Internet Art Sales and Fraud

Last week the Art Newspaper posted an interesting article on increasing internet art sales, which is good and fraud and misrepresentations which of course is bad.

As appraisers we know fraudulent internet art sales have been a problem for many years.  Fellow appraiser Tony Pernicone, ASA wrote a good article for the 2012 edition of the Journal of Advanced Appraisal Studies on fakes on the internet entitled Caveat Emptor!  Fakes and Frauds at eBay and other Online Auction Sites.

The growth in internet art sales continue, evidenced by Christie's recently stating  that it would offer 30 online only sales in 2013 compared to only 7 in 2012. The Art Newspaper article notes that fraud is not only in sales, but also in money laundering  shill bidding and taking money without sending the art.

The Art Newspaper reports

As internet sales of art reach unprecedented levels—witness Christie’s sale of Edward Hopper’s October on Cape Cod, 1946, which went for an online record of $9.6m in November—concerns about online fraud are also on the rise. The issue is attracting increased attention after a two-week conference in Dubai in November of international government representatives who are putting the regulation of internet traffic on the agenda across multiple industries.
The art market is also taking note, but it is becoming clear that tackling the problem is more complex than simply confirming a work’s authenticity.

Although art organisations, including the Calder Foundation in New York and London’s Portable Antiquities Scheme, monitor sites for fakes, this is not a priority for the police. “The point that is often missed is that it’s not just a case of saying something is not genuine. There are legal differences between a misattribution, a copy and a fake, and the focus for the police is to establish dishonesty,” says Vernon Rapley, formerly the head of New Scotland Yard’s Art and Antiques Unit. Attempting to prove that the seller intended to deceive bidders is made more difficult by the fact that many online descriptions of works (including legitimate ones) are vague. More evidence would be needed in a situation where a piece was described as “signed by Picasso”, for example, rather than “by Picasso”.

Gathering evidence is also a challenge. Online sellers are typically anonymous and have multiple accounts. Time can be wasted on investigations that later reveal that the criminal lives abroad and is not covered by the relevant national jurisdiction. Establishing links between auction accounts and corresponding bank transactions, and tracing victims, is an arduous process, and resources are limited.

“The moment you introduce complications such as lots of victims based abroad or anonymous suspects, you just don’t get these things off the ground,” says Richard Mandel, a UK-based lawyer. “Subsequently, the message is going out that you’re unlikely to be prosecuted, and the situation has become one of diminished trust, coupled with diminished investigation,” he says.

Source: The Art Newspaper