Going, Going, Gone: Online Auctions and Wire Transfers a Risk

August 11, 2008

The popularity of internet auction sites can sometimes lead shoppers on a pathway to fraud. The Better Business Bureau says that buyers can reduce their financial risk when they are shopping on Internet auctions by not using wire transfers to pay for their goods.

“Internet auction sites give buyers access to everything under the sun. And while the vast majority of people are thrilled with their purchases, others have learned that transactions between buyers and sellers can be risky,” says Lynda Pasacreta, BBB President and CEO.

Wire transfers can be useful when you want to send funds to someone you know or trust — but they are not appropriate when you are doing business with a stranger.

Wiring money to buy an item from an Internet auction site — either through a money transmitter or directly to someone’s bank account — can lose you money with little or no recourse regain it.

Be suspicious of sellers who insist on cash wire transfers as the only form of payment they will accept. Ask to use another method of payment. If the seller insists on a cash wire transfer, it’s wise to call off the transaction.

Scamsters often use a number of deceptive tricks to get online buyers to use a wire service. Here is a common one:

“Second Chance Offers” Scam artists pretending to be legitimate sellers will make a “second chance offer” to losing bidders. The fraudster wants to “lure” the losing bidder off the auction site in an attempt to get him or her to wire funds. The scammer sends a message that claims to be from the auction site telling the buyer to wire payment. It looks real, but it’s a fake.

Other trick lines to get unsuspecting buyers to wire funds:

“Our credit card account (online payment service) is having technical difficulties.”
“We’ve had problems in the past with buyers who pay with online payment services.”
“We’ll provide insurance for your wire transfer.”
“We’ll pay the fee for the wire transfer.”

Safer Payment Alternatives
Credit cards are safest. Some sellers limit the types of payment they accept; many post that information on their auction listings.

Online payment services offer some protections; look for them in the terms and conditions section of their websites. Make sure that you are using an independent third party site. Some scam artists will set up a bogus site to appear legitimate.

If you suspect an online auction transaction is fraudulent, report it to Reporting Economic Crime Online at www.recol.ca.

For more consumer tips visit www.bbb.org.