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Posted on 01/12/2003 7:47:47 PM PST by new cruelty
WASHINGTON (Reuters) - Teresa Smith discovered Internet auctions in a big way about two years ago, selling $800,000 worth of Apple Macintosh (news - web sites) computers through sites such as eBay and AuctionWorks.
Like thousands of other small-time entrepreneurs, Smith found that online auction sites could expand her reach and connect her with customers from Hawaii to Switzerland.
Soon she was hiring employees and tooling around Boston in a new Ford Mustang convertible.
While Smith certainly cashed her customers' checks, unfortunately, she rarely bothered to send out the computers they had paid for.
Smith admitted in court in November that she had ripped off 300 customers in what law-enforcement authorities estimate may be the biggest case of auction fraud to date.
While few scam artists operate on Smith's scale, they have for years turned to auction sites like eBay and Yahoo! to sell cars they don't own, computers that don't exist and diamond rings -- without any diamonds.
Reports of auction fraud have skyrocketed from 106 in 1997 to 25,000 in 2001, according to the Federal Trade Commission, far outpacing other common online scams.
Scam artists commonly sell big-ticket, relatively generic items like computers or automobiles, advertising them with pictures downloaded from elsewhere on the Internet, according to Delores Thompson, an FTC staff attorney who focuses on auction fraud.
"They come in, they hit quick, and they disappear," she said.
HOMEWORK IS KEY
Of course, the vast majority of auctions go off without a hitch -- eBay estimates that only one in 10,000 transactions on its site is fraudulent.
Still, law-enforcement experts say consumers should do their homework before plunking down thousands of dollars for that PowerMac G4 computer or Volvo V70 station wagon.
Prospective bidders should shop around on different sites to determine average prices, experts say, to decide whether a particular offer is indeed too good to be true.
"A lot of it really comes down to common sense on the part of our users," eBay spokesman Kevin Pursglove said.
"Feedback" ratings, which are indications of past customer transactions, are a good place to start, Pursglove said, although scam artists like Smith sometimes create multiple identities or steal those of others.
Bidders should also look for a refund policy and contact the seller with any questions before they place a bid, he said.
The FTC's Thompson said bidders should make sure they have a street address for the seller and to avoid sending checks to a post-office box.
Big-ticket purchases should be made with a credit card, which has built-in fraud protection, or an online payment service such as PayPal, rather than sending a personal check, experts said. Or better yet, buyers can turn to an escrow service, which holds their money until the merchandise arrives.
But buyers should beware of these services as well -- law-enforcement officials say many fraudsters now set up bogus escrow services to aid their scams. Once the buyer sends in his money, the escrow service pulls up its stakes and moves on.
Buyers should keep in mind that they do not have to use a particular escrow service recommended by the seller, Thompson said, and should scrutinize the escrow service's Web site carefully.
An inability to handle credit-card transactions is a likely red flag, she said, as are misspellings or other errors in the fine print.
"If it's a crude-looking site, steer clear," she said.
Buyers can also check Web sites like http://www.sos4auctions.com to determine if problems have been reported with any particular escrow service.
With her business shuttered, Smith pled guilty to five counts of mail fraud and five counts of wire fraud in December. She faces a prison sentence of up to five years, a fine of $250,000 -- and an order to pay back her would-be customers.
They, meanwhile, have started an online support group called iMad, a spoof of a popular Macintosh model.
(Excerpt) Read more at story.news.yahoo.com ...
Some people (either through inexperience or blind faith) just place to must trust in others.
What is that other saying... 'A fool and his money...'
Lazy writing, unattributed source.
Think for a minute: what qualifies someone as such an expert? Why isn't this person and their qualification(s) named
Hint: there is no such person
The use of un-named experts in a story like this ought to earn the writer 5 years in prison
Why not charge back your purchase through your credit card company? As far as the law is concerned, you were paypal's customer, not the scammers (i.e., you paid paypal, not the scammer). You didn't get your stuff and paypal is responsible. No agreement between you and a merchant (paypal) can waive your rights to charge back a transaction through your credit card company.
In this case I'd simply remain silent on the fact that I didn't get the goods - and allege the transaction was fraudulent - i.e., that someone used my card without permission.
Without cooperation from the seller (who likely would be long gone), PayPal would have a difficult and expensive time proving it was me that used the card. In this case the Fair Credit Billing Act would kick in and my loss would be limited to $50.
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