Online Auction Sites Including E Bay Com example essay topic

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 (Causing). Despite the SEC's efforts this problem has not been alleviated, but instead continues to grow.

According to the Internet Fraud Complaint Center (IFCC), ! SS 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 U-Bid. com. 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 Mp 3 player on Bidz. com, 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 Bidz. com showed the Mp 3 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 Bidz. com via e-mail making a complaint about the seller but never got a response.

Scheuer's disappointing purchase is an example of the fraudulent behavior of misrepresentation. The final member of our group to experience online auction fraud first hand is Curt Wagner. Wagner used the online auction site E-bay to purchase a T-shirt. When Wagner received the T-shirt he discovered that the shirt was not the size that was indicated by the seller. Wagner had to except the fact that he too suffered a loss due to misrepresentation. Now that we have explained why we chose to study this problem we will now elaborate on what online auction fraud consists of.

Online Auction Fraud According to the Federal Trade Commission online auctions began in 1995. Online Auctions are websites that offer numerous items for sale by many sellers. The seller posts the items on the site with a brief description and sometimes pictures of the item. Bids are then posted by several interested buyers.

When the auction for the item is over the highest bidder wins the item. Some of the most popular online auction sites are E-Bay, U-Bid, and Bidz. com. E-bay states that the most obvious types of online auction fraud are paying for an item and never receiving it and receiving an item that is less than what is describes (e-bay. com). In addition to these obvious types of auction fraud there are non-delivery, misrepresentation, triangulation, fee stacking, black-market goods, multiple bidding, and shill bidding (Bay State Internet Services). "h Non-delivery is when a seller lists an item that he does not possess (BSIS). A buyer then bids on the item but has no chance of receiving it. "h Misrepresentation occurs when the seller provides deceitful information or misleading pictures of the item (BSIS). The seller does this to try and gain a larger bid for his item. "h Triangulation involves three parties: the perpetrator, a consumer, and an online merchant (BSIS).

The perpetrator buys goods from a merchant using a stolen credit card and then attempts to sell the goods on an online auction site (BSIS). The consumer purchases the item without knowing that it is illegally owned. The consumer is then susceptible to police questioning and confiscating of the goods. The buyer and the merchant are both victims (BSIS). "h Fee stacking is the process of adding hidden charges to the item after the consumer has already made the purchase. Examples include separate charges for postage, handling, and the shipping container (BSIS)". h Black-Market goods are sold openly in online auctions. Black-Market goods are goods that are illegal.

They include counterfeit merchandise, copied CDs, pirated software, and guns (BSIS). "h Multiple bidding is used by a buyer to buy an item at a lower price. The buyer obtains several aliases on the auction site and then makes multiple high and low bids with these different names. At the end of the auction the bidder then retracts the larger bids in order to get the item at a low price (BSIS) "h Shill bidding happens when the seller bids on his own item in order to raise the price on the item. The Study In our study we hope to provide further evidence that the problem of internet auction fraud exists. Our first action was to come up with a survey to assess the usage and types of problems faced when using online auctions. The first question in our survey was designed to establish whether the participant has ever used an internet auction website.

If yes was the answer to the first question then the participant was instructed to fill out the next five questions. The second question determined which online auction site was used by the participant. Question three provided what problems if any the participant came across when using online auctions. Next we asked the participant how they attempted to correct the problem they faced and whether or not the problem was fixed.

The final question for this part of the survey asked the participant if the problem they faced would deter them from using online auction sites in the future. The second part of the survey was for the population that has not used an online auction before. The first question determined whether the participant would feel comfortable using an internet auction website to purchase an item and then asked why or why not. That question was followed by three questions in which alarming facts about internet fraud and online auction fraud were given and the participant revealed whether or not they were aware of these facts.

We finished our survey by asking a participant whether he / she still felt comfortable using internet auction sites after reading the facts given. After the survey we investigated several major online auction sites including E-bay. com, U-bid. com, and bid. com. While investigating these sites our main goal was to find out what each site did to make it secure for a customer to purchase or sell an item. We were looking for things like how much information each site provides about the seller, whether the seller gets rated on satisfaction from the buyer, how the payments are arranged etc. We finished our study with a search of several different security sites such as the Securities and Exchange Commission, the Internet Fraud Complaint Center, and the Federal Trade Commission.

In searching these sites we wanted to find out information on how to avoid becoming a victim of online auction fraud. The Results For our survey we were able to get 100 participants to answer our questions. The online auction sites used by the population were e-bay. com, u bid. com and bid. com. Out of the 100 people we surveyed 19 of them had experienced some sort of internet auction fraud. Our group was able to categorize the fraud experienced as fee stacking, non-delivery and misrepresentation. In attempting to recover the damages from the fraud our participants used e-mail to contact the seller or internet auction website.

Only 5 of the 19 who experienced the fraud were able to regain the losses they sustained. We then asked our participants if their problematic experiences would deter them from using an internet auction again. Ten of the nineteen participants reported that their fraudulent experiences have made them reluctant to trust another online auction site. The next section of our survey was directed at the portion of our sample that has not used an internet auction. We first asked if the participants would feel comfortable using an internet auction website to purchase an item. Surprisingly about 70% said that they would feel comfortable using an online auction site.

Finally, we provided several alarming facts about internet auction fraud. After reading these facts our participants were then asked if they still felt comfortable using internet auction sites, only half said they were still comfortable. After we investigated the three top internet auction sites to see what they did to make transactions secure. Ubid UBid. com is an online marketplace where buyers can bid on items.

To ensure honesty in the market place, u Bid has the merchants become certified. To become u Bid Certified, merchants must fill out an application and pay a $99 fee to cover application processing costs. UBid will terminate the seller's certification if they fail to abide by the rules and regulations set by the site. It is also Ubid's policy to prosecute individuals who are participating in fraudulent activities. Ubid allows buyers and sellers to use PayPal as a way to secure the money and items in the transaction. PayPal works as an intermediary between buyer and seller.

When items are purchased the money is sent to PayPal until the transaction is complete and PayPal will covey up to $500.00 in losses if a problem occurs in the transaction. When a buyer does not receive his / her product they must try to contact the other party and try to resolve the problem. If the problem cannot be resolved, they must file a Buyer Complaint Form with PayPal. PayPal will then investigate the problem by contacting the seller to obtain evidence that the seller has shipped the item. If PayPal cannot obtain any such information, it will debit the amount lost and credit the buyer's account. Bidz. com Bidz. com offers a money-back guarantee on all merchandise that is labeled with a Bidz Auctions Guarantee logo.

Under this guarantee if a problem occurs with an item covered by the site then the buyer is eligible for compensation. Some items may require a 15% restocking fee that the buyer is responsible for. The buyer must also cover the shipping costs to return the item. When a buyer gets suffers losses from misrepresentation he / she must file a complaint with Bidz. com. The site will inform the seller of the complaint and keep track of the claims for fraud control purposes.

In addition to these methods Bidz. com also uses PayPal to keep monetary transactions secure. EBay. com EBay also offers PayPal as a way to pay and to be compensated for fraudulent activities. It also offers buyers the option to contact the seller if a dispute arises. If these methods do not resolve the situation, EBay will set up a place called a Square Trade. A Square Trade is a place where the buyer, a third party mediator, and the seller can meet online to try to settle the dispute. By talking directly with the mediator, both sides will be able to discuss their sides of story and come to a mutual agreement.

Ebay. com also gives the buyer the ability to provide feedback about a seller. This feedback can be used to flag a seller who does not operate by the rules. Discussion Based on the information we found in the research and results of our study we further proved that internet auction fraud is a widespread problem. Even with the SEC, FTC, and other fraud governing bodies working to decrease the amount of fraud happening on the web, the losses in 2002 still amounted to $54 million (IFCC).

That amount is three times as much as it was the year before, showing that the problem is still growing (IFCC). With online auction fraud representing 46.1% of this fraud, we felt it was the obvious type to focus on (IFCC). The results of our survey reinforced our hypothesis that online auction fraud is a problem that needs more awareness. We feel that our sample size of 100 people served adequately to what we were trying to find out. It was alarming to us that 19% of the population had experienced fraud using online auction sites. It was equally alarming that only five of the 19 that experienced fraud were able to recover some of the losses.

Internet auction fraud is a serious problem that will require continuing efforts by government bodies to inform and raise individual awareness levels. Our group recommends that the best way to avoid internet auction fraud is to know as much about it as possible. In an effort to prepare people for internet auctions, our group has researched many tips on how to avoid becoming a victim of internet auction fraud. Tips on Avoiding Internet Auction Fraud Tips for Buyers"h Make yourself familiar with the website. Rules and Guidelines of one site may not be the same on other sites". h Find out if the auction site provides insurance or guarantees for undelivered items". h Thoroughly examine the seller's description of the item. Some key words to look for are!

SS refurbished!" , ! SS discontinued!" , or! SS off-brand!" ". h Find out all possible information about the seller. Check out feedback posted on sites about seller by other buyers". h Confirm who's responsible for shipping and handling". h Ask about the seller's return policy.

Can you return the item for a refund if you are not satisfied?" h Email or call the seller if you have any questions. When Bidding"h Establish a maximum price that you! |re able to pay". h Do not bid if you are not intending to actually buy the item". h Save all information from transactions with the seller. Before Paying"h Confirm what type of payment the seller is willing and able to accept". h Never give out your social security number, driver's license number, credit card number or bank account information without making sure the seller and payment service is legitimate". h Research any online payment service that you are unfamiliar with. See if they offer any customer service contact information". h Study the online payment service's security measures and privacy policies". h Be cautious of any online payment service that is unable to process its own transactions". h Check with the Better Business Bureau, state attorney general or consumer protection agency for any complaints about a particular online payment service. Tips for Sellers"h The seller is required under federal law to advertise their product or service and terms of sale honestly and accurately". h Illegal goods are prohibited from being auctioned". h Shipping of the item must take place within the specified time frame.

If no specific time is posted, then within 30 days of the auction's closing date. Advertising Your Product"h Describe the condition of the item as new, used or reconditioned". h Answer all possible questions the buyer might have, within the description of the item". h Include a picture of the actual item". h List the minimum bid you are willing to accept". h Specify the amount and who will pay the shipping charges. Also, tell if you are willing to ship overseas". h List your detailed return policy, and who is responsible for return shipping costs. Dealing with Bidders"h Answer questions the buyer may have about the item quickly and thoroughly". h Contact the winning bidder as soon as the auction closes; confirm the winning bid, shipping charges and how they can pay for the item.