Scammer Guilty of $2.7 Million Online Auction Fraud

Auction scams are messy. Consumers who are new to the world of online auctions are more likely to fall victim to deals that are too good to be true. Victims either get stuck with inferior or counterfeit goods, or they are charged and never receive the purchased item at all.

My spouse used eBay to search for skin care products, and was pleasantly surprised by the low prices she found for the products she wanted. Since she doesn’t have much experience with eBay, she called me over to help her complete the transaction. I saw that the seller had no feedback from previous buyers, and suggested that my wife hold off on the purchase. She begrudgingly agreed with me, and the next day when she logged in, the seller had been suspended from eBay. (I told her I’m wicked smart!)

If it looks like it might be fraud, it probably is.

A Romanian man recently pled guilty to charges of wire fraud and conspiracy before a Chicago judge, after having acted as a money mule in a scheme that scammed eBay, Craigslist, and AutoTrader users out of $2.7 million. The man’s associates in Romania used auction websites to sell nonexistent cars, motorcycles, and RVs. Buyers paid by wiring money to the scammers’ accounts, but never received the expensive items they had supposedly purchased.

Online classified and auction websites could prevent fraud and protect their users by incorporating device reputation management. One anti-fraud service getting lots of attention for delivering fast and effective results is ReputationManager 360 by iovation Inc. This software-as-a-service incorporates device identification, device reputation and real-time risk profiling. It is used by hundreds of online businesses to prevent fraud and abuse in real time by analyzing the computer, smartphone, or tablet connecting to their online properties.

While iovation does not collect any personally identifiable information (PII) from their business clients, they have a very unique view into the connections between computers and the accounts they access. For example, what might typically look like one transaction to a single auction site is often a coordinated attack across multiple sites. When a group of devices hits multiple sites, across various industries, iovation can detect the attacks through velocity triggers and shared experiences across their customer base to alert the affected business and thwart the attacks.

A device reputation check used on a scammer setting up a new account in an online action site would stop him at the front door, leaving no chance to post fake items for sale which would soon cause damage to the business and its customers.

eBay makes safety recommendations for users, and the first rule is to use eBay’s built in payment system, and not to use alternate payment methods, like wiring money.

Never provide sensitive personal information like your account password, a credit card or bank account number, or your Social Security number in an email.

Before you bid or buy on eBay, know your seller. Look at your seller’s feedback ratings, score, and comments to get an idea of their reputation within the eBay marketplace.

I generally recommend using PayPal to help prevent online identity theft. If you use your credit card, check your statements frequently and refute any unauthorized charges immediately.

Robert Siciliano, personal security and identity theft expert contributor to iovation, discusses scammers and thieves on The Big Idea with Donnie Deutsch. Disclosures.