Fed-up consumers are taking complaints into their own hands

By Jon Swartz
USA Today

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Protecting yourself Sources for information about Internet auction fraud: The Federal Trade Commission has advice for consumers about using auction sites, including tips for preventing auction fraud, at ftc.gov. The Internet Fraud Complaint Center has posted its May 2001 report about auction fraud online as an Acrobat file at ifccbi.gov. The site auctionblacklist.com hosts an online database where consumers can post complaints about auction buyers and sellers.

The cyber-vigilantes are filing more police reports, attempting more often to track down merchants on their own and putting up more Web sites to warn others of merchants they say are unscrupulous.

They say they have little choice because auction sites don't have enough employees to police millions of daily transactions.

"We run into people all the time who are using Web sites and chat rooms to warn about merchants," Internet Fraud Complaint Center chief Tim Healy said. "They feel they have to police the Internet since there are so many scammers online."

One of those cyber-vigilantes was John Rowles, 32, an online marketing consultant in Newport, R.I. "Persistence paid off," he said.

Several months after paying for a laptop that was never delivered, Rowles constructed the electrodepotsucks.com Web site, to "shame" ElectroDepot of New York into refunding $1,600 for the laptop.

Rowles said eBay, where he bought the laptop, never responded to his repeated complaints.

But eBay said it booted ElectroDepot off the site in May because of buyer complaints.

In a recent e-mail, ElectroDepot said it was shutting down and had refunded more than $200,000. The financially troubled company claimed it notified eBay of its problems this year.

EBay said it is the responsibility of sellers to communicate with bidders about delays in shipments or financial problems.

Taking action

Most of the vigilantes' complaints focus on eBay, which handles about 85 percent of online-auction transactions.

"When police come knocking on eBay's door, they do a good job. But as far as playing police officer, they don't," IDC analyst Jonathan Gaw said. "You go to eBay for good deals and hard-to-get items. But there is an element of risk. They can't stop fraud completely."

How cyber-vigilantes are taking action:

More police: When Marvin Plank ordered a $2,000 guitar on eBay last year and it didn't come, he filed a complaint with police in Tucson, Ariz., where the merchant, Michael Fauth, lived. Plank, 46, a pawnbroker in Muscatine, Iowa, called eBay but was frustrated because he said it moved too slowly. "They sent a form, and that was it," he says.

Plank searched eBay chat rooms and found two other alleged victims of Fauth's. They presented evidence to police, who arrested Fauth, 21. He pleaded guilty to fraud in March. Fauth was placed on probation for seven years and ordered to repay his victims.

"If I hadn't done anything, the guy would be $2,000 richer and I would be $2,000 poorer," Plank said. "You have to be motivated." EBay does not comment on individual cases.

Personal investigation: Dave Metta, 49, security manager at Argonne National Laboratory in Illinois, last year vowed to turn his beef with a guitar seller "into my personal hobby."

For nine months, the former deputy sheriff conducted a personal investigation to recover $3,500. Metta started with a search online to compile information about New York-based merchant Mike Falco. He contacted music dealers in upstate New York. Then he took out ads on eBay, explaining how Falco allegedly failed to deliver a guitar.

Metta said he also filed a complaint with the FBI's Internet Fraud Complaint Center. Falco could not be found for comment. Metta said Falco eventually refunded the money.

"Sure, it was a long haul, but I did this on principle more than anything else," Metta said. "eBay's motto should be 'buyer beware.' "

Online ads: John Carman, 37, a stay-at-home dad in Elmhurst, Ill., said he got back $900 in September shortly after he placed online ads accusing an eBay seller of fraud.

"The guilt card works — if they have any guilt," Carman said. "Still, getting my money back was stressful and time-consuming. I hope eBay understands that."

The lucky few

Rowles, Metta and Carman are among the few who recoup losses, according to law enforcement officials. Online auction fraud was the most reported offense last year, with 43 percent of almost 50,000 complaints. And, it is growing along with auction activity, the FBI said. The average number of monthly auction fraud complaints has risen to 2,377 this year, from 1,779 last year.

EBay, the largest auction site, with $3.1 billion in merchandise sales in the first quarter of 2002, maintains only 0.01 percent of its listed items — 422 million last year — result in confirmed fraud. But that's still about 42,200 cases.

The company's first line of defense is its merchant ratings system, which tips buyers and sellers to potential trouble spots.

An eBay user receives a point for each positive comment by another member and no points for a neutral comment. A point is deducted for each negative comment. EBay users also submit descriptive comments, such as "Great deal" or "Don't shop here."

EBay also said it is responsive to complaints. It encourages users to wait 30 days before filing a fraud complaint on its Web site.

The company then forwards the complaint to its internal fraud team. EBay won't say how big that team is, only that it is part of its 500-person customer-service division. The team investigates the buyer and seller and the circumstances of the disputed sale to determine if there is fraud.

If eBay discovers fraud, the seller is barred from the site. EBay won't say how many sellers it ejects annually.

Fast action

The hard part, however, is tracking down fraudulent sellers and making them refund money. EBay must depend on the FBI and local authorities to prosecute.

"Quite frankly, the process can last anywhere from several weeks to many months," said eBay spokesman Kevin Pursglove. "We kick off merchants every day and make sure they don't get on the site again. But we can't prosecute them or force them to return money. That's up to law enforcement."

But Rowles got his money back within 48 hours of posting his merchant-bashing site. Some 50 unhappy customers of ElectroDepot quickly added their names and comments to the site. He eventually bought a laptop from another auction site, uBid (www.ubid.com).

"If I hadn't acted, eBay would have done squat," Rowles said.