Online auction scams multiply

Authorities beef up their inquiries into online fraud, including investigations of two bay area companies.

By ANITA KUMAR

© St. Petersburg Times, published July 17, 2000

Stanley Anderson needed a new computer for his business last year, so he did what thousands of people do every day: logged onto the Internet and started browsing.

Though he had never tried an online auction site before, when he found the DellAuction site, Anderson decided to bid $1,300 for a Pentium III, 650 megahertz system.

Later that day in October, Anderson received an e-mail congratulating him on his winning bid and telling him to send a cashier's check to Gail Grierson at Creative PC in Oldsmar.

That's when the waiting began.

Nine months later, Anderson still hasn't received the computer. He finally bought another one a couple of months ago from a retail store.

Anderson isn't the only one with a complaint.

Local and state consumer protection agencies and the Better Business Bureau report similar stories from Creative PC customers throughout the nation and Canada.

Efforts to reach the company and Cybercom Industries, a Pinellas Park business that told customers it was completing Creative PC's computer orders, were unsuccessful.

Tampa Bay Postal Inspection Services, a law enforcement arm of the U.S. Postal Service, is investigating the two companies. But so far, customers have not received computers or their money back.

"That was my first time out, and I got stung," said Anderson, a 60-year-old actor outside Los Angeles who does voice-over work. "I've learned."

As use of the Internet skyrockets, so does the frequency of online fraud. And auction sites, which host thousands of transactions each day between buyers and sellers, consistently top the list of complaints.

Law enforcement agencies from the Federal Trade Commission to local police departments are tackling Internet auction scams, but experts say consumers also must do their part to avoid getting taken.

"It can happen to the best of us," said Delores Gardner, a FTC attorney specializing in online auction fraud. "But consumers can protect themselves. They shouldn't have to be afraid."

Internet auctions, which first appeared in 1995, now account for almost nine of every 10 fraud complaints made to Internet Fraud Watch, an online reporting system created by the National Consumers League.

The FTC reported more than 10,000 auction complaints in 1999, up from just 100 complaints two years before. That's more than half the organization's total number of Internet complaints.

Most gripes stem from products that never arrive, come damaged or are worth far less than promised.

Online auction site eBay reports about 20 complaints for every 1-million transactions. But while eBay, the grandaddy of online auctions, has initiated many safeguards such as insurance and escrow accounts, other sites may not have.

Creative PC customers said they encountered the company after bidding on Internet sites such as DellAuction, auctions.msn.com and others. But the result was always the same.

"I was kind of stupid," said Preston Thomas, 26, a doctor at a Detroit hospital who lost $985 last year. "I didn't do my research, and it's frustrating because there's nothing I can do. I'm out almost $1,000."

Prompted by similar complaints, law enforcement agencies are suggesting consumers be aware of costly shipping and handing fees, check comments made on sites by previous buyers and make sure to get the seller's identifying information.

The agencies are trying to investigate online auction schemes, even though that's sometimes made difficult by the victims' addresses -- sometimes across the world -- and the challenge of tracking cybercriminals.

In the FTC's first felony conviction stemming from an online auction, a Lake Worth man was banned for life in 1998 from doing business on the Internet after he scammed 25 people out of $20,000 to $30,000 in computer auctions.

"It's a big problem, and we are really going after it," said Gardner of the FTC. "Nobody should have to get defrauded."

Just last year, the Pinellas County Sheriff's Office arrested three local people accused of bilking more than 70 online auction customers out of $60,000 for computers they never received. After handing over their money, customers either received empty computer cases, boxes filled with phone books or nothing at all.

Kenzie Jones, 60, of Nova Scotia successfully bought a computer on an online auction last year. So he eagerly went to the Internet last fall when he wanted an upgrade.

Jones bid $1,100 for a computer being sold by Creative PC. He was so eager to get it, he deposited the money directly into the bank account Ms. Grierson gave him to speed up the process.

But he never got a computer or a straight answer.

He was told the same thing as other customers: There were shipping problems. Another company, Cybercom Industries, was completing the order. Sometimes, he was ignored altogether.

"I feel so embarrassed," he said last week. "I should never have gotten hooked on such a scam."

Jones, a retired motel owner, was so upset that he and his wife, Marilyn, flew down to Florida in the spring to check out the companies. He couldn't find them, although Cybercom Industries still has a Web site.

"I'm very disappointed in this whole thing," he said. "I can't understand why they are still operating. It blows my mind."

Creative PC customers spent months complaining to local and state police and consumer agencies, with no results. Pinellas Park police and the Attorney General's Office in Tampa referred calls to the U.S. Postal Service.

The Tampa Bay Postal Inspection Services has been investigating the two companies since late last year, spokeswoman Linda Walker said. But she said she could not discuss the details of the inquiry.

The state Department of Consumer Affairs also has received complaints, but six of the seven could not be resolved because the businesses could not be reached.

Several phone numbers for Creative PC and Cybercom Industries were not in service last week and e-mails to several addresses were either returned or unanswered. Ms. Grierson also could not be reached.

Customers said they realize they probably will never see their money again, but they still would like to see company officials punished.

"It's a big deal when you put all (these cases) together," said Anderson, the California computer buyer. "People end up losing not only their money, but any kind of trust and faith they have in the system."

- Times researcher Cathy Wos contributed to this report.

Where to complain

For more tips or to report a complaint contact:

Federal Trade Commission: (877) FTC-HELP (877-382-4357) or www.ftc.gov

Florida Department of Consumer Protection: (800) HELP-FLA (800-435-7352) or www.800helpfla.com

Internet Fraud Watch: (800) 876-7060 or www.fraud.org

www.auctionwatch.com

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