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Protect Yourself Against Online Auction Fraud
by Reid Goldsborough
Link-Up Digital
November 1, 2004


Despite the ever-increasing technological sophistication of the Internet, it’s still largely the Wild West out there in legal terms, with online fraud and identity theft acting as the latter-day equivalent of cattle rustling and shootouts at high noon.

A new study by Symantec Corp. revealed that the problems are now widely known, with most people changing the way they use the Internet as a result, although there’s still a lot of uncertainty. Nearly 44 percent of respondents said they receive unsolicited e-mails requesting personal information several times a day. Slightly more than 44 percent thought they had visited a fraudulent Web site but were not sure, and nearly 20 percent said they had definitely visited a fraudulent Web site.

One of the major areas of online fraud is auctions, with people falling victim to misleading descriptions, deceptive photography, pirated products, and nondelivery of items purchased every day. Online auction fraud continues to be the most frequently reported offense at the Internet Fraud Complaint Center (http://www.ifccfbi.gov), a site run in part by the FBI.

John Comeau of La Mesa, Calif., was one of more than a dozen people scammed by a Philadelphia seller last year in phony eBay auctions for laptop computers and gold coins. But he was both smart and lucky. Because of publicity that he helped generate about the scam on the Web and with the help of a local TV station, he got his $405 back.

The best Web sites for exposing scammers, said Comeau in a phone interview, are Slashdot (http://slashdot.org) and Stop Online Fraud Forum (http://www.stoponlinefraud.com/forum). “Roaches run from the light,” he said.

Still, it’s best to avoid roach infestation problems in the first place. buySAFE (http://www.buysafe.com), a new service based in Alexandria, Va., and founded by Steve Woda, is designed to reduce the risk of online auction shopping by bonding sellers who choose to participate in the program.

Sellers earn the right to display the buySAFE seal on their auctions once buySAFE performs a background and credit check on them, ensuring that sellers are who they say they are and that they’re trustworthy. This costs sellers one percent of the winning bids of successful auctions in which they display the buySAFE seal (buyers pay nothing).

Often, sellers sign up for the program when would-be bidders say they’ll bid on their auctions only if they sign up with buySAFE, said Woda. Because it’s an automated online process, it takes 10 to 20 minutes to fill out the application and 5 to 10 minutes to be approved.

The service currently works only with eBay, which is far larger than all the other online auction services combined and where the lion’s share of online auction fraud occurs. Buyers can search for auctions guaranteed by buySAFE. Click on Advanced Search, check the box before “Search title and description,” and include “buySAFE” as one of your search terms. As of this writing, there are 40,000 current eBay listings protected by buySAFE.

Woda got the idea for the service after he himself was scammed on eBay, paying for a Palm Pilot personal digital assistant that he never received despite taking precautions by making sure the seller had a good eBay feedback rating. “I realized that if it could happen to me, it could happen to others,” he said.

buySAFE will guarantee any given auction up to $10,000, which is far higher than the standard limits that eBay or its online payment subsidiary PayPal offers with their buyer protection plans. The business plan appears to be highly successful. Woda says that thus far, because of the rigorous checks they do, they’ve never had to reimburse any buyers for money lost on scam auctions.

Fred A. Murphy of Lancaster, Ohio, is the archetypal eBay seller. Murphy owns a collectibles business, Bigg Fredd’s (http://stores.ebay.com/BiggFredds), that’s now entirely online. (It was previously run out of a retail store from 1975 to 2003.) Using the eBay I.D. sales_at_biggfredd_dot_com, Murphy auctions off collectibles, tools you can use to find them, and metal detectors, with several thousand completed transactions since he started with eBay in 1998. Murphy uses buySAFE. “It’s the first true buyer protection plan,” he said.

Online auction buyers can take other steps to protect themselves. The most important step is this: Never buy from a seller who sells through private auctions in which people are prevented from contacting bidders unless you know the seller and know that there’s good reason for making the auction private. The act of knowledgeable people contacting bidders in scam auctions is a major way these scams are stopped.


Reid Goldsborough is a syndicated columnist and author of the book Straight Talk About the Information Superhighway. He can be reached at reidgold@comcast.net or http://www.reidgoldsborough.com.

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