Contact: Gail Gawenda
608:267-1711
(
In connection with this announcement, the FTC released its annual report of fraud and identity theft complaints. According to the report, in 2005
Governor Jim Doyle signed into law yesterday three pieces of important legislation that will assist consumers in protecting their personal financial information and aid in the fight against identity theft: Assembly Bill 912 allows consumers to place a freeze on their credit report for a small fee limiting access to the sensitive information contained in a credit report; Senate Bill 164 requires businesses to notify consumers if their personal information has been stolen; and Assembly Bill 536 prohibits Registers of Deeds from recording documents that include a person’s social security number.
Because internet auctions are the top source of fraud complaints, the DFI suggests consumers take the following quiz. Answers follow the questions.
1) True or False: The term “Internet auction” refers to the sale of computers online.
False. Internet auctions can include the sale of computers, but also almost any item imaginable–from trading cards to automobiles.
2) Which of the following is NOT true?
A. Most Internet auctioneers set a time limit for bidding;
B. Internet auctions are illegal unless they are for charity;
C. Some sellers set “reserve” prices as the lowest they’ll accept;
D. Buyers and sellers often use e-mail to arrange payment and delivery.
B. Internet auctions don’t have to be for charity. As long as buyers and sellers obey the law, internet auctions are completely legal.
3) True or False: Some sites require a seller to pay a fee for every auction, whether they sell an item or not.
True. It’s also true that there are some sites that charge sellers only when an item is sold.
4) True or False: It’s always safe to wire money to pay for Internet auction purchases.
False. Be suspicious of sellers who will accept payment only by wire transfer. In fact, to protect both buyers and sellers, some auction sites now prohibit the use of wire transfers as a method of payment.
5) True or False: It’s a good idea to use a credit card when paying for items bought on an Internet auction.
True. Credit cards allow buyers to seek a refund from the credit card issuer if the product isn’t delivered or isn’t what they ordered. Some online payment services also offer protections, but you should read each service’s terms of agreement before you use it. With other kinds of payments–like money wiring services–you’ll have no recourse if there’s a problem.
6) If you want to use an online escrow service to protect yourself from fraud in an Internet auction, you should know that:
A. Escrow services accept and hold payment until a buyer receives and approves merchandise, and then the service forwards the payment to the seller;
B. Buyers pay a fee for online escrow services–generally a percentage of the cost of the item;
C. Some sellers set “reserve” prices as the lowest they’ll accept;
D. All of the above.
D. Online escrow services can be helpful in preventing fraud, but be aware that both buyers and sellers have used illegitimate services to commit fraud.
7) Users of online auctions should be on the lookout for signs of “phishing” such as:
A. Unusually low prices for seafood products such as tuna
B. Slippery offers such as “buy one get one free”
C. Emails asking for passwords or other financial information
D. Offers of bootleg copies of CDS by alternative rock bands
C. Usually these emails are from impersonators who want the information in order to access your accounts. Legitimate companies won’t email you for this information.
8) Which of the following is NOT a common form of fraud used on Internet auction sites?
A. Arson with intent to defraud
B. Fake checks or money orders
C. Bid shielding–when buyers submit a very high bid to discourage competition, later retract the bid, and then let a friend bid at a lower price
D. Failure to send merchandise after it has been purchased
A. We made up “arson with intent to defraud.”
9) True or False: Bid siphoning is a practice con artists use to lure bidders off legitimate auction sites by offering to sell the same item to them at a lower price.
True. And by going off-site for the purchase, you lose any protections the original site offered, such as insurance, feedback forms, or guarantees.
10) Before using an online auction site, you should:
A. Cross your fingers and hope for the best
B. Read the site’s Terms of Use & other information
C. Get a new Internet Service Provider
D. Reboot your computer by holding down the escape key
B. Understanding all the rules that apply will be time well spent–and could save you from a lot of problems and frustration.
11) True or False: The law requires sellers on all auction sites to offer a standard return policy.
False. There’s no standard return policy. It’s up to you to learn from each seller whether or not you can return an item you do not like, who pays for postage and restocking, etc.
12) True or False: If you’re selling an item on an auction site, the law forbids you to ask friends or relatives to place “shill bids” in order to drive up the price.
True. Likewise, it’s illegal to offer false testimonials about yourself in the comment section of internet auction sites.
To educate the public and to fight the increase of fraud and identity theft, the DFI and other agencies suggest people visit www.OnGuardOnLine for information on how computer users can be safe online. Topics include foreign lottery scams, check overpayment schemes, spyware, identity theft, phishing and spam scams.
If you suspect fraud, you can file a complaint with the DFI at 1-800-452-3328 or the FTC at 1-877-382-4357. Additional information can be found at www.wdfi.org.
