Researching on various articles on Internet auctions, I have compiled below description of some of the most common frauds seen in Internet auctions.

False Claims / Misrepresentation

Inflated description, false claims of superiority, overstated value, misleading facts are some of the common means of confusing buyer. Fraudsters use cleverly framed language to trick buyer in believing seller's claim.

If there is anything in an item description that doesn't make sense to you, or that just makes you wonder, don't brush it off. That's almost always a valid warning sign. Ask the seller. And don't buy unless you're sure of the answer.

Vanishing Seller

Seller accepts money and that's the last time you interact with him/her - you never receive the promised merchandise.

This is one of the oldest tricks in business - but there are safeguards like escrow accounts to cover your backside.

Fraud Buyer

The fraudster, posing as buyer, pays through fake money order, bogus cashier's check or bank draft, bounced checks, stolen credit cards, or a number of other techniques.

Fake Buying Bids

As in live auction, artificially inflating price on an item by using fake bids from phony user IDs or accomplices.

Bid Shielding

In this mode, fraudsters use bogus high bids from phoney accounts to jack-up the price and scare off potential buyers. The actual bidder then retracts the higher bids, getting the item at a much lower price than he would have otherwise.

Piracy and counterfeiting

Fake diamnonds, pirated music, phoney jewellery, forged collectibles, pirated software etc. are some of the examples.

Internet Fencing

Using Internet auction to sell-off stolen goods

Triangulation

This is an extremely innovative way of defrauding people - that can fool even experienced surfers.

The fraudster puts high value items (e.g. branded perfumes, leather articles etc.) at extremely attractive price. This kind of "unbelievable deal" can easily attract many buyers but also raises suspicion in the minds of experienced surfers.

So, to ward off buyer's suspicion, the fraudster offers to send the items on approval.

The fraudster then use stolen credit cards to order the items, to be shipped to buyer. The buyer receives the items and gladly pays for this "unbelievable deal" to the fraudster in cash. Shortly afterwards, the buyer gets a visit from the police for credit card fraud and theft.

Shell Auctions

There is no merchandise - fraudsters organize bogus auctions to get money or credit card numbers from unwary buyers.

False Replacement Claim

The buyer gets the merchandise in decent condition but Complaints of damaged merchandise. He/she then returns a similar looking item that has been damaged, or a fake, with the claim, "It isn't what I expected." The seller refunds their money, and is left with broken/damaged or fake product that can not be sold again.

Misleading Additional Fees

Additional charges like shipping and handling costs are added after the sale has been made.