July 29, 2002 — Has auction fraud gotten worse recently? That depends on whom you ask. Dennis Barringer went hunting for con artists recently after he ordered a laptop computer from an auction seller and received a phone book instead. His vigorous vigilante efforts since then have landed him two death threats. Another vigilante, Michael Carr, says in some categories on eBay, 75 percent of the items offered are scams. And even eBay concedes that auction criminals are getting more crafty all the time.
While fraud schemes might be more clever, and the stakes seems high enough to elicit death threats in at least one case, other auction watchers say fraud rates aren’t any worse than they’ve ever been. The con artists are just getting smarter.
But it’s hard to tell that to Barringer, who ordered the laptop computer from an eBay.com seller about six weeks ago. Days later, he received a laptop-sized FedEx package — but inside was a Montreal phone book. The criminal had to front over $50 to ship the phone book.
“I started thinking to myself, if this scam artist would spend all this time and $53.04 cash to sell me a $2,500 phone book, he must be successful at what he does,” Barringer said.
The scam set him afire, and he’s spent the past 50 days hunting down scam artists, spotting and spoiling hundreds of fraudulent auctions. For his troubles, he received an e-mail and an instant message from one con artists saying he would pay “$4,000 to Ukrainian killers to arrange you.” The FBI is investigating, Barringer said.
Auction site ignores warning
Meanwhile, Barringer is doing his own investigations, as a new member of eBay’s unofficial neighborhood watch team. Hundreds of vigilantes, most former scam victims, scour eBay daily looking for suspicious auctions. Their work often ends in frustration. Sometimes, they find sellers who are almost surely con artists, warn the auction sites, and the warnings fall on deaf earns. They then watch helplessly as buyers are scammed, knowing eBay or Yahoo could have prevented the crime.
Barringer just went through that scene with eBay and a seller named “maxxolo” — who currently has 107 high-ticket items up for sale on eBay. About a month ago, he warned eBay that maxxolo’s auctions were very suspicious. eBay didn’t respond.
On Monday, Barringer got an e-mail from a helpless buyer, who about a month ago paid $1,135 to maxxolo for a new desktop computer.
“I just received three reams of paper instead of the computer,” the buyer said. This buyer, like most defrauded on auction sites, has little or no chance to get his money back.
As auction vigilantes go, Barringer is relatively new. For years, there have been ad-hoc groups prowling eBay, Yahoo, and other auction sites looking for obvious scams. Auction fraud rates may not be climbing lately, says auction watchdog Rosalinda Baldwin of The Auction Guild — but criminals are using more devious and clever methods to scam auction users. And that certainly can give the impression that crime is on the rise. With each new scam method come a swarm of copycats, and inevitably a swarm of Dennis Barringers who try to fight the crime.
But auction crime is too easy to find lately, says Carr, another vigilante. During a recent 10-minute scan, Carr found 30 auctions for big-screen, high-ticket plasma TV’s that were fraudulent. Payment listings of high-risk items in foreign currencies was the tip-off in many of the auctions he cited to MSNBC.com, and he was on the money. Every auction he cited had been removed by eBay a week later — thanks to Carr’s warnings to the Web site.
The scams are easy to spot — such as a brand-new seller suddenly posting dozens of laptop computers for sale, insisting on wire transfer payment. In fact, they are so easy, people like Carr wonder why eBay doesn’t spot and remove the scams automatically.
Instead, Carr thinks things are getting worse, “probably 35-40 percent worse than a year ago.” He conducts almost daily searches for suspicions auctions. At any given time, he’s likely to quickly find about 400 such frauds, up from about 250 a year ago, he said.
eBay spokesperson Kevin Pursglove concedes auction con artists have become more clever in recent months. But he says fraud rates are still a tiny fraction of eBay’s 7 million items on sale each day, and the rate has stayed stable.
“Clearly what we have seen in last year or so are attempts by individuals to be far more sophisticated,” he said. “That’s in part because ... eBay is getting better at detecting fraud activity.... We have made huge advances compared to two years ago.” Pursglove said the company often removes fraudulent auctions even before they get in front of consumers.
The company’s published fraud rate is about one-tenth of one percent of items, Pursglove said, but he added that “there’s no statistic we can provide to a user that’s going to make them feel good if they feel they’ve been defrauded.”
eBay-related fraud is probably higher, because many con artists work outside the eBay system, contacting auction bidders and offering exclusive deals direct from the seller. Pursglove concedes the outside-eBay fraud rate may be considerably higher, “but this is a good opportunity to remind people not to work outside the system.”
Clever scammers now regularly ship reams of paper, or even rocks, to buyers. That buys the scam artist a few more days before arousing suspicion, and often a FedEx tracking number is enough to convince a buyer to send the money. Scam artists have also gone to the trouble of creating fake escrow Web sites and fake shipping sites to assuage skeptical buyers. And they also hijack accounts that belong to long-time, credible sellers, and then run their scams on the good name and reputation of that eBay seller.
There have been several high-profile prosecutions of auction thieves in recent months, including a 12-year prison term for Thomas Houser, who collected more than $100,000 from eBay and Yahoo buyers for items he never delivered. Tom Higgins, an investigator from the U.S. Postal Inspector’s office, who last month helped prosecute infamous auction scam artist Jay Nelson, agrees that Yahoo and eBay has gotten better at hunting down fraud artists.
“They certainly have made great strides,” he said.
But that doesn’t satisfy Barringer, who’s still pounding eBay executives with word of fraudulent auctions every day.
“Sony can’t even manufacture this product for $1,400.00,” he said in recent note to eBay, pointing out a recent Sony Vaio laptop fraud. Just last weekend, he says he helped stop $250,000 worth of bad auctions. “This scammer has had three sites closed down in the last week by Internet fraud investigators. I warned you of this scam two days ago and the auction is still running strong. Many will get scammed and eBay is to blame. It is beyond me how you can ignore this. Do you have any compassion for the victims who lose hundreds of thousands to these criminals?”
Justice in their own hands
eBay is popular with criminals because it is the top auction site, but Yahoo is hardly immune. “Molly,” who requested that her identity be withheld, is the appointed Yahoo watchdog in her loose-knit group of vigilantes. During the past 18 months, she’s received a couple of threatening e-mails like Barringer, including one saying “I’m going to stab your wife.” She wasn’t scared that time, since she has no wife.
She actually agrees that fraud rates aren’t getting any worse, but she’s astonished at how many easy-to-spot frauds are on Yahoo’s site. Nokia cell phones are a particular problem right now, she said. And so are weekends — many criminals start two-day auctions on Friday night, knowing the auction site’s customer service department is lightly staffed on the weekends. That means warning e-mails that are sent by people like Barringer and her often go ignored until it’s too late.
That’s why she resorts to what might be called “eclipse bidding.” Some vigilantes take matters into their own hands, bidding outrageously high amounts on auctions they think are scams. That effectively kills the auction.
Molly and other vigilantes believe they are saving potential fraud victims from losing money. Resorting to such tactics is the the only way to keep up with the nimble criminals, she said.
“I think if we don’t do it who will?” she said. “Many people I’ve helped don’t even know I’ve helped them.
Yahoo declined to provide a spokesperson to discuss this story, but said in a written statement that while the company tries to work with vigilantes like Molly, it’s not very comfortable with their tactics.
“We are aware of some individuals or groups that try to manage online auctions fraud and we try to work with them, as possible. However, we’d prefer that people use the tools and services we’ve specifically developed,” the statement said.
eBay was more direct — spokesperson Pursglove thinks such vigilantes are engaging in “site interference.” And while eBay appreciates the spirit, the tactic is against site rules, and Pursglove said many vigilantes are suspended for doing it.
Then an interesting cat-and-mouse game follows, with vigilantes creating multiple eBay accounts, just like criminals do, to evade eBay customer service so they can continue to administer their own brand of justice.
Molly, who has helped shut down about 5,000 fraudulent auctions in the past 18 months during her free time, says taking the rules into her own hands is sometimes the only way to prevent fraud.
Their own fault
While auction sites find themselves in the awkward position of fighting against both criminals and vigilantes, Baldwin, of The Auction Guild, says eBay and Yahoo have only themselves to blame.
“The whole thing is, why do we need vigilantes? Why isn’t eBay policing its own site?” she said. A lengthy list of simple proposals, such as verifying seller phone numbers, has been ignored by eBay.
But criminals will never ignore one of the world’s biggest marketplaces — eBay alone has over 1 million new items for sale every day. Combine that with the anonymity of the Internet, the instant delivery of electronic funds, and the built-in 30-day shipping delay, and scam artists have clearly found an ideal incubator for new cons. Baldwin says it’s up to individual buyers to protect themselves, to deal only with sellers who have verifiable phone numbers, addresses, and track records.
“Once you start looking at these things you can taste the scams,” she said.
The fact that the scams are easy to spot is what frustrates vigilantes like Barringer, who had spent nearly every day last week sending voluminous notice of current scams to an eBay executive assistant he’d talked to on the phone recently.
By Monday, the executive assistant had heard enough. “Please send all of these complaints to our webform,” an e-mail reply came. “No further messages will be responded to.”
“I guess [he’s] tired of getting this rubbed in his face,” Barringer said. “The fact that eBay refuses to do anything about it borders on criminal.”
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