Auction Information

Online Auction Fraud


eBay sales may have grown 51% last year over the previous year, but general online complaints jumped by 66.6% over the previous year to some 207,000+ complaints in 2004. The Internet Crime Complaint Center (IC3), a partnership between the FBI and the National White Collar Crime Center (NW3C), stated in its yearly report that 71.2% of all complaints received pertained to auctions.

Online fraud is a growing problem on the internet and the auction segment is far from immune. The IC3 reports that most complaints consist of late or no shipment of products, items that don't match advertised condition and bogus payment or escrow services.

If you decide to offer "all items to be shipped within 24 hours", make sure you keep your word, and go to great lengths to honestly represent and describe the item in your auctions. Your bidders will appreciate your honesty and it will eventually show up in your feedback.

As consumer fears increase, there are a number of common sense ways to help protect you from fraud, as well as enhance your reputation as a trustworthy seller and set you apart from the crowd.

Watch Out for Bad Checks, Money Orders and Cashiers ChecksYears ago I had a buyer who complained rather loudly when I didn't ship an item as soon as I received the check in the mail. In hind site it was a good decision to hold the shipment since the check ended up being fraudulent. Bad checks, money orders, and cashiers checks are rampant in ecommerce today. The simplest way to offset the danger of bad paper is not to ship the auction item until the check, money order or cashier check clears your bank for payment.

Overpayments

Never accept any overpayments for any item. One of the more popular scams today is for a buyer to send a cashiers check for an amount that is higher than the agreed upon final price. They then claim it was in error and ask the seller to kindly return the overage when the item is shipped. Off goes the item, the overage amount in good money, and the defrauded seller finds out too late the cashiers check was fake.

Use an Escrow Service for High Priced Items

The primary purpose of escrow services is to protect buyers and sellers from fraud. Basically what they do is to accept the money from the buyer and hold it until the buyer receives and approves the merchandise. Please note that fake escrow services are increasing on the internet. If a buyer contacts you after a sale and recommends an escrow service you are not familiar with BEWARE. At present eBay only recommends one escrow company: www.escrow.com. For information go to http://pages.ebay.com/help/confidence/payment-escrow.html

Records, Records, Records

Keeps a copy of every transaction detail from the original auction listing to the last email. You will need that kind of proof to validate your claims if you should find you need to file a complaint.

Protect Yourself by Being Educated

At the very least you need to be knowledgeable about your legal obligations as a seller and familiar with the fraud protections and policies for the auction sites and payment processing services you use. eBay and Paypal have extensive sections on their websites dedicated to fraud policies and protections. You should take the time to read through these or similar information pages for the sites and services you use on a regular basis and be very familiar with the material.

A few of the key recommendations from Paypal's Protection for Sellers section include:

Ship only to the address listed on the Transaction Details page

Use a shipping service with tracking

Check out the buyer's reputation

Accept payment from only one Paypal account per buyer

Limit credit card payments

Enhancing Your Safe Seller Image

Here are a few tips that will help improve your image as a safe seller for your bidders.

Identify Yourself - Make use of the about me pages to let your customers know who you are, how long you've been in business and how much their business means to you. Be honest.

Feedback Ratings - Auction buyers want to see 100% positive feedback.

Methods of Payment - Make it easy for your customers to buy but consider convenience, cost and security in choosing any payment method you offer.

Full Disclosure - Your auction listings should clearly state the condition of the item you're auctioning, your shipping/insurance and return policies.

Bonding programs - A number of bonding programs are available on the internet. One of the more popular is BuySafe (www.buysafe.com). In a bonding program the seller agrees to certain obligations such as shipping on time, representing the item correctly, and standing behind the transaction. In return the seller can display a seal on their auctions showing bidders they are honest sellers and providing transaction insurance in some cases up to $25,000.

Other programs you should be familiar with include:

IDVerify
SquareTrade
Trust-e

If You Become a Victim of Online Fraud

You need to know exactly what should be done in the event you are victimized. Make your plan now, before it happens. The most recommended steps to take if you are victimized are listed below but please keep in mind these are general recommendations and you should have you own plan based on your needs.

File a complaint with your auction site
File a complaint with the Federal Trade Commission
File a complaint with the IC3
File a complaint with the National Fraud Information Center
Contact your local and state law enforcement agencies
Contact the local and state law enforcement agencies in the perpetrator's home area
File a complaint with the shipping company you used
It the perpetrator is a business and a member of the Better Business Bureau you should also file a complaint there.

Further reading

Paypal Seller Protection Policy (go to your Paypal account)

FTC recommendations http://www.ftc.gov/bcp/conline/pubs/online/auctions.htm

To read the entire 2004 IC3 Internet Fraud Report http://www1.ifccfbi.gov/strategy/2004_IC3Report.pdf

More Important Fraud Links

Find Your Local Police http://www.usacops.com
FBI Internet Fraud Unit http://www1.ifccfbi.gov/index.com
FTC Internet Fraud Unit https://m.ftc.gov
USPS Mail Fraud http://www.usps.com/postalinstpectors/fraud/

© Copyright 2005 Steven Woodward - All Rights Reserved

Steven Woodward is the owner, editor and publisher of the Auction Sellers Network (ASN); a web site for individuals and companies who are serious about utilizing the online auction marketplace for their business. In addition to topical articles, ASN provides an extensive resource center, news feeds, member forums and classified ads. For more information or to become a member please visit http://www.AuctionSellersNetwork.com

No permission is needed to reproduce an unedited copy of this article as long the About the Author tag is left intact and included. We do request that we be informed where it is posted and reciprocal links will be considered.


MORE RESOURCES:

Treasury Auctions Set for the Week of April 27
New York Times
The Treasury's schedule of financing this week includes Monday's regular weekly auction of new three- and six-month bills and an auction of four-week bills on Tuesday. At the close of the New York cash market on Friday, the rate on the outstanding ...



Automotive News (subscription) (blog)

Manheim expands its mobile auctions
Automotive News (subscription) (blog)
Manheim is expanding its mobile auction business, expecting its sales from the operation to rise at least 25 percent this year. As part of the expansion, Manheim, the nation's largest auto-auction company, just rolled out two mobile auctions, bringing ...



WNYT

At least 75 firefighters respond to fire at Lincoln Auctions in Coxsackie
WNYT
COXSACKIE- Flames broke out at Lincoln Auctions on Route 9W in Coxsackie around 10:30 a.m., Saturday. At least 75 firefighters from surrounding departments battled heavy flames for more than two hours. Viewers sent in some of their pictures and videos ...

and more »


Chicago Sun-Times

Opinion: Prevent abuses in FCC spectrum auctions
Chicago Sun-Times
So when the Federal Communications Commission recently conducted an auction to make more spectrum available for commercial purposes, many companies participated including Illinois-based Geneseo Communications. The proceeds from auctioning off ...

and more »


Paste Magazine

Rick Baker Auctions Make-up FX; Includes Gremlins and Men in Black Pieces
Paste Magazine
The auction comes after the decision was made by Baker to downsize his Cinovation Studios and sell the building. Baker will continue to work in film, but can no longer house the size of his collection. Brandon Allinger, the Chief Operations Officer of ...

and more »


Reports: Fire consumes Lincoln Auctions barn in Coxsackie
Albany Times Union
COXSACKIE — The big red barn that housed Lincoln Auctions in Coxsackie has been consumed by fire, according to reports from Channel 13, WNYT, and social media posts. State Police confirm that a fire began at the site of 9W around 10:30 a.m.. Printable ...



New York Daily News

Sotheby's auctions 'flawless' 100-carat diamond worth up to $25M (VIDEO)
New York Daily News
A "perfect" 100-carat diamond in a classic emerald cut could fetch between $19 million to $25 million at auction Tuesday. "This 100.20-carat diamond is the definition of perfection. The color is whiter than white. It is free of any internal ...

and more »


The Australian Financial Review

Booming real estate clearance rates for 'disrespectful' Anzac Day auctions
The Australian Financial Review
Anzac Day commemorations marking the centenary of the 1915 landings at Gallipoli broke many records on Saturday, but that did not deter property buyers amid claims the auctions were "disrespectful". The auction clearance rates in Sydney and Melbourne ...
“Disrespectful” Anzac Day auctions not enough to deter property buyersSmartCompany.com.au
Record for Sydney's highest auction clearance rate smashed again amid drop in ...NEWS.com.au
Sydney's housing market auctions set record clearancesThe Australian
CommBank MyWealth -Courier Mail -MacroBusiness (blog)
all 11 news articles »


AL.com

Inaugural 'St. Jude Field of Dreams' event to feature music, auctions, food ...
AL.com
Beginning at 6:30 p.m., Regions Field will come alive with music, food, drinks, dancing and auctions all to benefit St. Jude Children's Research Hospital®. Rick Journey will serve as the night's emcee while guests of the St. Jude Field of Dreams enjoy ...



Brazil likely to exclude railways from new infrastructure auctions
Reuters
Despite criticism from more leftist members of her Workers' Party, Rousseff has auctioned off major airports, sea ports and highways to refurbish the crippled infrastructure of the continent-sized country. Three years ago the government announced it ...

and more »

Google News

home | site map
© 2006