How Much Fraud Can eBay's Customers Endure

Fraud on eBay is making news again, this time for upset customers being sold counterfeit goods. Here is an article by Katie Hafner of the New York Times:

"A year ago Jacqui Rogers, a retiree in southern Oregon who dabbles in vintage costume jewelry, went on eBay and bought 10 butterfly brooches made by Weiss, a well-known maker of high-quality costume jewelry in the 1950s and 1960s.

Rogers thought she had snagged a great deal. But when the jewelry arrived from a seller in Rhode Island, her well-trained eye told her all the pieces were knockoffs. Even though Rogers received a refund after she confronted the seller, eBay refused to remove hundreds of listings for identical "Weiss" pieces. It said it had no responsibility for the fakes because it was nothing more than a marketplace that links buyers and sellers.

That stance — the heart of eBay's business model — is being challenged by eBay users such as Rogers who are starting to notify other unsuspecting buyers of fakes on the site. And it is being tested by a jewelry seller with far greater resources than Rogers: Tiffany & Co., which has sued eBay for facilitating the trade of counterfeit Tiffany items on the site.

If Tiffany wins, other lawsuits would follow and eBay's business model would be threatened because it would be nearly impossible for the company to police a site that has 180 million members and 60 million items for sale at any time."

For the full story, read: eBay users fed up with fakes.

eBay hasn't only been in the news recently for being a marketplace for counterfeit goods. In a recent post, I covered the problem of stolen goods being sold and merchandise being purchased with fraudulent financial instruments.

Also covered in this post is the growing problem of buyer/seller accounts being hijacked. This normally occurs when a seller becomes a victim of phishing, or is tricked into giving up their account information to a seemingly legitimate eBay request via e-mail. The e-mail links them to an official looking eBay site, where they are asked to "validate" their account information. Should someone fall for this, the criminal has all the information necessary to hijack the account and use it (the account) to conduct fraudulent business.

Although, eBay's official policy is to support law enforcement requests without a subpoena, it takes them 10-20 days to honor these requests. If criminals have access to multiple accounts and fraudulent financial tools, the trail is likely to be pretty cold in 10-20 days.

Here is my post on that activity: Better Teamwork is an Opportunity.

eBay is also getting a reputation for Advance fee fraud (419) activity. On auction sites, fraudulent buyers offer to buy something and send a financial instrument to the seller for more than the asking price. They then dupe the seller into negotiating the instrument, which is counterfeit and wiring the excess money (less a commission for the seller) overseas. When the instrument is discovered to be fraudulent (often much later), the seller is held accountable and could even be charged with a crime.

Counterfeit Postal Money Orders, Cashiers Checks and a new type of instrument, OChex (checks ordered electronically over the internet) have all been used in these frauds, which are becoming collectively known as auction scams.

Over the Christmas season, we saw another scam, where XBox packaging was being sold as the real thing: XBox Latest Lure in Auction Scams.

I wrote this in a recent post, eBay Needs to Protect Those that Line it's Pockets:

"My message to the folks at eBay is that they better take a look at upgrading their "authentication systems" and hire some extra security staff. Blogs like mine and many others are trying to educate the very people, who are making them billions and they blame for allowing themselves to be scammed. eBay is no longer the only the only game out there and if they fail to protect those who line their pockets, they are likely to go elsewhere."

Perhaps a few legal actions will wake eBay up?