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updated 4/25/2011 3:18:05 PM ET 2011-04-25T19:18:05

Credit: Dreamstime

From luxury cars to Disney characters, you can find almost anything you want by visiting online auction sites.

But if you don't take the necessary precautions, your money could be going, going, gone, according to Ina Steiner, editor of AuctionBytes.com, a trade publication for online merchants.

Steiner offers these 10 tips to help prevent online auction fraud:

Stay away from wire transfers, Western Union, etc. "The scam artists will come up with a good reason why they're overseas and ask you to send them the money via wire transfer," Steiner said.

But that's never a good idea, because you have absolutely zero protection in case the deal goes south.

Beware of escrow scams. "If the seller says, "Let's use escrow," the red flag should go up," Steiner said. "You should be really cautious because the seller will pretend to use an eBay escrow service or an Amazon escrow service. They have it all set up so you think you're sending the money to an eBay or Amazon escrow service — but neither eBay nor Amazon has an escrow service."

Scammers will set up a domain name such as www.ebay-escrow.com and send emails from that account, but there is no such service. However, escrow is a good service to use if it's legitimate.

If it seems too good to be true, it probably is. "If you're really concerned that something is a scam, you probably already know that there’s something wrong," Steiner said.

Listen to that voice in your head, and proceed with caution.

Read the fine print on payment processing sites such as PayPal or Google, because they don't always cover everything. A credit card is a good way to make an online purchase because it offers a lot of protection.

Remember that an auction site like eBay is not the seller. "If a transaction goes wrong, the auction site will not refund your money," she said.

Sites like eBay are merely the venues — you are buying from a third party.

If you’re new to bidding at online auction sites, start small. "You don't want to bid on a car your first time out," Steiner said.

If you have friends who are more experienced than you at bidding on eBay, run the item by them.

Don’t ever purchase anything outside of eBay or any other auction site. "It's a big red flag when a seller says he wants to take the transaction offline," she said. "There's no reason why a seller on eBay or any other auction would need to complete the transaction outside of eBay."

Many scammers will list something on eBay that they really don't have in their possession. Then when the consumer places a bid on it, the seller will say he wants to take it offline because it will save him money on eBay fees and he can sell it to you for a lower price.

The scammers do that because then they can communicate with the buyers directly and persuade them to send the money via wire transfer or Western Union.

Be aware of account takeovers. "For example, a seller has built up a great reputation and he's a very honest seller, but a scammer has hacked into his account and taken it over," Steiner said.

"Then the scammer will put in the description of the auction, 'Email me for a discount,'" she explained. "The scammer's email address will be something like seller@hotmail.com. So the shopper will send an email to the seller. The seller will then say to the shopper, 'Look at my reputation. I have a great reputation.'"

So you send the money to this scam artist, and the real seller has no idea the description of the item in the auction listing has been changed.

The scammer might also start listing many big-ticket items, such as 50 digital cameras, using the legitimate seller’s account. However, the scammer doesn't have those 50 cameras.

If a seller has been selling items one-by-one in a particular category, and then all of a sudden he's listing 50 cameras or Nintendo Wiis, that's a red flag because it means the account may have been taken over.

"And eBay will not protect you in that case," Steiner said.

If you're thinking of bidding on an expensive item, contact the seller before you place a bid and see how responsive he is. This won't always establish the seller's bona fides, but you may be able to knock down the price a bit.

If you win an item on eBay, be sure the PayPal account has the same e-mail address as the eBay account. "Sometimes scammers will enlist the help of unsuspecting people — called mules — via online wanted ads to defraud people on eBay or other auction sites," Steiner said.

For instance, the scammer will say to the mule, "I'm a distributor in Europe or Asia and I can't get a PayPal account in the U.S. but we have orders coming in from the U.S. that we're going to ship and we need you to do the payment processing for us. So we’ll hire you and when we get an order, the customer will send the money to your PayPal account and you take out your salary and then forward the rest to us."

Steiner said that's another really big red flag. It helps the scammers defraud people on auction sites.

 

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