High Tech Crime Unit issues warning of increased activity in online auction escrow fraud
02/28/2005

Ellis County's High Technology Crime Unit has issued an advisory because of increasing activity in an online auction fscam called the "Online Escrow Fraud."

In the advisory, the HTCU -- Fort Hays State University Police Director Ed Howell, Ellis County Deputy/Investigator Brad Ricke and Hays Police Department Detective Tom Meiers -- explain that the fraud's perpetrators copy information about real cars for sale on sites such as eBay, AutoTrader.com and Calling All Cars, and then list them for sale on other online auction sites. Fraud suspects normally target rare or expensive cars, boats or motorcycles at reduced or must-sell prices so that potential buyers will be quick to make the transaction.

Once a buyer "wins" or uses the "buy now" option, the suspects will insist that the transaction be made immediately and that the buyer use Western Union or push a specific online escrow service. The suspects intentionally push a specific online escrow service because the fraudster has fake e-mail ready to send to the unsuspecting buyer. Once the buyer sends the money to the fraudulent online escrow service, the fraudster picks up the cash and is never heard from again.

Normally, online escrow services make online transactions safer by acting as an intermediary between buyer and seller. Transactions on eBay, for instance, are insured against fraud for up to $200, and Amazon.com auctions cover certain transactions for up to $1,000, but when auction transactions cost $10,000 to $75,000, it's the buyers who bear all the risk.

While online auction services are a great way to obtain hard-to-find items at a great price, the HTCU warns that using such services comes with a price of its own and offers tips to avoid becoming the victim of fraud: Be wary if the seller pushes a specific escrow company, and call the company to determine whether the seller is legitimate; ask for a VIN if the vehicle is registered in the United States; contact your local law enforcement agency to run the VIN to verify whether the registration matches the seller.

The HTCU ends with the most famous warning against fraud: If the offer seems just too good to be true, it probably is.


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Kent Steward, Director   |  ksteward@fhsu.edu  |  Kurt Beyers, Assistant Director   |  kbeyers@fhsu.edu