April 30, 2003 1:11 PM PDT

FTC, states take on online-auction fraud

The Federal Trade Commission and 29 states have launched a campaign to crack down on Internet auction fraud, federal and state officials said Wednesday.

"Operation Bidder Beware" has resulted in 57 criminal and civil law enforcement actions in a sweep involving the coordination of the FTC, attorneys general of the participating states and local police agencies, according to the FTC.

Online-auction fraud is the No. 1 type of Internet-related complaint tracked by the FTC in terms of volume, according to the agency. The FTC received about 51,000 complaints regarding online-auction scams in 2002, representing about $37 million in losses, said Howard Beales, director of the FTC Bureau of Consumer Protection. That number likely represents just a fraction of the actual number of rip-offs that occurred, officials said.

Although the vast majority of complaints involve the collection of payments for goods that never materialize, the authorities are seeing a few new twists, Beale said. One involves identity theft by sellers in order to cover their tracks and throw investigations off track. In some cases, scam artists have taken over the accounts of other online sellers. Another problem, said Beales, involves fraudulent escrow services that collect either payments and merchandise or both, ripping off both buyers and sellers.

Beales, who spoke at a press conference held at FTC headquarters in Washington, D.C., offered tough words to perpetrators of such scams. "Real-world law enforcement will not allow you to get away with online fraud, and neither will the Internet auction industry," he said.

Beales conceded, however, that many states are short on the resources needed to pursue offenders and that the virtual nature of the Internet can throw a wrench into the jurisdiction of these cases. For that reason, prevention and consumer awareness are major aspects of the operation.

Beales' advice to consumers is to use a credit card--rather than cash, checks or money orders--as a form of payment. The FTC also recommends that buyers check sellers' legitimacy through member ratings and other buyers' comments offered on eBay and other sites. If the seller is a business, buyers should consult the Better Business Bureau. Consumers should also read up on the rules of auction sites and be familiar with the protections they offer, Beales said.

"The single biggest common denominator in many of these cases was that the consumer paid by a mechanism other than a credit card," said Christine Gregoire, attorney general for the state of Washington. Gregoire, who also spoke at the press conference, said her state has filed two cases and settled a third as part of the law enforcement sweep under Operation Bidder Beware.

Consumers can also file complaints about fraudulent auctions or other Internet-related scams on the FTC's online shopping Web site or by phone at 1-877-FTC-HELP.

Beales praised eBay, by far the world's largest online-auction site, for cooperating with authorities on fraud investigations. eBay has also expressed interest in doing more to help members whose accounts have been hijacked for use in fraudulent auctions, he said.

eBay has long downplayed fraud initiated through its site, claiming it affects only one one-hundredth of 1 percent to one-tenth of 1 percent of all its auctions. Beales said the FTC had no data to either confirm or refute eBay's fraud statistics.

8 comments

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EBay is NOT helping
I was ripped off last year for a product which never arrived. EBay took no responsibility nor did it attempt to assist. Instead they pointed me to their disclosure, a remediator, and the online fraud center all in a neat little page or 2 on their site. They never told me they were investigating the seller. They never told me that they shut off his account and notified everyone. EVEN WORSE, the seller duped me into a 'delivery delay' which basically took up the time that I had to report back on the seller at EBay. EBay would not even let me add a comment on to the seller's feedback since the time had elapsed.

Use your local Newspaper Classifieds! Better deals, no shipping, and you can go pick it up the same day!!!
Posted by coders4hire (1 comment )
Reply Link Flag
While there are a lot of unscrupulous folks out there that are trying to steal you money, you can actually take some steps to protect yourself. It is easy to be taken advanatage of when a transactions is not face to face and that's because there little or no oversight and responsibility. However, when buying at auctions at eBay and other online auction marketplaces, you have to always check the feedback of the auction people you are doing business with, and stay away from those with substantial negative feedback. Also you can participate in government auctions and not be as afraid of being ripped off because, sionce the government has no profit motive, you can give it instant credibility. Finally, even if you happen to get ripped off, you can just call you credit card company and if the other party can't prove they delivered the item(s) the bank will charge them back and put the money back on your account.

Jules
<a href="http://www.governmentauctions.org/aNoFeeCarsByState.asp">Auto & car
auctions</a>
Posted by julesfrpr (4 comments )
Link Flag
How do you know?
How do we know that this online auctions are frauds?
I have proven this one. A highly recommended site for online auctions is Elfingo.com . They are the new ebay. Many smaller sites like this offer buyers far better deals than ebay ever could. Buyers also save a ton because this site charges little or nothing depending on the day. One more reason I like elfingo.com is because they don't take a part of the sale at all. No commissions or final value fees. It's an A+++.--- <a class="jive-link-external" href="http://www.elfingo.com" target="_newWindow">http://www.elfingo.com</a>
Posted by saintsinner2004 (1 comment )
Reply Link Flag
Online-auction fraud is frequently taking place nowadays. Terrorists take the help of internet to spread violation which should be prevented.
--------------
Ella
<a href="http://www.gov-auctions.org" rel="dofollow">auto auctions</a>
Posted by ella1940 (1 comment )
Reply Link Flag
Did anything evolve from this fraud investigation? many good sites for auctions since then www.oltiby.com as one of the better reverse auction platform.
Posted by onlineauction (1 comment )
Reply Link Flag
A good tip is to check references of a type of auction to see what other people who have taken part in that kind of auction think of it. Were they dissatisfied or happy? Many times people confuse a bad user experience with fraud.
--------------
Rick
&lt;a href="http://www.carauctioninc.com"&gt;Car Auctions&lt;/a&gt;
Posted by carauction1 (1 comment )
Reply Link Flag
Yes, it's also worth while reading as much about the auction site in the media first. There are also many good books that warn about the dangers of auctions, especially on ebay, what to look for and what to avoid.

=========================
Hero
http://www.usa-car-auction.net/
Posted by WeCanBeHeroes (2 comments )
Reply Link Flag
While there are a lot of unscrupulous folks out there that are trying to steal you money, you can actually take some steps to protect yourself. It is easy to be taken advanatage of when a transactions is not face to face and that's because there little or no oversight and responsibility. However, when buying at auctions at eBay and other online auction marketplaces, you have to always check the feedback of the auction people you are doing business with, and stay away from those with substantial negative feedback. Also you can participate in government auctions and not be as afraid of being ripped off because, sionce the government has no profit motive, you can give it instant credibility. Finally, even if you happen to get ripped off, you can just call you credit card company and if the other party can't prove they delivered the item(s) the bank will charge them back and put the money back on your account.

Jules
&lt;a href="http://www.governmentauctions.org/aNoFeeCarsByState.asp"&gt;Auto &#38;amp; car
auctions&lt;/a&gt;
Posted by julesfrpr (4 comments )
Reply Link Flag
 

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