How to avoid online auction fraud

The global online marketplace eBay developed from humble beginnings to an internet giant. Founded in 1995 as AuctionWeb, the site changed its name to eBay and grew into the online trading community we all know today. As an internet company, eBay now also owns familiar brands such as Skype and PayPal, along with many other acquisitions. It boasts hundreds of millions of registered users.

The average internet user is not the only person who has been watching eBay’s phenomenal growth and enduring success. The online auction forum connects buyers and sellers in unprecedented numbers – approximately 10 million people a day – and so has become a very popular site among internet fraudsters.

Most bidders will be aware of the dangers of auctions in general – dangers such as shill bidding (where the seller makes fake bids in order to drive up the purchase price) and the selling of fake, broken or otherwise misleadingly advertised items.

But since eBay is an online auction site, it also attracts other kinds of fraud which are made easier when the buyer and seller are physically remote from one another and can remain practically anonymous.

Caveat emptor“Let the buyer beware.” This adage is particularly apt when applied to eBay. If you’re in the market for some great value secondhand goods, what habits should you adopt when browsing the online marketplace?

eBay is a very attractive target for phishing. If you receive a notification that looks as though it comes from eBay (or any web service, for that matter) then don’t follow the links in the mail. Always use your own bookmarks or type the address into your browser’s address bar. If eBay has something to tell you, then you can be sure it will show up on your account homepage.

Always take the time to read through any feedback that has been left about the seller you are considering buying from. Feedback has long been the cornerstone of eBay’s self-policing initiative and should be the first place to look for any dodgy dealings in the past activities of your seller.

If there is negative feedback, examine it before deciding whether to make your purchase. If the seller has very little or no feedback, take care. You should make every effort to verify that the seller is who they say they are, and has what they say they have.

Don’t be shy about contacting a seller and asking some probing questions. If they are genuine, they should be more than happy to talk to a potential buyer. If it’s a high-value purchase, get inventive. You could even consider asking for a photo of the item alongside today’s newspaper to prove ownership, or if the item has distinguishing features, then ask for a close-up picture.

Caveat venditor In the world of online auctions, it is not just the buyer who is at risk of being defrauded. There are also schemes for sellers to be wary of.

The so-called Nigerian 419 scam has found a new home on eBay. Sellers receive an e-mail from an interested buyer, offering a very attractive price for their item as an immediate sale, as long as the seller is prepared to ship it outside the country of origin (often to Nigeria).

The buyer will offer to pay using an electronic payment service such as PayPal. This initial offer will then be followed up with a faked PayPal notification e-mail, stating that a payment has been made to the seller, but is being held in escrow until the seller confirms shipment of the goods by way of a shipment tracking number.

Naturally, the funds never appear after the seller ships the item abroad. In some cases, the initial e-mails are followed by more threatening e-mails pretending to come from law enforcement; these are, of course, just as fake.

Staying secureIt is impossible to guarantee security online, especially where payment and shipment take place at different times and places. But there are some simple steps you can take to ensure you don’t fall for most scams.

Whenever you use PayPal, eBay or any other online transaction site, never rely on anything other than your account on the website itself.

Never follow links sent to you in seemingly official e-mails from the service. Always type the website address yourself and use transaction IDs or eBay article numbers to locate the item in question.

Always use a safe method of payment. If your credit card offers fraud protection, find out the terms of that protection. PayPal also offers fraud protection as long as the buyer is verified with a confirmed address and the item was sent with proof of delivery.

For high-value items, you could consider using an escrow service. Finally, if something does go irretrievably wrong, then call on the services of the resolution centres at eBay or PayPal.

[The views in this column are those of the author and not of MSN or Microsoft.]