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Online auctions open up opportunities for several types of frauds. A particular type, which facilitates illegal loans, is on the rise in several nations. Researchers have analyzed these cases to find patterns, which could help identify them, including other types of auction frauds.

As the internet reach broadens, more and more people have started to use online auctioning (EBay). Along with this growth, fraud also keeps growing. 2007 alone saw about $14.37M in auction fraud. Misrepresentation of items, fake bids by the seller to drive up the price, adding hidden charges (shipping & handling, insurance), non-delivery of items and offering black market goods are just some of the well known online auction frauds.

A particular type of fraud is very prevalent in Korea and is also found in most other markets – Online Credit Card Phantom Transactions (OCCPT). In this type of fraud, the seller and buyer collude to create a fake transaction, there by resulting in money (loan) got from the credit card company at a relatively very low interest rate, as compared to other options. This fraud is done in situations where, a person is not able to secure any forms of legal loans, interest rate of available loans are very high or cash advance limit on the credit card is very low compared to the purchase limit. Finally, the buyer (the owner of the credit card) could pay or not pay the credit card company.