FBI Opens eBay Auction Fraud Probe
Jun. 07, 2000
SAN FRANCISCO (AP) _ The FBI is investigating whether people are driving up prices at online auctioneer eBay by bidding on each others' items.
The probe was launched after lawyer Kenneth A. Walton tried to auction an abstract painting bidders believed was by Richard Diebenkorn, whose work has sold for millions.
``We can confirm that there is an investigation and we're assisting in any way possible,'' eBay spokesman Kevin Pursglove said Wednesday. He declined to elaborate.
A spokesman in the FBI's Sacramento office, which is leading the investigation, declined comment Wednesday.
But Donald Vilfer, a supervisory special agent, told The New York Times in a story Tuesday that investigators opened the case after reading a story in the newspaper that described how Walton and other eBay users had bid on each other's items and offered glowing testimonials.
Self-bidding, known as shill bidding, is forbidden by eBay and is generally illegal at traditional auctions. Participation in a bidding ring violates federal laws prohibiting mail and wire fraud. Each count carries a maximum penalty of five years in prison and $1 million in fines.
To avoid being victimized by shill bidding, consumers should research the product on which they are bidding and get to know the seller, said Delores Gardner, a Federal Trade Commission attorney specializing in Internet auction fraud.
Gardner said the number of complaints about online auctions increased from 107 in 1997 to 10,700 last year, out of roughly 19,000 complaints of general Internet fraud in 1999.
The auction complaints are chiefly in two categories: from consumers who didn't get the merchandise they paid for or those who received merchandise of far less value than they paid, she said.
Walton, 32, said Tuesday he had not been contacted by the FBI and knew nothing of an investigation. A telephone message left at his office Wednesday was not returned.
No one knows if the painting in question is in fact an original Diebenkorn. Walton didn't make that claim when he offered the ``great big wild abstract painting'' he said he'd bought at a garage sale for auction on eBay on April 28.
The bidding began at 25 cents, went to $10 and slowly climbed. A Dutch man named Rob Keereweer won the painting for $135,805 on May 8.
But investigators for eBay dissolved the sale and barred Walton from the site after discovering he had placed a $4,500 bid on the painting himself, using an online alias. Walton said that bid was made for a friend and had ``absolutely no effect on the eventual price.''
On the net: Internet Fraud Complaint Center: www.ifccfbi.gov.