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 AuctionBytes.com. 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.
The scammer may try to lead the e-mail recipient to an off-eBay site to complete the transaction, take them to a fraudulent escrow site or ask them to wire money for the item. Wire transfers comprise the most commonly suggested way for victims to pay, says Steiner. “A wire transfer is like sending cash.”
Either way, both instant cash wire transfers and bank account transfers are unsafe ways to pay for items. Buyers risk never receiving the item and losing any funds sent for it. These payment methods aren’t traceable to the recipient. It’s a lost cause.
Not all second-chance auction offers are scams. EBay allows sellers to make second-chance offers to bidders in instances where the winning bidder doesn’t pay, the winning bid doesn’t satisfy a reserve price or when the seller has identical items for sale. Yet some crucial differences between legitimate second-chance offers and fake ones exist.
Will the real second-chance offer please stand up?
With eBay, a legitimate second-chance offer will not come directly as an e-mail from the seller but from eBay itself. If a member has a bona fide second-chance offer from eBay, it will appear in one of several places.
- As an e-mail from eBay with the subject line “EBay Second-chance Offer for Item …” The message should include a yellow “buy it now” icon to accept the offer, along with a new number and page for the unsold item.
- As a link on the closed item page for that particular listing, beneath where it says “You were outbid,” any second chances will appear.
- As a message next to the greeting at the top of the “My eBay” page after a member signs in.
- As a message on members’ “Items I Didn’t Win” pages, which customers can access through their “My eBay” pages. Second-chance offers, if any, will be linked.
- Ask that you pay by instant cash wire transfer service or bank transfer.
- Direct you to e-mail the seller.
- Direct you to complete the sale off-site.
- Come from the seller directly.
- Come to your non-eBay e-mail account.
- Have the subject line “Message From eBay Member.”
- Ask the bidder to pay more than an original bid.
Fraudulent offers appear as e-mails with the subject line “Message From eBay Member” and usually request payment for the item through instant cash wire services, such as MoneyGram International or Western Union, or by making a direct bank transfer. EBay advises members not to send money for merchandise if the seller insists on these risky payment methods. While they’re convenient ways to pay, they’re difficult to trace.
Unofficial second-chance transactions do not receive eBay’s purchase protection coverage, so verify the offer’s authenticity before sending any money.
What to do about fraudulent second-chance offers
EBay members can make it easy to spot these scams by configuring their eBay preferences to not receive second-chance offers. Second-chance offers received after that will obviously be scams.
Wall says victims of second-chance fraud should alert the auction site and the IC3. EBay members can forward fraudulent second-chance offers to firstname.lastname@example.org. Other eBay auction complaints can go to eBay’s online security center.
Money sent is likely a total loss
If you already arranged payment through an instant cash wire transfer service, call the company to see if the funds were sent.
It’s “virtually impossible to recover your money once it’s sent,” says Steiner. “If your money has gone overseas, the chances of your getting it back or getting help is very small.”
Depending on the amount you sent, local authorities may or may not do anything about your loss. Contact them anyway, Steiner suggests, and they will direct your complaint to the proper authorities.