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Federal, State Officials Move to Curb Internet-Auction Fraud

May 01, 2003|From Times Wire Services

U.S. law-enforcement officials announced a crackdown Wednesday on Internet-auction fraud, which has grown along with traffic on EBay Inc. and other auction sites.

The Federal Trade Commission said it had shut down two vendors who allegedly engaged in fraudulent behavior, while law enforcement agencies of 33 states -- including California -- have taken action in 57 cases, ranging from warning letters to criminal prosecution.

Howard Beales, head of the FTC's consumer-protection division, said such inter-agency efforts were key to reducing the fast-growing problem.

Online auction scams are the most common type of Internet-based fraud, according to FTC figures. The number of complaints in 2002 reached 51,000, up about three times from 2001 levels.

"Law enforcement will do what it can, and responsible auction sites are trying to police their own market," said Washington state Atty. Gen. Christine Gregoire at an FTC news conference. "But the single most powerful tool to protect consumers is education."

Scam artists in recent years have found that online auctions provide an easy way to sell nonexistent merchandise, commonly offering big-ticket, relatively generic items such as computers or automobiles.

EBay, which had almost 28 million active users and revenue of $1.2 billion in 2002, estimates that only one in 10,000 transactions on its site is fraudulent. The company is cooperating with the government's anti-fraud efforts.

Many of the cases announced Wednesday were relatively straightforward -- bidders paid for an item that was never delivered to them, the FTC said.

But some alleged scam artists go to greater lengths to conceal their activities.

One case involved a seller who since 1999 changed his account name constantly and even stole others' identities, including that of a dead man, to stay ahead of those he had allegedly ripped off.

As online commerce sites' anti-fraud efforts get more sophisticated, so do the activities of scammers.

"In some cases, they're getting even bolder than before," EBay spokesman Kevin Pursglove said.

As part of its efforts to crack down on fraud, the San Jose-based online giant is alerting users if it notices someone trying to access their account or change the associated e-mail contact.

Also participating in the crackdown, the FTC said, were members of California's Computer and Technology Crime High Tech Response team, including the San Diego district attorney and city attorney as well as the Orange County district attorney.


Bloomberg News was used in compiling this report.

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