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US cracks down on internet auction fraud

The US Federal Trade Commission (FTC) and 29 state attorneys general have launched 57 criminal and civil actions against perpetrators of internet auction fraud and has promised that more criminal and civil investigations are on the way.

The FTC and Washington State Attorney General Christine Gregoire announced the results of Operation Bidder Beware, which resulted in 17 criminal cases being filed.

In most of the 57 total actions the agency or law enforcement groups took, the seller took payment for a product and did not deliver, or delivered a product different than was promised in the auction.

Three Washington state cases were among the 57 listed, and one involved sales of DVDs to a number of customers for as little as $50, said Gregoire.

Gregoine added that internet auction fraud is the biggest single complaint her office gets about internet fraud overall. Other cases across the US included the failure to deliver computers, gaming consoles, demonic toys and dolls, designer handbags and more than $50,000 worth of dental equipment.

"It's not an area that [attorneys general] can afford to look the other way on," Gregoire added. "I guess the message here today is despite the amount of money, we are no longer going to tolerate this type of activity on the internet."

The 51,000 internet auctions reported to the FTC in 2002 generated claims of $37m (£23m) in lost money, and those complaints are likely to be just the tip of the iceberg, said Howard Beales, director of the FTC's Bureau of Consumer Protection.

In two of the 57 cases, the sellers were, allegedly, using stolen identification to auction products online, and in one case, a group of people set up an online escrow service, called Premier-Escrow.com, that allegedly tricked others into sending them money or merchandise.

But Beales did not blame the internet for the problem. "I think fraud in whatever medium is perpetually inventive," he said.

"Fraudsters will look for ways to use new technology to their advantage. We are continually alert for that... and when we see those kinds of problems, we'll go after them."

Premier-Escrow.com is no longer online.

Existing fraud laws are sufficient for prosecuting online auction fraud, Beales said. The internet does complicate the prosecutions in that it can be difficult for law enforcement officers to find the criminals, he added.


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