Auction Fraud is Most Reported Cyber Crime, According to IC3

It seems that auction fraud is the new black in the land of cyber crime. According to its website, the Internet Crime Complaint Center (IC3) has recently received a large number of calls reporting fraud involving international automobile auctions online. This particular fraud involves an online auction in which the "winner" pays via wired money for a vehicle that will supposedly be shipped from Europe. The money is wired, and the buyer waits in vain for a vehicle, which, predictably, never shows. Unfortunately, once the money is gone, there is little that can be done in the way of recovering it.

The IC3, a partnership of the FBI and the National White Collar Crime Center, this year released its yearly complaints report, which stated that reports of internet fraud made up 62 percent of crime complaints received, crowning it with the dubious title of most commonly reported cyber crime. Other top complaints include undelivered merchandise or payment, credit and debit fraud, and check, investment, computer, and confidence fraud.

According to IC3, buyers in the United States planning to purchase online a vehicle that is located outside of the United States should exercise caution and thoroughly research any potential sellers or auction houses for legitimacy. Buyers should be aware of the risk of what are known as "second chance auctions," wherein a buyer who lost an "auction" is contacted and told that they may buy the item they bid on at a discount rate, due to the original auction winner defaulting on payment. Buyers should also beware of any monetary transfers requested that don't involve an established and trustworthy method, such as an escrow service.

The IC3 recommends observing the guidelines below to avoid being duped into an online fraud scam:

  • Educate yourself. Research how the auction works, what your obligations are as a buyer, and what the seller's obligations are before you bid.
  • Research the seller, especially if the only information you have is an e-mail address. If it is a business, check the Better Business Bureau where the seller/business is located. If you can't find any information, do not place a bid.
  • Research any feedback from past customers.
  • Determine the method of payment and where the seller is requesting it be sent.
  • Be aware that a problem with an international auction transaction may be much more difficult to resolve because of the difference in laws.
  • Find out the seller's policies on problems, warranties, delivery times, exchanges, and defective merchandise.
  • Avoid surprise charges by finding out if shipping and delivery are included in the auction price or are charged as separate costs.
  • Do not give your social security number or drivers license number to the seller. No reputable auction house has any use for them.

One issue that makes an online auction a prime spot for fraudulent exchange is that users can easily be mislead or become confused about the responsibility of the site in question. Some people don't realize that a site such as eBay does not sell the items up for auction; what eBay does is provide a forum for sellers to hock their own goods. Most online auction sites will not reimburse a buyer's losses, and emphasize the importance of using caution when engaging in online commerce.

eBay's Trust and Safety policy states that the site has put in place a safety team dedicated to keeping their "marketplace a safe, well-lit place for people around the world to trade with one other." The site features a number of protection methods in place to benefit users:

  • Feedback - Users can rate each other, establishing marketplace reputations and acting as watchdogs for dishonest or unfair auction practices (defective merchandise, late payment, inordinately long shipping time, etc.)
  • Buyer Protection - eBay is set up so that users can pay for their merchandise in a fashion that offers more security than wired cash.
  • Fraudulent Web Site Protection - eBay offers users a toolbar that alerts users in the event they stumble upon a fraudulent site.
  • Security Center Features - eBay offers tips on practicing good marketplace habits, as well as information on reporting fraud or other online criminal activity.

Other ways to protect oneself in the world of online auctions include avoiding both buyers and sellers who seem suspicious:

  • If the seller claims to be located in the United States but wants the payment sent overseas or to someone else, beware. Also, if the seller claims he suddenly had to leave the country for whatever reason, don't conduct business until he is back in the country.
  • If the seller requests cash payment or wire transfer, do not send it. Using these services leaves virtually no paper trail and no way to recover the money in the event of fraud.
  • Avoid dealing with sellers who claim to be authorized dealers or factory representatives in countries where you know such positions don't exist.
  • Do not trust buyers request the merchandise be shipped using methods that avoid customs or taxes.
  • Sellers should be suspicious of any credit card purchases if the address of the cardholder does not match the shipping address, and be sure to receive the cardholder's authorization before shipping any products.

Users who suspect they may have been a victim of internet fraud are encouraged to contact the IC3 at http://www.ic3.gov/.

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