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Vigilantism or Public Service? 31 May 2004 Edition
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One of the very first online business models to show a profit was the internet auction.

Even back in the late 1990s when most sites were surviving on promises, hope and venture capital, a number of online auction services were already spinning a nice little profit.

These days, eBay has become one of the economic powerhouses of the Net, conducting many millions of individual transactions each week and producing huge revenues.

Here in New Zealand we've seen several auction sites appear, the most well-known and popular of which is TradeMe.

Unfortunately, like so many things in life, online auctions have their good sides and their bad sides. While it's possible to snap up some real bargains -- it's also possible to find yourself out of pocket and feeling stupid when you become the victim of a fraud.

Most auction sites are concerned about the effects that fraudulent transactions have on their business and, as a result, have introduced a number of mechanisms designed to reduce to protect customers against such rip-offs.

Unfortunately, given the large numbers of individual auctions in effect at any given time, it becomes virtually impossible for large auction sites to vet each individual offer.

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According to a group of TradeMe regulars however, the management of NZ's leading auction site are not being proactive enough and are concerned that some basic protections are not being applied. They claim that they've spotted over 50 fraudulent auctions in a single day on the TradeMe website.

In order to highlight this situation, the group have set up a website designed to highlight the problems of fraudulent auctions and their dissatisfaction with TradeMe's response to the problem.

Scambusters believe that many of the problems are created by scammers operating from Romanian net addresses and say that blocking such IP numbers would be a simple and effective way of reducing the level of fraud.

However, the Scambusters have found themselves at odds with the auction site's management. In the first three days of May, TradeMe banned four of the five core members of the group from posting on the site's message boards and a further two new recruits a few days after.

In a press release issued this weekend, one of the Scambusters group, Alf West, said "We understand that TradeMe would prefer their site to be seen as a happy place where the sky is always blue. A safe venue for online trading. However kiwis are being ripped off by scams on TradeMe regularly and we would like the company to take responsibility for the problem."

West says of the Scambusters website: "it's a direct reaction to TradeMe's silly attitude. Silencing the messengers has done nothing to reduce the problem. The Romanians are still posting scams and attracting victims. We believe that by sanitising their site of the 'S-word' TradeMe management is doing its members a grave disservice. We sincerely hope that they'll use some common sense and rethink their position."

The Scambusters website already catalogs several groups of spammers and their activities on the TradeMe website and this case in particular makes interesting reading.

Certainly the fraud problem is nothing new to TradeMe and at least one prominent case was featured recently on Fair Go.

Are TradeMe's management putting the fraud issue into the too-hard basket and neglecting their responsibilities here -- or are online auctions simply another case of caveat emptor?

What level of responsibility does an online auctioneer have to monitor for and respond to fraudulent traders?

Is the ScamBusters website a good use of the Internet and a valuable tool for those who might wish to participate in online auctions?

Should TradeMe link to this site as an additional way of educating its users to the risks associated with buying a sight-unseen product from someone you do not know?

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