Going, going - swindled! George Carlson won the highest bid for a set of cameras on eBay. But all he got was a headache and a US$700 hole in his wallet when the Houston resident paid for the equipment but received nothing from the seller in Florida.
"He wouldn't reply to e-mails," said Carlson, who found other buyers who had been burned by the same individual. "He never had the cameras."
Chastened, Carlson bought a camera via eBay again, but used I-Escrow to safeguard his money until the merchandise arrived.
He got a great deal from a seller named "Kuchar" and the camera showed up - sent from Amazon.com. Smelling a rat, Carlson called Amazon.com and found the equipment had been bought via a credit card belonging to George Carlson, but the account numbers did not match his own card. Kuchar had ginned up bogus cards and was counting on grabbing the escrow money and disappearing.
Carlson sent the camera back to Amazon.com.
"It sure looked like I was the one who had committed fraud," Carlson said. After more investigating on eBay, he found that all of Kuchar's contact information was fake and that the scammer was selling items under six different aliases. He discovered the individual also had three aliases on Amazon.com's auction site. Amazon.com officials said they don't have a serious fraud problem on their site.
Buyer beware
EBay spokesman Kevin Pursglove acknowledged fraud occurs but said the auction company has no liability: "The responsibility rests with the individuals involved in the transaction. EBay never takes possession of the goods."
The online auctioneers do little to verify who is selling what on the sites.
It's a familiar problem to Federal Trade Commission investigators who have seen a twentyfold increase in online auction fraud complaints over the past year across all the popular bidding sites, including Amazon.com, eBay, Yahoo! and ZDNet. More than 6,000 gripes have been received this year alone, and most deal with nondelivery of goods, FTC staff attorney Lisa Hone said.
"The uptick we've seen is in part due to more people using Internet auctions," Hone said.
The National Consumers' League also is seeing a flood of Net auction fraud reports. In the first six months of this year, the group received more auction complaints than in all of 1998. Such reports now make up 87 percent of all Internet fraud cases called into the League.
"It's very easy to con somebody in an auction," said National Consumers' League spokeswoman Holly Anderson. "People are willing to send checks and money orders without thinking about it."
It appears many auction bidders often don't avail themselves of third-party escrow services because doing so adds to the price of a purchase. I-Escrow, a third-party escrow service, charges 6 percent of a transaction up to US$500 in value.
In late June, George Bourke of San Francisco won the highest bid on some specialized drive belts on eBay, but lost $50 when they never arrived.
Despite the one bad experience, Bourke has bought more than 150 items via online auctions and said he's unlikely to use an escrow service. "It would make most of the stuff uncompetitive," he said.
Bourke notified eBay about the problem but didn't hear much back. He also filed a mail fraud complaint with the U.S. Postal Service, which could turn out to be the most effective remedy. The Post Office has its own investigation division, and penalties for mail fraud include fines and up to five years' imprisonment.
State law enforcers are beginning to try auction fraud cases and have had mostly successful outcomes. California, Florida, Illinois and Pennsylvania recently prosecuted auction scammers, and the FTC is likely to bring more complaints to the federal courts.
Meanwhile, auction houses said they are doing all they can to provide a safe environment for their patrons.
EBay now offers free bid insurance up to US$200 that covers no-show items or dissatisfaction. The company is also developing a "verified" user program that would demand a much higher level of identification.
Amazon.com guarantees bids up to US$250 and just recently started offering credit-card payment services on all sales.
