Online auction fraud soars - Scams increase from 106 to 25,000 in only four years

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By ANDY SULLIVAN Reuters News Service

WASHINGTON -- Teresa Smith discovered Internet auctions in a big way about two years ago, selling $800,000 worth of Apple Macintosh computers through sites such as eBay and AuctionWorks.

Like thousands of other small-time entrepreneurs, Smith found that online auction sites could expand her reach.

Unfortunately, while Smith cashed her customers' checks, she rarely bothered to send out the computers.

Smith admitted in court in November that she had ripped off 300 customers in what law enforcement authorities estimate may be the biggest case of auction fraud to date.

While few scam artists operate on Smith's scale, they have for years turned to auction sites like eBay and Yahoo to sell cars they don't own, computers that don't exist and diamond rings without any diamonds.

Reports of auction fraud have skyrocketed from 106 in 1997 to 25,000 in 2001, according to the Federal Trade Commission, far outpacing other online scams.

Scam artists commonly sell big-ticket, relatively generic items like computers or automobiles, advertising them with pictures downloaded from elsewhere on the Internet, according to Delores Thompson, an FTC staff attorney who focuses on auction fraud.

Prospective bidders should shop around on different sites to determine average prices, experts say, to decide whether a particular offer is indeed too good to be true. more

-- Anonymous, January 09, 2003


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