Avoiding Online Auction Fraud

Online auction fraud is the most frequently reported form of Internet fraud. It is estimated that out of all internet fraud reported, 70% is auction fraud.

The most common type of auction fraud is known as the ‘invisible goods’ fraud. This occurs when the seller does not actually own the goods that are advertised on the auction site. The successful bidder pays for the goods, but they are never received. It is often the case that the seller has given false contact details when setting up the auction account, making it impossible to be contacted by the victim after payment has been made. The items offered for sale are often of a high value and are selected because they are likely to attract many bidders.

A second type of auction fraud, called ‘non-payment’ fraud. This occurs when the buyer uses false details, the seller sends the goods and the payment fails to be made. This can occur when a stolen credit card, fraudulently obtained credit card details are used or an arrangement to pay for the goods on delivery is made. When buying from an Internet auction site as a buyer you may not really know whom you are dealing with, so be careful.

To reduce the risk of being caught out some buyers prefer to use an ‘escrow’ service, this type of service is offered online and holds the payment until buyer receives the and checks the goods, in effect the escrow agent acts as an intermediary. Unfortunately, fraudsters have set up a number of websites offering escrow services. Typically the buyer will make a payment to the escrow site and the site will fail to pass the money on to the seller, both parties will then find it impossible to contact the escrow agent. Fraudsters who are behind escrow service scams can also commit a type of ‘invisible goods’ fraud and have been known to contact loosing bidders who have used genuine auction sites claiming to have a similar product for sale. The fraudster insists, in both cases that the payment must be made through the fraudulent escrow service, resulting in the goods never arriving, and both the escrow agent and the seller – who is often the same person – becoming impossible to contact.

Some tips for avoiding online auction fraud include; Make yourself familiar with the terms and conditions of the auction site, as some sites may offer compensation to victims where a fraud has been committed through their site. Check the feedback reputation of the seller, but bare in mind that it is possible for this to be falsified. If possible pay by credit card, as this may provide fraud protection insurance, depending on the terms and conditions of the account. Be wary if the other party insists on using a specific unknown escrow service, an online database of fraudulent escrow services can be found at escrow-fraud.com. When buying goods of high value; get the name, contact address and home phone number of the seller, and contact the seller by phone before making payment.

Bio of Author of this article: My name is Mark Jones and I recently graduated from the University of Wales with a 1st class BSc degree in Computer Networks. I am currently involved in optimising an ecommerce art website.

The author of this article works for Modern Artz; an ecommerce website hosting an artist web community and selling affordable modern Abstract Art designed to complement current interior decorative styles.