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Beware second-chance auction scams

With the holiday season fast approaching, you might find yourself bidding online for that designer handbag for mom or that five-drawer tool chest for dad.

The low prices on a wide range of items, after all, make online auction sites alluring marketplaces to shop for holiday gifts. If you're an auction "newbie," however, know this: Scammers sometimes watch bidders in high-dollar auctions, especially on big-name auction sites, such as eBay, and try to dupe unsuspecting buyers out of their money after an auction closes.

The scheme, known as a second-chance auction scam, is just one of many types of Internet auction fraud -- the leading type of offense reported to the Internet Crime Complaint Center, or IC3. Second-chance scams are one of the most popular auction fraud complaints currently reported to the center, says Aaron Naternicola, an Internet fraud analyst with the IC3. Of the 17,933 auction fraud complaints it received within the past 12 months, 1,381, or 7.7 percent, involved second-chance online scams.

Second-chance scammers wait until auctions end and then offer nonwinning bidders a phony second chance to purchase the item -- usually through a wire transfer service. April Wall, a research associate with the National White Collar Crime Center, or NW3C, explains that by targeting bidders in specific auctions, the scammer can cash in on the victim's invested interest in the product.

Some items involved with second-chance scams that have been reported to the IC3 include automobiles, jewelry and high-priced football tickets.

A majority of second-chance auction fraud complaints come through eBay auctions, says Wall, but "this is more than likely simply a function of the huge popularity of the eBay site and the high volume of auction traffic, which creates a larger pool of potential victims for the fraudster.

"All auction sites have the potential for this type of fraud, so it is important that individuals involved in these types of transactions be vigilant and follow necessary safeguards as much as possible. Individuals should also be wary of any offers that appear too good to be true, especially during the holiday season," says Wall.

"Crime in general, especially fraud, seems to surge through the holiday season."

How to spot a bogus second-chance offer
Many fraudulent second-chance offers come as targeted e-mails to outbid bidders, says David Steiner, president of Steiner Associates LLC, which publishes But, these scams also arrive as "shot in the dark" phishing e-mails offering second chances to buy popular items that the recipient might not have necessarily bid on, such as iPods.

Here's how the targeted e-mail works:


A few days after an auction closes on a high-dollar item, the scammer goes back and pulls up a list of bidders in that auction. The fraudster concocts a message to the second-highest bidder, pretending to be the seller. It claims that the winning bidder backed out of the purchase or that the highest bid did not meet the reserve price -- a hidden number set by the seller that a winning bid must beat to score the item. With the winning bid out of the picture, that means the outbid buyer gets another chance to purchase the merchandise. Happy day -- for the scammer.

The second-chance scam phishing e-mails come to regular e-mail addresses, regardless of whether the recipient participates in auctions. With this type of e-mail, the message pertains to a more generic auction for a popular item that many people likely bid on.

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