SecurePuter

Series: Do Not Fall Victim to Internet Scams
Entry 1: Internet Auction Fraud Prevention

In 2007, the Internet Crime and Complaint Center (IC3) received 219,553 complaints that totaled $239,090,000 in financial losses. The average loss per complaint is around a thousand dollars. That is a mortgage payment, two months of groceries, or even a week of gas (soon enough anyhow ). Now take into consideration the reports of other agencies and all instances that go unreported and you have an enormous amount of e-commerce dollars being stolen yearly. According to the 2007 IC3 Report, Auction Fraud and Non-Delivery Fraud make up over 60% of all e-commerce crimes.

From the IC3 2007 Report

If I could have educated just one percent of the victims reporting auction or non-delivery schemes to IC3, I would have prevented almost a million and a half dollars from being unlawfully taken. This is one of the reasons I have created this blog . The best contribution I can make is educating the public. If that makes the smallest difference in preventing computer crimes, I have done my job. This will be my first entry in a series titled “Do Not Fall Victim to Internet Scams ” that will explore each of IC3’s top 10 internet crimes.

What is Auction Fraud?

Internet auctions are big business within the e-commerce marketplace, and as such make up the largest amount of reported complaints. Websites, such as eBay and Yahoo Auctions, complete millions of transactions a day by allowing anyone to post an auction. Although convenient, the anonymity of these sales requires buyers to be ever vigilant of auction scams.

Auction Fraud Example
I read an article a while back by Bob Sullivan for MSNBC which details how a man in South Salt Lake, Utah, masterminded one of the largest eBay fraud schemes in the history of the website. He victimized close to one thousand people, and received roughly $1 million in a matter of weeks. He owned a company called Liquidation Universe and sold laptops exclusively on eBay. After masquerading as a legitimate business for nearly 6 months, the company stopped shipping merchandise to buyers. Many of the victims were lured into a false sense of security due to a SquareTrade $1,000 protection logo. The assumption was that the buyer was guaranteed, up to $1,000, not to get scammed by this seller. However, on SquareTrade’s website the terms of service state that the $1,000 is allocated per seller, not buyer. Therefore, the victims are entitled to approximately a “buck” a piece. The example shows how even legitimate businesses, with promises of security, still need to be thoroughly researched before sending payment.

Protect yourself from Auction Fraud

There are a few symptoms to watch out for when attempting to discover a fraudulent internet auction.

• An extremely new account, with no feedback history, should be treated with extreme caution.
• A negative user rating indicates that other buyers and sellers dislike the business practices of an individual or company.
• Auctions that require payment by any other means than credit card or Paypal should be avoided, especially if the seller request payment be sent to a P.O. Box.

Some preventative measures are taken by the auction sites themselves, but the authenticity of an auction still requires some work on the part of the buyer.

• Ensure the auction site is legitimate and has a secure payment process. On any website that you are entering sensitive information, ensure that the site has an SSL Certificate. Double click the icon in the bottom right of your browser window to see the Certification Authority.
• Attain a clear understanding of the obligations of the buyer and the seller, as set forth in the auction details, to alleviate any confusion.
• Read the policy of the hosting website, and only participate in an auction if they are in full compliance.
• Research the seller’s feedback history, and check with the Better Business Bureau if they are a legitimate company.
• Scrutinize the shipping procedure, the return policy, and how the payment transaction is supposed to occur.
• If you are purchasing something fragile or highly valuable, it may be worth purchasing insurance on the item.
• International sales aren’t governed fully by United States laws, and should be thoroughly researched before doing business.
• Offer only information pertinent to completing the deal, ie. a social security number is never needed.
• I can’t stress this enough, use common sense. If something looks suspicious, smells suspicious, and tastes suspicious, avoid it completely. It is not worth the risk.
• And one more cliché for you, “If a deal looks too good to be true, it probably is.”

Free Auction Fraud Prevention Tool
If you can’t be bother to spend your time researching each and every auction, there is a FREE software tool for Windows and MAC users that screens for over 200 signs of auction fraud called Auction Inquisitor . It will examine user feedback, auction history, and a number of other factors. The system operates on best guess assumptions by flagging suspicious activity. However, it cannot identify definitively if the seller is a scammer. The tool basically does the legwork for you and presents the information in a simple report.

Reporting Auction Fraud

Victims of internet auction fraud and scams should immediately contact their local and state police departments. Complaints ought to be filed with the auction company, the Internet Crime Complaint Center , the National Fraud Information Center , the Better Business Bureau , and if possible, the law enforcement agencies at the perpetrator’s location. Internet auction frauds are tough to identify, but utilizing the preventative methods described herein is a step toward eliminating the chances of being victimized. As technology develops and consumers achieve a better understanding of the online marketplace, auction fraud will become less costly in the future.

Check back soon for Entry 2 of the Series, “Do Not Fall Victim to Internet Non Delivery Scams”