Cyber-thieves target auctions

NEW YORK — Sophisticated cyber-scammers are ripping off hundreds of online auction buyers and sellers through bogus escrow services in the latest variation of Internet fraud.

Buyers of expensive cameras, computers and cars, including one man who paid $50,000 for what he thought was a new BMW sport-utility vehicle, have been taken in the auction hustle, which emerged on the Internet last fall.

Similarly, sellers of expensive jewelry and other items, including a man who sold a used Rolex Presidential watch for $14,000, also have been victimized.

The polish on the scam includes elaborate Web sites with names like Premier-escrow.com, mimicking legitimate escrow services.

To foil federal investigators, the cyberthieves mask the physical location on their sites and operations and the identity of computers used for their E-mail and other transactions.

And in a novel twist, consumers’ dread of getting ripped off is the scammers’ great bait in this game.

For buyers, it’s the threat of not receiving the merchandise paid for, while for sellers, it’s the fear of not getting paid for items shipped.

An escrow service, which guarantees the proper exchange of goods and money, seems like the best security for transactions.

For online auction participants, legitimate escrow operations work this way: Buyers deposit the purchase price of an item with the escrow service. The money is released to the seller after the buyer receives the item and verifies its authenticity.

“Shipments are insured and tracked, and there are other security measures so both buyer and seller are protected,” said Dana Wathen, senior escrow officer of Escrow.com, a legitimate company affiliated with eBay, the online auction service.

In the scam, however, people posing as legitimate buyers and sellers also run the bogus escrow services, such as Premier, EscrowSol.com, and Simple-Escrow.net., according to Federal Trade Commission officials.

Those sites have been shut down by the FTC, but new ones appear all the time, said investigators.

“The perpetrator will close on an item and send an E-mail to the auction participant saying they should use an escrow service as the safest and most efficient way to consummate the transaction,” said eBay spokesman Kevin Pursglove. “The escrow service is the perpetrator’s, and that’s that.”

Auction fraud is the No. 1 Internet scam, according to the FTC’s database of more than 285,000 complaints.

Similarly, auction fraud represented 46 percent of 75,063 complaints made last year to the Internet Fraud Complaint Center, run by the FBI and the National White Collar Crime Center.

The online escrow operations are among the most sophisticated of the scams. The Web sites are well-designed and seem to have security features, and the E-mail correspondence looks highly professional.

Premier-escrow.com, for example, was one of the most successful scam operations until it was shut down this spring by the FTC.

“They would set up stuff on auction sites or surf auction sites, and the fake seller, for example, would E-mail a bidder, ‘I’ll give it to you at a discount if you close right now,’ or the fake buyer would E-mail a seller, ‘I’ll pay you more if you close now,’ “ said Karen Leonard, FTC staff attorney. Then the fake buyers and sellers would persuade auction participants to use Premier-escrow.com.

“They’d say, ‘Check out the Web site,’ and people would, and it looked like the company was based in Cincinnati, Ohio, and they had all these safeguards,” she said.

Buying victims were persuaded to buy E-gold, or digital dollars, from other online services and deposit the Internet currency in Premier’s account. Then buyers would be notified that the item had been shipped and their funds were being released to the seller.

“Of course, nothing was ever sent, and when buyers e-mailed Premier, they got a response saying, ‘We’ll get back to you within 24 hours,’ but they never did and the buyers were out the money,” Leonard said.

Selling victims were conned into the same routine and were notified that the fake buyer’s money had been received. The legitimate sellers’ items, including camcorders, laptops, cars and jewelry, were shipped out, generally to hotels, FedEx service centers and overseas locations, she said.

When the FTC began investigating the site, it found that Premier’s managers had used stolen credit cards and fake identities to register their domain name, Premier-Escrow.com.

Premier’s managers used free e-mail services, or proxy servers or open relays, to disguise the origins of their transactions. The E-gold and digital dollars had been moved around, were withdrawn from accounts and had disappeared.

“So far, we’ve been able trace Premier to servers in Spain and Romania, but beyond that, we’re still working on it,” said Leonard.

Fraud on Ebay has been pervasive lately, especially with auctions for high end electronics, cameras, and computers.

Always remember the adage, if it sounds too good to be true, it probably is. If you see an auction for an item for auction and it seems too good to be true, here are some signs to watch for that may indicate a scam:

A "Buy it Now" price that is less than 50% of retail. Right now, for example, there are many auctions offering a Canon EOS 1Ds digital SLR camera for $2000 or less. The camera retails for $7900. Big red flag.
A seller has chosen to sell to "pre-approved bidders". There could be several reasons for this, some legitimate, but many fraudulent.
A seller has lots of positive feedback, but their sales history shows items completely unrelated to the item in question. For instance, if a seller's history shows they sell mostly children's toys or nutritional products that typically sell for under $50, but now they're offering a $3000 high-end computer or speaker system, watch out. Almost invariably, this is a hijacked account. Scam artists have become adept at gaining access to Ebay accounts through fraudulent spoof emails that convince a person to reveal their username and password. The scammer then logs on, changes the password, and starts posting fraudulent auctions. The person who's had their Ebay ID stolen is mostly powerless to do anything to stop it, since they need to login to Ebay to report the fraud. Duh!
If you inquire about an auction item and the seller offers to sell it to you outside of the Ebay system, don't do it. It may be legitimate, but most likely it's not.
If an seller responds and suggests or insists on using a wire transfer like Western Union, don't do it. They'll get your money and disappear without sending the product. Very important: - Believe it or not, if you express doubts about the transaction, scam artists will suggest you simply send the money but send it to a different name of your choosing, and only when you receive the product, changing it to their name so they can then pick up the money. This is a scam artist, remember. They lie. All they need to pick up the money is the wire transfer number. They don't need to give a name.
If an Ebay seller is registered as someone from the U.S. but wants the sale money sent overseas (we're on vacation, I'm here on business, etc.), be cautious and proceed with the assumption that it's a scam. It probably is.
If you receive an email purportedly from Ebay or Paypal asking you to verify, confirm, re-authorize, etc. your user name and password, treat it as if it's a scam, because it almost certainly is. Scam artists can easily re-create a page that looks like it came from Ebay. All they have to do is lift the logo graphics. If the email provides hyperlinks, don't trust the link to take you where it says it will. What you see in the text of the message may be completely different from how the hyperlink is coded.
Don't ever trust an escrow service or payment method suggested by a seller if you're skeptical about the auction. As this article mentioned, it's a simple matter for a scammer to set up a site or service, call it www.easyescrow.com, for example, and pass it off as a legitimate escrow service that they have no affiliation with. Remember, domain names are cheap, anyone can buy one, and a fraudulent but legitimate looking "escrow service" can be online in a matter of hours.
Lastly, if you do receive one of these emails and you suspect it's a fraud, forward it to Ebay's fraud department, without comments or attachments, at spoof@Ebay.com.

I avoid eBay. There might be some good deals there, but once every few weeks, our local news reports someone else who was "taken" on eBay. It's not always organized. Sometimes it's just smallfry stuff and smallfry thieves who figured out they can offer something at auction and not deliver--then disappear into the woodwork.

Same with amazon.com--never buy from an unproven seller if buying used goods or books. Those "I'm New" signs should set off alarm bells. Some of these people offer a stack of best-selling items at very low prices, and by the time anyone's figured out they're a fraud, the money and the seller are gone--to reappear under another new name and account. Amazon, at least, makes good on these as a rule, but I wonder how long they can keep subsidizing the crooks--which is pretty much what it amounts to.

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