Online auctions can be fun, convenient and profitable. But, it is difficult to always avoid being the victim of an unscrupulous buyer or seller at an online auction since online auction fraud is now very common. Fraud is any intent to hide or disguise the legitimate source of an offer to make it look as if it originated from a legitimate source. There are ways you can reduce your chances of becoming a victim. Understand as much as you can about how the online auction process works before bidding or posting an item for sale. Pay attention to fraud alerts posted at online auction websites.
Before you post an item for sale, understand your obligations as a seller. Decide the payment form you prefer, how you will ship the item, if shipping costs are included in your price, which locations you will accept payment from and which locations you will ship to. Before you buy, learn about the seller and their obligations. Check the feedback and the reputation of the seller, what payment form they prefer and their payment address. Find out if the item for sale has a warranty, if shipping costs are included in the price, the refund policy and how long delivery should take. If you are an American citizen, try to stay within the United States so consumer protection laws apply.
Using a credit card instead of an online check, debit card, cashier’s check or wire transfer within the U.S. allows American consumer protection laws to apply. Don’t accept a cashier’s check from outside the United States or use an escrow service based outside the U.S. You can read about wire transfers from the Federal Trade Commission. Use a legitimate payment verification service such as PayPal, VeriSign or WorldPay.
Don’t accept payment for an amount more than the sale. Even if the person said they made a mistake and want you to return the remainder, this could be money laundering or an overpayment scam. Your bank will expect you to replace the funds that may be proven illegitimate even if the funds were ‘cleared’ by the bank and made available for your use.
Don’t respond to an offer (usually by email) for the same product or service you missed at an auction for a better price requesting your monies be sent through a service such as Western Union, a wire transfer or a cashier’s check. Beware after the auction has closed and the seller changes their payment preference without posting the change. When the seller requests payment to be mailed in the form of a check, cashier’s check, or money order, or sometimes-made payable to an individual instead of a company, this has the potential for fraud. Beware when a buyer or seller asks for personal, banking, or financial information not necessary to complete the sale such as your Social Security number, drivers license number, mother’s maiden name, or account number. This has the potential for identity theft.
Remember that persons can have as many online personalities as they like, even being more than one person at the same time. Reputable auction sellers don’t want to tarnish their reputation. Reputable sellers do want to make feedback available about their items and quality of service from real customers. Fraudulent sellers can be the same person as their customers providing feedback to potential customers even though the names and addresses seem to be totally unrelated. Recognizing the difference can be tricky. Reputable sellers sometimes make previous customers available with their permission but don’t have the need to flaunt customer's opinions or pressure prospective customers into contacting previous or existing customers.
You can file a complaint with law enforcement in the USA, UK and Canada. Other law enforcement links are available at the Cyber Criminals Most Wanted website. For a review of how to generally recognize a scam, read this article about scams.