Attorney General Cuomo Cracksdown On Internet Auction Fraud
New York, NY (June 7, 2007) - Attorney General Andrew M. Cuomo today announced a crackdown on a nationwide online auction fraud scheme that tricked consumers out of hundreds of thousands of dollars.
Ezra Dweck and employees of his company EMH Group, LLC, one of the nation's largest jewelry auction houses, secretly placed bids on their own online auctions and illegally inflated the prices of goods they sold, a practice called Shill Bidding. In about a year, Dweck directed his employees to place more than 232,000 shill bids worth over $5 million.
"Consumers should not have to surf with sharks. Whether its radio advertisements or jewelry that is being brokered, this scam highlights the growing vulnerability of online auction shoppers," said Cuomo "My office is absolutely committed to combating auction fraud and protecting the integrity of the online marketplace."
Under the terms of the settlement with the Attorney General's office, Dweck and EMH Group will pay $400,000 in restitution and penalties. Additionally, Dweck and EMH Group are banned from the online auction industry for four years. Thereafter, should the company resume business, it will be monitored by the Attorney General's office and must preserve all relevant records and make them available upon request.
The Attorney General's investigation found that Dweck, who sold jewelry on eBay, the nation's largest player in the online auction market with about 200 million registered users, frequently lured unsuspecting shoppers with the promise of "no reserve" auctions. Items sold in this type of online auction have no set minimum or reserve price. The lowest bidder begins the auction; the highest bidder wins.
Unknown to shoppers, each day, Dweck ensured his employees received in advance a spreadsheet of which auctions to bid at along with a predetermined price. In just over a year, Dweck's employees posing as interested shoppers placed more than 232,000 shill bids artificially hiking up the prices of auctioned jewelry by more than 20 percent per piece.
Online auction fraud is one of the top Internet fraud crimes nationwide.
The case was brought to the attention of the Attorney General's office by eBay's fraud investigation team.
Dweck was selling jewelry on his Ebay store called Jewelry by Ezra as well as on his own website www.AuctionRiot.com.**
The case was handled by Assistant Attorney General Carolyn Fast and Investigator Vanessa Ip of the Internet Bureau, under the supervision of Justin Bookman, Assistant Attorney General in Charge of the Internet Bureau.
The Attorney General also offered safety tips for avoiding online auction scams:
- Online auction houses are frequently intermediaries between buyers and sellers, often they will not resolve disputes if the transaction goes wrong. Consider using a safe form of payment.
- Keep copies of advertisements, descriptions, or auction site printouts for any product you purchase.
- Keep copies of any correspondence you have with a buyer or seller (including email).
- Whenever possible, consumers should pay for their purchases by credit card, which offers additional protection in case of a dispute. Consider using an "e-cash" payment system, which may offer protections against fraud.
To learn more about ways to avoid becoming a victim of auction fraud or file an internet auction fraud complaint, visit the Attorney General's website at www.ag.ny.gov or call 1-800-771-7755.