Current government investigations looking into alleged fraudulent auctions and anti-competitive practices, and involving the Web site eBay, point up some real problems with buying online.
eBay revealed last week that it is the subject of a number of government investigations. The ongoing probe into the Sotheby’s and Christie’s auction houses for alleged price fixing is said to also involve eBay.
While the company says that the overwhelming majority of its auctions are completed without a problem, there are visible signs of trouble at the Web’s largest auction site in the number of fraud complaints against its members. In a filing to federal regulators, eBay admitted it was involved in a number of local police investigations of buyers and sellers who defrauded others using online auctions.
eBay has always had a trusting attitude towards its users. Until recently, people who sold goods through the site were on sort of an honor system. The company would let them send in a check for the auction fees after the auction was over. After enough people abused this by failing to pay and then signing up again under new names, the service began requiring sellers to provide credit card information up front.
Another big problem is phony buyers. I personally had an auction experience where I believe a friend of the seller bid up the price of a piece of hardware I wanted to buy. I traced back the phony bidder to the same company as the seller of the merchandise, but after I complained to eBay about it they did little to investigate the incident. This kind of an auction trick is against the law in most states.
In a recent series of publicized incidents, phony bidders placed bogus $10,000,000 bids for a number of domain names offered for auction. None of the bidders ever materialized at the end of the auctions. As a result of this public embarrassment, duly reported by the media, eBay began pre-qualifying buyers who bid on high priced items.
In other cases, sellers collected money from buyers and failed to deliver the goods. The number of these fraud complaints, which eBay says occur only once in every 25,000 transactions, are what has generated the most recent publicity as users contacted their local police for assistance in tracking down the missing merchandise.
eBay also is in trouble with investigators over allegations that it blocked rivals such as Bidders Edge from access to auction data on the site. Bidders Edge and other sites track prices of certain items on eBay and report them to their users. eBay says it blocked the other companies to force them to sign agreements that would protect users from fraud and bad information.
So if you’re going online to buy and sell, be very careful. There could be some real sharks swimming out there.
Article – Copyright 2000 Hugh Brower Syndicated by ParadigmTSA
