posted on March 20, 2004 09:01:18 AM new
With Internet Fraud Up Sharply, eBay Attracts Vigilantes
March 20, 2004
By KATIE HAFNER
SAN FRANCISCO, March 19 - Five months ago, Klaus Priebe, a
soft-spoken building contractor who said he was sick and
tired of fraud on eBay, decided it was time to catch the
cheaters at their game.
In one recent auction, he bid as much as $2.5 million on a
telescope worth no more than $2,000. He knew he would not
have to pay for the telescope because he was sure that it
did not exist.
The listing was a fake, he decided, because the seller
offered free shipping and was registered in Andorra, a
small country in the Pyrenees that is often listed by
swindlers. Mr. Priebe said his wild bid was an attempt to
protect innocent bidders from falling into the trap he had
spotted.
Mr. Priebe, 42, is an eBay vigilante, one of a number of
eBay members who are stepping in to fight online auction
fraud - a problem they say is getting worse by the week -
because they believe that the company does not do enough
policing of its own.
But in eBay's view Mr. Priebe and his vigilante brethren
are pariahs. Rather than embrace these virtual posses, eBay
discourages them, occasionally going so far as to suspend
the vigilantes' accounts.
"We love it that people want to help, but there's a right
way to do it and a way that isn't constructive or in the
interest of a good community marketplace," said Rob
Chesnut, eBay's vice president for rules, trust and safety,
who added that eBay was doing everything it could to make
it safe to buy and sell on its Web site.
EBay, based in San Jose, Calif., has 800 people deployed
around the world to fight fraud, he said, and does not need
amateur help. "Just like in the offline world," he said,
"you can't have people running around taking the law into
their hands."
Critics, however, say the company is not only slow to stop
fraud, but is loath to reveal how much of it goes on.
"EBay's denial of the extent of the problem is out of
control," said Mark Seiden, a computer security consultant
in Manhattan who stumbled upon a fake deal for a high-end
espresso maker on eBay several months ago and has since
uncovered hundreds of fraudulent listings. "They probably
think their brand will be stronger if they hide the fraud."
Mr. Priebe, who lives in Pueblo, Colo., is not waiting for
someone else to solve the problem. Like other eBay
vigilantes, he routinely alerts eBay to listings he
believes are fraudulent and sends e-mail messages to people
who have bid on a fake item to alert them to the fraud.
"That's a part of safe trading," Mr. Priebe said. "I
believe that wholeheartedly. Watch my back and I'll watch
yours."
Deception is no stranger to eBay, which has 93 million
registered users. Within its warm and fuzzy culture, based
on trust and honesty, there have always lurked renegades.
There was the spectacular case in 2000 when a fake Richard
Diebenkorn painting was nearly sold for $135,000 on eBay.
Travel voucher fraud on eBay became such a problem that the
company now requires frequent sellers to register with an
independent verification company. The sale of fake rare
stamps has spawned watchdog groups both on and off the
auction site.
Yet far more rampant than art forgeries and fake
collectibles these days are fraudulent listings for
expensive consumer goods. Plasma televisions and laptop
computers, mountain bikes, fancy espresso machines,
treadmills, telescopes, even vehicles are prime candidates
to be phantom objects on eBay, sometimes promoted with
photos and descriptions lifted straight off the
manufacturer's Web site. Often, the seller uses auction
software to post dozens of items at once, flooding a
category with fake listings.
Last year, some $200 million lost to online fraud was
reported to the Federal Trade Commission. And nearly half
the 166,000 complaints the agency received last year were
about online auctions, a 130 percent increase from 2001.
While the F.T.C. does not break out figures by companies,
the vast majority of online auctions are conducted on eBay.
"It's gone nuts just since November of last year," said
Greg Schiller, a computer and network technician in Aztec,
N.M., who says he reports hundreds of fraudulent listings
every day to eBay.
Against this tide, online vigilantes have had an impact.
Last year, they were instrumental in cornering a pair of
swindlers from Arizona who bilked eBay users out of nearly
$110,000. Often, they are the ones who doggedly trace the
source of the fraud to places like Romania, which appears
to be a popular redoubt, although many Romanian swindlers
claim to be based in Andorra. Indeed, by late last year,
Mr. Chesnut said, more than 100 arrests had been made in
Romania alone.
"It's very difficult to find people who are hiding in
foreign countries where there's a language barrier and it
requires cooperation with foreign agencies," said Deborah
Matties, a lawyer in the marketing practices division at
the F.T.C. and leader of the commission's task force on
Internet auction fraud. But she said the agency did not
work with vigilantes to ferret out online auction fraud.
Mr. Schiller and others say they engage in self-help
activities in part because they yearn for the days when
eBay was a much safer place. "EBay is a wonderful thing,"
Mr. Schiller said. "But a lot of people are getting ripped
off for a lot of money."
The company says vigilantism, like Mr. Priebe's bidding
tactics, is not a solution and will not be tolerated. The
company also does not allow its members to send e-mail
messages to bidders to warn them that they are bidding on
something that does not exist, or to post details and item
numbers on eBay discussion groups.
"If you allow that sort of activity, even the bad guys
start posting about the good guys and you end up with a big
free-for-all and a lot of finger pointing," Mr. Chesnut
said. "That's not the right way to go about doing things."
EBay estimates that of the 20 million or so items that are
for sale on its Web site at any given time, only about
2,000 items, or one-hundredth of 1 percent, are fraudulent.
But that figure reflects only those cases that are settled
through the eBay buyer protection claim process.
Mr. Seiden, the computer security consultant, says the
actual number of fraudulent auctions is considerably
higher. "EBay's protections don't apply to many kinds of
transactions like Western Union scams, so they go
uncounted," he said.
Mr. Chesnut said the company was aware of most of the
fraudulent listings that the vigilantes report. But he
contends the vigilantes can be mistaken. "There's a lot of
information that they might not have at their disposal," he
said. Hani Durzy, a spokesman for eBay, said it was "not a
rare occurrence where eBay has noticed that vigilantes have
disrupted legitimate auctions."
The vigilantes argue that the signs of fraud are quite
obvious. A fraudulent seller almost always asks for payment
via Western Union. Often there is no feedback from other
users. And the seller usually offers to sell the item at a
much lower price if the buyer agrees to leave eBay and
close the purchase privately.
One common ploy is to set up an auction under the identity
of a legitimate eBay user who has received positive
responses from buyers in the past. Brad Celmainis, an eBay
member in Calgary, Alberta, said that warning signals go up
as soon as he sees a seller's history and spots
incongruities.
"You'll get some lady who was selling teapots and baby
clothes and all of a sudden she's an electronics kingpin,"
said Mr. Celmainis, who alerts bidders and eBay users whose
accounts have been hijacked.
Stirling Smidt, a 28-year-old financial analyst in
Wellington, New Zealand, could have used such a tip. He
thought he had found a great deal on a digital camera on
eBay, and promptly sent off 850 New Zealand dollars ($557)
via Western Union to the seller who said she was in London.
"There was a lot of e-mail back and forth between the
seller and me," Mr. Smidt said. "Her English was really bad
and she kept saying, `I'm just a 57-year-old woman with a
sick son and a camera to sell.' Things like that." The
camera never arrived.
Ina Steiner, editor and publisher of AuctionBytes.com, an
online newsletter about Internet auctions, said she was not
a vigilante but she sympathized with their cause.
"If I get ripped off by somebody on eBay and I see they're
still selling on eBay and ripping other people off, I want
to reach out and warn people," she said. "EBay doesn't look
kindly on that."
Mr. Chesnut said the company frequently warned its members
to be wary of traps set to steal their account information.
Further, he said, the site is now peppered with various
warnings about unsafe practices, like sending money via
Western Union and going off eBay to complete a transaction.
The company also routinely alerts winning bidders of
fraudulent auctions, telling them not to complete the
transaction, Mr. Chesnut said. Such was the case with the
fake Diebenkorn painting.
Still, it was another eBay user's warning that saved
Marianne Houkom. Ms. Houkom, 55, who lives in Newton, Kan.,
received an e-mail message from Mr. Seiden warning her that
the espresso machine she was bidding on did not exist. She
said she was horrified, and then relieved when someone
outbid her.
Mr. Seiden said he felt obligated to inform bidders in
fraudulent auctions because he did not trust eBay to catch
all of those schemes. That may be because "the people in
eBay seem to vary widely in their competence and
understanding of claims of fraud and willingness to
investigate," he said.
For his part, Mr. Priebe has tried to reason with some of
the hucksters. He said he recently had an interesting if
fruitless exchange with someone posting fraudulent auctions
who said he was a 16-year-old living in Romania.
"He told me his parents wanted him to make money and that
everyone in the U.S. is rich," Mr. Priebe recalled. "I said
it isn't really that way and that karma was going to catch
up with him one of these days."
___________________________________
Have you noticed since everyone has a Camcorder these days no one talks
about seeing UFOs like they used to?
posted on March 20, 2004 02:22:42 PM new
After reading that and eBay stating that they had 800 people to catch fraud doesn't go right with me. They talked about the arizona couple. Well that took a long time for eBay and PayPal to shut them down. We knew that something was going on way before that. If they have the 800 people doing only that job then they should catch the fraud much sooner tnan they do. If they have 800 people doing that I think they need a new leader.
