Bad Behavior

These days, the range of items for sale on online auction sites is vast – allowing bargain hunters, collectors, and buyers of all kinds to place bids on everything from designer fashions to sports memorabilia to cars. But, Internet auctions are also being leveraged by scammers looking to lure victims and make illicit profits from your purchases. Find out how to keep safe when placing your bid, to make sure you get what you pay for, and that your money and personal information isn't going once, going twice...gone!

Understanding the Threat

Millions of legitimate transactions take place every day on auction sites, where participants can bid on a wide range of products and services. But, according to the U.S. Federal Bureau of Investigation (FBI), which recently issued a warning on online auction fraud, the fraction of transactions resulting in some type of fraud does add up to substantial number.1 In fact, figures from the Internet Crime Complaint Center (IC3) show that an estimated one out of every four complaints received this past year involved online auction fraud.

So what exactly is involved in these types of scams? Fraud on online auction sites can take place in a variety of forms, including scams due to the misrepresentation of a product being sold and the non-delivery or non-payment of a purchased item. Keep reading for a more detailed look at how the bad behavior often plays out.

The Bad Behavior

According to the FBI, three of the most common types of online auction fraud, which often involve high-value items, include:

  • Overpayment fraud.To carry out this scheme, the scammer will send the seller a phony check or money order for an amount larger than the agreed upon price of the product. The buyer directs the seller to deposit the payment, and return the remaining money to the buyer.
  • Wire transfer schemes.In this ploy, the buyer is told to wire money to the seller using a money transfer company, but, once the money is exchanged, the buyer is left without further contact from the seller (and, without the item they intended to purchase).
  • Second-chance schemes.This tactic involves tempting losing bidders of online auctions with the chance to purchase the item that they bid on at fraction of the price. The scammer will request payment through a money transfer company, but never deliver the purchased item.

Winning Strategies

To help to avoid online scams, keep these winning strategies in mind when making online purchases.

  • Do your research before making online purchases.Check out the site you're planning to use, the seller, and the product that you are buying, before making any purchases in order to confirm that you're using a reputable site and purchasing from a legitimate seller. The FBI also recommends asking the seller for his or her phone number and then verifying it before moving ahead with a purchase. And keep in mind, if the price of the item being sold sounds too good to be true, it just may be!
  • Don't ever disclose personal or sensitive information online without first exercising caution. Keep in mind that legitimate sellers will not ask for personal information like social security number and driver's license numbers.
  • Check out the payment and delivery details with care.Always pay close attention to the terms and conditions of the arrangement, to make sure you understand the payment and delivery options, as well as what actions can be taken if an issue arises during the transaction or shipment. According to the FBI, you should be on guard if the seller is insistent upon using wire transfers as the only accepted method of payment. For pricey purchases, consider using an escrow service.

For more tips on how you can avoid being the victim of online auction fraud, visit the FBI's Internet fraud page.


Complaints of online crime hit a record high in 2008, with a 33% increase over the previous year. Losses linked to online fraud were estimated at $265 million.

Source: Internet Crime Complaint Center
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