Doing the homework
From the MSN Finances Page.
Nine out of 10 complaints to the National Consumer League this year involve online bidding. Here's how not to get burned -- in auctions or anywhere else on the Net.
By Jennifer Mulrean
It’s the stuff of love-hate relationships: Online auction sites continue to be wildly popular places to buy and sell things -- but they also rank No. 1 for Internet-related fraud complaints.
Online auction fraud has topped the National Consumer League’s list of Top 10 Net Frauds for five straight years through 2002, and the latest NCL stats from the first half of this year seem certain to make 2003 the sixth year.
For the first six months of 2003, auctions were the source of 94% of all Internet-related fraud complaints to the league, compared with 87% for the same period last year. The total number of fraud complaints filed with NCL this year so far is 22,336. Of that number, 20,436 complaints indicate lost money totaling $8.9 million -- slightly more than the $7.2 million reported lost in the same period last year and on pace to beat the 2002 total of $14.6 million. Auctions also lead in the number of Net-related complaints received in the last few years by the Federal Trade Commission, which collects fraud-complaint statistics from a number of organizations, including the NCL, FBI and Better Business Bureaus.Money 2004.
Smarter, faster and easier
than ever.
Most bidders filing auction-related complaints said their problem was that merchandise was either misrepresented or never delivered, according to the league. Those same problems are also behind the majority of general online shopping complaints, which came in at No. 2 on the league's list.
But you don’t have to join the ranks of the defrauded masses. There are ways to protect yourself no matter where you're shopping: using a third-party escrow service when shopping at auctions and paying with a credit card. For more tips click here, but first take a look at the rest of these common consumer pitfalls.
Nigerian money, adult Web sites
At No. 3, Nigerian money offers -- the scam that just won’t die -- follows auctions and general shopping complaints on the NCL list. It’s the same ranking the scam held for the last three years, though at 1%, it represents a smaller percentage of the overall complaints than it did in 2002 at 4% of the complaints. It's been around for a long time in one form or another, including offline -- at least since 1990, according to Secret Service estimates.
If you’re one of the lucky few to have somehow missed this one, it usually comes in the form of a plea for help, often from a supposed civil servant in Nigeria who is purportedly trying to get money out of the country. But it can come from other countries as well, including Zimbabwe, the Ivory Coast and Sierra Leone. The latest tactic for luring victims, reported Oct. 3 by Reuters, is to make the e-mail look like it was sent from a real London bank. In the past, these scammers also have used fake Web sites to bait people. In exchange for the use of their bank account, the recipient is told they'll receive a percentage of the funds being moved. Sound farfetched? Unfortunately, a good 10% of all recipients seek further contact with the authors, and 1% of those respondents become seriously involved, according to the Middle Atlantic-Great Lakes Organized Crime Law Enforcement Network.
The real trap is sprung when victims are told the deal is in jeopardy unless they can come up with cash to cover unexpected fees or bribes. These first requests are followed by more and more requests for money, drawing out the scam as long as the victims are willing.
Internet-access frauds appear at No. 4. Most Internet-access complaints are generated when a consumer's service is changed without his permission. No. 5 on the list is the information/adult services scam. That's the one where people are lured to adult sites where they can supposedly download free pictures, only to have their Net connection rerouted through a long-distance connection (across the globe, not just across the country). The victim doesn't feel any pain -- until the monstrous long-distance bill arrives.
NCL's top 10 Net frauds for Jan.-June 2003
Category % of all complaints
Auctions 94%
Online shopping 3%
Nigerian money offers 1%
Internet access 0.5%
Information/adult services 0.3%
Computer equipment/software 0.2%
Work-at-home plans 0.1%
Advance-fee loans 0.1%
Lotteries/Lottery Ticket Buying Clubs 0.1%
Credit card offers 0.1%
Perhaps a small glimmer of hope is that the average loss for all types of Net-related fraud has decreased more than 10%, to $433 so far this year from $484 in the same period last year.
Where the offers come from
This year, fewer people who filed Net fraud complaints -- only 3% of them -- said they were lured with e-mail. That may be because the deluge of spam worldwide may have made some consumers more skeptical of e-mail offers. A year ago, 8% of the complaints cited e-mail, and in 2001, 15%.
A full 97% of victims found trouble on their own through general Web browsing and shopping, and a small sliver -- 0.1% -- were targeted in newsgroups.
What you can do
If you’re still unaccustomed to hitting that Delete key, a good way to screen many of the questionable promotions in your e-mail inbox is to stop by one of the sites that specialize in debunking bogus e-mail. Snopes.com is an excellent site for screening out the junk -- those that pull on your heart as well as your purse strings.
For safer online shopping, the FTC recommends following the five tips below. If you're shopping at auctions, the NCL and FTC also suggest using escrow services, such as Escrow.com. These are third parties that hold the buyer's payment until the goods arrive. Using an escrow service, however, is especially important if you're not paying with a credit card. Be wary, however, of escrow services that do not provide a phone number or physical address. Without the address, the NCL says, you have no way of checking with state authorities to determine if the service is licensed. Fake escrow services do exist and will simply disappear with your money. (For more on how to protect yourself against auction scams, click here.)
The FTC's safe shopping tips
Use a secure browser. Secure browsers, such as the latest versions of Internet Explorer and Netscape, support encryption of your orders, making it more difficult to steal credit card numbers.
Know the seller. If you're at an auction, research the feedback other buyers have provided on the seller. Otherwise, shop at sites you know and trust.
Pay with a credit card. A credit card provides an element of safety that cash and money orders do not. Federal law says you're liable only for up to $50 on orders you dispute with your credit card company; some card companies offer increased protection. Visa has a "Zero Liability" policy, meaning you're not responsible for any amount of disputed purchases, for example.
Keep passwords private. This is fairly straightforward: Don't tape your passwords to your monitor. Use unique passwords at each site. And never give out your password in response to an e-mail or instant message from someone claiming to be a representative of the auction site.
Keep a record of your transactions. Don't rely on the site to e-mail you a copy of your receipt. Print one or make a snapshot of it and save it on your computer.
The NCL recommends an additional step: Use a credit card that offers "substitute" or "single-use" numbers for online shopping. These have been around since the fall of 2000, when American Express became the first major credit card company to offer them. As their name implies, the numbers expire after each purchase.
The worst ways to pay? With a check or money order. About 37% of the people filing complaints to the NCL this year had paid this way, leaving them little recourse for getting their money back. (You can read more about the safest ways to pay online here.)
Finally, don't let chagrin keep you from reporting fraud. Information is the best tool for fighting the good fight against these scammers. Links are provided at the left under Related Sites for filing complaints to the FTC or the NCL.
Nine out of 10 complaints to the National Consumer League this year involve online bidding. Here's how not to get burned -- in auctions or anywhere else on the Net.
By Jennifer Mulrean
It’s the stuff of love-hate relationships: Online auction sites continue to be wildly popular places to buy and sell things -- but they also rank No. 1 for Internet-related fraud complaints.
Online auction fraud has topped the National Consumer League’s list of Top 10 Net Frauds for five straight years through 2002, and the latest NCL stats from the first half of this year seem certain to make 2003 the sixth year.
For the first six months of 2003, auctions were the source of 94% of all Internet-related fraud complaints to the league, compared with 87% for the same period last year. The total number of fraud complaints filed with NCL this year so far is 22,336. Of that number, 20,436 complaints indicate lost money totaling $8.9 million -- slightly more than the $7.2 million reported lost in the same period last year and on pace to beat the 2002 total of $14.6 million. Auctions also lead in the number of Net-related complaints received in the last few years by the Federal Trade Commission, which collects fraud-complaint statistics from a number of organizations, including the NCL, FBI and Better Business Bureaus.Money 2004.
Smarter, faster and easier
than ever.
Most bidders filing auction-related complaints said their problem was that merchandise was either misrepresented or never delivered, according to the league. Those same problems are also behind the majority of general online shopping complaints, which came in at No. 2 on the league's list.
But you don’t have to join the ranks of the defrauded masses. There are ways to protect yourself no matter where you're shopping: using a third-party escrow service when shopping at auctions and paying with a credit card. For more tips click here, but first take a look at the rest of these common consumer pitfalls.
Nigerian money, adult Web sites
At No. 3, Nigerian money offers -- the scam that just won’t die -- follows auctions and general shopping complaints on the NCL list. It’s the same ranking the scam held for the last three years, though at 1%, it represents a smaller percentage of the overall complaints than it did in 2002 at 4% of the complaints. It's been around for a long time in one form or another, including offline -- at least since 1990, according to Secret Service estimates.
If you’re one of the lucky few to have somehow missed this one, it usually comes in the form of a plea for help, often from a supposed civil servant in Nigeria who is purportedly trying to get money out of the country. But it can come from other countries as well, including Zimbabwe, the Ivory Coast and Sierra Leone. The latest tactic for luring victims, reported Oct. 3 by Reuters, is to make the e-mail look like it was sent from a real London bank. In the past, these scammers also have used fake Web sites to bait people. In exchange for the use of their bank account, the recipient is told they'll receive a percentage of the funds being moved. Sound farfetched? Unfortunately, a good 10% of all recipients seek further contact with the authors, and 1% of those respondents become seriously involved, according to the Middle Atlantic-Great Lakes Organized Crime Law Enforcement Network.
The real trap is sprung when victims are told the deal is in jeopardy unless they can come up with cash to cover unexpected fees or bribes. These first requests are followed by more and more requests for money, drawing out the scam as long as the victims are willing.
Internet-access frauds appear at No. 4. Most Internet-access complaints are generated when a consumer's service is changed without his permission. No. 5 on the list is the information/adult services scam. That's the one where people are lured to adult sites where they can supposedly download free pictures, only to have their Net connection rerouted through a long-distance connection (across the globe, not just across the country). The victim doesn't feel any pain -- until the monstrous long-distance bill arrives.
NCL's top 10 Net frauds for Jan.-June 2003
Category % of all complaints
Auctions 94%
Online shopping 3%
Nigerian money offers 1%
Internet access 0.5%
Information/adult services 0.3%
Computer equipment/software 0.2%
Work-at-home plans 0.1%
Advance-fee loans 0.1%
Lotteries/Lottery Ticket Buying Clubs 0.1%
Credit card offers 0.1%
Perhaps a small glimmer of hope is that the average loss for all types of Net-related fraud has decreased more than 10%, to $433 so far this year from $484 in the same period last year.
Where the offers come from
This year, fewer people who filed Net fraud complaints -- only 3% of them -- said they were lured with e-mail. That may be because the deluge of spam worldwide may have made some consumers more skeptical of e-mail offers. A year ago, 8% of the complaints cited e-mail, and in 2001, 15%.
A full 97% of victims found trouble on their own through general Web browsing and shopping, and a small sliver -- 0.1% -- were targeted in newsgroups.
What you can do
If you’re still unaccustomed to hitting that Delete key, a good way to screen many of the questionable promotions in your e-mail inbox is to stop by one of the sites that specialize in debunking bogus e-mail. Snopes.com is an excellent site for screening out the junk -- those that pull on your heart as well as your purse strings.
For safer online shopping, the FTC recommends following the five tips below. If you're shopping at auctions, the NCL and FTC also suggest using escrow services, such as Escrow.com. These are third parties that hold the buyer's payment until the goods arrive. Using an escrow service, however, is especially important if you're not paying with a credit card. Be wary, however, of escrow services that do not provide a phone number or physical address. Without the address, the NCL says, you have no way of checking with state authorities to determine if the service is licensed. Fake escrow services do exist and will simply disappear with your money. (For more on how to protect yourself against auction scams, click here.)
The FTC's safe shopping tips
Use a secure browser. Secure browsers, such as the latest versions of Internet Explorer and Netscape, support encryption of your orders, making it more difficult to steal credit card numbers.
Know the seller. If you're at an auction, research the feedback other buyers have provided on the seller. Otherwise, shop at sites you know and trust.
Pay with a credit card. A credit card provides an element of safety that cash and money orders do not. Federal law says you're liable only for up to $50 on orders you dispute with your credit card company; some card companies offer increased protection. Visa has a "Zero Liability" policy, meaning you're not responsible for any amount of disputed purchases, for example.
Keep passwords private. This is fairly straightforward: Don't tape your passwords to your monitor. Use unique passwords at each site. And never give out your password in response to an e-mail or instant message from someone claiming to be a representative of the auction site.
Keep a record of your transactions. Don't rely on the site to e-mail you a copy of your receipt. Print one or make a snapshot of it and save it on your computer.
The NCL recommends an additional step: Use a credit card that offers "substitute" or "single-use" numbers for online shopping. These have been around since the fall of 2000, when American Express became the first major credit card company to offer them. As their name implies, the numbers expire after each purchase.
The worst ways to pay? With a check or money order. About 37% of the people filing complaints to the NCL this year had paid this way, leaving them little recourse for getting their money back. (You can read more about the safest ways to pay online here.)
Finally, don't let chagrin keep you from reporting fraud. Information is the best tool for fighting the good fight against these scammers. Links are provided at the left under Related Sites for filing complaints to the FTC or the NCL.