I. Current existing form of Online Auction Fraud

An increase of the substantial number of fraudulent cases reflects that fraud on the internet online auction is not limited to any particular type. Consequently, online auction fraud may manifest itself in a number of forms. The abuse may be separated during the two phases of the online auction process and after the bidding process has been completed.

In phase of during the process, at this stage, the abuser may do whatever to artificially inflate the bid price during an auction the price in the kidding process. At the old day, the victim may face the fraud technique called `bid shielding'. Bid shielding is refered as the collusion of bidders, where one bidder put in a low bid and then another bidder or co-worker puts in a bid high enough to discourage outside bidders from entering the auction. Then, just before the auction closes, the high bid is withdrawn and the low bidder, by default, is the successful bidder and has to accept the artificial price that has been created by those two conspirators. However, this technique has decreased in practice because there is some modification and change in the bidder regulation of online auction sites, which discourages potential bid shielding techniques.³¹ From this reason, there is another form of fraud bidding technique called "shill bidding". This technique typically occurs where the abuser employs different user names to makes these fraudulent bids, bidding on either their own or their co-workers offered items to inflate the price and to generate some other benefit to the seller such as special promotion on the site.³² This kind of bidding fraud technique may be considered to be complex problem because any individual can use. multiple account in online auction which may make shill bidding impossible to trace this collusive bidding.

After the bidding has been completed, the opportunity for fraud still emerges in the context of the online auction. The first simple scenario is a failure to perform the contract by one, party. This commonly occurs when a seller fails to deliver the promised goods after the buyer has fully paid for the goods.³³ Another scenario is wheni the successful bidder fails to complete the transaction by failing to pay for an item after the seller has delivered the goods. A second form is material misrepresentation of the item auctioned. In other words, sellers misrepresent items so that a disappointed purchaser receives counterfeit merchandise or the merchandise is significantly different from the product that he/she ordered.³⁴

Similar to other fraud in the online world, fraud on the auction website does not stop in the certain form. Fraud has always been developed by new techniques of these scammers. Of course, the- fraudster develops the technique by using the gap hole of uncertain rules in this new transaction. One of the fraud technique that has been developed by scammer is called “second chance:” This developed technique focuses on the rule called "second chance offer". This rule is that "if the person who wins an auction on the site doesn't pay up, the second high bidder of an auction may be offered the option to purchase the goods at his offer price.”³⁵ The fraudster takes advantage of this rule by sending a bogus e-mail to the potential bidder and impersonating the seller in an attempt to deceive a bidder. The bogus e-mail illustrates that the bidder might receive `second chance' for bid, he/she has done. Then, the scammer will attempt to conceal the bidder to make a payment to them by offering a lower price if the bidder wires the money directly to them.³⁶

The latest attempt from the fraudster may be the technique called "Phishing." Phishing e-mail is a kind of `identity theft fraud'.³⁷ "Phishing" is a form of threatening e-mail that is sent by the abuser as legitimate online business with the intent of hijacking passwords and another personal sensitive data. For example, e-mail are sent with the e-Bay or PayPal logo demanding that the recipient updates their account information. Then, this scammer will provide a fraudulent hyperlinks at the bottom of the e-mail directed to a fake identical website demanding passwords and other sensitive data, often including financial detaiI.³⁸ Lastly, scammers will take financial advantage from this Important sensitive data. It can be said that Phishing may be a crucial problem for the online auction user. Phishing is not only scamming by stealing credit card numbers but can also facilitate another scam scheme on the online auction site by using the stolen identity. With these various form of fraud in online auctions, this leads to the question whether there is any attempt to protect the consumer or the player in. this kind of transaction. the next section will examine existing fraud solution in online auction websites.

II.  Existing fraud solution in the online auction transaction
1) Self prevention of the fraud on the online auction site

As fraud arises in online auction sites, the online auction is also aware of the increasing problem concerning fraud. This is because fraud may concern about their website. The first concern of the online auction website is about raising on financial difficulties in order to earn commission from the members of its trade. As the fraud increases on the site, fraud may bring doubt to creditability and security of the website. For example, if the perceived threat of fraud is too great, the user might elect not to participate. If the user elects not to participate, the online auction sites will not earn any commission from auctioning in their website.³⁹ Of course, this may bring financial difficulty to the online auction website. At the same time, the online auction website is also concerns that government regulation will dry up growth on their website. The solution has pointed to self-policing mechanism as the suitable way in dealing with fraud on their website. Consequently, the self-policing mechanism has been fostered by the online auction website in order to retain the customer confidence in security of the website and solve concerns. Self-policing is a safeguard employed as a voluntary tool and program on their website. The most used forms can be seen below.

Feedback System
The feedback forum nowadays is a one of the self-policing mechanism to prevent fraud l provided in various auction online websites. Feedback systems are mechanisms that provide a comment and rating left by another user who has bought from or sold to them before. These comments and ratings will indicate the degree of reliability of the user reputation the buyer or seller on online auction websites.⁴⁰ With the indication of reliability, the user can easily elect to educate themselves about their auction partner and can precisely determine the level of fraudulent practice in seller and buyer. One can argue to that this is an effective method in preventing any fraudulent matters in online auction transactions. Furthermore, the feedback system provides an opportunity for self-policing by the user themselves, for example, if a user earns a low feedback rating, the online auction site will automatically suspend the membership and the suspended user will not be able to sell or bid on the site. Then the suspended user will be removed from the system .⁴¹ With this self-policing mechanism, the feedback system provides obvious benefits to the online auction website as a mechanism that provides a low-level of cost and responsibility.

31.Bidder are now not permited to withdraw their bid unless there is special circumstance typical error, the seller has significant change in term of the offer, email messages sent to the seller are returned as undeliverable See Michaelle Dennehy, eBay UPfates Bid Retraction Rules at http://auctionwatch.com/email/print.htmI?ret+? Access on 5/6/ 2005.

32 . See. Help pages, What's shill bidding : why is not permit in eBay at <http://pages.ebay.co.uk/help/community/ '~-iShlll.html#whatis> access on 5/6/2005 For example some online auction website, if a particular auction reaches 'a certain number of bids, the auction will be specially promote on the site.

33 . See Brian Krebs, FTC seeks to stem online auction fraud at <http://www.newsbytes.com/news /00/143828.html> access on 27/12/2004.
34. Id.
35. See John Leyden, eBay second  chance fraud reach UK at <http://www.theregister.co.uk/2004/10/05/ ebay scam ruse/> access on 3/7/2005.
36. Id.
37. "Identity theft occurs when someone possesses or uses your name, address, Social Security number (SSN), bank
or credit card account number, or other identifying information without your knowledge with the intent to commit fraud or other crimes". See Federal Trade Comission, understanding and detecting identity theft at <http://www.consumer.gov/idtheft/understand&dectect IDT.html > access on 7/7/2005.
38. See Frank Fortunato, Battling Fraud on eBay : Part one Phishing Expedition in the Virtual world of eBay at
< http://www.ecommerce-guide.com/article.php/3495451 > access on 3/7/2005.
39. Kristen Weisse, Remedies for internet fraud : consumers need all the help they can get (2002) 14 Loyola Consumer law review 205, 221.
40. eBay, help : what's feedback, at <http://pages.ebay.com/help/feedback/questions/feedback.html> access on 7/7/2005.
41. The member who are indefinitely syspended within 90 day of registering on ebay will automatically remove from the system. See eBay, Community : General announcement at < http://www2.ebay.com/aw/core/200506232138432. html > access on 7/7/2005.