Bidders Beware: Scams Commonly Used on Internet Auctions

Online auction fraud is one of the most commonlywebsite. In instances like this, the seller will take the
reported cases of Internet fraud reported to thebuyer’s credit card number and never deliver
Federal Trade Commission each year. The 2005the product. In some cases the person’s
Internet Crime Complaint Center Report states thatidentity is completely stolen. Unfortunately, since the
62.7 percent of all reported Internet fraud claimsbuyer has left the legitimate auction site they are no
regarded Internet auctions. This is an 11.9 percentlonger covered by the auction's security policies and
decrease from 2004. With these statistics, no oneprocedures and it is easier for the seller to get away
would argue this is a problem within the online auctionwith their crime.
community; however, eBay, the Internet’sThe most popular auction sites like eBay, and Yahoo!
leader of online auctions, reaches approximatelyAuctions will never offer buyers a “second
32,000 people a week and the number of peoplechance,” even if emails and offers look
participating in Internet auctions continues to grow.legitimate, report them to the auction service.
Buyers who have received damaged products,Payment Problems
misrepresented products or no product make upFind a Third Party
most of these reports; however, some have hadMost sellers accept cashier’s checks and credit
credit cards or bank accounts compromised. Sellerscards. However, giving credit card information to a
are also among the victims, although not nearly asstranger can be dangerous. Cahier’s checks
often.are a fairly safe way to pay for products, but often
Don’t get scared off by the statistics, maysellers will not ship an item until the check clears and
people have excellent experiences with onlinethere is no paper trail for the buyer if the seller takes
auctions, but like any other business or shoppingoff with the money without delivering the goods.
endeavor it is always smart to remain shoppingThe safest, most popular and recommended way to
savvy. The following are a few common frauds andpay for an item bought or sold at auction is through
scams performed by con artists and ways to avoida third party payment company like Pay Pal. A
them.company like Pay Pal provides both the buyer and
Product Scamsseller with an additional sense of security because the
Always do your Research.seller has no access to the buyer’s personal
Before ever placing a bid, always do your researchcredit or back accounts; additionally the seller can ship
about the auction site, the seller and the product.the product immediately without waiting for a check
Read the terms and services agreement presentedto clear.
by the auction site. Some have hidden fees orUsing wire transfers is highly discouraged and some
don’t offer any kind of fraud security.auction sites refuse to allow sellers who insist on
Additionally, many auction services have feedbackthem. Wire transfers are dangerous because they
centers. Read the feedback about the seller.can be sent anywhere in the world, the seller has
Feedback is used by auction sites to help sellers andaccess to a buyer’s personal account and
buyers establish a reputation and creditability withinthere is no receipt. Often, money wired outside the
the auction community. If they have an extraordinaryUnited States is no longer protected under United
number of negative feedbacks, reconsider theStates Internet fraud laws and prosecutions. This is
purchase. However, don’t disregard a seller fortrue for other countries as well. The law can become
not having any feedback, this person may be new tofuzzy between international waters. If the seller
the auction circuit and everyone has to startinsists on using wire transfers as the only means of
somewhere.payment, reconsider the purchase.
In the end, consider the product price and what theBe Aware of the Address
seller says about it. Since the buyer has to take theBeware of sellers that claim the item is located in one
seller’s word for the product’splace, and then ask for the money to be sent to
authenticity, always approach “genuine,”another. This could be a red flag for a number of
“authentic,” orreasons: the item may not exist, the person may live
“autographed” merchandise with caution.in another country or it may not be theirs to sell.
Research how much the item usually costs in retailHowever, there can be legitimate reasons like the
stores or what the seller’s situation is and whyperson has recently moved. This is a good reason to
they might be selling the items so cheap, especiallycontact the seller before placing a bid. For these
high–ticket items like computers and cars. Ifsame reasons, also be wary of sellers using P.O. Box
the price is too good to be true. it probably is.numbers for addresses.
Read the Fine PrintThe Duality of Escrow
Sometimes sellers will slip “fine print” intoEscrow can be a buyer’s best friend or their
detail pages or item descriptions. It is illegal for sellersworst enemy. Escrow is usually used in
to misrepresent their products; however, fine print ishigh–ticket purchases and acts like a middleman
a legal loophole and the responsibility to find it isbetween the exchange of money and product. If the
placed on the buyer. Sellers sometimes do this toseller or buyer insists on an unknown escrow
save their hides about the quality or condition of thecompany, beware. This can be the plot of an
product. This is not a common practice and auctionelaborate scam where the seller establishes a bogus
sites and buyers frown upon sellers who use it.escrow establishment then the money is sent but
Additionally, make sure the seller has some kind ofthe product isn’t. This scam can also happen
return policy. If the seller refuses to agree to ato sellers, where the buyer creates the escrow
return or refund policy, reconsider the purchase; thiscompany then never sends the money.
is especially imperative for expensive items like TVs,Many auction services suggest trusted escrow
laptops and collectables. Online auction servicescompanies, with good reputations. If the seller or
encourage honest business practices and try tobuyer insists on a different company, proceed with
detour scam artists; however, many are too large tocaution.
police every person that sells online. They rely onAlthough sellers can sometimes be the victim of
buyers and feedback to help monitor the system.auction fraud with “deadbeat bidders,”
Don’t be Fooled by Second Chancesfake checks or escrow scams, buyers are more likely
Second chances occur when a seller contacts theto be taken advantage of. Just remember to stay
losing bidders and offers them the same product onsharp. Just because it’s on the Internet
a different website. This is sometimes calleddoesn’t make it legitimate.
“luring,” because the buyer is beingResources
“lured” from the legitimate auction site(2006, March). Internet Auctions A Guide for Buyers
to another, less secure and potentially dangerousand Sellers.