Taking Care of Mom and Dad: Internet Auction Frauds
The Internet is a great resource for older people. It allows them to stay in touch with family or friends...and keep up-to-date on news or with subjects of interest. But the Internet is also a new form of media used by some savvy swindlers.
The most common form of Internet scam is the online auction fraud. Most auction frauds are simple variations on the classic "bust out" scheme. In these schemes, a swindler opens a business or offers goods for sale online. He then accepts payments for the goods (and, sometimes, credit for supplies) but never makes any products or pays any bills. He stays in contact with customers and creditors as long as possible -- without honoring any commitments. Finally, he disappears, leaving customers and creditors empty-handed.
Internet auctions are a good environment for swindlers because they are administered -- but not really controlled -- by large, well-known companies. Your parents have probably heard of eBay and Amazon; and they may be aware that both have auction services. But they may not realize that actual business being done on these sites is between unregulated (and loosely identified) individuals.
Swindlers are often drawn to circumstances that allow people to be confused about identity.
Most auction sites offer some form of seller ratings. These are programs that invite buyers to rate the seller and the deal on various scales, all designed to give other buyers some idea of what they can expect from the individual sellers.
However, to protect themselves from getting scammed, your parents should take a few extra steps. These include:
- Look beyond rating scores. Read through the detailed comments that back up ratings -- look for clues in even mild complaints. Comments like "frustration" and "delay" even in positive feedback can be signs for problems.
- Look at the seller's history. Has the seller ever sold the kind of product your parents are buying? Ideally, he or she has sold at least a few similar products. The more expensive the product, the more important this becomes.
- Know how you got to a site. One of the trickiest aspects of the Internet is the cloudy connection that exists among Web sites. Your parents may not even be aware which site they're on when they see something they want to buy.
- Avoid off-site auctions. Some swindlers will pressure you to move off of a recognized auction site and do business privately. This way, they can avoid a high level of scrutiny.
Another smart protection may seem to run against the spirit of online commerce: Keep a paper trail. More specifically, encourage your parents to:
- print a hard copy of the Web site's main page;
- print a hard copy of the product detail page;
- print hard copies of all e-mails between them and the seller; and
- print hard copies of all exchanges with the Web site's Internet service provider (ISP).
Again, the biggest risk is that your parents pay for something and the seller never delivers. Most larger online auction sites offer some kind of protection against nondelivery of goods sold on their sites. In these cases, your parents usually have to absorb a deductible equal to 10 percent of the purchase price of the non-delivered goods.
Also, if they paid by credit card, your parents may have some success going to the card company. Most offer some form of "customer protection" -- which will usually mean refunding part of all of the charges on your parents' card.
Credit card companies may require considerable documentation -- including various sworn statements. And their response time can be quite slow.
There are other things that you can do if you think your parents have been scammed online:
- Confirm that a fraud has been committed. Some problems turn out to be basic disputes between buyers and sellers.
- As much as possible, stay in contact with the seller. Your parents should state clearly that they will make a formal complaint if they don't get satisfaction.
- Keep a paper trail of all communication. Especially in an age of e-mail, it may be tempting to avoid paper -- but nothing supports a claimed fraud better than hard copy.
- Take advantage of complaint channels. Most online auction sites invite buyer feedback; bad reports about specific sellers can pressure them to improve...or stop selling.
