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Buyer's Remorse: Auction and E-Commerce Rip-Offs

Of the numerous types of online fraud, auction schemes remain by far the most common, according to statistics published by Internet Fraud Watch. Last year, 78 percent of all the complaints reported to IFW concerned auctions. Steep as that figure is, it's down from 87 percent in 1999. "Even though Internet fraud is up this year, auction scams have leveled off," says the FTC's Wenger.

But fraudulent merchandise sales at other types of Web shopping sites have increased sharply--from 3 percent in 1999 to 10 percent in 2000, reports IFW. Victims typically get flimflammed by doing business with fly-by-night Web sites that take the money and run.

E-commerce scammers frequently lure victims by dangling faddish, hard-to-find goods in front of them--a classic example being the Sony PlayStation 2 cons that popped up last holiday season. Two sites in particular, PS2storeusa.com and PS2storecanada.com, both based in New Brunswick, Canada, promised consumers that they had plenty of the elusive Sony game consoles in stock. Hundreds of hungry shoppers whisked off their payments but never got the goods.

Late in December, the Royal Canadian Mounted Police arrested 20-year-old Scott Byers in Moncton, New Brunswick. Byers was charged with fraud related to both sites; preliminary hearings begin in July.

How can you avoid being taken by an e-commerce con? For starters, don't assume that a slick, well-organized Web site you've never heard of is on the up-and-up. Be skeptical of sites that offer incredibly low prices or claim to have impossible-to-get products in stock. And make sure you check out merchant-review sites such as Gomez for evaluations from experts or fellow consumers.

As for auctions: Buying from a seller with no feedback (or worse yet, with negative feedback) is inherently riskier than doing business with one who has a record of happy customers. Be wary of sellers who insist on payment by money order, cashier's check, or other options that leave a burned buyer with little recourse.

The Unhappy Few?

With online auctions still notoriously at the top of the scam hit list again this year, why do people keep coming back for more? For one thing, auction sites claim that the chances of getting conned are small. EBay spokesperson Kevin Pursglove reports that 1 item in every 40,000 resulted in a fraud complaint in 2000, down from 1 in every 35,000 the previous year.

The thrill of wheeling and dealing for a low price is another factor. It's one reason PC World named EBay the Web's best site last year.

For Tom Ogle, though, online auctions are not just about price. Ogle runs his own Seattle-based commercial photography business and relies on EBay for hard-to-find equipment. He spotted a listing for a new Epson scanner that could handle transparencies. Ogle won the auction for $180 and sent a money order to the seller, who was based in San Jose, California.

Then he waited. And waited. Other bidders started complaining about the seller, and EBay responded by suspending the seller's account. Ogle ended up buying a new scanner locally at full retail price.

Eventually, Ogle did what many burned buyers have to do. He took the initiative and went after the seller himself--in this case by filing a report at the San Jose Police Department's Web site. The police called him the next day to follow up, and "I asked them to get a big guy in blue on his doorstep," recounts Ogle. The police did show up at the seller's door, and Ogle finally got his scanner--albeit a refurbished unit, not a new one. "Had I relied on EBay exclusively, I would've been seriously out of luck," says Ogle.

Even though Ogle's story has a (somewhat) happy ending, it highlights a complaint common among bidders burned by auction fraud. Sites claim that the measures they've set up promote safe trading, yet when an auction goes sour the site's response often sends a mixed message.

When EBay suspends a seller, no one is allowed to post feedback, including warnings, about the seller. So when feedback gets shut down, many users jump onto EBay's message boards to spread the word about dubious sellers. But that too can lead to a dead end, as Maxon learned.

"A few of us started a thread [at EBay's message boards] to alert people," she says. "EBay removed the thread because we had the seller's ID in the title."

According to EBay, using a seller's ID in messages is inappropriate and violates the site's guidelines. Moreover, under its "auction interference" policy, EBay no longer lets members send e-mail messages to other bidders either before or after the auction closes.

More recently, EBay introduced another new rule: Members can no longer see other members' e-mail addresses. Instead, they must communicate through a forwarding system. Many members are furious, suspecting that this move will make it harder to detect shilling.

Along with the auction interference rule, the ban on members' e-mail addresses also makes it harder for defrauded parties to band together. EBay says it imposed the new policies to make it more difficult for junk e-mailers to harvest e-mail addresses.

All auction sites encourage the use of payment or escrow services to help transactions go more smoothly. Most sites also provide some kind of insurance coverage. Despite the various payment services and insurance plans, getting your money back--or at least getting help--is not always a cakewalk.

Scam victims often complain of finger-pointing: The payment service may tell you to go to the auction site if you've been defrauded, and the auction site may point you back to the payment service.

Bidder Beware

Instances of Internet auction fraud may decrease over time, but that doesn't mean that shoppers should be any less cautious. And despite progress by the FTC and others, "it's clear that we need to do more and improve our protection measures," acknowledges the FTC's Wenger.

Xmas Maxon agrees--and that's one reason she's walked away from auctions altogether. "I don't want to give EBay or any auction site my business again," says Maxon. "Our communication about a fraudulent seller on EBay was halted and made it impossible for new users, especially, to know what was going on."

For the time being, it seems, scammers will continue to find and exploit cracks in the system. And until the sites do more to protect buyers, fraud victims like Maxon are sure to remain disgruntled.

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