Consumers warned of rising auction fraud, scams

Consumers have been warned about the rising numbers of sophisticated frauds and scams targeting unsuspecting people who use auctions to buy products. 

Park Village Auctions (PVA) and the South African Institute of Auctioneers (SAIA) sounded the alarm last week, saying the industry has seen a number of scams that have become increasingly elaborate and difficult to detect. 

The organisations said criminals usually create fake online auctions and demand upfront payments from bidders. 

“It is crucial to understand that ‘auction’ is the operative word here. Legitimate auctions don’t have pre-sales or reserves. The only payment required upfront is a refundable deposit to participate in the auction itself. This is precisely where people must be extremely vigilant and take all necessary measures to ensure they’re dealing with a real auction house,” said Clive Lazarus from PVA. 

He said scammers are now tailoring their approach to match the demographic profile of their targets, making their schemes even more convincing.

“We’ve even seen cases where fraudsters are ‘employing’ victims, promising full-time positions once they’ve sold a certain number of cars. These fake job offers are just another way to lure people into their scams,” said Lazarus.

Graham van Niekerk from PVA said their industry was particularly vulnerable to scams due to several factors, including the high value of items being sold, the anonymity of bidders and the complexity of the transactions. 

“It’s not so much about loopholes as it is about vulnerabilities caused by the auction business shifting over the last few years to being conducted primarily online and at arm’s length,” he said. 

“Their tactics range from fairly simple to extremely complex. Most involve the false advertising of repossessed vehicles for sale on Facebook and other websites. Once they get a bite, they deploy several tactics to reel in their victims. This includes profiling the subject and providing them with a deal they can’t refuse. The ‘standing room only’ clause is often used to make the target feel special but pressurised into making a financial transaction to avoid missing out on a bargain,” explained Van Niekerk.

Sonja Styger from SAIA explained that bidders needed to do their homework before bidding. “Never pay without seeing and inspecting the item. Don’t fall for paying a ‘reserve fee’ because that is not allowed because only the bidders determine the price of the item on the day of the auction,” said Styger. 

Things to look out for when bidding

• Always insist on inspecting vehicles in person before engaging with any auction house.
• Be wary of auctions advertised primarily through social media.
• Report and block suspicious profiles on social platforms.
• Verify the legitimacy of auction houses through official channels.
• Never feel pressured into making hasty payments or decisions.
• Remember that legitimate auctions only require a refundable deposit for participation.
• Be sceptical of unsolicited job offers related to selling auction vehicles.