FBI ISSUES WARNING TO CONSUMERS: Beware of internet auction scams

Courtesy of IC3

I recently penned an article about a famous entertainer’s involvement in an internet scam in which he was indicted on federal wire fraud charges. The entertainer allegedly ran ads on auction sites and when a buyer attempted to make a purchase, he is accused of directing the buyer to wire money to him rather than to use the escrow account offered by the auction site. The problem arose because he failed to deliver the promised merchandise – cell phones. This was rather timely, as a friend of mine had just recently come close to falling prey to just such a scam. She was searching Ebay for a pre-owned vehicle and came across a deal that seemed too good to pass up She is a lot like me in that she researches things to the tenth degree. During her research, she noticed several things that the “seller” told her just did not match up. During her second contact with the seller, she was asked to wire money to the seller, rather than using an Ebay account. This was an obvious red flag. The seller she had been emailing posed as a recent widow of a soldier she claimed was killed in Iraq. She gave her location as a small town about twenty miles outside of Lafayette. She told her that she was selling a nearly new Mazda for only $5,000.00 because she needed money for bills. That was, of course, another red flag. The last straw came when she emailed the photo of the vehicle she was supposedly trying to sell and not only could an entire lot and dealership be seen in the background, but mountains could also be seen. As previously mentioned, the seller was supposedly in Louisiana. I think we all know that photo could not have possibly been taken in this state. Needless to say, my friend decided to make her purchase from a legitimate local dealership, but had she not diligently researched the sale, she could have very easily have been taken for thousands of dollars.

According to a recent press release from the FBI, the number of internet scams has sharply risen in recent months. A potential customer can peruse catalogs of all sorts of merchandise on numerous websites. Purchases of everything from CDs and DVDs to vehicles can be made. Ebay is one such site that operates as a legitimate online auction house, but a small percentage of the offerings on the site are used to lure unsuspecting victims into a scheme.

There are a variety of auction frauds, but here are some of the more common ones include the following:

Overpayment fraud targets the seller. A seller advertises a high-value item on the internet (such as a car or a computer). A scammer contacts the seller to purchase the item, then sends the seller a counterfeit check or money order for an amount greater than the price of the item. The purchaser asks the seller to deposit the payment, deduct the actual sale price, and then return the difference to the purchaser.
Wire transfer schemes start with fraudulent and misleading ads for the sale of high-value items being posted on well known online auction sites. When buyers take the bait, they are directed to wire money to the crooks using a money transfer company. Once the money changes hands, the buyer never hears from them again.
Second chance schemes involve scammers who offer losing bidders of legitimate auctions the opportunity to buy the item(s) they wanted at reduced prices. They usually require that victims send payment through money transfer companies, but then do not follow through on delivery.

In none of these scenarios, do customers receive what they pay for. Individuals are generally behind the scams, but some times there are criminal enterprises behind them. West African scam artists are often behind the overpayment schemes. Romanian crime groups some times prefer the second chance schemes.

The FBI is working diligently to address the problem of internet fraud schemes and they have had some recent success, however schemes still exist and customers should be careful not to make a purchase outside of the website where the auction exists.

What to do if you’ve been victimized. Go to the Internet Crime Complaint Center or the Federal Trade Commission websites and submit a complaint. You can also report incidents to your local police and to auction companies.

TIPS TO AVOID BECOMING A VICTIM OF INTERNET AUCTION FRAUD:

Ask the seller for a phone number and verify it
Beware of buyers who insist on wire transfers as the only form of payment they will accept
For big ticket items, always use a legitimate online escrow service that will hold the payment until you receive what you ordered
If you receive an overpayment as a seller, do not cash it, but instead ask for the exact purchase price
Do not ever give out your social security or driver’s license number. Legitimate sellers have no use for this information and will never ask for it
Be skeptical if the price sounds too low

Remember, you can find some great deals online, but as with anything else, you will want to be careful not to fall prey to a scam.

For great tips on purchasing vehicles, please visit the webpage of the New Orleans Car Shopping Examiner. He offers some great tips to follow when purchasing a vehicle.