EcommerceBytes-Update, Number 76 - August 11, 2002 - ISSN 1528-6703     2 of 8

Online Auction Fraud: What You Should Know, Part 1

Email This Story to a Friend

A Dutch executive bid $135,000 for a Richard Diebenkorn painting for sale by a U.S. seller on eBay two years ago. He was lucky; he found out before sending his money that the painting was a fake. Two men implicated in the case pled guilty to wire and mail fraud last year and agreed to pay restitution to their other victims But not all victims of online fraud are so lucky.

Nearly 43% of all reported Internet fraud comes from online auctions, according to the Internet Fraud Complaint Center (IFCC)'s annual data trends report Buying online, particularly on auction sites like eBay, offers added risks not encountered when shopping elsewhere. Auction transactions are between buyers and sellers, and eBay does not get involved in refereeing disputes between parties. Whether you are bidding on a computer or a consumer electronics gadget, the person you are buying from could be a retailer, a manufacturer, a Mom and Pop business or an individual, and they may be located anywhere in the world.

The potential for being defrauded is high, and, in some ways, it is amazing that anyone would even risk buying on auction sites. But in the first quarter of 2002, eBay users purchased $3.11 billion in goods. What do you do to make sure your money isn't "going, going, gone" to a seller who is not going to deliver the item you bid on? You can minimize the risks of shopping on eBay by staying alert and knowing what to look out for.

eBay Feedback System

eBay does not vet its members. They leave it to buyers and sellers to rate each other using a feedback system. You can leave a Positive, Neutral or a Negative comment about your trading partner after your transaction has been completed. Once a feedback rating has been left, it is nearly impossible to change or remove it Feedback has been the number one deterrent of fraud on auction sites, but it is far from perfect.

Some members who leave negative feedback for a trading partner are dismayed when they see a negative retaliatory feedback on their own ratings. eBay member Sharon B. learned about retaliatory feedback the hard way. A seller failed to send her merchandise, so she posted negative feedback against the seller, stating "Did not receive item. Buyer unresponsive."

Sharon said the seller retaliated by leaving feedback for her claiming she was a deadbeat and personally insulting her. "eBay refused to do anything. The amount of this transaction was small, and I thought I had learned a cheap lesson, but when feedback issue came into play, I felt violated and humiliated." As members encounter retaliatory feedback firsthand, they become reluctant to ever post negative feedback again.

For more information about fraud on eBay, visit Remember that when you place a bid on eBay, you are entering a binding contract, so you must do your homework before you place a bid.

Editor's Note: This is Part 1 of a 3-part series on online-auction fraud. The series was originally published as a complete article in the June 2002 issue of "The CyberSkeptic's Guide to Internet Research," a subscription print newsletter published by BiblioData.

Part 2 will cover "What to Do Before Bidding" and "After You Win an Auction," and Part 3 will cover "What to Do If You Are Ripped Off." You can also get more information on the AuctionBytes forums at

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

You may quote up to 50 words of any article on the condition that you attribute the article to and either link to the original article or to
All other use is prohibited.