WASHINGTON - The fastest growing source of fraud on the Internet is at vulnerable auction sites, where cyber con artists take advantage of unsuspecting bidders, costing the trust between honest buyers and sellers.
Online auction complaints filed with the Federal Trade Commission soared 100 percent in the last two years, skyrocketing from 107 complaints in 1997 to 10,700 in 1999, while the U.S. Postal Service has seen a 300 percent increase the past year.
The vast majority of complaints focused on goods bought at auction that weren't delivered at all or weren't ''as-advertised'' if they arrived.
''The dramatic expansion of e-commerce lets businesses and consumers buy from each other, but it also opens the door to a handful of rogue operators,'' says Jodie Bernstein, head of consumer protection for the FTC.
Chris Painter, the federal prosecutor in charge of tracking computer crime in central California, points to the case of Robert Guest as typical ''of how cyber-criminals use the Internet to trap their victims in a web of would-be fraud.''
Guest, of Blue Jay, Calif., was sentenced to 14 months in prison after pleading guilty to fraud for collecting $37,000 from bidders who turned to the popular eBay auction site to buy digital cameras, laptop computers and ''supposedly precious gemstones that weren't of gem quality,'' Painter said.
Guest even went so far as to create a reputable ''seller's history'' with eBay before he accepted bids from 30 customers for merchandise they paid for but never got.
Guest's sentence requires him to cough up $100,000 for restitution.
EBay, the world's largest personal online trading company, and other major auction sites, are fighting back, beefing up consumer protections by offering insurance policies to buyers and setting up escrow accounts that hold the proceeds of an auction until buyer and seller are satisfied.
That doesn't solve the problem of fly-by-night peddlers, however, who set up their own Internet auction homepages, stage an auction and disappear with the cash.
''There are a thousand-plus auction sites, and it's beyond comprehension how to regulate them,'' says Attorney General Joseph Curran of Maryland, one of a dozen states that have led the crackdown on cyber-auction fraud.
Curran adds that these electronic ''flea markets'' where customers can't see, feel or taste the goods, are tough for states to police. Even so:
- Alabama authorities won a property theft conviction against David White, who was charged with using fictitious names to auction goods all over the world that never got delivered. He was sentenced to five years' probation and ordered to pay back the customers.
-Pennsylvania won a legal agreement from one cyber-auctioneer that he won't sell knock-offs of trademarked collectibles. State Attorney General Mark Fisher also has filed a civil complaint against a second e-salesman who failed to deliver 500 Furbies he auctioned but didn't deliver and ordered him to repay 38 customers $2,200 for Pokemon cards they ordered but did not receive.
- New Jersey has filed a complaint against a couple accused of offering Beanie Babies and Bruce Springsteen concert tickets for sale to the highest bidder but not delivering the merchandise.
Susan Grant, head of the National Consumers League Internet Fraud Watch, says auction complaints now account for 87 percent of the Internet problems her group fields.
She adds that consumers with a problem should act as soon as possible because ''alerting law enforcement authorities to scams quickly gives them a real head start in their efforts to shut down fraudulent Internet operators.''
Internet Fraud Watch runs a toll-free telephone hotline at 1-800-876-7060. Internet Fraud Watch also takes online complaints at www.fraud.org and forwards them to the proper federal, state and local law enforcement authorities.
(Mary Deibel is a reporter for Scripps Howard News Service.)
