Internet Auction

In today's auctions, participants may never hear the hammering of a gavel on a sound block or an auctioneer's cry of "Going once, going twice, sold!" In 1995, the introduction of internet auctions began a new era.¹ The hammering was replaced by the sound of keyboard strokes and computer-mouse clicks, and the auctioneer's cry is muted by the hum of a modem. However, the convenience of buying and selling items over the internet sometimes comes at a price that is completely different from the actual cost of an item. According to the Federal Trade Commission (FTC), excluding identity theft, fraud dealing with internet auctions constantly ranks at or near the top of the list of consumer fraud complaints.²

The most common internet auction fraud complaints received by the FTC are by buyers who complain of sellers who fail to send the merchandise or send something of lesser value than advertised. Buyers also complain about sellers failing to deliver merchandise in a timely manner, or failing to disclose all relevant information about a product or fully disclose the terms and conditions of the sale. Other problems include sellers using "shills" to bid on items to drive up the price, and con artists luring bidders off legitimate auction sites by offering to sell the same or similar item at a lower price, intending to trick the person into buying the item and then not sending it.³

Even though the threat of fraud always lurks when participating in internet auctions, there are ways to lower the possibility of becoming a victim.⁴ You should familiarize yourself with the internet auction site you intend to use. Never assume that each auction site has the same set of rules or protections. Some auction sites offer insurance or guarantees for items that are undelivered, not authentic, or not what the seller had claimed. You should also learn as much as you can about the seller. Many auction sites offer feedback ratings based on comments by other buyers. Although this is often a good indictor of the quality of the seller, be aware that some of the comments may be written by the seller, the seller's friends, or by people paid to write a positive review. Prior to bidding on the item, know the seller's return policy if one is in place. Find out if you will be given a full refund or if you will be required to pay the shipping costs or a restocking fee.

Once you are comfortable with the internet auction site and feel comfortable buying from a particular seller, decide if you are willing to risk sending the payment. Remember to protect your privacy. Never give your Social Security number, driver's license number, credit card number, or bank account information until you have checked out the seller and the online payment or escrow service, if you are using one, to ensure legitimacy.⁵ Consult with your credit card company to determine if you are afforded any protections if your card is used to purchase items in an internet auction. If a payment or escrow service is used, read the service's terms and conditions and decide whether or not you agree with them.

Internet auctions are an exciting and fun way to shop. Use these hints as a starting point for learning about, and participating in, internet auctions. Remember to print and keep a record of all of your transactions. If you have not received the product when promised, reach out to the company or individual in a firm, but polite manner. If they do not respond to your requests, contact the New York State Attorney General, and file your complaint. Forms are available on-line at www.oag.state.ny.us or by phone at (800) 771-7755. For more information about internet auctions, visit the FTC's website at www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-800-382-4357); TTY: 1-866-653-4261.