FBI to probe online auction scam

At traditional auction houses buyers view the goods first

The FBI is to investigate the sale of a painting on an internet auction site, after the seller appeared to push the price up from 15 pence to £70,000 by bidding for it himself.

A photograph of the painting was posted on the US-based eBay website by a lawyer who then started a bidding frenzy by placing his own bid of £3,000.

People bidding for their own goods at auction to inflate the price, also known as "puffing", is illegal in the United States but a grey area in the UK.

Crime experts say the explosion of internet auctioneering is proving hard to police, giving new life to old scams.

The FBI suspects the seller of the painting may have had help from other cross-bidders to push the price so high.

The seller insists he made a bid for a friend and it had "absolutely no effect on the eventual price".

Buying frenzy

He started by listing the abstract painting on the site for 25 cents, saying he had found it in a car boot sale in California.

But the style of the piece, its purported age and signature made some buyers believe it was an undiscovered painting by the late California modernist Richard Diebenkorn - whose works sell for millions.

The painting eventually sold to an amateur Dutch collector, but in the glare of media publicity eBay suspected self bidding and voided the sale.

The volume of goods sold through eBay and other online auctions means there is scope for bogus items to slip through unchecked.

Millions of items

Rob Chestnut, eBay chief of security, said: "On a typical day, we'll have well over three million items for sale. That translates into well over $8m in gross merchandise sales."

At traditional auctions the goods on sale are normally stored in a show room and viewed beforehand.

But the nature of online auctions like eBay and QXL in the UK means that buyers are deprived of this process.

Nicholas Bonham, deputy chairman of auctioneers Bonhams, said that while traditional auction houses take possession of the goods and act as agents, there is no possession of what's being auctioned online.

Internet auction fraud is made easier by the fact that a bid can be placed from anywhere in the world.

In the United States 10,000 cases of internet fraud were investigated last year.