Online auction fraud is a growing problem. Be careful.

The Internet has become a great place for doing business. One of the most successful Internet based businesses is eBay, the online auction company. Each day, millions of people buy and sell items using eBay’s easy to use system, which allows nearly anyone to sell anything at auction to the public. The system works well, and thousands of people earn their living selling merchandise through eBay’s Website.

Not all sales go smoothly, however. There are people who take advantage of others and use the online auction site as a place to commit fraud. Here is an example of a typical fraudulent transaction:

The seller describes an item for sale, say, a Harley-Davidson motorcycle. These motorcycles are in heavy demand and the seller knows it. He or she lists the item for sale with a minimum bid that is well below the going price for that item. In this case, for instance, a $10,000 motorcycle will be listed with a minimum bid of $2500. The auction proceeds as usual, and the bidders place their bids and when the auction concludes, the seller notifies the winner. At this point, the seller tells the winner that the only method of payment that he or she will accept is a wire transfer via Western Union. No checks, money orders or any other money transfers are accepted, the seller says. When the buyer wires the money, the seller picks it up in person at a Western Union office and promptly disappears, never to be seen again.

The exchange of money cannot be traced; once the seller gets the money from the Western Union office, the money, and the seller, are gone. There is no recourse for the buyer, and Ebay’s fraud policy only covers up to $200 worth of loss.

Ebay is certainly working to correct this problem, and cautions buyers not to use Western Union for payment, but buyers should be aware that this sort of problem exists. If you see an item for sale and the seller indicates any of the following, you should be careful:

• The item is large ( a boat, car, or motorcycle, for instance) and is for sale in another country
• The seller says that he or she will pay for air freight shipping
• The seller accepts a wire transfer as the only payment option.
• The photo of the item in question seems to be a stock or promotional photo and not one taken by the seller

Auctions under these terms are to be avoided. Sometimes, the seller is actually in another country but claims that he and the merchandise are in the United States. If you are unsure, you can e-mail the seller and as, “May I come see this in person before I bid?” Most sellers would agree to such a request, particularly if the item is an expensive one. Watch out if the seller declines. As with most any other financial transaction, the motto when shopping in an online auction is “buyer beware.” A little common sense will go a long way towards avoiding being a victim of online auction fraud.

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