Head: Net Auction Fraud Charge, CNNfn
Sect: Business
Byline: Kitty Pilgrim, Fred Katayama
Time: 21:47:00
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FRED KATAYAMA, CNNfn CORRESPONDENT (voice-over): Going, going, nowhere. More users are gripping they've been stiffed at Internet auction sites. From Oklahoma City to New York, federal and city investors are
(21:47:10) looking into complaints about fraudulent sports memorabilia bought on eBay (Company: eBay Inc.; Ticker: EBAY ; URL: www.ebay.com/) .
MEG WHITMAN, CEO, EBAY: We have a community of over two million users which is actually bigger than the city of San Francisco and (21:47:20) San Jose together. And we have 250,000 new items that go up on the site every single day. And so we are completely focused on this. But like any community, it's hard to control everything that (21:47:30) happens on the site.
KATAYAMA: The problem: some sellers don't deliver the merchandise after taking payment. The consumer advocacy group, National Consumers League reports that more than 60 percent of the complaints it gets on Internet fraud stem (21:47:40) from auctions.
SUSAN GRANT, NATIONAL CONSUMERS LEAGUE: We'd like to see online auction companies take more responsibility about the goods and services that people are actually promoting on their sites. For instance, some of these like (21:47:50) credit repair job offers are just probably scams to begin with. So, we'd like them to screen the goods and services.
KATAYAMA (on camera): Unlike traditional auction houses, like Christie's, eBay is just a (21:48:00) middleman. It does not authenticate goods. It has no control over what's exchanged.
YOCHAI BENKLER, NEW YORK UNIVERSITY: I could imagine a situation where consumer protection agencies decide that the risk to consumers of having this free-wheeling (21:48:10) auction system are too great. And that this type of business model needs to be more highly regulated. That the value of the transactions doesn't justify the potential losses to
(21:48:20) consumers.
KATAYAMA (voice-over): eBay says fraud makes up less than 30 of every one million deals. But it's taking steps to eliminate it. It and its rival, Auction Universe , now offer insurance and escrow programs to protect (21:48:30) consumers.
Fred Katayama, CNN financial news, New York.
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