Online Auction Fraud – What Are They and How To Avoid Them

I still remember when eBay was the place to trust buy and sell things.

Of course, as with any new platform, as soon as people started making money, the businesses came in and made it impossible for individual sellers to compete.

But for a time, if you didn’t mind hauling packages to the Post Office every few days (this was before printing postage at home was so easy), you could make some good money selling stuff.

We were so young and naïve back then. We, of course, knew we could trust be scammed.

Never once, though, could we have imagined the many different ways scammers would learn to defraud consumers in the future.

Until the pandemic, I bought most of my clothes on eBay. It was a great way to get a deal on gently used clothing. The biggest problem I encountered was that an item would be in worse shape than represented in the listing.

In some cases, the items arrived stinky, marked by deception. That blouse might smell stale, like mothballs, or like cheap perfume used to disguise the other smells.

Sometimes items would be covered in pet hair or reek of cigarette smoke.

And, unless you wanted to battle for a refund, leaving a bad review was all you could do.

After learning about all online auction fraud, I now realize I made the right decision, walking away when I did. It’s so risky nowadays.

You don’t have to give up your favorite auction sites, though. There are ways to get great deals on items while staying safe.

What Is Online Auction Fraud?

Online auction fraud is a deceptive form practice that exploits the platforms designed for consumers to trade goods. While these platforms typically incorporate security measures to safeguard transactions and offer remedies for non-compliance by buyers or sellers, fraudsters adeptly navigate these safeguards to illicitly acquire money or products, turning them into a crime and remaining undetected until they are eventually removed from the platform.

Among the various platforms facilitating such transactions, eBay stands out as the foremost choice for everyday consumer goods, although other alternatives exist. Vigilance is crucial when engaging in peer-to-peer transactions, regardless of the chosen platform, as awareness of prevalent scams is essential for swift identification and prevention of this form of crime.

Types of Online Auction Scams

Online auction scams come in a variety of flavors. Here are some of the most common.

1. Gift Card Scams
2. Brushing Scams
3. Deceptive Photo Scams
4. Incorrect Name Scams
5. Unprotected Payment Scams
6. Off-Platform Fraud
7. Second Chance Offer Fraud

1. Gift Card Scams

What is it?: Auction sites can be great for offloading those gift cards you don’t use. With this scam, someone purchases your gift card, drains the balance, and then disputes the purchase with the auction site. 

Their claim? That the gift card was an unauthorized purchase. Since credit card companies often refund unauthorized gift card purchases, scammers can sometimes get away with it. Even if they don’t, you’re out the money while the claim is investigated.

How to spot it: If you’re selling on auction sites, you’ll quickly learn that you typically don’t get to choose who purchases from you. That makes scams like these tough to avoid. It’s best to avoid selling gift cards on sites like eBay since they’re prone to scams.

How to avoid it: If you need to sell a gift card, look into sites like CardCash or ClipKard. Those sites specialize in gift card sales, providing a safer alternative to potentially illegal activities.

2. Brushing Scams

What is it?: Brushing scams aren’t unique to auction sites (they’re common on Amazon), but they’ve become prevalent in recent years. With this type of fraud, you receive an empty package in the mail. It might have some low-dollar item instead of being empty. 

The goal is to show that an item was shipped from the seller to you, helping legitimize the seller. In a variation of this scam, the fraudster can hack into your account and leave a review for your supposedly purchased product. Alternatively, someone sends it to your address without permission, and the site assumes it’s a gift.

How to spot it: I’ve had days where I received a package I couldn’t identify. Upon opening, though, I always recognize it. So, of course, the appearance of an empty package on my porch would get my attention. It might seem harmless, but such a delivery could signal that someone’s targeting our accounts to leave a fake review.

How to avoid it: While we can’t easily avoid brushing scams, if an empty or unfamiliar package arrives, change your password first and ask questions later. You can also check to ensure nobody has left reviews using your account by going to your feedback profile, accessible by clicking the drop-down arrow next to your name on the desktop version. Otherwise, report the scam as best you can.

✎ Related: How do you check if Amazon reviews are real or fake? ➔

3. Deceptive Photo Scams

What is it? With this counterfeit scam, someone lists an in-demand product, hoping you’ll take action without thoroughly reading the description. But what you missed by rushing to buy was that the listing was for the box only. Similar to when we see a cute outfit for sale, but the pants or shoes aren’t included. 

How to spot it: This scam is best avoided by putting it through the “too good to be true” test. If an item is tough to buy and you see it on an auction site, always scrutinize it. What’s the catch? Chances are there’s a reason it’s available on this particular auction site.

How to avoid it: If someone has sold you a box or a picture under the guise of a real item on eBay, it likely falls under the site’s No Item Listings Policy. This policy states that every listing must have an actual item for sale. Always read a listing closely before buying. If you have questions, message the seller so the communication will be logged.

4. Incorrect Name Scams

What is it?: With this scam, you purchase an item, and the seller ships it. When you receive the package, someone else’s name is above your address on the label. You return the item unopened, assuming you received someone else’s package, but the seller treats the transaction as though the package was rejected. 

The seller gets to keep the package and your money. A variation of this scam has the seller shipping the item to the wrong address deliberately, and then using the tracking number as proof the item was delivered. You don’t have the information to dispute exactly where it was delivered.

How to spot it: A package with someone else’s name and your address is a good sign you’re being scammed. The seller counts on you returning it to the post office unopened.

How to avoid it: You can nip this scam in the bud by checking the name and the address. If it’s your address and the packaging fits your expectations for a purchase, go ahead and open it. You’ll keep the item, and the seller will be thwarted.

5. Unprotected Payment Scams

What is it?: In most cases, your online auction purchases are protected. But some categories on eBay aren’t covered. For instance, if you purchase a vehicle, real estate, NFTs, or travel tickets, eBay’s money-back guarantee won’t apply. That makes those areas of the site prime targets for scammers.

How to spot it: Since eBay doesn’t protect these high-dollar transactions, it’s best to use other sources for making those purchases. 

How to avoid it: Sticking to more reliable sources when making major purchases is best. Real estate and vehicles, for instance, are best kept to more traditional buying sources. I buy nothing that costs more than $100 unless I’ve seen it in person first.

6. Off-Platform Fraud

What is it? It may be hard to believe, but eBay existed before PayPal. We required money orders for payment, sent via postal mail because handing over credit card numbers to strangers was a bad idea. PayPal transformed online shopping, allowing us to make online payments securely.

That’s why some scammers will try to steer you off the platform. Once you pay outside the system, you can no longer dispute the transaction on eBay. 

How to spot it: Any time someone asks you to pay outside a platform, take pause. With many platforms, moving communication or payment outside the system voids any protections you might have.

How to avoid it: Refuse to take anything off the eBay platform. If someone reaches out, asking you to pay via an alternative method, don’t engage. 

7. Second Chance Offer Fraud

What is it? One thing that stinks about auctions is that we aren’t guaranteed to win. I’ve lost my fair share of items over the years and been disappointed. But occasionally, sellers will send a second chance offer. It’s a legitimate thing that, of course, scammers manipulate. With a legit second chance offer, a seller copies the eBay message interface to send the offer to your inbox. You think it’s simply a duplicate of the one in your eBay inbox. Hackers sometimes find their way into a seller’s eBay inbox and send the message there. Either way, you’re asked to wire or send the money outside eBay’s system, bypassing the authentication process. 

How to spot it: The request to send the funds separately should always be a warning. If you check your eBay inbox and don’t see the message, then the scammer sent the message directly to your inbox. But keep in mind that eBay accounts can be hacked.

How to avoid it: Keep all payments and messaging within your eBay inbox. You may receive copies of your eBay messages in your email inbox, but go to the app to reply and take action. Not only will this help prevent fraud, but you’ll have proof of those interactions if you have to file a dispute. Remember, the price of vigilance is far less than the potential cost of falling victim to fraud.

Avoiding Auction Scams

Online auction platforms can be a great way to get great deals and make a little money.

But there’s a risk to any peer-to-peer transaction, even when it’s protected. Here are some things you can do to protect yourself from scams while using online auctions.

1. Stick with Seasoned Sellers

It can be tough to get started as a seller on eBay. Buyers look at reviews and often avoid sellers with no review history.

There’s a reason for that. A new profile with few (if any) reviews is a red flag.

That’s why we must always think twice if a seller doesn’t have a solid review history.

Read the content of the reviews, too. I’ve noticed some eBay users habitually leave five- and four-star reviews while revealing negative aspects of items.

2. Stay on the Platform

Sites like eBay exist to make money. So it can be easy to assume circumnavigating their system will save you money.

It can also be easy to fall for the line that eBay only doesn’t want us to leave the money because it wants the money.

Sure, eBay wants its fee. That’s a given.

Yet eBay also sees, on the admin side of things, what happens when someone is convinced to pay somewhere else.

If someone asks you to communicate or pay outside of eBay, question that person’s motive. Chances are, the motive is not a good one.

3. Carefully Scrutinize Listings

I’ll be the first person to confess that I’ve been guilty of seeing and buying a great item, then regretting it later.

It’s easy to go by the pictures and forget to read the listing. I probably never read a full listing, start to finish, the entire time I ordered on eBay.

In most cases, it worked out okay. Yet there were times when I received an item that wasn’t quite what I thought. If I’d read the listing before bidding, I would have caught it. 

But I was bidding. And when you aren’t committing to buy just yet, it’s easy to think of it as not quite a commitment yet.

Always assume when you bid that you’re going to win the item. Even if you’re sure bidding will be competitive, stop and scrutinize. You’ll save yourself a lot of time later, especially if you’re dealing with a skilled auctioneer.

How to Recover From This Fraud?

If you’ve been a victim, don’t panic.

First, assess the damage and then start taking action. Here are some things that might help.

1. Resolve It Through eBay

eBay’s Money Back Guarantee protects both buyers and sellers.

There are some requirements to be eligible: 

• First, you’ll need to have paid through eBay.
• You’ll also need to have purchased an item covered by eBay’s guarantee. No cars, NFTs, real estate, etc. 
• If an item you bought doesn’t arrive, you’ll go to your recent orders and report that it hasn’t arrived. You’ll then have to give the seller time to respond.
• If you’re a seller, you’ll have to be able to prove you shipped the item and it was retrieved.

Always ship using tracking!

If you were tricked into paying outside the platform, check with your payment provider to see if you can dispute the charge.

2. Report Suspicious Activity

Reporting scammers can go a long way toward keeping online auction platforms safe.

Let the site know if you narrowly escape a scam or have reason to believe someone may be scamming users.

For eBay. you can report such issues here.

eBay can investigate the listing and the seller and take action if necessary. Even if you don’t see a listing come down immediately, you’ve at least put that seller on the site’s radar, and the platform can carry out an investigation into the matter.

3. Consider Identity Theft Protection

What if an online auction scammer has grabbed your information?

You may have given out your credit card number or input some details like your Social Security number or birthdate.

If identity theft is a possibility, taking measures to protect yourself is important. 

You can: 

• Contact your bank to put an alert on your account or card.
• Freeze your credit.
• File a police report.

Another option is identity theft protection. Services like Aura, LifeLock, and IdentityForce will monitor your credit reports and accounts and let you know if fraud is detected.

They’ll also help you out if you have to recover from identity theft.

Conclusion

Online auction sites are a great way to find deals on products you want. You can also offload a few items you don’t need.

But as with any great service, scammers find ways to manipulate it for gain.

By being aware of the various cybercrimes and scams, you can take measures to stay safe while you’re on auction platforms.

✎ Related: How To Avoid Online Shopping Scams ➔