• Do a telephone number search (a reverse search
and check the name of the party owning that
number); legitimate companies should have their
own number. The buyer can also call that number to make sure that a live entity is behind that
number. You can also cross match it to an email
• Occasionally, a seller asks to send cash or equivalent. What one can do is send an email saying
that “by coincidence I am passing through your
city. Can I drop by, pay in cash, and pick up the
item?” If the seller does not respond, or says I
only ship, do not do business with that person.
Smart crooks could bluff, however, so there is no
• Through the exchange of email, one acquires
much more information about the entity with
which one is dealing. Phone number, name,
address, tracing the routing of response messages
and so forth. Then one can use the Internet to
check on the entity, as discussed earlier. If the
seller does not respond to your questions/email
this should raise suspicion.
• Always pay with a credit card. Some sellers will
not sell the item to you, but that is the price you
pay for security. Some swindlers allow PayPal, but
they only accept the one that comes from your
bank account, not the kind of charge that comes
through your credit card.
• When you receive a package, open it in front of
the delivery person or company representative.
You can tell your delivery company not to drop
off without a signature.
• Go to an “eBay Xchange Point,” or something
equivalent. In Switzerland, eBay has proposed
meeting points at major train stations where buyers and sellers can meet face-to-face to inspect the
goods and pay for them. This is not entirely practical for goods bought far away, but for more
local transactions, nothing beats face-to-face.
• Chua [ 2, 3] also proposes being more proactive in
reporting and preventing fraud through such
techniques as collective action on reporting (for
example, to Traderlist), contacting other potential
victims directly, or even “vigilantism” in which
buyers deliberately sabotage auctions they feel are
Advantages and disadvantages. The advantages of
buyer precautions are obvious, they reduce fraud and
make it more difficult for crooks. They do not cost
as much, if anything, to implement. The disadvantages are that not everyone would take advantage of
Auction houses today appear to be at a crossroads,
with many people now losing confidence in the system [ 8]:
“...do you have a reasonable expectation that the
Mac G5 you are bidding on is going to be shipped to
you? How about the Sony plasma 60-inch monitor?
Or, the Sony PSP for $50 to $100 over retail? No, you
don’t. Now, you might say, ‘Hey, moron! Why are you
bidding on stuff like that on eBay? Don’t you know
that 95% of those auctions are fraudulent, especially
the ones that only accept payment via Western
Union?’ Of course, I know. But what about all of the
people who don’t?”
Now is the time to act before the negative cycle
mentioned at the beginning of this article develops in
full swing. We hope that some of the recommendations listed here restore the public’s confidence in the
system. While it may be impossible to eliminate Internet auction fraud, at the very least we may be able to
reduce it drastically and make it very expensive for
those who persist. c
1. Bajari, P. and Hortaçsu, A. Economic insights from Internet auctions.
J. Economic Literature 42, 2 (2004), 457–486.
2. Chua, C. and Wareham, J. Fighting Internet auction fraud: An assessment and proposal. IEEE Computer 37, 10 (Oct. 2004), 31– 37.
3. Chua, C. Wareham, J. and Robey, D. The role of online trading communities in managing Internet auction fraud. MIS Quarterly 31, 4
4. eMarketer. The ePrivacy and security report. Jan. 2001. White paper
published by MarketResearch.com.
5. Gavish, B. and Tucci, C.L. Fraudulent auctions on the Internet. E.
Comm. Research 6, 2 (2006), 127–140.
6. Hafner, K. With Internet fraud up sharply, eBay attracts vigilantes.
New York Times, (Mar. 20, 2004).
7. Internet Crime Complaint Center. 2007 Internet crime report.
National White Collar Crime Center and the Federal Bureau of Investigation (March, 2008).
8. Palmer, S. Can eBay be saved? OnlineSPIN. MediaPost Publications
(June 16, 2005).
9. Reuters. Read this before buying on eBay. Wired News (Jan. 9, 2003);
10. Snyder, J.M. Online auction fraud: Are the auction houses doing all
they should or could to stop online fraud? Federal Communications Law
Journal 52, 2 (2000), 453–472.
11. Trade Commssion of the U.S. (FTC) releases list of top consumer fraud
complaints in 2007 (Feb. 13, 2008); www.ftc.gov/opa/2008/02/
12. Waters, R. How fraudsters set traps and take the credit. Financial Times
IT Review (May 21, 2003), 1.
BEZALEL GAVISH ( firstname.lastname@example.org) holds the Eugene J.
and Ruth F. Constantin Distinguished Chair in Business at the Cox
School of Business at the Southern Methodist University, Dallas, TX.
CHRISTOPHER L. TUCCI ( email@example.com) is a professor
of Management of Technology at the Ecole Polytechnique Fédérale de
Lausanne (EPFL), Switzerland, where he holds the chair in Corporate
Strategy & Innovation.