“Here is the deal! I have 1,000 numbered envelopes all with a piece of paper with an amount on it randomly placed in them. I mixed them up and don't know myself what is in each. Then I let my youngest daughter (5 years old) draw an envelope for you (she really likes to help). She will then open the envelope and give it to me. I will keep the same envelopes in play until all envelopes are gone! Just some hints on what’s inside: they range from $.xx to $xxx.xx bills. Ebay rules: I cant tell you exactly what is in them, just hints. Its all real money. No jewelry, toys, mystery junk, nothing like that. Some gifts of large value and many more with small amounts.”The above remarks come from an actual “Mystery Auction” on eBay. It may sound innocent, honest and even fun to the unwary but it is nothing more than a time honored bunco scam. Did you miss seeing it on eBay? Don’t worry, there are were 1,402 other “Mystery Auctions” listed at the time I was writing this, all of them making money and all of them dishonest.
I bring this to your attention today as an expose of an extremely successful modern day auction swindle that has been going on every day on eBay for years. I have to admit that as a historian of nineteenth century confidence men a good part of me laughs at the victims of these auctions. After all it was their own greed to “get something for nothing” that put them in their predicaments in the first place. No one goes into one of these “auctions” thinking, “I know I won’t win but it will be fun anyway.” They actually think someone is giving away money. What bothers me is the large amount of auctions and victims there are, and the fact that these swindles are allowed to operate seemingly unmolested.
“…and 1,402 to take ‘em.”
I admit I had a personal agenda in writing this article. My great grandfather was an infamous bunco man himself. He was known as “Soapy” Smith and he sold soap in what is termed as a “Prize Package” swindle on street corners of the old west. I started this investigation hoping to find similar cons performed between today’s con men and my bad man descendant, but I was not prepared to see the grand scale at which the "industry" swindles are taking place. I use the word “industry” because I found eBay has even given these crooks their very own category under “Mystery Auctions,” and have been running legally and with the consent of eBay for years. Although called by another name these “Mystery auctions” are nearly identical to the “Prize Package” scams of a century ago. These operators are so well protected on eBay that when victims suspect foul play and complain they find they have little recourse in getting a full refund. It is not that eBay condones thievery but rather there is little they can, or will, do to aid the victims who seek retribution.
Once on eBay in the “Mystery Auctions” category you will find an assortment of “Prize Package” swindles run very similar to the ones of the nineteenth century. They even have shills writing eBay guides on “how to play and win” the games just as the cappers and shills for three-card Monte and the shell game of the old west used to inform their victims in methods to “beat the game.”
How they work. Or, “Please have your PayPay account ready”
The most popular method is the “e-envelope mystery auctions.” This is an e-mail virtual envelope that victims do not actually receive by mail but rather the seller “opens” for you and sends any “gifts” to your PayPal account automatically.
The operators offer a muti-chance sale or auction at a set price, most being .99 cents but there are numerous ones that charge a much higher price per chance, claiming better “gifts.” Some offer cash prizes while others offer goods, along with cash prizes, such as Wii game systems. These latter auctions clearly state that in the event not enough lots are sold then the cash prize will be substituted. That wording protects them from having to give-away anything of real value, minus a refund of a small amount of your own money.
“In order to comply with eBay's terms of service, this is NOT a lottery, game of skill, raffle, lottery, sweepstakes, pool, competition, or for charity. In addition, participants in this auction are not "winning" anything, as I am not distributing prizes or monetary compensation and a prize. They are only purchasing an envelope. Anything inside the envelope is a free gift to them.”There might be upwards of 1000 individual lots to purchase in a single sale, which is to be paid with PayPal only. This solves the operators problems of dealing with the federal government postal system, bank checks and their applicable laws. PayPal’s policy is very favorable towards these swindles even if unintentional. Time is also a key factor here. With PayPal an excited “winner” who has been emailed a notice by eBay that he/she has won, can pay his/her owed amount in seconds whereas in the days of Soapy Smith, his gang had to stall their victim until a check could be cashed. Even after cashing a victims check at a local bank a stop-payment order from the victim can have authorities searching for the bunco men seeking reimbursement for the cashed check.
Most of the operators offer discounts if you buy in bulk, one operator advertising, “buy five envelopes you get one free!” After the auction concludes the victims are to watch their own PayPal accounts and within three days or so there will be a deposit of “winnings” that came from the “virtual envelope” they purchased.
In reading the auction descriptions you will notice that the auctions operators do not call what they offer as “winnings” or “prizes,” as that would imply gambling. Bidders here you will be given what they refer to as a “gift.” It is clearly stated that you are ONLY bidding on an envelope and that,
“Anything in that envelope is a gift to you from me!” Every victim does win some money, but only a fraction of what the victim paid but this is enough for some victims to give them the feeling of actually almost winning something. Hopefully the thought of being swindled never crosses their minds. In fact, just the opposite might occur when the operator offers a second chance to play with an incentive of obtaining more chances for the price of one.
In every auction write-up is the “complaint and feedback” paragraph(s). These ask the victim to contact the operator with complaints so that the victim might be persuaded from causing any trouble or in giving bad feedback. Sometimes a small refund might be given along with a lecture on receiving bad feedback in return if it is given by the victim against the operator. Believe it or not this intimidation tactic works.
Shills are used in auctions to give good feedback which gives the victim a false sense of security looking over all the good feedback and seeing that apparently people do win money. In reality these shills only claim to actually win money.
As one operator wrote,
“Everyone can NOT get a Great Gift please be a good sport and have fun.”Is this legal? “This is NOT a lottery.”
How are they legally allowed to continue, you might ask? The answer is simple, they are operating within the legal confines of the law. It’s in the wording of the auction and looking at the 1,402 auctions they all read nearly identical to one another. The way in which they differ is in the spiel to catch the mark. Unfortunately, the operators keep their “word” as far as how they represent the auction, therefore there is little eBay or PayPal can do or say to compensate the victims.
In every single auction I found this statement,
“As per eBay rules: This is NOT a lottery, raffle, sweepstakes, game of skill, pool, competition or for a charity. Participants in this auction are not ‘winning’ anything and are only purchasing an envelope. Anything in the envelope is a gift from me.”If a seller is going to get into hot water with officials at eBay and PayPal it will be over mistakes, intentional and otherwise, made in their auction description. A normal seller who sells an antique chair but fails to mention a large tear in the fabric is going to get caught and be forced to make a refund. A seller can sell any allowable item on eBay as long as the description is truthful and complete. Here is the key, the “Mystery Auctions” are frauds…but their descriptions (according to eBay and PayPal) are truthful and complete. Their auction descriptions have been written up in such a way that they are fully within the legal limits of the law. They have been at this for a long time and you will find that most of the descriptions read almost identical to one another. As long as an item is properly represented by a seller and there is no evidence of fraud, there is little damage a victim can do by complaining to eBay or/and PayPal.
With the amount of gullible dupes sending in their dollars to these crooks it might be asked how they are still operating. It was my great grandfather, Jefferson Randolph “Soapy” Smith who utilized the same methods. Rather than raking in one or two high stakes operations and then running to escape possible arrest, the bunco man collects the lowly single dollars from a large audience without calling too much attention to the operation. If a mark loses $100 in what is discovered to be a rigged deal the victim is much more likely to report the crime to authorities, but when the loss is only $1 to $10 the victim is far less interested in going through the hassle and work involved knowing that they will probably never see the return of their money anyway. No, it is easier to just chalk up the loss to experience and move on. The fact that few people will complain too loudly at having lost $1 helps maintain the status quo for these operations.
Is there really that much to be made
in “Mystery Auctions” and at what cost?
It may seem like there is not much money in it this sort of swindle, but there actually is. $1 seems hardly worth the time and effort to set up such an operation on eBay knowing that one slip could mean arrest. The take must be worthy of the work and risk…and it indeed is. Multiply that $1 many times over and the amount taken in by the operation can quickly turn into thousands of dollars each month. Operations like this are re-listed every day on numerous auction firms like eBay.
At what cost does the operator incur
in order to operate such a swindle?
The only monetary cost is the small listing fees charged by eBay and other on-line auction firms. Even the work of contacting the dupes of their loss is done by having the victim do the work by checking their own PayPal account for a money transfer. There are no envelopes to actually send out and the “work” of re-isting each auction is done with one click of a button as these auctions are written up once and saved as a draft for reuse on eBay.
Operator "Stepanhiewalters323" is just seemingly starting out. She (if it really is a woman) has operated only 10 auctions thus far. Eight of them were auctions for a mystery coin. All eight bidders paid .99 and won more than what they bid, one even claiming to have won a gold coin for .99 cents. Her newest auction is the usual envelope auction but looking at her feedback a dupe will come to the conclusion that this seller is giving money away and will likely bid hoping to get a gold coin, etc.
Operator "Rose122799" has 721 auctions under her/his belt. Selling one auction of .99 cent envelopes with 80 total in one auction 20 envelopes were sold for .99 cents that’s $20. If that was an average for each auction then this seller has made somewhere around $14,420. since being on eBay.
Operator "Melissajane123" has held 1295 of these style auctions…figure the math.
The “industry” is so big that I posted a request for victims of this scam to step forward with their stories. Immediately I received three responses, all of them hoping I could help them get their money back and angry as hell.
One victim, who shall remain anonymous, shelled out $151.51 on February 27, 2008 with the hope he would win a brand new Wii game system with lots of extras. He was notified by PayPal that he had won and happily paid his money. Then came the bad news from the seller that in fact he had lost, but was willing to refund 1/3 of the victims money back.
The victim writes,
“I was ripped pretty good. I bid on the xbox360, was awarded the bid from e-bay-invoice, was sent requesting payment from e-bay.-I contacted the seller to find out what was included, which was all the normal accessories. I paid the invoice $151.50 and the next day I was informed I didn’t win and he was going to send me back a refund of $50. I just lost $100.50 and no X-box. I contacted the seller and he wrote back I bid on a E-envelope. The invoice said I won an X-box 360 and have to pay the price I bid. The invoice said I won the X-box 360 not a F****** E-envelope.”He was promptly sent an email by the operator that if he chose to try again his chances of winning were all but guaranteed. How could anyone resist what the confidence men used to call...a
sure-thing. 
Soapy Smith(Click image to enlarge)
