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As Internet sales increase, fraud reports go up



Published: Wed, February 2, 2005 @ 12:00 a.m.



Consumers become more cautious as identity theft awareness spreads.

WASHINGTON (AP) -- Americans are increasingly turning to Internet auction sites to buy and sell goods from around the world, and a growing number think they might be getting a raw deal online.

The number of complaints filed with the Federal Trade Commission over Internet auctions has nearly doubled from 51,000 in 2002 to more than 98,000 last year, the agency said Tuesday in its annual report on consumer fraud and identity-theft complaints.

The online complaints cover everything from the failure of sellers to deliver goods or services to consumers claiming their purchases weren't worth the price they paid.

Complaints for all types of fraud have grown since 2002, according to the FTC report. Internet auction grievances comprised 13 percent of the 403,000 total fraud complaints in 2002; in 2004, it made up 16 percent of the 635,000 grievances.

Americans are becoming more wary of potential scams, heeding the advice of public awareness campaigns, said Betsy Broder, a lawyer with the FTC's consumer protection bureau.

"We like to think that people are more savvy about shopping online. They've learned to take precautions that just because it's on the Internet doesn't mean that it's legitimate," Broder said.

The only other category in which more complaints were filed in 2004 was identity theft -- 39 percent, or more than 246,000 of the total complaints, down slightly from 40 percent in 2002. It was the fifth straight year that identity theft topped the list of consumer concerns.

Identity theft involves stealing someone's personal information for financial gain. The most common cases involve credit cards, followed by telephone or utility, bank and workplace fraud.

More caution

Consumers and businesses appear to be taking more caution in protecting credit card information, Broder said. In 2004, 17 percent of identity theft complaints involved someone trying to use a victim's personal information to open a credit account, down from 24 percent in 2002.

Neil Creighton, president of GeoTrust, a Needham, Mass.-based firm that secures online credit card transactions, says more companies are using electronic authentication services like security "certificates" to protect their sites and consumers.

"We are reaching a tipping point. Consumers are starting to realize that this is a big problem, but people in the industry are starting to realize and look for more fraudulent type of activities too, Creighton said.

'A very rare occurrence'

EBay, the online auction giant, has 30 million listings, but only about 1 in 10,000 might be fraudulent, company spokesman Hani Durzi said.

"It's a very rare occurrence," Durzi said. He encouraged buyers to ask questions of sellers and review comments of other eBay users who have dealt with a seller.

Buyers should use only secure methods online to pay for items and should never wire money, he added.

According to the FTC, the third most common complaint involved shop-at-home or catalog sales, accounting for 8 percent of grievances in 2004. It was followed by complaints about Internet-related service issues (6 percent), such as undisclosed Web site charges and spyware, and foreign money offers (6 percent).




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