Tuesday

Online Auction Fraud

By now everyone is familiar with the saying "if it sounds too good to be true, it probably is." But even the most careful of persons can end up the victim of fraud. One of my client's recently brought in a case related to an ebay auction he had bid on. The auction was for the purchase of an early 1970's model Camaro. Once the auction ended my client received an e-mail notifying him that he was the successful bidder at a price considerably lower than fair market value. The e-mail had ebay's logo on it and by all accounts appeared to have been sent from ebay. Excited about the purchase, my client quickly complied with the instructions in the e-mail and wired the money to a bank account in London, England. That was the last he saw of his money and the Camaro. He had been the victim of an e-mail scam that took advantage of ebay's auction practices. Despite our best efforts, ebay would not reimburse him for the money he had lost. The scammer disappeared and no legal recourse could be taken against ebay since they had not sent the e-mail.

Tips to Consider Before You Purchase From An Online Auction

The following recommendations have been made by the National Consumer League to protect consumers from online fraud:

1) Check the seller’s feedback rating if that information is available on the auction site. While a positive rating is no guarantee that you won’t have a problem, a negative rating is a danger sign;

2) Look for information about insurance and understand the terms. Some auction sites offer insurance protection, but coverage is limited to set amounts, there is usually a deductible, and there may be exclusions; for example, you may not be able to make a claim if you purchased something from a seller whose feedback rating was negative at the time of sale;

3) Pay the safest way. If you pay the seller directly with a credit card, you can dispute the charges if the item never arrives or was misrepresented. You don’t have that right if you use a third-party online payment service, even if you use your credit card to put the money into your account with the service. However, your credit card issuer may still be willing to help you;

4) Use an escrow service for purchases that aren’t covered by insurance or your credit card dispute rights. The difference between an escrow service and other online payment services is that the escrow service doesn’t pay the seller until you confirm that you got what you were promised.

The tips should prove useful to avoid being a victim of online auction fraud. A word of caution regarding online escrow services. A number of fraudulent escrow services have popped up recently. Before you open an account with an online escrow service look at the California Department of Corporations website. The website provides valuable information no matter what state you live in.
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