Internet auction fraud can occur in several ways. It can involve misrepresentation of auction items, non-delivery of auction items, fee stacking by the seller, triangulation, and fraudulent escrow services.
Tips to Prevent Auction Fraud
- Review the seller’s feedback
- Be extra cautious when dealing with individuals outside your own country
- Ask questions of the seller/buyer if there is any suspicion about an item before committing to an auction
- Carefully read all auction polices set by the seller. Ask the seller questions about the policies if there is confusion or lack of information about them
- Consider insuring the auction item that was purchased before final payment is made
- If an escrow service is used, verify that it is legitimate
- Be wary of sellers only accepting payment through an escrow service. Money orders and cashier’s checks are acceptable payment on most auction sites
- Investigate the seller or the seller’s online web site. If a seller’s web site looks suspicious then the seller’s reputation might be as well
Misrepresentation: The seller posts false information or pictures for the auction item. The buyer believes he/she is purchasing a quality product but receives something different or of lower quality/value.
Non-delivery: The seller for an auction item fails to deliver the auction item to the buyer after receiving payment.
Fee Stacking: The seller informs the buyer that there are additional charges for the auction item after the buyer wins the auction. The additional charges may include postage, handling, shipping materials, or a transfer fee.
Triangulation: A seller fraudulent purchases and obtains an item by illegal means (stolen property). The seller then places the item up for auction. The buyer of the item, after payment is made, is mailed the auction item. The buyer is now in possession of stolen property.
Escrow Services Fraud: The seller creates a phony escrow service and requests that the buyer uses the third-party (phony) escrow service for payment of an auction item. The victim signs up at the phony escrow service and makes the payment. The seller pockets the payment and never delivers the item. The buyer could also use a phony escrow service and have the seller send the auction item prior to an alleged payment being made into the phony escrow service.