Retailers shift their ad spending from TV, radio and print ads to digital ads.
With more than 51,000 complaints filed by consumers against web auctions last year, the Federal Trade Commission and 29 states have filed 57 law enforcement actions as part of the Operation Bidder Beware crackdown on online auction fraud.
With more than 51,000 complaints filed by consumers against web auctions last year, the Federal Trade Commission and 29 states have filed 57 law enforcement actions as part of the Operation Bidder Beware crackdown on online auction fraud. The cases include non-delivery of paid-for goods, theft of consumer identities and a phony payment escrow service.
The fraudulent activity and the efforts to stop it come at a time when online auctions continue to rise in popularity. EBay Inc., the largest source of online auctions, says it averages 16 million auctions running at any time, up from 12 million in the fourth quarter of last year. EBay, which cooperated with the FTC in catching fraudulent auctions on eBay.com, says it has seen a fairly small though constant rate of auction fraud, at less than 1% of all of its auctions.
The FTC says many of the fraud cases involve scams through which consumers who believe they have won a legitimate auction send their money to the seller but never receive any merchandise.
But some fraudsters also take additional steps to hide their activity. In one case, the FTC said, a fraudulent seller constantly changed the name of his Internet auction account to make it difficult to track his non-delivery of paid-for goods. To further attempt to hide his actions, he managed to set up bank accounts and post office boxes in the names of consumers whose identities were stolen from the records of a suburban Chicago hotel, then had some buyers send payment to these accounts, the FTC said.
In another case, a fraudster set up a phony online escrow service, Premier Escrow, that was designed to bilk auction sellers as well as buyers. The fraudster would pose as a seller and direct the buyer to send payment to the escrow service, then collect the money but never deliver any merchandise. Other times, the fraudster would pose as a buyer, insisting on using Premier Escrow for payment, then abort payment after receiving the goods won at auction. "These sellers allegedly shipped their merchandise to the scammers and never heard from them again," the FTC said. A U.S. District Court in Virginia has ordered a halt to the Premier Escrow scam, dismantling its web site and freezing its assets.
To help consumers guard against online auction fraud, the FTC has made available "Internet Auctions: A Guide for Buyers and Sellers," at its web site, FTC.gov/onlineshopping. Among the tips: Avoid doing business with a seller who tries to lure bidders off an auction site with promises of a better deal.
EBay advises users to read through the buyer-feedback comments posted on all eBay auctions, and to e-mail the seller with questions about how they operate. "Be wary of the way the seller communicates," an eBay spokesman says. "If a seller is insisting on payment within a day of when the auction closes, or wants money wired to another country, that`s suspicious."