E-Commerce and Internet Auction Fraud: The E-Bay Community Model

Date: April 29, 2004
Source: Computer Crime Research Center
By: Mohamed S. Wahab

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... involving the quality and standard of the delivered goods, and payment.

Conclusion:

E-commerce is increasingly expanding its share of the world trade, and is becoming a global phenomenon that is not affected by physical or territorial barriers. However, the lack of face-to-face interaction in conducting e-commerce acts as a barrier to trust and confidence, especially for consumers who may be dealing with total strangers thousands of miles away. The relative risks associated with e-commerce are further aggravated in online auctions, which constitute the number one medium for cyber fraud. Thus, there is a persisting need for boosting confidence and trust in e-transactions carried out on online auction sites through the establishment of an effective system of safe harbour principles and anti-fraud measures.

Whilst auction sites such as eBay are combating fraud by constantly boosting the level of security and trust in online trading through the regular implementation of anti-fraud measures and the provision of guidelines for safe trading, the nature of e-commerce makes it virtually impossible to eliminate it totally, especially in countries which lack the necessary executive and legislative framework to deal with computer-related and cyber crime.
Although Internet auction fraud is a borderless activity, we have seen that some of the anti-fraud measures are limited by territorial constraints. This calls for a high level cooperation between governmental and non-governmental organisations across the globe and requires extending the scope of protection to all victims of fraud regardless of territorial or national constraints.
Having reviewed the main reasons for fraud and some of the effective anti-fraud measures, it is safe to say that the key aspect of fraud prevention is public awareness of the best practices in buying and selling. This includes: reviewing the online auction site policies, dealing with sellers and buyers of good feedback ratings, giving preference to holders of established trustmarks and people with verified identities, processing payments by credit cards or through well-established payment companies or using escrow services for high value purchases, and resorting to swift and effective dispute resolution services in cases of actual fraud.

The more protection schemes are offered by an online auction site, the less cases of fraud could occur, which promotes e-commerce and render the site a safe market place. Thus, on global auction sites such as eBay, which offers many forms and levels of protection and where millions and millions of items are on sale everyday, cases involving fraud do not exceed several thousands each year, which constitutes a relatively small percentage of the total amount of transactions.

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