Internet Fraud

Topics: EBay, Auction, Online auction business model Pages: 9 (3044 words) Published: June 2, 2004
Internet fraud is a problem that has become very widespread in recent years. Internet fraud was first monitored by the Internet Fraud Watch organization in 1996. The Fraud Watch has stated that each year after its inception internet fraud has increased. In 1998, the Securities and Exchange Commission established the Office of Internet Enforcement to fight online securities fraud which was another sign of how large the problem is becoming (Clausing). Despite the SEC¡¦s efforts this problem has not been alleviated, but instead continues to grow. According to the Internet Fraud Complaint Center (IFCC), ¡§the total dollar loss from all referred internet fraud cases was $54 million in 2002; this amount is almost three times as much than was lost in 2001¡¨(IFCC). This increase shows that the problem of internet fraud is becoming more widespread. The most widely reported type of internet fraud by the IFCC is online auction fraud. In 2002, 46.1% of all internet fraud complaints were online auction related (IFCC). Because of how many people are affected by online auction fraud alone we decided to focus our study solely on this one type of fraud.

Why study online auction fraud?

Due to the large percentage of fraud that online auctions make up we have chosen to narrow our study to online auction fraud. The fact that online auction fraud is such a growing concern we would like to make people aware of several ways to avoid falling victim to one of the online auction scams. Also upon researching each type of online fraud we found that there was much more information about online auctions than any other type. The group then discussed that the type of online fraud that we have heard the most about and have the most experience with is online auction fraud. Each member of our group has in some way purchased merchandise from an online auction. In our experiences we have also fell victim to a form of online auction fraud. Jesse Zirillo attempted to purchase a Nintendo Entertainment System at the online auction site E-bay. Zirillo outbid all other bidders and assumed that he would receive the item within the stated period of delivery. After weeks of waiting Zirillo then contacted E-bay and the seller of the item only to find out that the item he bid on did not exist. Zirillo had become a victim of non-delivery and lost the money that he paid for the item. Our second group member, Charlie Cheraso also had a problematic experience with online auctions. Cheraso bid on a Minolta XG-7 SLR camera on a different online auction site called He was the high bidder and won rights to the item. Cheraso¡¦s bid totaled the amount of $63 and the shipping and handling was $2.50. After the auction, the seller emailed Cheraso and proceeded to tell him that the cost of shipping was $6.50. Cheraso immediately emailed the seller back and asked why the price went up. The seller responded to Cheraso and insisted that the amount of $6.50 was the price of shipping and handling. Cheraso gave in to the seller and paid the extra few dollars on the condition that the seller showed proof of the shipping cost. The seller made no attempt to respond to the request and Cheraso lost money due to the scam called fee-stacking. Along with the problems faced by Zirillo and Cheraso, group member Andrew Scheuer had his own bad episode with online auctions. Scheuer placed the winning bid on an Mp3 player on, and paid the seller $100 on his credit card. Two weeks later the item was received by Scheuer but not as it was shown in the picture on the site. The description on showed the Mp3 player to be black in color, with 128 MB of space, and sent with headphones and an armband. The item received was blue, had 64 MB of space, and was not sent with headphones or an armband. Andrew contacted the seller but received no response. Andrew contacted via e-mail making a complaint about the seller but never got a response....
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