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Online art sales are on the up—and so is fraud

Retailers need to do more to protect buyers from fraudsters selling fakes as online art businesses attract more investment

As investors pour more money into online art businesses, experts say that fakes are rife, and virtual retailers are not doing enough to combat the problem. “I get calls from victims every day—whether they’ve been taken by a small gallery, a major auction house or a hotel liquidation sale, it’s all the same stuff,” says Colette Loll, the founder and director of Art Fraud Insights, a consultancy. She likens the battle against online fraudsters to a “game of whack-a-mole”—when one is squished, another pops up elsewhere.

There is hope on the horizon, Loll says. Her company has been scanning “thousands” of dubious auctions listings with the goal of creating an algorithm that can spot cons automatically and blacklist offenders. But the task is a daunting one, given the scale of the problem. “It’s not to say nothing good ever happens online,” she says. “But it’s the exception to the rule.”

The online sales spiral

The popularity of online sales is growing. The most recent report published by The European Fine Art Fair (Tefaf) found that internet sales of art and antiques increased 32% between 2013 and 2014. Online art sales accounted for a total of €3.3bn ($3.7bn) last year—equivalent to 6% of all art transactions. Most were in the range of $1,000 to $50,000, according to the report.

The pervasive problem of fakes

The problem of fakes being sold online is “pervasive”, says Sharon Flescher, the executive director of the International Foundation for Art Research (IFAR) think tank. It is difficult to track the extent of the problem since there are so many places to buy art online, and there is no single body to handle complaints. The Internet Crime Complaint Center registered almost 10,000 instances of online auction-related fraud in the US inthe last six months of 2014. The organisation, a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center, estimates art-related auction fraud cost victims a total of around $11.1m.

The fakes and the fakers

The most forged artists seem to be those whose work is fairly easy to reproduce. But any artist is vulnerable to copycats: a 2011 study by George Washington University and the University of California, Irvine found that 91% of works by Henry Moore for sale on eBay were fake.

Recent high-profile instances of online art fraud include the case of John Re, a New York-based painter who was arrested last year after earning $2.5m through the sale of forged Jackson Pollock and Willem de Kooning works via eBay and other channels. And in 2014, police in the UK shut down the eBay accounts of two men, David Henty and Geoffrey Spilman, after the Daily Telegraph newspaper revealed that they were selling forged works by artists including L.S. Lowry. In 2011, the FBI arrested seven people involved in a $5m counterfeit ring that included eBay sales of dodgy works of art. Most recently, the New York foundry owner who was sentenced last year for selling fake Jasper Johns sculptures was also found guilty of selling forged versions of other artists’ work online.

Fighting fraud: what companies are (and aren’t) doing

These crimes come at a time of heady investment in online art platforms. In April, Sotheby’s unveiled a new partnership with eBay (after a failed first attempt that ended in 2003). The same month, the auction site Auctionata announced that it had attracted $45m in fresh investment, while Artsy revealed a $25m funding round a month earlier. But many of these sites are not doing enough to fight fraud, say some.

Amazon and eBay, for example, “could do a great deal more due diligence”, says Christopher Marinello, the founder of the Art Recovery International crime database. Marinello says that international police have reported at least 25 instances of fakes having been bought online so far in 2015. A spokesman for eBay says it “partners with experts in this space to regularly monitor the site for unauthentic listings, while proactively and reactively work closely with law enforcement”. He declined to say how much fake art eBay has caught in recent years. Amazon Art, the art division of the online retailer, did not respond to requests for comment. 

Sharon Flescher of IFAR says that eBay contacted her organisation in 1999 to see whether it might verify listings, but the deal fell through because “we couldn’t work on their timeline, or from digital photographs. We need to do research and examine works in person,” Flescher says.

Artnet rarely inspects the lots in its online auctions in person; the company relies on “the experience and expertise of our specialists”, says Hannah Cohn, its senior director of auctions. Paddle8 mostly checks authenticity against high-resolution images but “increasingly has its own eyes” on art that is valued at more than $50,000, says the company’s managing director of auctions, Thomas Galbraith. The site pulled four Keith Haring drawings from sale last year over questions of authenticity.

Auctionata has a two-stage verification process, says its managing director, Joseph Stasko. People who want to sell work send in a photograph, which Auctionata appraises for authenticity. If the object passes this test, the piece is sent to the company where staff checks it in person. “A lot of people think they have a Monet, but then they send a wider shot of the picture and it’s got the Met [Metropolitan Museum of Art] logo on the bottom and it’s just a poster,”

Stasko says.