Online auctions No. 1 in Internet fraud

(CNN) -- Online auctions are the most common avenue for Internet fraud by a landslide, according to a report from the National Consumers League's Internet Fraud Watch.

Eighty-seven percent of Internet fraud occurred through online auction sales in 1999, according to the report. That's a substantial increase from 1998, when auction sales accounted for 68 percent of online fraud.

"The thing that's unique about online auction sites is that they enable anybody to sell anything to someone else," Susan Grant, director of Internet Fraud Watch, told CNN. "And the auction Web site itself doesn't verify that the merchandise really exists, or that it meets the description that's provided."

REPORT RESULTS View the results of the IFW report     ALSO Be E-Wise: How to Shop Safely Online Gather tips from this National Consumers League brochure

Non-auction sales of general merchandise ranked second at 7 percent, with computer equipment and software at 1.3 percent. But while these forms of fraud are less common, the cash losses are higher than losses for auction sales, according to the report.

For online transactions of general merchandise, buyers lost an average of $465 while computer and software equipment sales garnered an average of $580. Consumers lost an average of $293 through online auction sales.

Overall, Internet fraud rose by 38 percent in 1999 and buyers lost over $3.2 million in reported frauds.

Internet Fraud Watch, launched in 1996, offers these tips for participation in online auctions:

• Understand that many auction sites don't verify whether the advertised item exists or is described accurately.



• Research the seller, and realize that consumer comments could actually have been planted by the seller. Require that the seller provide name, street address and telephone number, and use this information when contacting the state or local consumer protection agency to check on legitimacy.



• Beware of sales from private individuals -- most consumer protection laws don't cover private sales.



• Pay by credit card when possible, so you can dispute the charges if you never receive the goods or feel they were misrepresented. Other options are cash on delivery (COD) made out to the seller, and an escrow account, which acts as an intermediary between you and the seller.

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National Consumers League
FBI Internet Fraud Complaint Center

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