internet Auction Fraud

auction fraud is the number one fraud committed over the Internet, accounting
for 64 percent of the more than 30,000 complaints received by the Internet Fraud
Complaint Center (IFCC), which is a partnership between the Federal Bureau of
Investigation and the National White Collar Crime Center. According to an IFCC
report, Internet auction fraud cost consumers almost $4 million in 2000, a loss
that has continued to escalate in 2001, with 4,000 complaints filed with the
IFCC between January and April 2001. The average loss per complaint, said the
IFCC, is $766.

IFCC defines an Internet auction as “items that are offered for sale on an
Internet auction house with the process of bidding against others to receive
them.” Internet auction fraud includes:

  • Non-delivery:
    The seller places an item up for bid when there is no item and therefore the
    item is never delivered to the buyer after he or she purchases it. If
    payment is made by credit card, the seller obtains the buyer’s name and
    credit card number.

  • Misrepresentation:
    The seller deceives the buyer as to the true value of the item by, for
    example, listing false information about the item up for bid or by altering
    pictures or using pictures that are not the actual pictures of the items up
    for bid.

  • Triangulation:
    A perpetrator buys merchandise from an on-line merchant using stolen
    identities and credit card numbers and then sells the merchandise at an
    on-line auction site. The perpetrator has the unsuspecting buyer wire
    transfer him or her the money and then sends the merchandise. Later on, the
    police would question the unsuspecting buyer and take the stolen merchandise
    as evidence.

  • Fee
    The seller adds hidden charges to an item after the auction is
    over to obtain more money. For example, the seller may say there are
    separate charges for postage, handling, and the shipping container instead
    of a flat postage rate for postage and handling, so the buyer ends up paying
    more than anticipated.

  • Shill
    The seller intentionally places fake bids or has someone else
    place fake bids to drive up the price of his or her own item.

auctions can be good places to buy items at discounted prices but they also give
perpetrators another avenue to commit fraud, says the IFCC. To help avoid
Internet fraud, the IFCC recommends that buyers consider the following questions
before bidding:

  • Do
    you understand exactly how the auction works?

    Because auction sites are set up differently depending on the type of
    auction, buyers need to know as much as possible about how it works before
    placing a bid.

  • Do
    you know what steps the Web site or company takes if there is a problem
    before, during, or after the auction?
    Bear in
    mind that auction sites are third parties that may not be able to resolve
    problems, so be sure to read the Web site’s disclaimer.

  • Do
    you have more information about the seller than an e-mail address?

    Send an e-mail to find out if the address is active and be wary of e-mail
    addresses from free services that don’t require a credit card to open an
    account. Then find out as much as you can about the seller by, for example,
    checking with the Better Business Bureau where the seller is located. Try to
    get a physical address if only a Post Office box is given, as well as a
    phone number, then call to make sure the number is correct and working.
    Twenty-five percent of Internet fraud victims that complained to the IFCC
    didn’t have a physical address for the subject of their complaint and 14
    percent of those that had a physical address listed a Post Office box.

  • What
    is the method of payment and where is it sent?

    Be wary of bidding if the seller requests payment be made in cash or
    delivered to a Post Office box.

  • Is
    the seller located outside the United States?

    Because of the difference in laws, resolving a problem may be more difficult
    if the seller is not located in the United States.

  • Do
    you have information about delivery, warranties, and returns?

    Before placing a bid, buyers should ask when they can expect delivery or if
    they can exchange merchandise if there is problem with it.

  • Does
    the auction price include shipping and delivery costs?
    Asking this up
    front can avoid surprises later on.

you think you have been a victim of Internet fraud, you can file a complaint
on-line at the IFCC Web site (www.ifccfbi.gov).
IFCC will review and evaluate each complaint and maybe refer it to the
appropriate local, state or federal agency, however, it does not guarantee that
the complaint will be investigated.

WebinarCase Studies and White PapersSand Exchange Blog

imageSource Magazine Quick Links
Upcoming Events
ITEX Expo & Conference
©2015 Questex, LLC. All rights reserved
Reproduction in whole or part is prohibited
Please send any technical comments or questions to our webmaster