Alleged Coin Fraud Strikes eBay

Just as one six-figure online auction scam on eBay was finding closure, eBay has begun investigating another, according to published reports Wednesday.

This time, the alleged fraud involves the sale of over US$400,000 in gold and silver coins and bullion, which were allegedly never delivered to winning bidders after payment was received, the New York Times reported.

News of the investigation arrived not long after two men pleaded guilty in Sacramento, California federal court to scamming eBay users out of $450,000 over two years by bidding on their own auctions to drive up prices.

eBay spokesperson Kevin Pursglove told the New York Times that eBay is working in conjunction with authorities to assist in the investigation of Anthony L. McEnroe of Peoria, Illinois, who allegedly used the account of another seller that was in good standing, called BillionOne, to auction the coins.

False Positives

According to a customer post on eBay, the false account used by McEnroe received more than 27,000 positive buyer feedbacks (mostly on the sale of Beanie Babies), approximately 17,000 of which were from repeat buyers. McEnroe was also reportedly using AuctionsManager software purchased from the owner of the account, enabling him to run hundreds of coin auctions simultaneously.

McEnroe told the New York Times that he had done nothing wrong and that late deliveries are often a result of customer errors. He also stated he feels eBay is threatened by the use of the AuctionsManager software.

"Nobody here has ripped anybody off that I know of," McEnroe was quoted as saying.

Blame Game

Several eBay customers have complained about eBay's handling of the situation, alleging that eBay knew about the problem and took too long to shut it down.

"eBay should take responsibility in this," one customer said. "I just sent payment on Saturday and they apparently knew about this and didn't inform us or shut this guy down."

The majority of eBay customer complaints stemmed from the fact that a former account selling coins under the name Tony McEnroe was also shut down in January for non-delivery. The January account used the same mailing address as the BillionOne account.

"eBay was notified about this possible connection some time ago," an eBay customer wrote. "They stonewalled and denied there was any connection! Guess what!!! I believe a lot of good eBayers will get burned badly on this."

Migraines All Around

However, Pursglove told the New York Times that eBay acted as rapidly as its procedures allowed. eBay reportedly suspended the account on Saturday.

The coin fraud is not the first time eBay has been accused of sitting back on a known auction scam. An auction of phony sports memorabilia turned into a legal headache for eBay when a $100 million lawsuit was filed in the spring of 2000, alleging that eBay knew about the auctions but did not take sufficient measures to thwart them.

Although a California judge dismissed the class action suit in January, an attorney for the plaintiffs said that they intended to appeal. The plaintiffs claimed that they purchased $10 million worth of phony memorabilia through eBay.