The Internet Crime Complaint Center fielded 303,809 reports of cybercrime in 2010. Of those cybercrime reports, auction fraud was the third most common complaint.
Auction fraud refers to fraudulent transactions on online auctions. Either a product advertised for sale is misrepresented, or purchases are never delivered at all.
The IC3’s annual report explains, “Historically, auction fraud has been the leading complaint reported by victims, with a high of 71.2 percent of all referrals in 2004. However, in 2010, auction fraud represents slightly more than 10 percent of referrals. This demonstrates the growing diversification of crimes related to the Internet.”
In other words, auction fraud is still profitable for scammers, and they’ve also discovered many new techniques for scamming consumers.
IC3 advises consumers against conducting online transactions with anyone who exhibits the following suspicious behavior:
- The seller creates an online auction as though he resides in the United States, but responds to buyers with an email claiming he’s outside the United States for business reasons or a family emergency. Or, the seller posts the auction under one name, but asks for payment to be transferred to a different name.
- The seller requests payment via Western Union, MoneyGram, or bank-to-bank wire transfer. This makes the money virtually unrecoverable once the victim discovers the scam. Any transaction involving a money transfer control number (MTCN) may indicate fraud.
- The seller poses as an authorized dealer or factory representative in a country where there are no such dealers.
- The buyer asks for a purchase to be shipped to another via a particular method in order to avoid customs or taxes.
- The buyer uses a credit card for which the billing address does not match the shipping address. Always secure the cardholder’s authorization before shipping any purchased items.
Online classified and auction websites could prevent fraud and protect their users by incorporating device reputation management. One anti-fraud service getting lots of attention for its fast and effective results is iovation’s ReputationManager 360. This service incorporates device identification, device reputation, and real-time risk profiling. It is used by hundreds of online businesses to prevent fraud and abuse by analyzing the computer, smartphone, or tablet connecting to their online properties.