Online Auction Fraud Guide


Internet fraud is growing at an alarming rate each year, and the most common complaint by far is auction fraud. Protect yourself by following these steps: 
Check out the auction site and the protection it offers
Understand as much as possible how the auction works and what your obligations are as a buyer and seller. Familiarize yourself with the fraud protection offered by the site. For a fee of $25, eBay provides protection for up to $200 for items never received or misrepresented. But that doesn’t help people who buy more expensive or rare items.‘s auction site offers full fraud coverage for items not delivered or fraudulently represented – but only when you use their ‘Amazon Payments’ feature and only up to $2,500. 
Research the item 
Auction sites aren’t necessarily offering the best price or information. A little shopping around may prove the item auctioned as ‘rare’ is available at the discount store down the street. 
Be a cautious buyer 
Ask lots of questions about the product, regardless of the item’s description or photos. Be wary of items sold ‘as is,’ high shipping charges or significantly delayed shipping dates. Also, research the seller. Most sites provide a seller’s rating and feedback history for each sale that a person has made. But even these can be manipulated by crooked hackers who will use someone else’s feedback rating to sell you fraudulent items. In general, avoid sellers with several negatives and those with no feedback. Get the seller’s phone number and physical address, then verify the number by calling. And remember that if a seller is located outside the United States, laws may be different when it comes to resolving disputes. There should be no reason to give out your social security number or driver’s license number to the seller. If a seller asks for this information, report him or her to the site’s fraud program and to the Internet Fraud Complaint Center
Be a cautious seller 
Verify the physical address of the buyer before you ship an item. Phony buyers have been known to give bad credit card numbers and then have the merchandise sent to a different address than the one on the credit card. Or they have it sent outside the United States and the seller never gets his money. In your seller description, make it known that you don’t take credit card transactions if the addresses don’t match. 
Decide on your offer in advance 
After you’ve done your homework, decide how high you’re willing to bid for the item and stick to it. This prevents heat-of-the-moment decisions especially in highly competitive bidding. If you win the bid, print out the photos, descriptions and e-mails exchanged with the seller. Insure the item and pay promptly. Keep all records until the item is received and verified.  
Special credit card warning 
Using a credit card online is usually a smart move, but it can get dicey in the online auction business. If you use an online payment service like PayPal (owned by eBay), you waive all of your chargeback rights. Essentially, you are no longer dealing directly with the merchant when you use this intermediary service. So if the seller fails to send the merchandise, or if the seller is a liar a chear or a thief, you are out of luck.  
Consider using an escrow service 
Using a reputable escrow service could prevent you from getting taken when bidding online, especially if you’re buying something that costs more than $200 (eBay’s limit for fraud protection). Escrow services hold your money for a fee, and only when you receive the merchandise is the money released to the seller. But first check out for a list of the fraudulent escrow services. There are plenty out there. And remember not to deal with sellers who demand cash or third-party wire transfers. These are not traceable types of payment and offer no protection.  
When something goes wrong 
If there are problems, first try to work it out with the seller. If a dispute can’t be resolved, contact the credit card company and the auction site. If that doesn’t work, a report should be made to the Federal Trade Commission and the Internet Fraud Complaint Center.

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