Biggest con in Ebay history
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Biggest con in Ebay history
An eBay Merchant Disappears,
Failing to Deliver the Goods
By NICK WINGFIELD
Staff Reporter of THE WALL STREET JOURNAL
WHITE LAKE, Mich. -- Stewart Richardson seemed to be the model of a successful eBay entrepreneur, and January promised to be one of his best months yet. For five years he had built up a business on eBay as an online dealer in collectible figurines. In some cases, he was able to auction off whimsical ceramic creatures from the Wee Forest Folk line for hundreds of dollars apiece.
On the feedback bulletin board on eBay Inc.'s auction Web site, customers posted rave reviews of their experiences with Mr. Richardson and his business. A few days into the new year, he completed his biggest series of online auctions ever, collecting hundreds of thousands of dollars within a matter of weeks.
Then, on Jan. 17, Mr. Richardson told the handful of employees at his figurine shop here in this blue-collar Detroit suburb that he was going out to lunch.
He hasn't been heard from since.
Have you ever been the victim of an online scam? Participate in the Question of the Day.
Thursday, Mr. Richardson's store was locked and appeared to be in disarray. A woman inside refused a reporter's request to unlock the door, and a sign told UPS delivery personnel to go away.
Scores of online bidders who bought the little porcelain mice, moles, angels and other figures in Mr. Richardson's last auctions say they never received the items they paid for. The Oakland County, Mich., Sheriff's Department says it has handed the case over to the Federal Bureau of Investigation. A person familiar with the investigation says authorities don't know where Mr. Richardson is but that the FBI is treating the case as a fraud investigation.
Mr. Clark's Conclusion
There seems to be little doubt among his would-be customers that Mr. Richardson pulled off one of the most remarkable con jobs in the almost seven-year history of the eBay auction site, the Internet's most successful commercial outpost. "The guy ran off with the money," says Gene Clark, a computer consultant in East Brunswick, N.J., who says he paid Mr. Richardson $700 for four porcelain mice that never arrived.
A person familiar with the law-enforcement investigation estimates that Mr. Richardson reaped about $225,000 from the recent series of auctions, which ended Jan. 4, but some of the bidders say that figure is too low. According to his wife, Mr. Richardson withdrew a total of $220,000 from various business bank accounts in the days before his disappearance.
EBay says it shut down Mr. Richardson's account with the company on Jan. 23 after it received a flurry of complaints from users and concluded that his recent auctions amounted to a major case of fraud. "This is a pretty extraordinary situation," says Rob Chestnut, the ex-federal prosecutor who leads eBay's fraud-prevention team.
'Middle of Our Life'
Mr. Richardson's wife, Arlene Murray, who was his business partner, also was caught off guard. "The man just left in the middle of our life," Ms. Murray says.
Indeed, a person close to the investigation says he believes that Mr. Richardson acted "totally behind the backs" of his wife and employees.
If Mr. Richardson's eBay sales ultimately prove to be fraudulent, the scam would rank among the costliest frauds ever perpetrated over eBay. The case, first reported in the online SuperSeller Auction Newsletter, suggests that even with a big company's aggressive policing measures, fraud is an unavoidable risk of Internet commerce.
Insurance Policy
EBay says that fraud is a persistent problem, but the company adds that it affects fewer than 0.01% of the millions of transactions the auction site handles every year. The San Jose, Calif., company, which makes most of its money on commissions from its auction sales, had revenue of $749 million last year. It says it isn't liable for any fraud-related losses on its site, because the transactions occur strictly between buyers and sellers. The company's insurance policy provides a maximum $175 per auction to reimburse any defrauded bidders.
The company employs a team of about 20 fraud investigators. They look into complaints about sellers and then contact law-enforcement authorities and shut down the sellers' eBay accounts if there's enough evidence of wrongdoing.
EBay says it has an arsenal of fraud-prevention weapons, many of which it won't disclose. One example: It verifies the credit-card numbers sellers provide when they open eBay accounts and cross-checks the credit-card billing addresses to make sure they match the addresses the sellers have listed on their eBay accounts.
At the heart of its efforts to weed out crooked sellers is its "feedback" system, which allows buyers and sellers to rate each other based on their satisfaction with a transaction. For example, a buyer might rate a seller positively for delivering an item in the promised condition or a seller might rebuke a buyer for slow payment. The system aims to give a buyer and seller who are usually strangers some way to gauge each other's integrity.
Even so, scammers have found many ways to use eBay. In past cases, sellers have operated with rings of "shill bidders," cohorts who bid on an item solely to run up its price. Last year, in the most notorious such case, two men pleaded guilty to wire- and mail-fraud charges involving several instances of shill-bidding in eBay art auctions. Those auctions included the sale of a painting purported to be by the late artist Richard Diebenkorn. Bidding on the painting, which turned out to be a fake, reached $135,805.
Cashing In
In other cases, eBay executives say, individuals have conducted legitimate auctions for several weeks or months to build up positive ratings, and then cashed in on their track records by holding a series of phony auctions, often for pricey items.
Still, Mr. Richardson's case stands apart. For one thing, he had a real bricks-and-mortar business here, a shop called the Retired Figurine Exchange Inc. And then there was his sterling record and relatively long history on eBay.
In all, Mr. Richardson earned 6,185 positive feedback points since he started selling on the site in 1997, with an additional 58 negative and 56 neutral ratings from buyers who bought from him, according to eBay records. Those scores meant that 98% of the sales Mr. Richardson made resulted in satisfied buyers.
Mr. Richardson was fussy about his reputation, says Vickie Johnson, an employee who handled eBay sales for him from his shop. She says he fretted if anyone posted negative feedback about a sale. But Mr. Richardson's standing was especially high among eBay's small, but passionate, community of figurine collectors.
Figurines of many types are hot items among collectors. Mr. Richardson sold the most popular brands -- Lladr
Failing to Deliver the Goods
By NICK WINGFIELD
Staff Reporter of THE WALL STREET JOURNAL
WHITE LAKE, Mich. -- Stewart Richardson seemed to be the model of a successful eBay entrepreneur, and January promised to be one of his best months yet. For five years he had built up a business on eBay as an online dealer in collectible figurines. In some cases, he was able to auction off whimsical ceramic creatures from the Wee Forest Folk line for hundreds of dollars apiece.
On the feedback bulletin board on eBay Inc.'s auction Web site, customers posted rave reviews of their experiences with Mr. Richardson and his business. A few days into the new year, he completed his biggest series of online auctions ever, collecting hundreds of thousands of dollars within a matter of weeks.
Then, on Jan. 17, Mr. Richardson told the handful of employees at his figurine shop here in this blue-collar Detroit suburb that he was going out to lunch.
He hasn't been heard from since.
Have you ever been the victim of an online scam? Participate in the Question of the Day.
Thursday, Mr. Richardson's store was locked and appeared to be in disarray. A woman inside refused a reporter's request to unlock the door, and a sign told UPS delivery personnel to go away.
Scores of online bidders who bought the little porcelain mice, moles, angels and other figures in Mr. Richardson's last auctions say they never received the items they paid for. The Oakland County, Mich., Sheriff's Department says it has handed the case over to the Federal Bureau of Investigation. A person familiar with the investigation says authorities don't know where Mr. Richardson is but that the FBI is treating the case as a fraud investigation.
Mr. Clark's Conclusion
There seems to be little doubt among his would-be customers that Mr. Richardson pulled off one of the most remarkable con jobs in the almost seven-year history of the eBay auction site, the Internet's most successful commercial outpost. "The guy ran off with the money," says Gene Clark, a computer consultant in East Brunswick, N.J., who says he paid Mr. Richardson $700 for four porcelain mice that never arrived.
A person familiar with the law-enforcement investigation estimates that Mr. Richardson reaped about $225,000 from the recent series of auctions, which ended Jan. 4, but some of the bidders say that figure is too low. According to his wife, Mr. Richardson withdrew a total of $220,000 from various business bank accounts in the days before his disappearance.
EBay says it shut down Mr. Richardson's account with the company on Jan. 23 after it received a flurry of complaints from users and concluded that his recent auctions amounted to a major case of fraud. "This is a pretty extraordinary situation," says Rob Chestnut, the ex-federal prosecutor who leads eBay's fraud-prevention team.
'Middle of Our Life'
Mr. Richardson's wife, Arlene Murray, who was his business partner, also was caught off guard. "The man just left in the middle of our life," Ms. Murray says.
Indeed, a person close to the investigation says he believes that Mr. Richardson acted "totally behind the backs" of his wife and employees.
If Mr. Richardson's eBay sales ultimately prove to be fraudulent, the scam would rank among the costliest frauds ever perpetrated over eBay. The case, first reported in the online SuperSeller Auction Newsletter, suggests that even with a big company's aggressive policing measures, fraud is an unavoidable risk of Internet commerce.
Insurance Policy
EBay says that fraud is a persistent problem, but the company adds that it affects fewer than 0.01% of the millions of transactions the auction site handles every year. The San Jose, Calif., company, which makes most of its money on commissions from its auction sales, had revenue of $749 million last year. It says it isn't liable for any fraud-related losses on its site, because the transactions occur strictly between buyers and sellers. The company's insurance policy provides a maximum $175 per auction to reimburse any defrauded bidders.
The company employs a team of about 20 fraud investigators. They look into complaints about sellers and then contact law-enforcement authorities and shut down the sellers' eBay accounts if there's enough evidence of wrongdoing.
EBay says it has an arsenal of fraud-prevention weapons, many of which it won't disclose. One example: It verifies the credit-card numbers sellers provide when they open eBay accounts and cross-checks the credit-card billing addresses to make sure they match the addresses the sellers have listed on their eBay accounts.
At the heart of its efforts to weed out crooked sellers is its "feedback" system, which allows buyers and sellers to rate each other based on their satisfaction with a transaction. For example, a buyer might rate a seller positively for delivering an item in the promised condition or a seller might rebuke a buyer for slow payment. The system aims to give a buyer and seller who are usually strangers some way to gauge each other's integrity.
Even so, scammers have found many ways to use eBay. In past cases, sellers have operated with rings of "shill bidders," cohorts who bid on an item solely to run up its price. Last year, in the most notorious such case, two men pleaded guilty to wire- and mail-fraud charges involving several instances of shill-bidding in eBay art auctions. Those auctions included the sale of a painting purported to be by the late artist Richard Diebenkorn. Bidding on the painting, which turned out to be a fake, reached $135,805.
Cashing In
In other cases, eBay executives say, individuals have conducted legitimate auctions for several weeks or months to build up positive ratings, and then cashed in on their track records by holding a series of phony auctions, often for pricey items.
Still, Mr. Richardson's case stands apart. For one thing, he had a real bricks-and-mortar business here, a shop called the Retired Figurine Exchange Inc. And then there was his sterling record and relatively long history on eBay.
In all, Mr. Richardson earned 6,185 positive feedback points since he started selling on the site in 1997, with an additional 58 negative and 56 neutral ratings from buyers who bought from him, according to eBay records. Those scores meant that 98% of the sales Mr. Richardson made resulted in satisfied buyers.
Mr. Richardson was fussy about his reputation, says Vickie Johnson, an employee who handled eBay sales for him from his shop. She says he fretted if anyone posted negative feedback about a sale. But Mr. Richardson's standing was especially high among eBay's small, but passionate, community of figurine collectors.
Figurines of many types are hot items among collectors. Mr. Richardson sold the most popular brands -- Lladr
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From: Bay Area
it was only a matter of time before something like this would happen, if you want to buy anything 2nd hand online, your best bet is to buy from someone locally and meet the person. Even that would still be risky. because you never know who your going to meet, and you might get robbed anyways 
The moral of this story is, you cant trust anyone anymore.
Especially since we are in a recession and everyone is out trying to make ends meat.
The moral of this story is, you cant trust anyone anymore.Especially since we are in a recession and everyone is out trying to make ends meat.
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