5 years ago... eBay has its back to the wall over online auction fraud

15.12.98: The suspension of a user from an online auction company for suspected fraud of up to $100,000 has created a clamour for better internet auction security.

Internet auction pioneer, eBay has refused to refund defrauded customers, after user Sonny Stemple allegedly persuaded other users to send money for items he never had.

Users have been complaining for several weeks that phantom buyers known as "shillers" or "shielders" - who create a fake online buyer persona to drive prices up for a seller - were artificially manipulating prices.

Some users have slammed eBay for not performing background checks or asking for credit card details before allowing people to sign up. But the company itself claims it is impossible for it to screen all users and many says many of its customers claim this is in opposition to the spirit of an internet trading service.

Analysts claim it is not just an Internet problem - but a problem with auctions in general. Dave Birch, consultant at Hyperion, said: "Most auction houses will tell you the only way of establishing reputation is by knowing everyone who trades, and not taking bids from individuals. Until there's an established standard for rating your reputability in electronic form, it's going to be a problem."

James Corsellis, managing director of UK-based online trading service Interactive Collector, said he understood eBay's reluctance to take credit details up front, but commented: "Without a standard to establish reputability you need to rely on credit card authorisation."

15.12.03: Five years on eBay's popularity is still acting as a magnet to fraudsters.

Recently the practice of phishing has had its sights set firmly on the auction site. Emails purporting to be from the site solicit user information such as account details, claiming they are needed to reactivate an account or to clean up the database.

However, users who fall for the scam and hand over the account details are often the dupes in fraudulent scams - such as people claiming to sell items they don't really have. And when users cotton on, it's the original victim of the phishing who takes the blame. Similarly they may be used to increase the bidding in a sale they aren't aware of.