eBay and Los Angeles Police Launch Fraud Probe

Online auction powerhouse eBay has confirmed that it is cooperating with Los Angeles police and postal authorities to investigate claims that some 150 consumers were defrauded by a single eBay member.

After the complaints were received, eBay suspended the privileges of the alleged offender, a highly unusual move on the part of the San Jose-based auction site.

eBay’s first contact with the Los Angeles authorities came earlier this month, after winning bidders complained of not receiving promised merchandise, said company spokesperson Kevin Pursglove. Some bidders had paid for items, but received something other than what they ordered.

The suspect evidently also bid on his own merchandise to drive up the prices. “That’s generally grounds for immediate suspension,” Pursglove said.

Although the company has chosen not to identify the individual involved, it is known that he had several accounts at the auction site that have received positive reviews from users in the past.

Insurance Minimizes Complaints

eBay reports that it gets complaints involving about one in every 25,000 transactions. Yesterday, with approximately 4.2 million items for sale in 4300 categories, the company would have expected about 168 cases of fraud.

Last year, one member was sentenced to 14 months in prison for bilking users out of more than $36,000 (US$).

Although there is no dollar estimate yet on the merchandise lost in the most recent alleged scam, all eBay users are covered by Lloyd’s of London and can recover up to $175 by filing insurance and fraud complaints, Pursglove said.

eBay instituted anti-fraud measures last year following a settlement with New York City’s consumer agency over complaints about phony sports collectors’ items on the site. The company’s new tactics include better verification of the identities of frequent sellers, and company-sponsored third party mediation in disputes between buyers and sellers.

eBay has also put a system in place that allows buyers and sellers to comment on and rate their transactions.

Consumer Fraud Complaints Increase

The increase in online auction purchasing has been accompanied by an overall increase in consumer complaints. The Federal Trade Commission (FTC) reports that consumers filed nearly 11,000 complaints about Internet auctions in 1999, as compared to just 107 in 1997.

According to the National Consumers League, online auctions accounted for 87 percent of Internet fraud complaints last year, an increase of 20 percent over the previous year.

The FTC has already launched its own effort, Project Safebid, to help federal and state authorities better track and prosecute people who commit fraud on the Internet.

Other U.S. Agencies Target Fraud

Meanwhile, another U.S. government agency, the Securities and Exchange Commission (SEC), has also moved to strengthen its policing of Web stock scams. After auction fraud, securities fraud is emerging as the next great headache for Internet watchdog groups and government agencies.

The SEC recently has started to use “sweeps,” clusters of cases filed at the same time, to draw maximum publicity against Internet operators.

In the past 16 months, the enforcement division has made three sweeps, charging 83 people and companies with fraud.

Yesterday, the SEC announced that it is also targeting “get rich quick” scams with an automated surveillance system that searches Web sites and message boards for investment fraud.

Privacy Issues Raised

Some industry observers have been quick to criticize the new technology. Larry Ponemon, a privacy expert at PricewaterhouseCoopers, said the program “is the equivalent of planting a bug.”

In response, SEC spokesman Chris Ullman said, “Privacy issues are of long-standing importance to the commission and we pay close attention to the letter and spirit of the law.”

8 Comments

  • Wonders WHY many buyers and sellers are leaving the site for the alternate sites such as eCrater, BISI, and Bonanzle.com.

    Once eBay and Paypal FINALLY does something about a scam, they tend to rule in favor of the scammer!

    Too many horror stories about this on the web today…

    • I had a strange thing happen to me when trying to complete a transaction for a computer won on eBay, in the process of paying through Escrow.com. When I got the seller’s info, I had a system error on my computer. I’m convinced a savvy computer hacker can link to bank info, and unless the account is closed, can tap into for future withdrawals. Please describe method of losses. thanks

        • I too was defrauded by eBay, PayPal and their client, a seller. I was pissed off that he took the money and ran. But the problem was he had many good feedbacks until he was suspended. But he did not send my item nor refund. He’s a CRIMINAL so is the eBay company. I paid $94.95 for ATI Radeon 9200 with 256 MB video card. He never send it. He took my money and ran. He didn’t have a company. I found out he was selling things from his home becuz his feet were in the picture for a child’s 2-piece clothes on the rug. So he don’t have company. Why naming "Longwholesalewarehouse.." and stated on the receipt "Long and Associates" meaning he didn’t have any company nor hiring ppl to work for him. One stunnned me the most was the email that was showing the receipt, right? Okay, I scanned down below and was perplexed that it stated "eBay Reconcile Amt: $14.99" meaning he did not actually have an item since he didn’t ship it becuz the shipping price was zero than the other receipt that was showing shipping and handling cost. So I put 2 together and he has a criminal background so the address was also appeared on Square Trade. So I’m waiting. If that will not happen, I will go directly to the bank with the emails and his address I copied down and file the fraud with them and they will severely dispute against BOTH the client and eBay. By law, the bank can do that but it will take 30 days to get the money from either one or BOTH. I will also file the fraud with NC police department to arrest that bastard. But I need a few inputs before I can start filing with the NC police department.

          • be aware, the police are totally worthless and even refuse to take a complaint… eBay buyer protection insurance will still end up costing you money, because even after they delay and fart around forever, they still take $25 for their BS and will not pay any shipping monies paid. PayPal will not pay, they will weasel out, and delay the investigation, all adding up to giving the crooks more time to run. The system is a total sham, a joke. My anger is exploding every time I hear the words eBay and PayPal. The Brooklyn police suck the big one too, as even though all local, state, and federal agencies have had formal complaints filed, they just sit on their dum arses, no one is doing a damned thing in my case and the name and location of the crooks is known by all. My suggestion…. file for your money, file all complaints, and never do business with all the parties. And vote in a government that actually goes after the crooks and does not help them get away.
            http://www.virtualairforce.com/editorials/ulthm.htm

  • Hello,
    I have been using eBay for several years, and PayPal. I have been pretty good at avoiding problems. I look for good feedback and use my Bank and PayPal. I bid on a Computer video card from a person (company) with very very good feedback, and only one neutral feedback. I paid $113.00 using PayPal. In the next few days, the feedback started to show that the Seller wasn’t communicating with the buyers. Then WHAM! eBay suspends him. The Seller is leaving messagages he left out of town on Fammily Matter, and even has the gaul to say "Thanks" He refuses to communicate any further. PayPal puts my complaint on 10 day hold giving this guy 10 days to remedy this legal sale. he never communicates, and Paypal then tell me they cannot get my money back.
    eBay just gives you a canned response says wait 30 days and do blah, blah, blah… then file for Buyer protection (eVBay owns PayPal) only difference is eBay wil charge $30 for the ‘Buyer Protection" but only after 30 days.
    I lookled up more information on the person, company that disappeared with my money (eBay will not tell you anthing about anyone when you get ripped off, you have to dig yourself):
    ————–
    Man Tand and Simon Tang
    EC Computers, Inc. Brooklyn, New York.
    Wed, 24 Mar 2004 10:20:30 -0800
    From: endofauction@ebay.com
    To: xxxxxx@xxxx.xxxx
    Subject: eBay Item Won! POWERCOLOR ATI RADEON 9700PRO Video Card, 128MB DDR, 25 (Item #2795204457)
    X-eBay-MailTracker: 10013.313.0.40158
    Congratulations xxxxxxx!
    Dear xxxxxxx,
    You have agreed to purchase the following eBay item from eccomputer (M Tang – Brooklyn, NY United States) on Mar-24-04 10:20:23 PST:
    POWERCOLOR ATI RADEON 9700PRO Video Card, 128MB DDR, 25 – Item #2795204457
    Please review the seller’s payment instructions below. Pay using PayPal
    Buy with Confidence – Learn payment safety tips and more.
    Payment details:
    Item price: US $100.00
    Bid quantity: 1
    Quantity won: 1
    Subtotal: US $100.00
    Shipping, handling: US $10.00
    Shipping insurance per item: US $3.00 (required)
    Sales tax: 8.625% in NY
    Payment instructions from seller:
    IF YOU WANT TO PAY BY CREDIT CARD CALL US AT 718 438-4388. THANKS ECCOMPUTER
    eccomputer@verizon.net
    ———-
    Ec Computers Inc
    2824 Fort Hamilton Pkwy
    Brooklyn, NY 11218
    718-438-4388
    ===============
    ————-
    eBay suspended him but will not say a word why, when etc…
    eBay wil not help anyone ripped off till 30 days has passed.
    I have filed with Internet Fraud complaints, eBay, PayPal, and again, eBay is of no help at this time…. period. I also filed complaints with both the Attorney General of New York and California. I contacted the Police in Brooklyn, New York, and was told I could only file a complaint in person. (I spent 20 minutes on the phone with a Fraud department). A waste.
    Don’t let my forum name fool you, I AM sick, permanently disabled USAF Veteran. $100 is a lot of money to me!

  • Buyer Beware! That’s the message I received from American Express, whom I used to pay PayPal for an item I bought on eBay but never received. EBay was the quickest to claim no responsibility. Despite the simple fact that this item was listed on eBay, they have the audacity to state that this transaction was "outside of eBay". The second insult came from PayPal. They initiated an investigation that essentially protected the fraud artist, and remained tight-lipped for the 30-day duration, mostly to ensure the fraud artist to make his getaway. Although the investigation fell in my favour, they claimed that there was no money to retrieve. To add insult to injury, American Express washed their hands from any responsibility by saying that there was no wrong, just buyer beware. So, before you decide to purchase on eBay, thinking that you’ve got three reputable organizations working to obtain your safe purchase online, think again!
    Peter
    mailto:peter_d@telus.net

  • How come the many many people that lost money on ebay thru escrow in the car department are not getting any help from ebay?? I lost $44,000.00 another guy $50,000.00 another guy $85,000.00 this is a lot of money for just three people. WAIT there are many many more people that lost BIG MONEY, and EBAY will still not post a BEWARE OF ESCROWS on their site, the first BIG loss was in FEB,02 three months later I lost $44,000.00 and there was losses after Feb and after my loss in May 02 and still going on.

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