Fraud Protection Center

Online Auction Fraud

Online auctions are very popular, and most auction participants are happy with their experiences. However, four in ten buyers and half of all sellers claim they have encountered problems with Internet auctions (source: Harris Interactive survey 2001).

Many buyers pay by sending a check, cashier's check, or money order directly to the seller. This is fine if everything goes well and the seller is legitimate. However, if the seller is not legitimate, the money can be presumed lost.

The most common problem for buyers is late delivery. Other problems include receiving items that are different than those promised, items arriving in damaged condition, and never receiving the items at all. Sellers report problems such as late payment, nonpayment, buyer's changing their minds, checks bouncing, and buyers using stolen credit cards.

Tips for reducing online auction risks

  • Use credit cards for payment. This way the sellers get their money immediately, and buyers can dispute the charges if the merchandise was misrepresented or not delivered.
  • Understand as much as possible about how the auction works, what your obligations are as a buyer, and what the sellers obligations are before you bid.
  • Find out what actions the web site/company takes if a problem occurs and consider insuring the transaction and shipment.
  • Learn as much as possible about the seller, especially if the only information you have is an email address.
  • Examine the feedback of the seller.
  • Be aware of differences in laws between countries. If something goes wrong when buying or selling through online auctions from someone from another country, it may be difficult to pursue legal action.
  • Ask the seller about when delivery can be expected. Also ask about what to do if there is a problem with the merchandise.
  • Find out if shipping and delivery are included in the auction price or if there are there additional costs.
  • Never give out personal information you feel is not required for the transaction, such as your driver's license or social security number.
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