Top 5 Auction Scams and How to Avoid Them

online auctions scams
Online auction platforms rely on the trust of buyers and sellers to thrive. But the sad truth is that trust can be undermined by scams conducted by ever-evolving malicious individuals. Over the years, online auction scams have become a widespread challenge, despite governments trying to raise awareness about this issue.

That said, while many online shoppers and internet users, in general, are familiar with platforms like eBay, there are times when dangerous red flags are missed. As a result, we now have a popular target for scammers. To prevent unwanted consequences for customers and businesses, we explain the main types of auction scams and how to avoid them.

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online auction fraud

What Is an Auction Scam?

An auction scam is an online fraud in which scammers deceive unsuspecting individuals by establishing bogus accounts on online auction websites and participating in auctions without intending to pay for the items. These scammers frequently employ stolen credit cards or fraudulent payment methods to win auctions, leaving sellers without recourse when the items are neither paid for nor delivered.

In general, auction scams can consist of various fraudulent activities on online auction sites. However, auction scams aren’t limited to buyers only. Fraudulent sellers can also employ tactics such as misrepresenting their products, selling counterfeit items, failing to deliver goods after the auction concludes, or engaging in fraudulent bidding.

How Does an Auction Scam Happen?

An auction scam typically occurs when a buyer trusts the process, unaware that a scammer is involved. Here’s a typical scenario. The scammer creates a seller account on an auction platform and lists an item for sale—the auction proceeds with genuine buyers placing bids. Eventually, the auction ends, and the highest bidder, unknowingly dealing with the scammer, must make a payment to receive the item.

In more complex cases, scammers can create multiple accounts to manipulate the auction process and gain more advantages from genuine users. For instance, they could use one account to list an item for sale and then employ a second account to place false bids on the item, artificially inflating the final sale price.

That’s why it’s clear that online buying and selling offer great deals but carry risks. Growing auction scams demand caution from both buyers and sellers. Statistics show that users who encounter fraud on any digital platform are more likely to switch to a competitor or refrain from recommending the platform to others, especially their friends and family.

Common Types of Auction Scams

Now that we’ve established a basic understanding of online auction scams let’s take a closer look at the most popular scamming techniques today.

1. Multiple Bidding

Multiple bidding has negative consequences for the seller, as they cannot secure the highest possible price for their item. It also harms other buyers who are discouraged from participating in the auction.

In general, multiple bidding is a type of auction scam where the malicious buyer places several bids on a single item without giving others a chance to bid in between. The same buyer cancels their final high bid just before the auction ends, leaving their lower bid as the new highest. This allows the scammer to purchase the item at a lower price by scaring away the competition with their fake high bid.

2. Non-Delivery Scam

In this auction scam, the seller accepts payment but fails to deliver the purchased item or provides a counterfeit or significantly different product. In other words, a non-delivery scam happens when a buyer pays for an item but has yet to receive it from the seller. This fraudulent act typically leads the buyer to initiate a chargeback with their card issuer once they realize they won’t receive their item.

3. Misinterpretation Scam

Indeed, scammers create listings for non-existent or misrepresented items using stolen photos or descriptions. Buyers pay for items they will never receive or get items that do not match the description. That’s why misinterpretation scams refer to situations where the buyers successfully win the auction, but the received item doesn’t match their expectations. Other forms of misinterpretation can include failing to disclose any damage or defects in the item or generating fake reviews to mislead potential buyers.

4. Bid-Shielding Scam

In a bid shielding scam, a lousy actor begins by placing a low bid on an item. Subsequently, they employ one or multiple fake accounts to make higher bids on the same item, aiming to intimidate genuine bidders and discourage competition.
Both bots and human scammers can be involved in executing this scenario. In the final moments of the auction, these fraudulent bidders withdraw their bids, leaving the initial low bid as the winning one. Many platforms have implemented rules prohibiting users from placing consecutive bids on the same item to prevent the negative impact of multiple bidding on auction sites.

5. Triangulation Auction Scam

The term “Triangulation” comes from the three primary parties involved in this fraudulent practice: the seller, the scammer, the buyer, and the online marketplace. A triangulation auction scam involves a bad actor who lists an item they don’t possess on an auction site. Once a buyer wins the auction, the bad actor exploits stolen credit card details to purchase the item from a different online marketplace. The item is then directly delivered to the buyer, who remains unaware of any scams since they receive the expected item.

Tips for Sellers and Buyers to Avoid Auction Scams

When it comes to sellers and the owners of online auction sites, identity verification is the number one defense against scammers. Verifying parties in the auction process online helps establish the identity of the site’s users, enabling auctions to detect and address duplicate or fraudulent accounts more effectively.

As for buyers, before placing a bid, it’s advisable to review the seller’s feedback and ratings. If the seller has a track record of negative reviews, seeking alternative options is best. When dealing with new sellers, engaging in transactions involving small and less expensive items is much safer than jumping straight into costly items.

Additionally, seek clarification by asking questions when participating in an online auction. Legitimate sellers will willingly provide answers. Remember that many online auction platforms restrict communication and discourage off-platform interactions with sellers. That’s why it’s essential to be cautious if any seller or buyer attempts to persuade you to communicate outside the platform.

To avoid scammers, auction site owners, buyers, and sellers must remain highly cautious. Reporting scammers and fraudulent auction sites is vital to prevent others from becoming victims of devious scams. Being aware of the top types of scams and taking proactive measures to report suspicious behavior will help combat fraud in auctions, not to mention increase trust and reliability, among others.

How To Report an Online Auction Scam

Let your close family and online friends know about these five types of online auction scams. Feel free to share this article if it was helpful. Meanwhile, you can report scammers and any other suspicious activity online to the Federal Trade Commission (FTC) using the portal below:

Report To The FTC Here

How To Protect Yourself More

If you want to be amongst the first to receive notifications about the most notorious scams every week, subscribe to our Scam Detector newsletter. You will receive periodic emails from us with insightful tips. That will include how to prevent fraud and information about the newest tools you can use to fight crime.

Meanwhile, feel free to educate yourself with some other Amazon fraud-related articles. They are listed under this paragraph, so that you know more about online security. Last but not least, if you have any bad experiences, make sure to use the comments section below to expose other scammers.

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selma hrynchuk
Selma HrynchukSelma is a fraud prevention specialist renowned for her expertise in private eye investigations and a remarkable partnership with law enforcement agencies. Beyond her investigative triumphs, her public speaking engagements and written works have empowered countless individuals to protect themselves and stay ahead of deceptive schemes. Selma's legacy shines as a tenacious agent of change, unyielding in her commitment to battling fraud and ensuring a safer world for all.

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