Police arrested the pair, who were operating out of a fictitious business park in Vienna’s Donaustadt.
The pair are now facing charges of transporting animals across an EU border without a pet passport, and publicly hawking animals.
The puppies were examined by a vet and found to be very weak, and one of them was seriously ill.
They are a cross between a pug and a West Highland terrier and were on sale for €170 each. They were micro-chipped but only had Hungarian vaccination cards.
The vet said the puppies appeared to be only about eight weeks old - too young to have had a rabies vaccine - and further proof that they had been illegally brought into Austria.
Four Paws said they had grown suspicious of the two puppy traders as they placed numerous ads using different names and changed addresses frequently.
In this case, the address given was one in Liesing, Vienna but the pair brought the dogs from Sopron in Hungary.
Four Paws criticised the willhaben portal: "Even if willhaben.at protests against the illegal trade in puppies and has recently brought Austrian animal rights activists on board we believe we’ll never win the fight against the puppy mafia, as long as dealers are allowed to list them online," said Four Paws campaign worker Irina Fronescu.
The animal rights group is demanding an explicit prohibition of online trading in animals and consistent enforcement of such a law.
Only registered breeders or traders are allowed to sell animals under Austrian law, along with animal welfare organizations. However the enforcement of this law on the Internet has proved difficult, and websites are not obliged to check all of their listings.