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4 Tips to Prevent Auction Holiday Fraud

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Auction fraud refers to fraudulent transactions that take place through auction and classifieds websites.  Either a product advertised may be misrepresented by the seller or the items sold are never delivered at all.

This holiday season, as you seek out hard-to-find gifts and look for the best prices, keep in mind that not everyone out there on the wild, wild web has good intentions.

Auction sites are ground zero for scammers. It’s very easy to set up a free auction page from anywhere in the world, collect people’s money, and run.

Here are four tips to keep you safe when shopping through auction websites.

  1. Use strong passwords: Use complex passwords that are hard to crack but easy to remember. Passwords should include upper and lowercase letters as well as numbers, and, if possible, other characters.
  2. Look out for phishing emails: Any email that appears to have been sent from an auction site should be considered suspect. Certainly there are legitimate communications being sent by eBay and similar sites, but none of them should require a direct email response. To confirm that a communication is legitimate, always go to the website directly via your favorites menu, log into your account normally, and check your “My Messages” folder, rather than clicking any links within the email.
  3. Secure your device: Whether you shop using a tablet, smartphone, PC, or Mac, they all need some form of antivirus protection. At the very least, the operating system should be kept up to date with all the latest security patches. Any website can potentially pose a threat. Never respond to pop-ups that claim your computer or other device has been infected and instruct you to install antivirus software. This is actually “scareware.”
  4. Buy from trusted sources: Some may not like my saying so, but buying from sellers with no track history is risky. If sellers have less than five transactions under their belt, they may be scammers. My rule of thumb is never but from anyone with fewer than ten transactions, and even then I take all their feedback into account before purchasing. If a seller has ten transactions but all those purchases are less than a dollar in value, that seller is still suspect.

Online classified and auction websites can do more to protect legitimate buyers and sellers by identifying fraudsters faster with advanced device identification.  iovation Inc.’s fraud prevention service is called ReputationManager 360 and incorporates device identification, device reputation analysis, and geolocation, velocity, and anomaly checks in its real-time risk profiling. iovation is used by hundreds of online businesses to prevent fraud and abuse by analyzing the computers, smartphones, and tablets being used to connect to their online properties.

Robert Siciliano, personal security and identity theft expert contributor to iovation, discusses Black Friday/Cyber Monday Scams on Mike and Juliet Show  Disclosures

Auction Fraud is the Third Most Common Internet Complaint

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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.

Robert Siciliano, personal security and identity theft expert contributor to iovation, discusses scammers and thieves on The Big Idea with Donny Deutsch. (Disclosures)