eBay, Feds Investigate Auction Fraud

A series of fraudulent auctions perpetrated by an alleged group of scam
artists has prompted eBay Inc. to call in
federal authorities to investigate.

The U.S. Postal Service and the Los Angeles Police Department were
contacted earlier this month to probe a seller or group of sellers who
reportedly built up positive feedback with valid auctions, then defrauded
buyers by not delivering many electronic items that were placed for bid. The
operations are believed to be based in the vicinity of Van Nuys, Calif.

eBay (EBAY)
spokesman Kevin Pursglove told InternetNews.com that the company has closed the
member accounts in question while the investigation takes place.

After building up a reputation as a reliable seller with a list of positive
feedback, Pursglove said the company received approximately 150 complaints
in regard to the seller delivering incorrect items, and in some cases, not
delivering items at all. Because some of the items were shipped via the U.S.
mail, eBay contact the USPS to investigate mail fraud, a federal offense
that carries a penalty of up to five years in prison.

“Law enforcement officials may bring criminal charges up on the alleged
sellers, and eBay will cooperate in any way we can,” Pursglove said.

eBay has a number of security features in place, including an insurance
option by Lloyd’s of London and an escrow service provided by i-Escrow.com Inc.

The increase in online purchases, especially auctions like eBay, have also
led to an increase in complaints. The Federal
Trade Commission
reported that consumers filed nearly 11,000 complaints
about Internet auctions in 1999, compared to 107 in 1997.

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