When your customer and/or merchant are nothing but a handle on an Internet website, the likelihood of falling victim to deceit greatly increases. In an age of credit card fraud and telephone scams it is imperative that sellers and buyers protect themselves.

Internet Fraud

The top ten Internet scams as listed by the National Consumers League’s (NCL) Fraud Center, in 2006 included:

1. Online Auctions - Misrepresented or undelivered goods.

2. General Merchandise - Misrepresented or undelivered goods not purchased through auctions.

3. Fake Check Scams - Consumers using fake checks to pay for sold items, and asked to have the money wired back.

4. Nigerian Money Offers - Deceptive promises of large sums of money, if consumers agreed to pay the transfer fee.

5. Lotteries - Asking winners to pay before claiming their non-existent prize.

6. Advance Fee Loans - Request a fee from consumers in exchange of promised personal loans.

7. Phishing - Emails pretending to represent a credible source, ask consumers for their personal information (e.g. credit card number).

8. Prizes/Sweepstakes - Request a payment from consumers in order for them to claim their non-existent prize.

9. Internet Access Services - Misrepresentation of the cost of Internet access and other services, which are often not provided.

10. Investments - False promises of gains on investments.

The Internet Crime Complaint Center (IC3), a joint venture of the FBI and the National White Collar Crime Center, in 2007 found:

1. Online auction fraud was the most reported type of fraud and accounted for 44.9% of consumers’ complaints.

2. Non-delivered merchandise and/or payment made up 19.0% of complaints.

3. Check fraud represented 4.9% of complaints.

4. About 70% of the fraud victims were scammed through websites and 30% of the victims were scammed by emails.

5. The average loss for all Internet frauds was $1,500.

Auction Fraud

A seen above, auctions are the number one source of fraud on the Internet. A great deal of fraudulent sellers and buyers manipulate eBay auctions. Among these frauds are the receiving of payment and failing to send merchandise, the selling of stolen or counterfeit items, and buyers forging emails to sellers claiming that a payment has been made. Some perpetrators go as far as to set up fake eBay websites that request log in information; allowing them to hack into an account.

eBay’s feedback system is one method of defense. By leaving feedback on a buyer or seller, you alert others of the level of honesty in their business practices. However, this feedback system does have its faults. For instance, giving a ‘neutral’ rating might cause a seller to retaliate by leaving a ‘negative’ rating. Therefore, some feel it is in the eBay user’s best interest to give feedback only after the buyer/seller has already done so.

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