When an online bidder with the handle of “dd9191” paid $1,825 for a nearly complete set of 1959 Topps baseball cards on eBay in July, the winner wasn’t the only one who walked away with a rare and valuable prize. The auction also provided two self-appointed detectives with conclusive evidence that the seller used a phony identity to illegally dupe the buyer into paying an extra $531 for the cards.
While Ebay users who devote considerable time and energy to expose fraud on the site say they are sure that phantom bidding and other scams occur every day, proving it is far more difficult. Even when they can point to suspicious activity that appears to defy rational explanation, eBay policies that the company says are designed to protect the privacy of sellers and buyers usually make it impossible to prove that a crime has occurred. And eBay responds to complaints with boiler-plate e-mails stating that action has or has not been taken, but never reveals details of what it found.
In the course of a two-month investigation into complaints that eBay is unresponsive to reports of fraudulent auctions on its site, especially when they concern profit-generating merchants known as “power sellers,” MSNBC.com examined 24 complaints that fell into the suspicious-but-unprovable category.
Now and then, paydirt!
But every now and then, the seekers hit paydirt.
During MSNBC.com’s review, investigators unearthed evidence that strongly indicated wrongdoing in four of the cases they presented.
Two of those cases are particularly revealing, both for the insight they provide into eBay’s practices in dealing with fraud complaints and for the light they shed on the self-appointed sleuths’ determination and ingenuity in pursuing their quarry.
While shill and phantom bidding are difficult to prove in the online environment, eBay user Bruce Moreland of Seattle found a “smoking gun” when he examined the results of the auction in which the Topps baseball cards changed hands on July 19.
The seller, “brsz-2,” listed contact information at the bottom of the auction as Broadway Rick’s Strike Zone, a sports memorabilia shop in Boynton Beach, Fla. “Bid with confidence - we have been in business for over 12 years!” the tagline read.
Moreland soon discovered that the bidder who drove “dd9191” upward in the late bidding on the cards — “nsports” — had provided identical contact information on another auction. He immediately used the company’s online complaint form to alert eBay’s “Safe Harbor” team that the seller and the bidder in the baseball card auction apparently were one and the same.
EBay should have had no difficulty recognizing this as seller or phantom bidding, said Steve Proffitt, a Virginia attorney who specializes in auction law.
‘Strong and powerful evidence'
“If you got the same identifying information from different screen names, that’s pretty darn strong and powerful evidence that would convince most people that he’s bidding up his own items,” said Proffitt. “That’s seller bidding and it’s illegal.”
But “Samantha,” a representative of the “Power Seller Trust and Safety” team, which investigates many fraud complaints against eBay’s biggest vendors, didn’t find the evidence so compelling.
“In accordance with our site policies, we have found that there is not enough evidence to show that a violation has taken place,” she replied in an e-mail to Moreland. “We understand your concern about this situation, and can reopen the investigation if any additional information can be provided.”
The rejection might have stood had not another eBay user, Alan P., who asked that his last name be withheld, followed up with a second complaint. After elaborating on the original complaint and citing eBay’s policy statement that “shill bidding is considered a felony with severe consequences,” he received a response from another power seller representative assuring him that “we have taken appropriate action in accordance with our site policies.”
Even though phantom bidding - identical to shill bidding, but perpetrated by an individual rather than co-conspirators — violates state and federal criminal fraud statutes and constitutes fraud under civil law, the “appropriate action” turned out to be a warning to the seller.
In a phone interview with MSNBC.com, Broadway Rick’s owner Richard Kohl acknowledged that he improperly bid the cards up using an account that he originally created for a friend, but said he did so only to avoid taking a financial hit on the item.
‘I will never do it again'
“I started my piece out at $1 and (the false bid) was to get people up to get the price I paid for it, and not to take a great loss,” he said. “I should have started at the price I wanted. I was warned by eBay. I’m ashamed of myself and I will never do it again.”
The buyer of the baseball cards — “dd9191” — did not respond to numerous e-mails seeking comment.
But another buyer — who ended up paying $200 more than he otherwise would have in another sports memorabilia auction in which “nsports” bid on an item offered by “brsz-2” — said he was never informed by eBay that he had been victimized.
Ronald Marshall of Oakland, Calif., said it was “disconcerting” to learn from a reporter that he had paid too much for the rare 1910 boxing book, “My Life,” by former heavy-weight champion James Jeffries, and that the seller had gone unpunished.
“If they find out somebody is shill bidding they should be removed from the system forever,” he said.
EBay spokesman Kevin Pursglove said that under the company’s privacy policy he could not discuss the specifics of the case, but he indicated that the officials with the company’s fraud-fighting team were “comfortable” that it was properly handled.
Meanwhile, since receiving the warning from eBay Kohl has used the “brsz-2” account only for “private auctions,” which hide the identities of bidders and make it impossible for anyone other than eBay to determine if fraudulent bidding is occurring. EBay help files state that auctions should not be made private “unless you have a specific reason, such as potential embarrassment for bidders and the buyer.”
Teamwork unmasked alleged forgeries
If the trading card auction shows how an opportunistic tag-team can occasionally uncover wrongdoing, the case of an alleged stamp forgery ring demonstrates the power of relentless teamwork.
Well-known U.S. stamp authority Richard Frajola and other philatelists operating under the umbrella of SCADS (Stamp Collectors Against Dodgy Sellers) say they have lodged “innumerable complaints” with eBay asking it to shut down what they say is a fraud ring selling altered postage stamps.
The SCADS experts have assembled a damning dossier showing that the ring has systematically purchased stamps with obvious flaws that diminish their value, then altered them to make them appear to be in better condition or to be different, more-valuable stamps.
The alterations use techniques like bleaching cancellations, recutting and reperforating and overlaying “grills” — an anti-counterfeiting measure that the U.S. Post Office used in the late 1800s — to improve the appearance of the stamps or otherwise increase their value in the eyes of unwary buyers, SCADS charges.
To hide their tracks, the group uses two eBay accounts — “chickfrdstk” and “stazy4” — to buy the stamps, and two others — “schuylerac” and “pcheltenham” — to sell the altered stamps, according to SCADS.
Stamps put under microscope
The stamp sleuths use techniques that would be at home in the FBI crime lab to keep track of the sales, including microscopic examinations of the “before” and “after” versions that show they share flaws like uneven perforation that would otherwise be undetectable. The comparisons demonstrate “with 100 percent certainty” that the stamps have been altered, SCADS says.
The stamps are matched using a database that the group began assembling early this year after linking the various identities.
“We would basically capture all the things that ‘chickfrdstk’ and ‘stazy4’ would purchase … then we would watch the other two gentlemen and we would capture all the auctions of everything they sold,” said SCADS member Richard Doporto of Oakland. “It quickly became very clear what they’re doing.”
“Schuylerac” is an eBay power seller while “pcheltenham” is not, though not because he doesn’t qualify for the rewards program. Since SCADS began tracking their sales in late March, the pair has sold nearly $89,000 worth of altered stamps after spending less than 10 percent of that for the originals, Doporto said.
MSNBC.com attempted to contact all four members of the alleged ring, but received a response only from “pcheltenham” — or Percy Cheltenham, according to his e-mail.
“I can only refer you to my feedback file, which represents actual participants and buyers,” he wrote, referring to his eBay rating showing more than 1,474 positive comments from purchasers and only a dozen negative ratings.
'Disclaimer' on auctions
He also referred the inquirer to a “disclaimer” on a recent auction that warned would-be buyers they were buying “a pig in a poke” — an expression that refers to buying something without knowing its inherent quality.
The statement says the stamps in question are part of a “handed down collection of over 20 boxes,” and adds, “It is the obligation of the buyer to determine which stamp it is, and to determine its condition, and subsequently the buyer’s decision on how much he is willing to pay for it.”
Proffitt, the auction law expert, said that the disclaimer would not protect a seller who is knowingly auctioning altered goods.
“The ‘as is’ disclaimer would do nothing to alleviate a knowing and intentional misrepresentation done with the purpose of defrauding the unknowing out of their money,” he said, adding that such conduct also could violate federal laws against stamp alteration and counterfeiting.
SCADS members say eBay’s apparent lack of action is particularly puzzling given that “schulyerac” and “chickfrdstk” have previously been brought to the attention of the company’s fraud investigators.
Accounts reportedly suspended
Both accounts were suspended in 1999 amid allegations of shill bidding, Linn’s Stamp News reported. Those allegations surfaced after eBay users complained to the company that bogus grading certificates were being advertised on “schulyerac” auctions with the apparent intent of duping unsuspecting buyers, the philately publication said.
EBay spokesman Pursglove said he could not confirm that the accounts were previously suspended or comment on the current allegations, citing the privacy policy. But he again said that the company’s fraud team reviewed the complaints and was confident they had been correctly handled.
While eBay has not taken any discernable action to shut down the alleged fraud ring, SCADS members say they did eventually succeed in getting the company’s attention.
After members started flooding the eBay stamp billboard with discussion about the alleged fraud ring, the company eliminated the stamp section of the billboard, Doporto said. Then, after SCADS members began contacting bidders on suspect auctions to warn them that they may be bidding on altered goods, eBay suspended several of them for up to 60 days for “auction interference,” he said.
Frajola, the stamp expert, said that eBay’s lack of response to the complaints has persuaded virtually all the veterans of the site’s stamp-collecting community that eBay is putting profit ahead of customer protection.
“This is criminal activity, cut and dry, and they don’t want to know and they don’t want it to be exposed,” he said.