Avoiding Online Auction Fraud
How are you at resisting temptation? Imagine a scenario where you can lie, cheat and steal virtually carte blanche, where a sucker and his money are always being parted, where your actions are limited only by your ethics or lack of them.
This is one side of the world of online auctions. It’s the Wild West out there, huge and still largely ungoverned.
Online auctions are the playing field of the conscience. How far will you go in promoting your interests, how dark will you tint the gray as you traverse the expanse that separates and melds truth and falsity into one another?
The good news is that, according to my experience and that of many others, there’s far, far more good than evil out there. The bad news is that there’s evil out there. This truth may be as old as the hills, but it’s a truth you need to keep in mind if you venture into the always fascinating and frequently rewarding realm of online auctions.
The big three online auction houses are eBay <www.ebay.com>, Yahoo Auctions
eBay contends that the rate of auction fraud on its service is very low. It says that only one “confirmed” fraud occurs per 40,000 eBay listings. That is indeed a low rate — 0.0025 percent.
The FBI, on the other hand, contends that the figure is much higher. As a part of its “Operation Cyber Loss” project, it determined that the rate of online auction fraud is about one in a 100, or 1 percent. This is a very high rate of fraud, a whopping 400 times higher than what eBay contends.
The FBI’s figure is the one to believe. eBay, whose earnings soared again in its latest quarter, to $47.6 million, is very reluctant to intervene in individual auctions, describing its service as merely a venue that brings buyers and sellers together. Its policy is that it won’t interfere with the auction of a blatantly counterfeit collectible, for instance, unless it’s contacted first by law enforcement authorities.
All the online auction services provide buyers and sellers with some protection against fraud. The most powerful is “feedback” — a way for participants in a transaction to rate one another and for others to see those ratings.
But the ratings are always skewed positively, since leaving someone with negative feedback opens you up to receiving retaliatory negative feedback in return, and most people are reluctant to risk tarnishing their feedback record this way. Still, a large percentage of negative feedbacks is a clear signal to stay away from a particular buyer or seller.
You also should avoid buying a big-ticket item from a seller with few feedbacks. But buying a more expensive item from a seller with many feedbacks also can be risky, depending.
One trick scammers use is to sell a number of low-cost items to build up positive feedback, then auction off a big-ticket item and skip town, virtually or otherwise, without sending it. It’s always best when buying an expensive item to make sure the seller has sold similar items in the past.
Mike Woodard Sr. of East Hampton, Mass., recently paid $300 for a set of old silver dollars through an eBay auction, only to have the seller nondeliver. Too often victims in these situations chalk it up as a learning experience — most online auction frauds go unreported — but Woodard took action.
He contacted his local police department, which unlike most has a new Internet fraud department. After Woodard presented his evidence, his police department contacted the police department local to the seller, who was from out of state. The seller was arrested and pleaded guilty, and Woodard is now awaiting restitution.
More frequently, abuses arise when sellers misdescribe their items, exaggerating positives and ignoring negatives. The overpositive spin has always been a part of advertising practices, and it’s easy for sellers to get caught up in this even when they’re not intending to deceive.
You should ask the seller for clarification beforehand if you have any doubts and refuse to bid if you don’t get a satisfactory answer.
Ultimately, with online auctions, knowledge is power. Arm yourself with information like this, and you’ll greatly lessen your chances of getting duped. You can find more at the following Web sites:
•Auction Watch’s Tips and Tactics
<www.auctionwatch.com/awdaily/tipsandtactics/index2.html>
•Internet Fraud Complaint Center’s Fraud Tips
•The Federal Trade Commission’s “Internet Auctions: A Guide for Buyers and Sellers”
<www.ftc.gov/bcp/menu-internet.htm>
Reid Goldsborough is a syndicated columnist and author of the book Straight Talk About the Information Superhighway. He can be reached at [email protected] or <www.netaxs.com/~reidgold/column>.
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