8.6
AUCTION FRAUD AND ITS PREVENTION
E-auction fraud accounted for 90 percent of the e-commerce fraud
that occurred on 2002.
TYPES OF E-AUCTION FEAUD
- Bid
shielding have phantom bidders bid at a very high price
when an auction begins; they pull out at the last minute, and
the bidder who bid a much lower price wins.
-
Shilling is placing fake bids on auction items to artificially
jack up the bidding price.
-
Fake photos and misleading descriptions. Borrowed images,
ambiguous descriptions, and falsified facts are some of the
tactics that sellers might employ to convey a false impression
of the item.
- Improper
grading techniques. The grading of items is one of
the most hotly debated issues among buyers and sellers.
- Selling
reproductions. A seller sells something that the seller
claims is original, but is turns out to be a reproduction.
- Failure
to pay the auction house.
- High
shipping costs and handling fees. Some charge extra
to cover “handling” costs and other overhead intangibles.
- Failure
to shop merchandise. This is the old collect-and-run
routine.
-
Switch and return. The seller has successfully auctioned
an item, but when the buyer receives it, the buyer is not satisfied.
PROTECTING AGAINST E-AUCTION FRAUD
-
User identity verification. eBay uses the services
of Equifax to verify user identities for a $5 fee.
-
Authentication service is a way of determining whether
an item is genuine and described appropriately.
- Grading
services is way of determining the physical condition
of an item.
- Feedback
forum provides users with the ability to comment on
their experiences with other individuals
- Insurance
policy. Uses are covered up to $ 200, with a $ 25 deductible.
- Nonpayment
punishment. eBay implemented a policy against those
who do not honor their winning bids.
- Appraisal
services use a variety of methods to appraise items.
-
Physical inspection. When the seller and buyer are
in the same location, it is easy to arrange for such inspections
-
Verification. One way of confirming the identity and
evaluating the condition of an item is through verification.
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