Online Auction Fraud and Retail Scams.

In an online auction scam, a fraudster starts an auction on a site such as eBay or TradeMe with very low prices and no reserve price, especially for typically high priced items like watches, computers, or high value collectibles. The fraudster accepts payment from the auction winner, but either never delivers the promised goods, or delivers an item that is less valuable than the one offered—for example, a counterfeit, refurbished, or used item.

Online retail schemes involve complete online stores that appear to be legitimate. As with the auction scheme, when a victim places an order through such a site, their funds are taken but no goods are sent, or inferior goods are sent.

In some cases, the stores or auctioneers were once legitimate, but eventually stopped shipping goods after accepting customer payments.

Sometimes fraudsters will use phishing techniques to hijack a legitimate member accounts on an online auction site—typically an account with a strongly positive online reputation—and use it to set up a phony online store. In this case, the fraudster collects the money, while ruining the reputation of the conned eBay member. When victims complain that they have not received their goods, the legitimate account holder receives the blame.

A more subtle variation of online auction fraud occurs when a seller ships an item to an incorrect address that is within the buyer’s ZIP code using the United States Postal Service’s Delivery Confirmation service. This service does not require the recipient to sign for the package, but offers confirmation that the Postal Service delivered the package within the specified ZIP code. The item shipped is usually an empty envelope with no return address and no recipient name, just a street address different from that of the victim. The delivery of the envelope with the Delivery Confirmation barcode attached suffices for the Postal Service to record the delivery as confirmed. The fraudster can then claim the package has been delivered, and offer the Delivery Confirmation receipt as proof to support the claim.

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