| | | | | and in this instance in the curve comes in the guise of |
| Fighting Internet Auction Fraud | | | | escrow fraud. |
| By Ulf Wolf | | | | Handling, as it does, substantial amounts of money, the |
| Cybercrime is up again for 2007. Hardly news, of | | | | escrow company is often itself a target of |
| course; it is no secret that this plague is spreading | | | | fraud-where look-alike phishing sites try to con you into |
| farther and deeper by the hour. | | | | using them rather than the bona fide site; and the |
| And here's another unsurprising piece of news: at the | | | | escrow company concept itself is also flagrantly |
| head of the pack, same as last year: Internet Auction | | | | abused by criminals who set up fraudulent escrow |
| Fraud. | | | | sites where money will only travel one-way: you |
| The FBI Numbers | | | | guessed it, away from you. |
| The Internet Crime Complaint Center (IC3), a | | | | In fact, the problem of fake on-line escrow sites is so |
| partnership between the FBI and the National White | | | | substantial that some reputable and legitimate escrow |
| Collar Crime Center (NWC3), recently released its | | | | sites have simply thrown in the towel. |
| 2007 figures on cybercrime complaints received and | | | | Buyer Guardian, for example, recently shut its doors |
| referred to law enforcement. | | | | due to Internet fraud stealing their business, and posted |
| Again, the numbers showed that Internet Auction | | | | the following note on their site: "We are sad to report |
| Fraud was by far the most reported offense in 2007, | | | | that after careful and lengthy consideration we have |
| comprising at it did 35.7% of all complaints. In addition, | | | | made the decision to cease operations at This is a |
| during the same period, the non-delivery of | | | | very difficult decision, and one that is made primarily |
| merchandise and/or payment from non-auction internet | | | | due to the rapid growth of online escrow fraud." |
| transactions represented another 24.9%, pegging the | | | | Many of these apparently bona fide escrow |
| combined total of on-line sales related fraud complaints | | | | companies, established for the sole purpose of |
| at 60.6% of all Internet fraud. | | | | enriching the criminal, are set up |
| Internet Auction Fraud | | | | off-shore-predominantly in Russia or China-where lax |
| What far too many users fail to realize is that when | | | | cyber crime laws (and sometimes questionable |
| something is purchased via an Internet auction, it is not | | | | cooperation with U.S. Authorities) makes it more |
| bought from the auction house (say eBay, or Yahoo) | | | | difficult to shut the sites down and bring the |
| but from an individual or company. The auction | | | | perpetrators to justice. |
| site-acting as a go-between-merely provides a forum | | | | Enter: Actually, entered this fray nearly ten years ago |
| where individuals can trade with one another, and it | | | | during the dot-com boom and has over the years |
| usually adopts-and prominently displays-a firm policy of | | | | shown itself to be the online escrow company to turn |
| washing their hands of legal responsibility for any loss | | | | to for secure and fraud-less auction and other online |
| suffered from using their service. | | | | sales/purchase transactions-with the credentials and |
| Once the bidding has concluded the payment for and | | | | staying power to prove it. |
| delivery of the goods bought and sold is negotiated | | | | Licensed by the state of California-as well as by the |
| between the purchaser and seller. If the item is not | | | | States of Idaho and Arizona, who require separate is |
| delivered after it is paid for or is not what was | | | | the only on-line escrow company credentialed to serve |
| represented on the auction site, the auction house will | | | | every state of the Union, and who indeed does so 24 |
| not refund any money. It is up to the buyer to | | | | 7. |
| approach the seller to negotiate a fair and proper | | | | While will handle transactions of any size, it may not |
| settlement. | | | | make financial sense to turn to them for low cost |
| The statutory warranties that normally cover trade do | | | | items since their transaction fee is $25, and their |
| not cover goods bought at on-line auction. The seller's | | | | commission is $63 per $1,000 value of the transaction |
| only obligation is to give clear title. | | | | if payment is by credit card and $32.50 per $1,000 for |
| Therefore, keep the following in mind when dealing | | | | wire transfers. |
| with on-line auctions, or whenever you buy anything | | | | But, if you value your sleep, would be indispensible for |
| online, especially from a private party: | | | | any transaction of $250 on up. |
| - Understand how the auction works, what your | | | | Peace of Mind |
| obligations are as a buyer, and what the seller's | | | | Michigan-based telecomclassifiedads.com, which buys |
| obligations are before you bid; | | | | and sells expensive telecommunication switching |
| - Find out what actions the auction house will take if a | | | | equipment concurs, would not, according to Mickey |
| problem occurs, and consider insuring the transaction | | | | Fivenson, complete any online transactions without |
| and shipment; | | | | "I use for all my equipment transactions, and without |
| - Be aware that if a problem does occur with an | | | | them I would not be in business. It's as simple as that. |
| auction transaction, it will be more difficult to resolve if | | | | "I deal with buyers and sellers on a daily basis who do |
| the seller is located outside the United States-laws can | | | | not know each other and who live in different parts of |
| differ widely country to country; | | | | the world. is the only way I can complete a transaction |
| - Learn as much as possible about the seller, especially | | | | between them. |
| if the only information you have is an e-mail address; | | | | "As a result, after five years of doing business through |
| - Before you make a payment for an auction | | | | I have never had anything but satisfied customers." |
| purchase, you should verify the seller's identity and | | | | Dave Kurko of RPM Auto Wholesale in Pleasant Hill, |
| contact details in case there is a problem with the | | | | CA could not agree more: |
| delivery of the item; | | | | provides a safety net for both seller and buyer, |
| - Ask the seller when delivery can be expected and | | | | delivering certainty in an uncertain world. |
| whether the merchandise is covered by warranty if | | | | "Most people understand the concept of escrow, |
| you need to exchange it; | | | | particularly if they have bought and sold real estate in |
| - Use registered or certified mail to enable tracing; this | | | | a jurisdiction that uses an escrow company rather |
| will eliminate claims that the parcel was sent but must | | | | than an attorney to settle a real estate transaction; in |
| have been "lost in the mail;" | | | | fact, we have modeled our transaction on the real |
| - Check that the auction account information matches | | | | estate transaction. has made this approach not only |
| email, phone number and any bank account and | | | | possible but also very effective. |
| location information; | | | | "They are also very customer centric, and thanks to |
| - Use auction house feedback forums to check out | | | | their tech support we have been able to integrate |
| the seller's history before agreeing to pay any money. | | | | opening an escrow account with them into our own |
| Please note however, that sellers sometimes post | | | | web-hosted application, allowing our CRM software to |
| positive feedback on themselves or organize other | | | | talk directly to their database over a secure link. |
| people to do so on their behalf. | | | | "Really, they're the only game in town. We've |
| And here is the most important advice of all: | | | | searched other companies, and nobody else |
| - If you have any doubts about the integrity of an | | | | measures up." |
| on-line auction seller-and even if you're not: use an | | | | Escrow.com-The Detective |
| escrow agent. An escrow agent or company is an | | | | While is gaining increasing recognition as the Internet |
| independent third party which holds payment in trust | | | | escrow company to turn to for peace of e-commerce |
| until the buyer receives and accepts the item from the | | | | mind, their staff, on a daily basis, also hunt and diligently |
| seller. While this service does incur a fee, it protects | | | | work to shut down fraudulent impostors, which are |
| the buyer because the third party will hold the money | | | | encountered daily. |
| until the goods have been received in good condition, | | | | And they spring up like mushrooms, these impostors: |
| inspected, and accepted; and only then released to the | | | | there are days that staff discovers as many as ten |
| seller. | | | | new such sites. |
| Internet Escrow | | | | A couple of clever fraud specimens can be found (if |
| The principle and process of Internet escrow is the | | | | they are still up at time of print) at and |
| same as with buying and selling real estate-where, of | | | | escrow-holdings.net, both of which have been |
| course, the escrow company is deemed indispensible | | | | confirmed as unlawful. You certainly cannot fault these |
| due to the amounts involved. | | | | criminals for lack of professional design. |
| - The buyer or seller opens an account with the online | | | | The good news is that as these sites are tracked |
| escrow company; | | | | down, authorities are alerted and the sites are soon |
| - The prospective buyer of an item sends payment by | | | | off the air.eBay Weighs In |
| wire transfer, check or credit card to the escrow | | | | To quote the biggest auction site of them all, eBay: |
| company; | | | | Pay safely - beware of fake escrow services when |
| - The escrow company verifies that the funds indeed | | | | you consider using them to pay for your eBay item. |
| do exist, or that the buyer is who he represents | | | | For eBay transactions, you should use eBay's only |
| himself to be and is in possession of the credit card | | | | approved Escrow Company: |
| used; | | | | To avoid being deceived by fraudulent email from a |
| - Once this checks out, the escrow company asks the | | | | fake escrow service, you should visit the escrow |
| seller to ship the merchandise; | | | | service's Web site to verify information you received |
| - Merchandise is shipped, and seller submits tracking | | | | via email. |
| information; | | | | Make sure you type the entire Web address (for |
| - Once the shipping site shows the merchandise as | | | | example, into your Web browser. Don't let your Web |
| delivered the escrow company double checks to | | | | browser auto-complete the Web address for you. It |
| ensure the buyer has the goods in hand; | | | | could mistakenly auto-complete a fraudulent Web |
| - The buyer now has an agreed-upon amount of time | | | | address. |
| to either accept the goods or return it to the seller; | | | | Learn more about escrow: |
| - Once accepted by the buyer, the escrow company | | | | Escrow.com-The Household Name |
| releases the funds to the seller, less any processing | | | | More importantly, however, as gains further and further |
| fees and commissions. | | | | recognition on its way to become a household name, it |
| Straightforward enough. If, that is, you are dealing with | | | | gets harder and harder for impostors to defraud the |
| a legitimate online escrow company. | | | | public for the excellent reason that they are not |
| Fighting the Fighter | | | | Escrow.com-the only name you know you can trust. |
| But the world, as we know, likes to throw us curves; | | | | Here's to peace of mind and a good night's sleep. |