Online Auction Fraud - Research Paper Example

Online Auction Fraud Introduction The invention of the internet was a breakthrough technology, which brought forth revolution in to the way businesses are conducted. Through it, online marketing was born which has been very rewarding to business. This is mainly due to their low cost requirement, larger geographical coverage and accessibility at all times throughout the year. Despite the merit reaped from the conduction of online transaction, internet fraud, which refers to intentional deception of a person by another for personal gain by the use of internet, is on the increase. This has led to numerous victims as the criminal usually diversify their means of attack. After the invention of the computer, various networks were made to ensure the computers were able to communicate with each other. As time progressed, developments were achieved in the application of the internet in business transactions but the systems in place were not in a capacity to handle all the needs. This provided loopholes for the commission of internet crimes by criminals, as they would hide the identity while undertaking their attacks thus leaving limited evidence of themselves. In mid-1990’s, the internet frauds had increased to alarming rates and researches on the causes of the rapid growth and how it could be curbed were conducted. During the period towards the end of the twentieth century, the “dot.com” era, which was manifested by increased use of internet by organizations and people, resulted in increase of internet fraud. Due to the continuous technological advancement, the internet frauds have been on the increase with the current number of frauds being around three times those conducted in mid-1990.There are two types of internet fraud namely offline and online. In offline fraud, the criminal usually steal personal data mostly financial and use it to make transactions. In the online fraud, criminals pose as esteemed institution and thus receive personal data, which they illegally use to make transaction. Some of the commonly used internet fraud include international modem dialer, investment schemes, fake legal schemes, market manipulation; work at home schemes, pharming, phishing, auction, and online shopping. This paper seeks to give an in-depth analysis of auction internet fraud. Online Auction Fraud Due to the continuous technological development, the internet has provided a platform in which direct interaction of the buyer and the seller is not necessary for a transaction to be effectively completed. Criminal have used advantage of this where they misrepresent a product advertised for sale through the internet auction site, fail to deliver the item, or deliver an item but not as specified by the customer after receiving all the money as stipulated in their agreement with the customers. This is usually defined as online auction fraud. To avoid one being a victim of such activities, it is often advisable to undertake a business transaction with companies or individuals one is well conversant with, clearly understand the contract terms, read the privacy policy and use the most secure means of remitting personal information (Royal Canadian mounted Police, 2006). Methods of victimization Since the internet auction process involves bidding by the interested parties, some people use this opportunity to victimize their target customers. Some of the most commonly used victimization methods include: Non-delivery- this usually occurs when one puts an item for bid whereas no such item exists. Therefore, despite the customer satisfying all the conditions set, he will never get the item (Anon, 2009.). During the transaction, the sellers get the financial details of the customer and thus may use them to exploit him/her further. Misrepresentation- this is manly executed by altering the actual details of an item in order to win a customer. In most cases, the images are used since they can easily be manipulated. Triangulation- this is somehow technical and involves a person buying something from an online seller using stolen details. In the conduction of the activity, the seller does not recognize that the details provided are stolen from another person. After collecting the bought item, it is sold to unsuspecting buyers where they get the bank details of the two parties. When the matter is investigated by the police, the item bought by the unsuspecting customer is gotten back and he and the original seller become victims of the situation. Fee stacking- this is usually executed by the sellers where he/she adds a charge on the shipping and postages charges on the customer thus making the buyer pay much more money than initially planned for. Black market- this is very rampant in software and music. In this case, the seller sells copyrighted products to the customers, which usually does lack in warranty and instruction. In doing so, the customer is placed at risk of arrest due to breaking of copyright laws. Multiple bidding- this is executed by the buyer where he places extremely high and low bids on an item. The high bids are aimed at putting off other interested customers. As bid time is about to expire, he/she withdraws the high bids and thus gets the item at the lower price. Shill bidding- this is executed by the sellers where they intentionally put bids on the items they have put up for bids in order to drive the prices high. Current existing form of Online Auction Fraud The current rate of online auction fraud is on the increase due to the diversity in the manner in which it can be executed. Although some of the methods are most frequently used, the choice of the method to be used is mainly determined by the type of item under consideration and the nature of the other party involved. The fraud can be executed during the bidding process or after the bidding process. The most common online auction fraud in use is geared towards raising the prices of a commodity in order to put of other bidders or increase the profit margins for the seller. Bid shielding is mainly conducted by the interested buyer who either personally or by the use of another buyer places a very high bid to discourage other buyers from biding or still places a very low bid. After bidding time is over, he withdraws the high bid and automatically wins the lower bid. Due to the increase in its rate of execution, various strategies have been put in place to curb it. On the other hand, sellers may place high bids in order to ensure they sell their items at higher prices. After bidding process is over, fraud occurs in case one party fails to perform the contract. A customer may fail to complete payment for the items or the seller may fail to deliver the goods to the customer after completing his payment. Phishing that constitutes a process through which important personal and financial information is stolen through emails is a problem challenging numerous institutions. Having got the information, they can use it to exploit the customers. The current online frauds are dynamic and moulded according to the set rules and regulations. Legal prevention on fraud in online auction There are laws and regulations set to punish people who undertake online auction fraud. Since the frauds are conducted by both the buyer and the seller, the rules clearly stipulate the legal punishment to each. Therefore, they have helped a great deal in bringing sanity to online auction (Parker & Morley, 2009). Despite this, it is evident that the existing laws are not comprehensive enough. In order to curb the crime completely, the customers should be educated on how to be more cautious while undertaking online transaction and the laws modified to cover the prevailing loopholes. Conclusion The online auction fraud has been on the increase because of the continuous technological advancement. Some of the most commonly methods used include shill bidding, multiple bidding, black market, fee stacking, triangulation, misrepresentation, and non-delivery among others. The current laws addressing the problem have assisted to some degree but they are observed not to be very effective thus necessitating modification. Educating customers on online auction fraud so that they can take sufficient measures to ensure that they are safe would also help a great deal in controlling the crime. References Anon (2009). Auction Frauds: Scams used on auction sites, like eBay. Retrieved from http://www.consumerfraudreporting.org/auctionfraud.php Parker, C. & Morley, D. (2009). Understanding Computers: Today and Tomorrow, Comprehensive. London: Cengage Learning. Royal Canadian mounted Police, (2006). Online Auction Fraud. Retrieved from http://www.rcmp-grc.gc.ca/scams-fraudes/online-enligne-fraud-fraude-eng.htm Read More