Computer Crime Research Center

Web Fraud Stings Couple

Date: April 01, 2004
By: Michael Sasso

An avid motorcyclist, Dan Holmes couldn't believe his luck when he spotted a 2001 Honda Gold Wing, in shimmering burgundy and emblazoned with eagles, selling for $5,000 on eBay.

At that price the cycle was a bargain - about $7,000 below market value.

Holmes' initial excitement soon turned to heartbreak and chagrin. After wiring $2,000 to the seller as a down payment, Holmes discovered he had been taken by an impostor in Bulgaria posing as a legitimate eBay vendor.

Such schemes remain relatively uncommon but are growing as more people buy online and scammers become more technologically savvy, said Jeff Matsuura, who heads the law and technology program at the University of Dayton law school.

Holmes and his wife, Julie, a retired Hillsborough County sheriff's deputy and emergency services dispatcher, respectively, can't believe they were duped.

"We've never run into anything like this," said Julie, a veteran eBay user.

Americans have become wise to Nigerian e-mail scams, which ask recipients for bank account numbers in return for a share of millions of dollars. The latest online scam, the ``phishing'' scheme, which Holmes fell for, combines e-mail and e-commerce fraud with identity theft.

Similar schemes have targeted the Web sites of Discover Card, EarthLink and other online businesses, but online auction sites such as eBay's are the most popular targets, according to the Internet Fraud Watch, a service of the National Consumers League.

How It Works

The scam works like this:

- Target the eBay vendor. Scammers often send e-mail to auction vendors that appears to be official communication from eBay. These "spoof" e-mails typically ask vendors to update their account information, including their eBay password.

- Next, steal the vendor's identity. Once scammers have a vendor's password, they can log into the seller's account and post items for sale on eBay under the vendor's name.

- Finally, move the fraudulent transaction off eBay and seal the deal.

Alicia Drummond of Holiday, known on eBay by the user name "Laurenkids," is among eBay vendors affected by the scam.

She was floored when she discovered someone was selling a motorcycle under her name a few weeks ago. Drummond sells children's clothing and bathroom accessories, not motorcycles, she said. About 20 people placed bids on the bike, she said.

"What in the world is this?" she thought. ``Right away, I e-mailed every person who bid on it and said, "This isn't my listing! Don't bid on this!'"

Drummond hasn't determined who stole her eBay identity, she said.

Outside The Site

Hani Durzy, an eBay spokesman, said a scammer may ask the customer to negotiate directly instead of through the Web site. Often, the scammer will ask the customer to wire money instead of using credit cards or eBay's online payment system, Paypal.

Wiring money affords the customer no protection against fraud, whereas credit cards, for example, typically limit liability, Durzy said.

The Holmeses, who live in Lithia, provide a textbook case on the phishing scheme.

After spotting the Honda Gold Wing on eBay, the couple and the scammer began communicating by e-mail outside the site, Julie Holmes said. Initially, the couple was suspicious because the seller wanted them to wire $5,000 to Bulgaria via Western Union. When they asked why he and the bike were in that country, the seller said he was an American soldier stationed there named Timothy Bergeron.

The couple decided his story was plausible and agreed to wire him $2,000 up front and the other $3,000 when they received the Gold Wing. The scammer told them he would ship the bike on Lufthansa's cargo airline, but once the Holmeses wired him the money, they never heard back from him.

The couple has filed a complaint with the Internet Fraud Complaint Center, a partnership of the FBI and the National White Collar Crime Center, which said it would investigate.

Nothing has come of the investigation yet, and eBay has denied responsibility in the matter, Julie Holmes said. Because she got a cash advance from her Visa card to pay for the $2,000 money transfer, she hopes Visa will help compensate her, she said.

Fraud's Ripples

It is unclear how many other eBay users have fallen for the scheme, but it is serious enough that an Internet chat room for eBay vendors was abuzz with talk of scams this week. Matsuura, the University of Dayton law professor, said the scam likely got its name from the way scammers fish around for personal information.

Durzy said 1/100th of 1 percent of eBay transactions are fraudulent.

Internet Fraud Watch reports that online auction fraud generates 90 percent of Internet fraud cases. In 2002, the latest year for which statistics are available, consumers lost about $14.6 million in all forms of online fraud, Internet Fraud Watch reports.

Matsuura said he doesn't think online fraud is undermining consumer confidence in doing business on the Internet. ``But if the problem gets bigger and is widely understood, it will have an adverse effect,'' he said.

Reporter Michael Sasso can be reached at (813) 259- 7865.

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