The FBI has launched an investigation in the US after a British couple who paid almost £5,000 for a Rolex watch in an internet auction received a photo of the item instead.

Tom and Carol Shead, of Peterlee in Durham, believed they were bidding for a diamond-encrusted, 18-carat gold watch worth £25,000 on auction site eBay. Rolex confirmed it's easily possible for a new Rolex to cost £25,000.

They transferred £4,700 to a bank account in America. But a few days later they received a package containing only an A4-sized picture of the watch.

The seller of the watch, an 18-year old US university student, denies any wrongdoing. He claims the Rolex snap was advertised in the art section of the auction site.

But Mrs Shead said there was nothing on the site to indicate the item she was buying was not a genuine Rolex watch.

“On the internet there was a description saying it was in mint condition. There was even a description of the diamond bezel,” said Mrs Shead.

The gift was to have been a birthday present from her husband Tom, an ex-miner who is housebound due to back injuries sustained in his work.

“I’ll never buy anything big off the internet again,” she said, “I’ve been so upset by this.” Mrs Shead said she now held no hope of seeing the money again.

The couple paid for the item directly from their bank account to the seller’s account. The vendor had demanded the transaction should take place in this way.

Detective Constable Brian Roberts of Peterlee police warned internet users against vendors who demanded cash transactions only.

“Reputable credit card companies are insured against internet fraud,” he said, “There is no reason why reputable sellers should be against a credit card debit.”

The FBI said this week an arrest was imminent in the case.