INTERNET AUCTION FRAUD
Article by PSECU's Loss Prevention & Security Unit
With the holiday season at its end, you may shop online in search of good deals. Or you may try to do away with unwanted gifts by selling them through Internet auction sites. While these sites continue to grow, so too has the number of fraud reports dealing with the e-commerce movement.
Regardless of what auction site you use, you should always exercise caution when buying and selling items online. According to the Federal Trade Commission (FTC), complaints dealing with online auction fraud “consistently rank near the top of the list.” The FTC recommends that consumers try to determine the relative value of an item before they bid. Anything that seems too good to be true probably is, and buyers should be skeptical of low-priced items. They might be counterfeit goods.
Buyers are also cautioned to try to learn about the sellers you interact with online. Research a seller’s rating, feedback and length of membership before you purchase an item. Some additional tips about buying online can help you avoid trouble.
- Read all agreements carefully to avoid any hidden fees or excessively high shipping rates.
- Be on the alert for bid-rigging schemes where sellers use multiple accounts to inflate the cost of their own products. Signs of this scheme are bids by new users with little feedback who make small bid increments before the end of an auction.
- Use secure channels to pay for products such as Google™ Checkout or PayPal™; do not wire money.
If you plan on selling on auction sites, or any online marketplace, you should be aware of the numerous frauds that occur. Sellers should be aware that a buyer who sends a check for an amount larger than expected may be part of an Advance Fee Fraud scam. The buyer claims the large amount is an error and then requests that you wire back the difference. Meanwhile the large check turns out to be fake, leaving you responsible for the entire amount.
If you have problems while participating in an online auction, try to work out issues directly with the seller, buyer or site operator. If that doesn’t work, file a complaint with:
- The attorney general’s office in your state
- Your county or state consumer protection agency
- The Better Business Bureau
- The Federal Trade Commission
If you have any other questions or issues, you may also contact local law enforcement, or the PSECU Loss Prevention & Security unit.