A scam on EBay Inc, the largest Internet auctioneer, that duped users out of US$880,000 for computers they bid on and never received has netted a Connecticut woman a four-year, nine-month jail sentence.
US District Court Judge Nathaniel Gorton also ordered the woman, Teresa Smith, to repay US$857,776 to buyers of the computers she never shipped and fined her US$10,000. Smith, 25, pleaded guilty on Dec. 20 to five counts of mail fraud and five counts of wire fraud, according to a statement from the office of US Attorney Michael Sullivan.
Sullivan said the scheme appeared to be the largest case of Internet auction fraud ever prosecuted. Sullivan claimed Smith, who also went by the name Teresa Iaconi, sold computers to 350 individual buyers through Internet auction sites from April 2001 to last October.
"Smith defrauded many of these buyers," according to an indictment filed by Sullivan. "She required them to pay for the computers up front, never provided them with the computers she had promised them, and refused to refund their payments."
Online auction scams accounted for 90 percent of consumer complaints about Internet fraud last year, according to the National Consumer League. People lost more than US$13 million to auction fraud last year, the group said last month.
EBay has said confirmed cases of fraud amount to less than one-one hundredth of 1 percent of all listings on its site. EBay spokesman Kevin Pursglove said the company hasn't released other fraud figures.
The company maintains a user feedback system by which buyers and sellers detail positive or negative dealings with others and employs workers to investigate and prevent fraud. Users with high negative feedback are suspended from bidding or selling on EBay.
The company also is testing software to detect criminal activity, Pursglove said.
Sullivan's indictment said Smith built up positive feedback by selling and delivering computers for at least US$500 below what she paid. Later buyers wouldn't receive their purchases, the charges said.
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