I’d love to take credit for the discovery of this online scam on my own but I’d have to give the rightful shout out to Ms. Judge Judy and her epic courtroom cases and Sharron Curry the Director of Corporate Fraud Investigations of Walmart Stores Inc. for her detailed insight on this topic.
Last weekend while watching Judge Judy reruns I came across a very interesting case. This episode revolved around an Ebay Scammer that was being sued by a teenager's mother after a fraudulent online purchase was made. The poor victim of this scam thought she was purchasing a bunch of brand new cell phones for a very good deal (everyone loves a bargain) so naturally she didn’t think twice about the legitimacy of her purchase. After making her payment she received a shipment of photos of the cellphones she had thought she purchased. Yup, she paid about $400 for PHOTOS of cellphones, not actual physical phones but pictures of cell phones. The Ebay scammer had written somewhere in some fine print in her product description that "this is for the pictures only" and therefore felt like she hadn’t scammed anyone. This is just one scenario of how online frauds execute their scams.
This type of trickery is referred to as Online Auction fraud. According to the RCMP: Online auction fraud includes fraud due to the misrepresentation of a product advertised for sale through an Internet auction site, the non-delivery of an item purchased through an Internet auction site or a non-payment for goods purchased through an Internet auction site.
Here are descriptions of the most common fraud seen at auctions, summarized from the article written by Sharon Curry.
Misrepresentation: One of the oldest tricks in business. Just what it sounds like. Or more accurately, the merchandise ISN'T what it sounds like. Value, authenticity or condition may be overstated, sometimes wildly.
Failure to ship merchandise: The merchant takes your money and runs, leaving you nothing but a lighter wallet for your troubles.
Failure to pay: Through the use of fake money orders, bounced checks, stolen credit cards, or a number of other techniques, the buyer gets the goods and leaves the merchant with nothing in return.
Shilling: Artificially inflating the price on an item by use of fake bids from phony user IDs or accomplices.
Bid Shielding: Using high bids from phony accounts to run up the price and scare off potential buyers, the actual bidder then retracts the higher bids, getting the item at a much lower price than he would have otherwise.
Piracy and counterfeiting: The sale of pirated music and software or counterfeit art, phony jewellery or gems, and forged collectibles.
Internet Fencing: Selling stolen goods through the auction.
Triangulation: The seller offers to send you the item (usually new, brand name goods) on approval. They then use stolen credit cards to order the item shipped to you. You pay for the goods (in cash) after receiving them, and get a visit shortly thereafter from the police. Credit card fraud and theft.
The "Buy and Switch": The buyer gets the merchandise and returns a similar item that has been damaged, or a fake, with the claim, "It isn't what I expected." The seller refunds their money, and is left with broken and unsellable product.
Fee stacking: Fees, usually "related" to shipping costs, are added to the cost after the sale has been made.
Loss or Damage Claims: Not always fraudulent. After all, things do get broken in transit. Often these claims are a result of the buy and switch, or careless handling by the buyer.
Shell Auctions: No merchandise exists. The sole purpose of the auction is to get money or credit card numbers from unwary buyers.
Like always, we ask our readers if they’ve ever come across an online scam like this? Please tell us your stories, let’s help spread awareness.