Buyer Beware: The Art of the Online Auction Scam

For a while Friday, you didn’t have to go all the way to the South Pacific to find a piece of debris from the fallen space station Mir. In fact, you didn’t even have to leave the heartland of the United States.

Hours after the Russian space station plunged through the atmosphere Friday, scam artists from Indiana were trying to pawn off bogus recovered Mir parts on eBay.

“I found this bolt laying next to my van when I left for work this morning,” one seller said in a message posted on the site. “I’m pretty sure it wasn’t there when I got home from work last night, so I think the only logical explanation is that some of the Mir debris did come down over Indiana.”

Before long, eBay began pulling the plug on what it determined were bogus “Mir Space Station Remains” postings — but not before some bids reached amounts in excess of US$20,000.

Is it really that easy to fool people online?

“I think it’s incredibly easy to fool people, because nobody sees the articles you’re selling,” National Consumers League (NCL) vice president of public policy Susan Grant told the E-Commerce Times. “Even though there’s only a small minority that aren’t honest, you’re still buying something sight unseen from a total stranger.”

What They Pay For

Web auctions are No. 1 on the National Consumer League’s list of Internet frauds. That fact is not surprising, considering that according to a Harris Interactive survey commissioned by the NCL, 94 percent of people who participate in online auctions are at least somewhat confident, if not very confident, that they will get what they pay for from the seller.

“I think [online auction fraud] is different than the counterfeit handbags vendors sell on the sidewalks, that people know are fake but still buy because they look good,” Grant said. “When you look at the amount of money spent on auctions, you have to assume [buyers] believe they’re getting the genuine article.”

Several Harry Potter fans might agree. Investigators in Arlington, Virginia reportedly arrested a man Friday for selling nearly $6,000 worth of bogus first-edition, autographed copies of author J.K Rowling’s Potter books on eBay.

“There’s practically no way of knowing in advance for users, no iron clad guarantee that what you get is what you were promised,” Grant said. “And even though you have legal rights on paper for fraud misrepresentation, practically speaking, it may be very difficult to take any action.”

Getting Serious

Some of these frauds seem to be merely an element of the college prankster mentality. After all, with everything from beach sand to individual souls being auctioned, Net auctions have almost become a showcase to see who can pull off the biggest auction sham.

However, other bogus auctions have gone well beyond the prank level. On March 9th, U.S. federal prosecutors issued an indictment against three eBay users, alleging that they placed more than 50 false bids on paintings they auctioned online from November 1998 to June 2000, including a fake Richard Diebenkorn painting that garnered a $135,000 bid.

Additionally, an auction of phony sports memorabilia turned into a legal headache for eBay when a $100 million lawsuit was filed in the spring of 2000, alleging that eBay knew about the auctions but did not take sufficient measures to thwart them.

Although a California judge dismissed the class action suit in January, an attorney for the plaintiffs said that they intended to appeal. The plaintiffs claimed that they purchased $10 million worth of phony memorabilia through eBay.

Hocus Bogus

In short, even if some bogus auctions provide a laugh, too many provide heartache for unwitting victims.

“Most con artists are in it for the money,” Grant said. “I imagine that there are some people just messing around, but those aren’t the ones taking lots of people. It’s not uncommon to see the same sellers names pop up over and over when we get complaints from consumers.”

So what can consumers do to protect themselves? The NCL strongly recommends paying by credit card or escrow service, rather then check or money order, and thoroughly checking on the background of sellers as much as possible.

“Insurance on eBay and other auction sites is relatively limited,” Grant said. “It’s not necessarily going to cover the whole (cost) of a high ticket transaction. If you don’t use another way to protect yourself, you’re really leaving yourself vulnerable to the possibility, however small it may be, that this may turn out to be your unlucky day.”