Federal authorities have arrested one Southern California man and indicted another in connection with two separate fraud schemes on eBay. George Arthur Cruz of Artesia, California, was arrested Tuesday morning and charged with 13 counts of mail fraud and one count of money laundering, FBI officials said. Cruz -- also know as Richard Cortez -- is accused of defrauding some 40 eBay members out of about $76,000 by auctioning items such as laptop computers and camera equipment on eBay but never delivering them to bidders. Last week, federal officials indicted Hen Ben Haim of Encino, California, in a similar case. Haim -- also know as Shay Albaz -- is accused of defrauding more than 200 eBay members out of about $32,000. He faces up to 75 years in prison if convicted. As with Cruz, federal officials charge that Haim offered computers and other items for sale on eBay and charged bidders for them, but never sent the items. Unlike Cruz, Haim is still at large, officials said. An Israeli citizen whose visa has expired, Haim faces charges on eight counts of mail fraud. He faces up to 40 years in prison if convicted. The FBI, the US Postal Inspection Service and the US Attorney's Office worked together in investigating both cases. The Los Angeles Police Department Computer Crimes Unit is also involved in the Haim investigation. Although the amounts involved in the cases are not large, the government is concerned that cases such as these could dissuade consumers from using e-commerce, said FBI spokeswoman Laura Bosley. "We are vigorously pursuing these investigations to protect commerce on the Internet," she said. Online fraud is a growing problem for enforcement officials and e-commerce companies alike. Earlier this year, the Federal Trade Commission reported that complaints regarding online auction transactions had jumped from little more than 100 in 1997 to 11,000 last year. As the leading online auction company, eBay has been at the center of the storm. In April, for instance, a group of sports collectors sued eBay, charging that the auction giant knew about auctions of fake sports memorabilia but did little to stop them. Last year, another Southern California man was sentenced to 14 months in prison for defrauding 31 eBay bidders out of about $36,000. Federal authorities contacted eBay about Cruz in October of last year, eBay spokesman Kevin Pursglove said. The San Jose, California-based online auction company suspended Cruz's account and cooperated with the federal investigation, turning over Cruz's trading history to authorities, Pursglove said. "By that time, several other complaints were already filed about his trading on eBay and several other sites as well," Pursglove said. Cruz received more than $38,000 from eBay bidders for items he didn't ship, federal authorities said. US postal inspectors intercepted another $34,000 in checks sent to Cruz, authorities said. EBay investigated Haim's alleged scheme in March, but Pursglove said he didn't have any new information about that case. Haim allegedly asked bidders to send checks to an office he rented in North Hills, California. When bidders tried to find out about their missing items, Haim did not return their calls, they said at the time. EBay provides insurance for bidders who have been defrauded on its service. However, the insurance reimburses bidders only up to $200 of losses, minus a $25 deductible. EBay has taken steps to reduce fraud on its system, requiring members to register with a credit card to prove their identities and credit worthiness, Pursglove said. He added that bidders can minimise the risk of being defrauded by using the company's feedback system and escrow services from outside companies. In addition, customers who use eBay's Billpoint payment system are not liable for fraudulent charges, he said. But few customers use escrow services, and some 80 percent of eBay transactions are still conducted via paper checks, Pursglove said. Unscrupulous sellers also have learned to exploit the company's feedback system to embellish their reputations while scamming bidders. Still, Pursglove said that fraud on eBay happens rarely, occurring in fewer than one-tenth of 1 percent of all transactions. The low percentage is "something any merchant in the offline world would be very, very thrilled with", he said. Take me to ZDNet's 2000 Cybercrime Roundup. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.