Researching on
various articles on Internet auctions, I have
compiled below description of some of the most
common frauds seen in Internet auctions.
False Claims / Misrepresentation
Inflated description, false claims of superiority,
overstated value, misleading facts are some of
the common means of confusing buyer. Fraudsters
use cleverly framed language to trick buyer in
believing seller's claim.
If there is anything in an item description that
doesn't make sense to you, or that just makes
you wonder, don't brush it off. That's almost
always a valid warning sign. Ask the seller. And
don't buy unless you're sure of the answer.
Vanishing Seller
Seller accepts money and that's the last time
you interact with him/her - you never receive
the promised merchandise.
This is one of the oldest tricks in business
- but there are safeguards like escrow accounts
to cover your backside.
Fraud Buyer
The fraudster, posing as buyer, pays through
fake money order, bogus cashier's check or bank
draft, bounced checks, stolen credit cards, or
a number of other techniques.
Fake Buying Bids
As in live auction, artificially inflating price
on an item by using fake bids from phony user
IDs or accomplices.
Bid Shielding
In this mode, fraudsters use bogus high bids
from phoney accounts to jack-up the price and
scare off potential buyers. The actual bidder
then retracts the higher bids, getting the item
at a much lower price than he would have otherwise.
Piracy and counterfeiting
Fake diamnonds, pirated music, phoney jewellery,
forged collectibles, pirated software etc. are
some of the examples.
Internet Fencing
Using Internet auction to sell-off stolen goods
Triangulation
This is an extremely innovative way of defrauding
people - that can fool even experienced surfers.
The fraudster puts high value items (e.g. branded
perfumes, leather articles etc.) at extremely
attractive price. This kind of "unbelievable
deal" can easily attract many buyers but
also raises suspicion in the minds of experienced
surfers.
So, to ward off buyer's suspicion, the fraudster
offers to send the items on approval.
The fraudster then use stolen credit cards to
order the items, to be shipped to buyer. The buyer
receives the items and gladly pays for this "unbelievable
deal" to the fraudster in cash. Shortly afterwards,
the buyer gets a visit from the police for credit
card fraud and theft.
Shell Auctions
There is no merchandise - fraudsters organize
bogus auctions to get money or credit card numbers
from unwary buyers.
False Replacement Claim
The buyer gets the merchandise in decent condition
but Complaints of damaged merchandise. He/she
then returns a similar looking item that has been
damaged, or a fake, with the claim, "It isn't
what I expected." The seller refunds their
money, and is left with broken/damaged or fake
product that can not be sold again.
Misleading Additional Fees
Additional charges like shipping and handling
costs are added after the sale has been made.
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