Online Fraud on the Rise
By: Source: AARP Bulletin Today Date Posted: 2003-06-30 07:58:50
It wasn't a merry Christmas last year for Kevin Pilgrim and the customers who claimed—mistakenly, it turned out—that he had duped them.
Impostors had broken into Pilgrim's account at eBay, the popular auction website. Unbeknownst to Pilgrim and eBay, the defrauders assumed his name and favorable ratings from eBay buyers to peddle camcorders on the site for as much as $850.
Buyers sent money to a phony address the defrauders set up. When they didn't receive the goods, they sent Pilgrim angry e-mails.
"It was a week before Christmas and people were writing, saying, 'This was my Christmas money, please send it back.' It was horrible," says Pilgrim, who lives near Kansas City, Mo.
Pilgrim, and the camcorder buyers, were victims of Internet fraud, now the number two consumer complaint, after identity theft. The Federal Trade Commission (FTC) and other law enforcement and consumer organizations received 102,517 consumer complaints about Internet scams in 2002, nearly twice as many as in 2001.
Half the complaints concern online auctions, FTC attorney Delores Gardner Thompson says. Consumers say they don't receive merchandise they paid for; that products and services are misrepresented or overpriced; and that con artists sell goods using the names of other sellers—like Kevin Pilgrim—without their knowledge.
While auction fraud tops the list, other forms of online chicanery abound, such as:
- " business opportunities, " in which customers pay up front for start-up materials on home businesses that don't work or don't arrive;
- investment promotions promising outlandish returns that never materialize; and
- pitches for quickie divorces, international driver's licenses and immigration documents that are invalid.
New schemes pop up almost daily. One involves services that enable auction buyers to send money to an escrow company that pays the seller only after the buyer accepts the goods. But buyers are complaining, the FTC's Thompson says, that some scheming sellers set up phony escrow companies and then abscond with their money.
Help may be on the way: The FTC, FBI and other agencies last month announced a joint initiative to crack down on runaway Internet fraud.
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